The 2008 financial crisis not only changed the shape and size of the global economy—combined productivity and employment shrank by 5.5 percent in 2014 across OECD countries—it also redefined how leaders across the world discuss and describe finance, banking, and wealth. According to Angel Gurria, Secretary-General of the OECD, it became “politically intolerable,” after billions in taxpayer money were used to bail out the world’s largest banks and corporations, that “only the middle classes and small- and medium-sized enterprises pay taxes while high net-worth individuals and multinationals don’t pay any at all.” In 2009, leaders of the G–20, at the now-infamous Pittsburgh Summit, acknowledged that it was time “to turn the page on an era of irresponsibility” in global taxation and vowed to “take action against non-cooperative jurisdictions, including tax havens.” As the group announced later that year, “the era of banking secrecy [was] over.”
The same cannot be said of corporate tax avoidance and evasion. Although the United States’ Foreign Account Tax Compliance Act in 2010, which required foreign banks to report the overseas assets of U.S. citizens, may have signaled the beginning of the end to anonymous banking schemes, a number of scandals, including the Luxembourg Leaks in 2014 and the Panama Papers two years later, have continued to expose how the world’s wealthiest exploit shortcomings in corporate tax rules in order to shift money across the world and hide cash from tax authorities.
Those leaks have spurred on countries in Europe, in particular, to pick up the pace on corporate tax reforms. They include sanctions on a blacklist of offshore tax havens with overly “preferential tax regimes,” a rule set to come into force at the end of 2017, and a more radical proposal now under consideration known as a “common consolidated corporate tax base” or CCCTB. This would create a EU-wide tax regime designed to eliminate profit shifting, which corporations like Google and Apple use to avoid paying taxes in Europe by transferring their profits to low-tax jurisdictions
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