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Joseph Stiglitz: Big businesses find ways to create tax loopholes and move their profits abroad to avoid paying up
We need global governance and transparency from leading economic powers to tackle the problem of tax avoidance
Editor's note: "Joseph Stiglitz, Nobel Prize laureate in economics, is an economist and professor at Columbia University. The opinions expressed in this commentary are solely those of the author."
(CNN)Two things in life are inevitable: death and taxes. But not for big corporations.
Although they are "legal persons" and can fund politicians of their choice without limit, they don't have to be limited by time and, thanks to our outdated system of taxing global profits, they can easily shirk paying taxes.
While multinational companies can get away with paying little or no taxes, average workers have no choice in the matter because their income taxes are paid even before they receive their paycheck. And while big businesses can exploit tax loopholes and shift profits to offshore subsidiaries by employing sophisticated tax planners, small and medium-size businesses have little choice but to pay the full rate.
Joseph Stiglitz
This week, the Organisation for Economic Co-operation and Development, or OECD, unveiled its package of reforms to the global tax system. This joint G20/OECD exercise is known as the Base Erosion and Profit Shifting Project, or BEPS. The BEPS Project is commendable: it is important to own up to the mammoth problem of tax avoidance and the outdated tax system its member countries have created. Just five years ago, a reform like BEPS would have been unthinkable. But after the financial shocks and revelations of widespread tax abuse by global companies, the G20 called on the OECD in 2013 to propose reforms to the global tax system.
