Why Are Panama Papers So Important

Companies in the US are finding clever deceiving ways to get what they want. Many companies like Google are investing offshore to avoid American taxes. Others like the company Monsanto uses

The main objective of many companies is to minimize their tax obligations. Jeffers (2014) discussed the reason of why companies adopt tax inversion strategies. The researcher indicated that the income maximization is a major reason of companies attempting to reduce their tax liability (pp. 100-101). Tax inversion strategies provide companies an advantage to lower income tax rate. Today, U.S. corporations renounce its U.S. citizenship and move to low-tax countries. Companies that reincorporate oversees are not obligated to pay U.S. taxes on earning income (p. 99). Many countries implement tax competition strategies to attract and retain businesses. Well-known companies, such as Exxon Mobil, Hewlett Packard, Tyco, General Electric, PepsiCo, etc. take benefits of tax shelter opportunities overseas (p. 102). Other benefits of the jurisdiction abroad are flexible banking laws and simplified litigation processes.

However, the introduction of such a law becomes increasingly difficult when the companies being questioned are some of the largest and wealthiest in the world. In order to truly understand the stature of these companies, one would need to look into some of the statistics regarding them. Remarkably, according to Al Jazeera America “the largest 500 U.S. companies would owe an estimated $620 billion in U.S. taxes” if they had to declare all their overseas stockpiles, of around $2.1 trillion (“Al Jazeera America”). In addition, it found that “three-quarters of the 500 biggest companies utilize tax havens”. The top three offenders included Apple, General Electric and Microsoft. In many cases according to the report, the money is not being utilized to improve foreign economies. By this they mean to say that, U.S. businesses were not using their overseas profit to build factories and employ individuals. Instead, the overseas profit was a result of accounting tricks purposely implemented to benefit the business alone. To put all of this in perspective, the United States is losing billions of dollars to foreign economies. These taxes are being introduced into countries such as Ireland and Luxembourg. In other words the money that should be invested in the United States of America on public services, is being

Americans may ponder the thought of struggling economy barely gaining momentum while corporations have witnessed some of the largest quarterly profits ever recorded. The driving force behind the extreme profits gained by many corporations is simply put as tax inversion. Tax inversion is nothing more than an American firm combining with a foreign firm in a country with beneficial and lucrative tax laws (Financial Times, 2014). The American headquarters will now be moved to the new foreign firm where they will enjoy the lower taxes and evade the taxation of the United States government (Financial Times, 2014). More and more American firms have been taking advantage of inversion while still being able to enjoy sales in the American market.

After the creation of the income tax in 1913, many wealthy individuals lowered their income tax by transferring their large revenues to holding companies. While this was not illegal at the time, people such as Pierre du Pont, Thomas Lamont, and Alfred Sloan had all used this device in order to pay less taxes. I Alfred Sloan’s case, Zunz says that he “invested in a yacht and incorporated it as a holding company”. After being exposed, Sloan reportedly said that he had not intended to evade taxes, but only the cost of operating the boat. This generated a lot of publicity, which in turn made Sloan attempt to rebuild his reputation by donating more in the latter

Outcry over the revelations indicated in the Panama and Paradise Papers demonstrates the significant public concern with the usage of international tax havens. While tax arbitrage is often legal, many stakeholders have serious ethical and legal reservations about a firm’s tax avoidant behaviors. Investors are becoming increasingly aware of the regulatory and reputational risks encountered in secretive low tax jurisdictions. Furthermore, stockholders and creditors are also troubled that firms engaging in tax avoidance are distracted from other activities that would enhance firm value.

Corporations are avoiding paying taxes to the government of the United States and other countries. This tax avoidance costs the governments of various countries millions, if not billions of dollars in tax revenue every year. The government needs to stop the manipulation of tax loopholes by US corporations who are avoiding paying millions of dollars in taxes each year and eliminate the tax havens and loopholes once and for all.

The panama papers exposed many revelations about wealthy, high ranking people. The document reference 12 current or former world leader, as well as 128 other politicians and public officials. The first significant thing about this is that we are seeing a good amount of wealthy people taking advantage of situations and hiding their money. This primarily leads to a divide between them and the majority of people, and also perpetuates a lack of trust for wealthy people. The other big thing about the panama papers is that it exposed widespread corruption across the world. For example, Sigmundur David Gunnlaugsson, of having ties, through his wife, to an offshore company that were not properly disclosed, while Argentina's President Mauricio Macri is alleged to have failed to disclose links to a company in his asset declarations (cnn). The panama papers showed the great lengths that people go to, to hide their money and ultimately open the public's eyes to corruption that is happening

Upon learning about the Panama Papers, I was stock at how much we know about what is going on, but nothing significant has been done. One would think with all of the legal loopholes these corporations and countries are using. The law makers would work tirelessly to pass new laws that would reject them the ability to use those loopholes. One example would be, “Incorporating your hedge fund in a country with no corporate income tax even though all your fund's employees and investors live in the United States is perfectly legal.” Why is it legal to do this? Why do we allow people like George Soros to get away with doing this?

As for the huge corporations that sometimes use elaborate and sophisticated tax avoidance techniques, there are two sides to this

The investigative long-running television documentary Panorama drawing on the ‘current affairs’ has gained considerable attention and credibility from viewers for a long time. As one episode of this factual television programme, ‘The Bank of Tax Cheats’ inherits the impartiality of this popular TV series and conducts an investigation around the issue of tax evasion, trying to find out how the Britain’s biggest bank HSBC has assisted its wealthiest clients to avoid paying tax. This essay will produce a detailed analysis of this particular case, focusing on how it structures and presents the real event in order to pursue the journalistic objectives and truthfulness.

The degree to which tax evasion and money laundering have been investigated in recent years, the validity of having such secrecy has been questioned again. In 2003 the European Union reached an agreement to phase out banking secrecy, but in fears that the clients will withdraw funds and deposit them in Switzerland, “the three member nations that have secrecy laws, Belgium, Luxemburg, and Austria, would be permitted to keep those laws so long as Switzerland does” (Meller & Langley, 2003). The EU countries, banks will be held to withholding a 15% tax on the earnings of account holders.

Duke of Westminster, Lord Tomlin observed in respect of T ax Avoidance that: "Everyman is entitled, if he can to order his affairs so that the tax attaching under the appropriate Acts is less than it other wise would be. If he succeeds in ordering them so as to secure this result, then however in appropriate, the commissioner of Inland Revenue or his fellow tax payers may be of his ingenuity, he cannot be .compelled to pay an increased tax".8 Thus in spite of the generally held opinion that tax avoidance is unpatriotic and anti-social, it is clear that it is not a moral or legal issue unless the legislature expressly prohibits it. Tax Evasion on the other hand is the deliberate refusal or failure to pay one's tax or the reducti9n of ones tax liability through illegal or fraudulent returns or failure to make a return or pay tax on time.9 Implicit in the definition is that Tax Evasion apart from being a moral wrong also amounts to a breach of the tax law. Perhaps the distinction between Tax Avoidance and Evasion will be better understood and appreciated from the vivid illustration of the Royal Commission on "Taxation of profits and Income”.10 The Commission distinguished as follows: "The latter (that is evasion) denotes all those activities which are responsible for a person not paying the tax that the existing law charges upon his income. Exhypothesis, he is in the wrong, though his

Over a long period of time, corruption has been the focal point of every government, media and academics globally. Through money laundering, proceeds of crime can be disguised. Proceeds of crime can simply be put as money earned from profit-oriented crime. The methods used are many and highly complicated. Corruption is one of the organised crime which is said to be primarily associated with the laundering of proceeds through money laundering. Technological tools accord further chances for individuals to employ money laundering as a process of ‘cleaning up’ dirty money and obscure the trail leading back to the underlying crime.

After World War II, with the rapid development of their earnings increasingly international and multinational companies, as well as the rise in many countries and the actual rate of tax, international tax evasion and avoidance of potential benefits from the taxpayers have increased cross-border so that international tax avoidance and tax evasion in the field more and more serious.