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Legalized Tax Fraud: How Top US Corporations Continue to Profit Through Offshore Tax Havens

March 3, 2015 Comments off

Legalized Tax Fraud: How Top US Corporations Continue to Profit Through Offshore Tax Havens
Source: U.S. Senate Committee on the Budget (Sen. Bernie Sanders, I-VT)

Sen. Bernie Sanders (I-Vt.), the ranking member of the Senate Budget Committee, today called on America’s leading corporations to stop sheltering profits in the Cayman Islands and other offshore tax havens. He also urged them to stop lobbying Congress for additional tax breaks as the Business Roundtable, an organization representing some of the largest corporations in the country, is expected to do tomorrow.

Sanders issued a new report that provides a fresh glimpse into the far-reaching corporate tax avoidance strategies of large and profitable companies represented by the Business Roundtable, including what he calls the “legalized tax fraud” of sheltering profits in offshore tax havens.

The report shows for the first time how more than 50 percent of the companies represented by the Business Roundtable are collectively holding more than $1 trillion in profits in offshore tax haven countries where it is not subject to U.S. taxes.

The report also shows that several of the companies have been profitable for years but pay nowhere near the 35 percent income tax rate that nominally applies to corporate profits. In fact, according to a report last year by the Government Accountability Office, the effective tax rate for large, profitable corporations was just 12.6 percent in 2010, a figure that Sanders is asking the GAO to update today. The report also points out that a number of huge corporations – including General Electric, Boeing, Duke Energy and Verizon – not only have paid nothing in federal income tax in recent years, they received refunds from the IRS.

International Financial Markets: A Diverse System Is the Key to Commerce

February 27, 2015 Comments off

International Financial Markets: A Diverse System Is the Key to Commerce (PDF)
Source: U.S. Chamber of Commerce

This paper provides a broad overview of the global financial system. It describes how financial institutions and markets in various financial instruments make up the global financial system, and the size of this system. It also discusses how the global financial system helps to boost economic growth and facilitates global trade. Ten main conclusions emerge from this analysis.

Innovation in European Cities

February 11, 2015 Comments off

Innovation in European Cities
Source: Bloomberg

Innovation in European Cities sets out the context for Bloomberg Philanthropies’ European Mayors Challenge. It gives an overview of the key themes facing European cities today and provides an independent analysis of the 155 submissions to the award and a detailed review of the five winning proposals. It has been carried out by LSE Cities, a research centre based at the London School of Economics and Political Science, which specialises in understanding the dynamics between the urban form and urban society.

Throughout 2014, researchers from LSE Cities provided input to Bloomberg Philanthropies on the political and demographic make-up of selected European cities, and carried out an objective assessment of the level of innovation shown by the shortlisted proposals. In writing this report, we also interviewed representatives from the winning cities. The report draws on this work as well as research on the social, economic and political dynamics of cities at a global and European level, a wider lens through which to better view and understand the themes uncovered by the European Mayors Challenge.

The report is organised into four parts. The first offers an overview of global dynamics in an urban age, the second identifies the key themes addressed by the submissions for the award and the third focuses on the five winning proposals. The report concludes by offering a series of reflections on what the European Mayors Challenge tells us about some of the key issues facing city governments across Europe today, and what lessons might be drawn from the Challenge, worldwide.

America’s Advanced Industries: What They Are, Where They Are, and Why They Matter

February 3, 2015 Comments off

America’s Advanced Industries: What They Are, Where They Are, and Why They Matter
Source: Brookings Institution

The need for economic renewal in the United States remains urgent. Years of disappointing job growth and stagnant incomes for the majority of workers have left the nation shaken and frustrated. At the same time, astonishing new technologies—ranging from advanced robotics and “3-D printing” to the “digitization of everything”—are provoking genuine excitement even as they make it hard to see where things are going.

Hence this paper: At a critical moment, this report asserts the special importance to America’s future of what the paper calls America’s “advanced industries” sector.

Characterized by its deep involvement with technology research and development (R&D) and STEM (science, technology, engineering, and math) workers, the sector encompasses 50 industries ranging from manufacturing industries such as automaking and aerospace to energy industries such as oil and gas extraction to high-tech services such as computer software and computer system design, including for health applications.

These industries encompass the nation’s “tech” sector at its broadest and most consequential. Their dynamism is going to be a central component of any future revitalized U.S. economy. As such, these industries encompass the country’s best shot at supporting innovative, inclusive, and sustainable growth. For that reason, this report provides a wide-angle overview of the advanced industry sector that reviews its role in American prosperity, assesses key trends, and maps its metropolitan and global competitive standing before outlining high-level strategies to enhance that.

Tracing CO2 Emissions in Global Value Chains

February 2, 2015 Comments off

Tracing CO2 Emissions in Global Value Chains (PDF)
Source: U.S. International Trade Commission

This paper integrates two lines of research: trade in global value chains and embodied emissions into a unified conceptual framework. This allows both value-added and emissions to be systematically traced at the country, sector, and bilateral levels through various production network routes. By combining value-added and emissions accounting in a consistent way, the potential environmental cost (emission with per unit of value-added created) along Global Value Chains can be estimated. Based on this unified accounting method, we trace CO2 emission in global production and trade network among 41 economies in 35 sectors from 1995 to 2009 based on the World Input-Output Database (WIOD) database and show how they help us to better understand the impact of cross-country production sharing on the environment.

Offshoring, Low-Skilled Immigration, and Labor Market Polarization

January 27, 2015 Comments off

Offshoring, Low-Skilled Immigration, and Labor Market Polarization
Source: Federal Reserve Bank of Atlanta

During the last three decades, jobs in the middle of the skill distribution disappeared, and employment expanded for high- and low-skill occupations. Real wages did not follow the same pattern. Although earnings for the high-skill occupations increased robustly, wages for both low- and middle-skill workers remained subdued. We attribute this outcome to the rise in offshoring and low-skilled immigration, and we develop a three-country stochastic growth model to rationalize this outcome. In the model, the increase in offshoring negatively affects the middle-skill occupations but benefits the high-skill ones, which in turn boosts aggregate productivity. As the income of high-skill occupations rises, so does the demand for services provided by low-skill workers. However, low-skill wages remain depressed as a result of the surge in unskilled immigration. Native workers react to immigration by upgrading the skill content of their labor tasks as they invest in training.

Trade Patterns in the 2060 World Economy

January 15, 2015 Comments off

Trade Patterns in the 2060 World Economy
Source: OECD

This paper presents long-term trade scenarios for the world economy up to 2060 based on a modelling approach that combines aggregate growth projections for the world with a detailed computable general equilibrium sectoral trade model. The analysis suggests that over the next 50 years, the geographical centre of trade will continue to shift from OECD to non-OECD regions reflecting faster growth in non-OECD countries. The relative importance of different regions in specific export markets is set to change markedly over the next half century with emerging economies gaining export shares in manufacturing and services. Trade liberalisation, including gradual removal of tariffs, regulatory barriers in services and agricultural support, as well as a reduction in transaction costs on goods, could increase global trade and GDP over the next 50 years. Specific scenarios of regional liberalisation among a core group of OECD countries or partial multilateral liberalisation could, respectively, raise trade by 4% and 15% and GDP by 0.6% and 2.8% by 2060 relative to the status quo. Finally, the model highlights that investment in education has an influence on trade and high-skill specialisation patterns over the coming decades. Slower educational upgrading in key emerging economies than expected in the baseline scenario could reduce world exports by 2% by 2060. Lower up-skilling in emerging economies would also slow-down the restructuring towards higher value-added activities in these emerging economies.

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