"When corporations skirt the tax system, they reduce the effective taxation of capital."

Tax avoidance creates inequality

#Money

Thu, Nov 5th, 2015 11:00 by capnasty NEWS

With a broken corporate tax system that causes inequality and allowing for half of the world's wealth to be in the hands of 1% of the population, The Guardian's Gabriel Zucman wants to know why "we tolerate rapacious, unjust tax havens."

First, the taxes avoided by big companies have to be compensated for by higher taxes for the rest of us – higher income taxes on the middle classes and higher sales or property taxes for everyone, unless we cut spending on education, health and infrastructure.

Second, tax avoidance distorts competition; big firms get away with low tax rates because they can operate all over the world and can afford the pricey services of the big accounting firms, while nascent businesses have to face the statutory rates. This unfairness rigs the functioning of markets.

Yet the fundamental problem is that corporate tax avoidance increases inequality. [...]

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