Amazon may prove exception to global tax rules

PARIS - The Group of Seven wealthy nations may have endorsed a plan to ensure the world's biggest companies pay a minimum global tax rate, but US tech behemoth Amazon may escape it.

The landmark deal is supposed to help put an end to top multinationals shopping for countries with low corporate tax rates in which to book their profits instead of paying where they conduct their business.

By introducing a minimum tax rate of 15 percent without exceptions proponents of the plan hope multinationals will have less incentive to go through complex efforts to shift where they pay taxes.

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There is a second "pillar" in the plan: countries would be allowed to tax a share of the profits of the most profitable companies in the world, regardless of where they are based.

The caveat: it applies only to companies whose profit margins exceed 10 percent.

That would affect about 100 companies, including US tech giants such as Facebook and Google, but as some experts have pointed out, not Amazon.

Despite Amazon's colossal footprint and market capitalization of more than $1 trillion, its profit margin last year amounted to just 6.3 percent.

It did not take long before the first brickbats were aimed at the deal by Britain's Fair Tax Foundation.

"Just one more reason for the G20 to revisit and embolden the package" when the group of the world's top industrialized and emerging nations look to sign off on the arrangement next month, the group said on Twitter.Amazon caught by web 

A source close to the talks confirmed that Amazon overall would not fall under the provisions allowing countries to tax part of its profits. 

However its cloud computing arm, Amazon Web Services (AWS), "turns in profits of around 30 percent" and "it will therefore be taxed on this segment of activity" by different nations, said the source. 

There is no other "exception" or loophole in the provisions, the source added.

Amazon, which has been surfing an e-commerce wave since COVID-19 hammered bricks and mortar retail, more than tripled its first-quarter net profit for this year to $8.1 billion.

AWS meanwhile saw its quarterly sales soar 32 percent to $13.5 billion.

Like fellow online giant Facebook, Amazon welcomed the G7 accord. 

In a statement to AFP, the company called it "a welcome step forward" which will "help bring stability to the international tax system."

Uniform approach welcomed 

Amazon's country director for Italy and Spain, Mariangela Marseglia, declared herself "very happy" with the deal reached by finance ministers and central bankers of the Group of Seven wealthy states over the weekend.

She said it adopts "a uniform approach to the taxation of multinational companies (which) is what we have been trying to pursue for a long time."

Amazon has long supported countries working together on corporate taxation, she said, in order to reduce the risk of double taxation. 

That may be an allusion to taxes imposed unilaterally by countries including France, Italy, Spain and Britain which will fall away once a global agreement takes effect.

Amazon has been variously targeted by the United States and several European countries over its tax optimization arrangements involving sophisticated accounting schemes which exploit differences in different jurisdictions.

Essentially this involves booking profits in countries with relatively low tax levels while conversely declaring losses where tax levels are higher.

Such measures allow Amazon to considerably lower its tax bill.

Amazon says it is now waiting on the details of a global accord. 

The reform now goes to a G20 finance ministers meeting in July before moving to negotiations between 139 countries overseen by the Organisation for Economic Co-operation and Development.

Agence France-Presse

Saudi triples VAT, halts govt handouts in austerity drive

RIYADH- Saudi Arabia's finance minister on Monday said the kingdom would triple its Value Added Tax (VAT) and halt monthly handout payments to citizens in new austerity measures spawned by the coronavirus.

"It has been decided the cost of living allowance will be halted from June 2020 and VAT will be raised from 5 percent to 15 percent from July 1," minister Mohammed al-Jadaan said, according to the official Saudi Press Agency.

The measures come after Jadaan last week warned of "painful" and "drastic" steps as the government steps up emergency plans to slash spending amid the double shock of the novel coronavirus and record low oil prices.

Saudi Arabia, along with other Gulf states, imposed a 5 percent tax on goods and services in 2018 in a bid to generate additional revenue.

The petro-state had also introduced handouts worth billions of dollars to citizens, known as the cost of living allowance, to cushion the impact of rising costs.

Jadaan has said he expected Riyadh could lose half of its oil income, which contributes about 70 percent of public revenues, as oil prices have fallen two-thirds since the start of the year.

He said the world's leading crude exporter would borrow close to $60 billion this year to plug a huge budget deficit.

The International Monetary Fund in April projected that the Saudi economy would contract by 2.3 percent this year. 

Agence France-Presse

G20 eyes taxing tech giants in bid for $100 billion boost

RIYADH - Leading world economies must show unity in dealing with aggressive "tax optimization" by global digital giants like Google, Amazon and Facebook, G20 officials said on Saturday.

The Organization for Economic Cooperation and Development (OECD) is developing global rules to make digital companies pay tax where they do business, rather than where they register subsidiaries. The OECD says this could boost national tax revenues by a total of $100 billion a year.

The call for unity appeared directed mainly at the United States, home to the biggest tech companies, in an attempt to head off any stalling on the rules until after the US presidential election in November.

"There is no time to wait for elections," German Finance Minister Olaf Scholz told a tax seminar on the sidelines of a meeting of G20 finance ministers and central bankers.

"This needs leadership in certain countries," Scholz said, looking directly at U.S. Treasury Secretary Steven Mnuchin, sitting next to him at the seminar.

The taxing of digital firms and the effect of the coronavirus outbreak on the global economy are among the hot topics being debated by G20 financial leaders, from the world's 20 largest economies, during their talks in Riyadh this weekend.

The OECD wants to set a minimum effective level at which such companies would be taxed and seeks agreement by the start of July, with an endorsement by the G20 by the end of the year.

"A coordinated answer is not the better way forward, but, given the alternatives, the only way forward," OECD head Angel Gurria told the seminar.

A draft G20 communique, seen by Reuters, showed financial leaders will endorse the OECD approach to the issue in their final statement on Sunday, backing the need pay tax where business is conducted and the need for a minimum rate.

They will also "reaffirm commitment to reach a consensus-based solution by end of 2020".

The OECD efforts were stalled late last year by last-minute changes demanded by Washington, which many G20 officials view as reluctant to deal with a potentially politically tricky matter before the presidential election.

Mnuchin said OECD countries were close to an agreement on the minimum tax level, which he said would also go a long way to resolving the issue of where tax is paid, although he warned that some aspects of the tax proposal could require approval by the U.S. Congress.

"I think we all want to get this done by the end of the year, and that's the objective," Mnuchin told the seminar.

Mnuchin sought to reassure G20 delegates that a US proposal to add a "safe harbor" regime to the tax reform effort - which has drawn criticism from France and other countries - would not let companies simply opt-out of paying taxes.

"It's not an optional tax," he said. "You pay the safe harbor as opposed to paying something else. People may pay a little bit more in a safe harbor knowing they have tax certainty."

US officials say their proposal would help address lawmakers' concerns and smooth passage of legislation that might be required for US implementation of new global tax rules. In essence, they argue, it would allow a multinational enterprise to elect to pay more foreign tax in exchange for better terms in the event of disputes over taxes, and easier administrative procedures.

But many questions remain.

MORE CLARITY NEEDED

French Finance Minister Bruno Le Maire told reporters it remained unclear exactly what the U.S. proposal would entail.

"We're still in the process of assessing what it really means," he said, adding, "It's not a non-starter for the French government. It's fair and useful to give all the attention to this new proposal."

European Union Economy Commissioner Paolo Gentiloni told Reuters there was still hard work ahead.

"It’s good that there is a commitment to find a solution, but ... it’s not there," he said, adding that he would meet with Mnuchin for bilateral talks later Saturday.

Scholz told reporters Germany remained skeptical. "I think we shouldn't start with letting companies choose which taxes they want to pay. This is leading to nowhere," he said.

Several European countries, including France, Spain, Austria, Italy, Britain and Hungary either already have a plan for a digital tax or are working on one, creating the risk of a highly fragmented global system.

"You cannot have in a global economy different national tax systems that conflict with each other," Mnuchin said.

Facebook Chief Executive Mark Zuckerberg said on Feb. 14 he would be ready to pay more tax in Europe and would welcome a global OECD solution that would make the levies uniform. 

source: news.abs-cbn.com

Boeing supports state tax change to avoid EU sanctions

WASHINGTON - US aerospace manufacturer Boeing said Wednesday it was in favor of a tax reform in Washington state that would eliminate a tax break but defuse a long-standing dispute with the European Union.

President Donald Trump's administration imposed punitive tariffs on a record $7.5 billion in EU products in a dispute over government subsidies to Airbus, with authorization of the World Trade Organization.

And Trump on Friday raised the tariff on aircraft to 15 percent from 10 percent as part of those sanctions.

The European Union has threatened to follow through with penalties against the United States for support granted to Boeing, but the American firm said the state tax reform would resolve the issue.

"We fully support and have advocated for this action," Boeing said in a statement. 

"When enacted, this legislation will resolve the sole finding against the United States in the long-running trade disputes between Europe and the United States over government support for the production of large commercial airplanes."

The change, which removes a 40 percent tax reduction for aerospace, will demonstrate US commitment "to fair and rules-based trade, and to compliance with the WTO’s rulings," the company said.

Boeing, which has its main manufacturing facilities in the northwestern US state of Washington, saved about $230 million in 2018 from this and other tax breaks.

Meanwhile, Airbus benefited from "billions of dollars of illegal 'launch aid' subsidies ... which the WTO has repeatedly found to violate global trade rules," Boeing said and the issue remains unresolved.

"Now is the time for Airbus and the European Union to finally come into compliance by ending illegal launch aid subsidies once and for all and addressing the harm they have caused the United States aerospace industry and its workers."

The EU also has called for "a negotiated solution to the aircraft disputes on the basis of the concrete EU proposals for existing subsidies and future disciplines in this sector."

The epic legal battle between Airbus and Boeing at the WTO began in 2004 when Washington accused Britain, France, Germany and Spain of providing illegal subsidies and grants to support the production of a range of Airbus products.

A year later, the EU alleged that Boeing had received $19.1 billion worth of prohibited subsidies from 1989 to 2006 from various branches of the US government.

The two cases were then tangled up in a legal quagmire, with each side being given partial vindication after a long series of appeals and counter appeals.

Agence France-Presse

Bloomberg's transaction tax sets stage for clash with Wall Street clients

WASHINGTON - Presidential candidate Michael Bloomberg's decision to back a tax on trades marks a blow for Wall Street lobbyists which had seen the moderate Democrat as a potential ally, said analysts and lobbyists.

On Tuesday, the former New York mayor and Wall Street investment banker, who made his $60 billion fortune in finance, proposed imposing a 0.1 percent tax on trading stocks, bonds and derivatives as part of a broader financial services agenda.

Bloomberg's decision to back the tax is likely to bring him into conflict with Wall Street firms that are fighting the policy, many of which are the very same clients that helped him make the fortune with which he is funding his campaign.

A spokeswoman for Bloomberg did not immediately provide comment. Bloomberg, who was a Republican, has said he would sell his eponymous Bloomberg Inc financial data company, whose trading terminal is widely used on Wall Street, if he wins the presidency.

"It is notable that a candidate who bills himself as a centrist businessman has moved so far left," said Brian Gardner, a managing director at brokerage Keefe, Bruyette & Woods in an analyst note. He added that Bloomberg's decision to endorse the tax meant it had become a more mainstream idea in Democratic circles. "It is likely to stay in headlines beyond the 2020 election."

Long seen as a radical non-starter, a trading tax has gained momentum due to the rise of progressive firebrands including Senators Bernie Sanders and Elizabeth Warren who have pledged to fund social policies with a "tax on Wall Street."

Former Indiana Mayor Pete Buttigieg also lists the tax among his policies, while former Vice President Joe Biden has voiced tentative support.

A Reuters/Ipsos poll released Tuesday put Sanders in the lead among Democratic and independent voters, with Bloomberg in second, Biden in third, Buttigieg in fourth and Warren in fifth.

That leaves Wall Street with few obvious allies on an issue that some firms regard as an existential threat. Depending on the structure of a tax, it could badly wound hedge funds and high-speed traders which profit by slicing tiny margins off millions of trades a day, according to academics.

For example, high-speed traders in France experienced a 30 percent reduction in trading volumes as a result of a 2012 transaction tax, according to a 2017 Journal of Finance study.

"It's certainly a concern for financial firms...since it increases the cost of trading," said Nicholas Colas, co-founder of Wall Street investment research firm DataTrek Research.

"I see it as a not-so-subtle attempt to show that Bloomberg the candidate is not afraid to hurt the clients of Bloomberg the business in order to appeal to Democratic voters."

Alarmed by its traction, the Securities Industry and Financial Markets Association (SIFMA), the US Chamber of Commerce, and the Modern Markets Initiative (MMI) are lobbying against the tax.

In addition to the rhetoric coming from the Democratic candidates, lobbyists note there are four bills pending in Congress that seek to impose a transaction tax of some type.

Kirsten Wegner, CEO of MMI, said advocates of the policy were wrong to frame it as a tax on the wealthy. MMI advocates on behalf of high-speed trading firms.

"It would be paid by all Americans invested directly or indirectly in the markets and not just the wealthy," she said in an email.

source: news.abs-cbn.com

Saudi Arabia's new 100 pct shisha tax sparks fury

RIYADH — A decision to impose a 100 percent tax on bills at restaurants that serve shisha has ignited criticism on social media in Saudi Arabia, where the water pipes are a popular pastime.

The furor has also been fueled by confusion over how the tax is applied.

In the meantime, some restaurants have stopped offering shisha, while others have lowered their prices to appease customers.

The government's official gazette said earlier this month that the tax would apply to all tobacco products.

However the ruling from the ministry of rural and municipal affairs said it will apply "to the total invoice of the business serving tobacco products".

A number of restaurants and cafes contacted by AFP said they believed that the tax applies to all table orders in any establishment that serves tobacco products, whether or not the order included shisha.

The decision sparked an avalanche of criticism on social media networks where the Arabic hashtag "tax on hookah restaurants" is trending in the kingdom.

Many people posted photos of their restaurant bills, with totals of more than double the initial amount when taking into account the new 100 percent tax and a still-unpopular 5 percent value added tax which went into effect last year.

"Tobacco tax -- controversy and confusion," read a headline in the Al-Madina newspaper on Monday.

In the face of persistent budget deficits, the world's top crude oil exporter has resorted to measures like cutting subsidies on fuel and power and imposing new taxes including on cigarettes and soft drinks.

There were also suggestions that the new shisha tax could be a measure to protect public health.

"This is an indirect way to prohibit shisha without actually prohibiting it," tweeted Electronic Lawyer, a popular commentator who has more than 80,000 followers.

Other Twitter users said the new decision goes against the country's Vision 2030 ambitions to change its ultra-conservative image and revamp the economy.

Encouraging investment and kickstarting tourism are part of a reform program envisaged by Crown Prince Mohammed bin Salman to wean the kingdom off its reliance on oil.

Saudi columnist Bassam Fatiny criticized the size of the tax as ill-considered.

"Let us assume that tax on tobacco has environmental and health benefits, is it logical that it be 100 percent!" he said on Twitter. "The ministry must have misunderstood Vision (2030)."

source: news.abs-cbn.com

France's 2020 budget cuts taxes in bid to placate 'yellow vests'

PARIS - France's government unveiled a draft 2020 budget on Thursday with more than nine billion euros in tax cuts for households as it hopes to move on from on from roiling "yellow vest" protests while still cutting the deficit to within EU limits.

The "social crisis" brought on by the protests, as well as a slowdown in global economic growth, "led us to make decisions that encourage investment and consumption", Economy Minister Bruno Le Maire said as he unveiled the draft 2020 budget.

The draft budget, which will be officially presented to the cabinet on Friday, will cut taxes for households by 9.3 billion euros ($10 billion) and businesses by more than one billion euros.

That includes five billion euros in tax cuts for some 12 million households already promised by President Emmanuel Macron, the result of a "great national debate" he held to try to address the ongoing protests.

Macron, who swept to the presidency in 2017 with a pledge to get the country back on a solid financial footing, was caught short by the "yellow vest" movement which accused the former investment banker of ignoring the day-to-day struggles of many French.

After months of street protests that often spiraled into rioting and battles with police, Macron unveiled tax cuts, wage increases and other measures for low-income households.

The measures are expected to push this year's deficit to 3.1 percent of gross domestic product, making France the only eurozone member to exceed the bloc's three percent limit -- even as countries like Germany, the Netherlands and Portugal are likely to post surpluses.

The government forecast next year's deficit ratio falling to 2.2 percent, still short of the previous goal of two percent.

And France's debt mountain will barely budge next year from 98.7 percent of GDP -- far above the 60 percent or less demanded of eurozone members.

The money for the yellow vests -- who are also demanding improved public services -- also makes it unlikely Macron will honour his campaign pledge of balancing the government's books in 2022.

"The government abandoned its strategy of reducing France's structural deficit in the aftermath of the yellow vests," Charles de Courson, an independent lawmaker respected on both the right and left for his public finance acumen, told AFP.

Nevertheless, the fiscal relief has helped sustain French growth, expected to reach 1.4 percent this year even as EU economic powerhouse Germany risks falling into recession. However the government revised its growth forecast for next year down to 1.3 percent.

GERMANY URGED TO INVEST

Le Maire called on Germany to invest to prevent the flagging eurozone economy from getting worse.

"Germany must invest and invest now, the sooner the better," he said.

"Do not wait for the economic situation to worsen to make the necessary decisions."

He also defended European Central Bank chief Mario Draghi, who has come under heavy criticism in some circles, including Germany, for unleashing a huge stimulus package aimed at propping up the eurozone economy.

"We support the courageous decision made by the ECB and its president," he said.

Budget Minister Gerald Darmanin said this week that the creation of a pay-as-you-go income tax system, which did away with self-reporting months after the fiscal year-end, had brought a 2-billion-euro windfall to state coffers.

The government has already indicated that defense and security spending will increase next year, offset by cuts at the finance and budget ministries, and reduced funds for local authorities.

Yet Macron has abandoned his pledge of slashing 50,000 central government jobs during his five-year term, saying that only 10,500 would be now be cut.

"France has chosen the right economic policies, even if it was forced to do so" because of the yellow vest revolt, said Philippe Waechter, chief economist at Ostrum Asset Management in Paris.

"We have a European economy that's slowing quite rapidly, and you're not going to reverse this by cutting back even more," he told AFP.

source: news.abs-cbn.com

Google agrees 945-million-euro tax settlement with France

PARIS - US internet giant Google has agreed a settlement totaling 945 million euros ($1.0 billion) to end a tax dispute in France under an agreement announced in court on Thursday.

The company will pay a 500-million-euro fine for tax evasion, as well as a further 465 million euros to settle claims with French tax authorities.

In a statement, Google confirmed the settlement and hailed the fact it had put an end to fiscal differences that it had had with France for numerous years.

The settlement follows similar out-of-court agreements reached in Italy and Britain by Google in recent years, though the French agreement is much larger than the previous ones.

Google said it now wanted to see a coordinated reform for a clear international taxation framework.

French Justice Minister Nicole Galoubet and Budget Minister Gerald Darmanin welcomed the "definitive settling" of all the contentious issues, adding in a statement that it was the result of two years of intense work by the French authorities.

"This outcome is good news for the public finances and fiscal fairness in France," their statement said.

Belloubet said the settlement showed that the French authorities have the tools to ensure an equitable tax system.

"It is a historic settlement both for our public finances and because it marks the end of an era," Darmanin said. "By normalizing Google's situation in France, (the settlement) responds to our citizens' demands for fiscal fairness," he said.

G7 DEAL?

The settlement comes as France and its European allies seek to find common ground with the United States in a long-running dispute over the taxation of digital giants.

Google, like several other big American tech companies, has its European headquarters in Ireland, where the government has set the corporate tax rate at just 12.5 percent in a bid to attract big companies.

But leading EU states like France argue that this is allowing tech giants to avoid paying sufficient taxes on the huge profits and sales they accrue in big countries outside where the tech giants are headquartered.

The French parliament in July passed a law taxing digital giants on their French operations, drawing an angry response from US President Donald Trump and threats of retaliation.

The British government is now planning a similar move, at a time when it also hopes to build on its relationship with Washington as it exits the European Union.

But French President Emmanuel Macron said alongside Trump at the G7 summit in August that leaders had reached an agreement on the taxation of tech giants, though the precise details remain to be worked out.

Macron has said it will scrap its digital tax once a new international levy being discussed among the 134 OECD countries is in place, which Paris hopes will happen next year.

Pascal Saint-Amans, who is leading the negotiations as head of tax policy at the OECD, said after the G7 that progress is being made but several key issues still need to be hammered out.

The Google investigation in France was first opened by anti-fraud prosecutors in 2015 and was followed by searches at its Paris headquarters in 2016, an operation codenamed "Tulip" that mobilized a hundred police and experts.

In 2016, Google paid £130 million ($160,000) in a settlement with the British authorities and in 2017 agreed to pay 306 million euros to settle a tax dispute in Italy.

source: news.abs-cbn.com

France urges G7 to find 'international solution' on digital taxes

PARIS - French Finance Minister Bruno Le Maire on Tuesday urged the G7 club of top world economic powers to find an international solution to taxing digital giants at their meeting outside Paris this week.

"I am convinced that during this G7 we are capable of finding a satisfactory international solution," said Le Maire, whose country angered the United States earlier this month by becoming the first major economy to impose a tax on digital giants like Google, Apple, Facebook and Amazon.

He said such a consensus would then open the way to an international agreement under the aegis of the Organisation for Economic Cooperation and Development (OECD).

"This would be the best way to solve this problem," said Le Maire, who on Wednesday and Thursday will host G7 finance ministers for a meeting in Chantilly outside Paris.

Le Maire, who is due to meet his American counterpart Steven Mnuchin on Wednesday ahead of the official opening of the meeting, expressed dismay over a probe ordered by US President Donald Trump that could trigger reprisal tariffs.

The so-called Section 301 investigation is the primary tool the Trump administration has used in the trade war with China to justify tariffs against what the US says are unfair trade practices.

"This is the first time in our long relationship that the American government has decided to open such a procedure against France," he said.

"France is a sovereign country and will continue to act as one," he added.

France's new law aims to plug a taxation gap that has seen some internet heavyweights paying next to nothing in countries where they make huge profits as their legal base is in smaller EU states.

The law will levy a 3 percent tax on revenues generated from services to French consumers by the largest tech firms.

Britain has also unveiled plans for a similar tax. But smaller EU states such as Ireland and Luxemburg -- which host the European headquarters of digital giants -- have prevented a consensus in the EU.

source: news.abs-cbn.com

'Tax us more,' US billionaires say

NEW YORK -- "Tax us more!" was the message on Monday from about 20 super-wealthy Americans who urged presidential candidates to back higher taxes on the wealthiest to confront climate change and other priorities.

"America has a moral, ethical and economic responsibility to tax our wealth more," said the group, which included George Soros, Facebook co-founder Chris Hughes, descendants of Walt Disney and the owners of the Hyatt hotel chain.

"A wealth tax could help address the climate crisis, improve the economy, improve health outcomes, fairly create opportunity, and strengthen our democratic freedoms. Instituting a wealth tax is in the interest of our republic."

Signers pointed out that fellow billionaire Warren Buffett has said he is taxed at a lower rate than his secretary.

The letter alluded to support among Democratic presidential candidates for higher taxes on the super-wealthy, including Pete Buttigieg and Beto O'Rourke.

But the letter noted broad bipartisan support for taxing the super-wealthy, saying "some ideas are too important for America to be part of only a few candidates' platforms."

It praised a proposal by Senator Elizabeth Warren that would lift taxes on those with more than $50 million in taxes, a measure expected to affect the 75,000 wealthiest families.

The letter was signed by 18 people representing 11 families, plus one anonymous person. Many in the group have been associated with progressive initiatives on issues such as climate change and the growing wealth gap.

Of about 40 countries, the United States is the sixth highest in terms of wealth concentration, according to data from the Organization for Economic Co-operation and Development.

Taxing the super-wealthy "would slow the growing concentration of wealth that undermines the stability and integrity of our republic," the letter said.

"Today, major policies seldom come to pass without the prior support of wealthy elites or other wealthy interests. Division and dissatisfaction are exacerbated by inequality, leading to higher levels of distrust in democratic institutions—and worse."

source: news.abs-cbn.com

$0 corporate tax for Amazon, profitable giants sickens US voters

AKRON, Ohio — Colin Robertson wonders why he pays federal taxes on the $18,000 a year he makes cleaning carpets, while the tech giant Amazon got a tax rebate.

His concerns about a tilted economic playing field recently led Robertson to join the Akron chapter of the Democratic Socialists of America. At a gathering this month, as members discussed Karl Marx and corporate greed over chocolate chip cookies, it was not long before talk turned to income inequality and how the government helps the wealthy avoid taxes.

“One of the benefits of taxation is taking it and using it for the collective good,” said Robertson, 25, comparing his minimal income to the roughly $150 billion net worth of Jeff Bezos, Amazon’s chief executive and the world’s richest person.

“He could be taxed at 99.9 percent and still have millions left over,” Robertson said, “and I’d be homeless.”

It is a topic that several presidential candidates, led by Sens. Bernie Sanders and Elizabeth Warren, have hammered recently as they travel the campaign trail, spurred by a report that 60 Fortune 500 companies paid no federal taxes on $79 billion in corporate income last year. Amazon, which is reported to be opening a center in an abandoned Akron mall that will employ 500 people, has become the poster child for corporate tax avoidance; last year it had an effective tax rate of below zero — receiving a rebate — on income of $10.8 billion.

For decades, profitable companies have been able to avoid corporate taxes. But the list of those paying zero roughly doubled last year as a result of provisions in President Donald Trump’s 2017 tax bill that expanded corporate tax breaks and reduced the tax rate on corporate income.

“Amazon, Netflix and dozens of major corporations, as a result of Trump’s tax bill, pay nothing in federal taxes,” Sanders said last week during a Fox News town-hall-style event. “I think that’s a disgrace.”

Corporations’ ability to whittle down their tax bills has long been a target of criticism by Democrats, and this presidential campaign is no exception, particularly among left-wing candidates who argue that corporations should be accountable for wage inequality and its impact on low- and middle-income workers.

Here in Ohio, even though unemployment has hit an 18-year low, several counties still have jobless rates significantly higher than the national rate, 3.8 percent, and the statewide rate, 4.4 percent. Ohioans have witnessed so many factory closures over the years that they seem to live with a permanent sense of economic wariness. The question for Democrats is how to leverage that to their advantage as they try to retake the state, which Trump won by 8 percentage points in 2016.

David Betras, the Democratic chairman in Mahoning County, a traditionally blue stronghold of union voters that Trump nearly carried in 2016, said that Democrats had not yet figured out how to use the economic angst of laid-off employees and minimum-wage workers to defeat Trump in Ohio in 2020.

“Believe it or not, if you listen to the president, he addresses that issue,” Betras said. “He does it with a lot of smoke and very many mirrors, but he’s at least talking about how good the economy is and what I’ve done for you. ‘I’m with you. I have your back.’”

Even as candidates focus on corporate taxation, Betras said the issue didn’t resonate with voters in the same way as more familiar topics like health care or immigration. “It appeals to a small slice of the electorate,” he said. (Betras, a lawyer, has endorsed Rep. Tim Ryan of Ohio for the Democratic nomination.)

A Gallup poll last fall suggested that taxes were generally a more important issue for Republicans than for Democrats.

In an election in which Democrats will seek to win back voters who supported President Barack Obama in 2008 and 2012, then switched to Trump, some Democrats also worry that calls to increase corporate taxes might actually turn off swing voters in this critical state, those like Thomas Chhay, a student at the University of Akron.

“I lean Republican,” Chhay, 18, said last week while having lunch at the university’s student union. “I agree with corporate tax cuts unless the companies ship the jobs overseas.”

The list of profitable companies that pay no corporate taxes, compiled by the Institute on Taxation and Economic Policy, a left-leaning think tank, also includes Goodyear and three other Ohio companies, including the Akron-based electric utility FirstEnergy.

The company, which has the naming rights to the Cleveland Browns’ stadium, paid no taxes last year on $1.5 billion in income, according to the analysis, and will receive additional tax credits that can be used in the future. In a win for consumers, some of that will be returned to the utility’s customers.

Several of the Democratic candidates have called for changes to the corporate system and Warren has gone the furthest in issuing a detailed plan to alter the corporate system. Under her proposal, corporations would pay a new 7% tax on every dollar over $100 million in profits they earn anywhere in the world. She estimated the new tax would apply to roughly 1,200 companies and bring in $1 trillion.

Under Warren’s plan, Amazon would have paid $698 million instead of $0 in federal taxes for 2018. In a statement, the company said it “pays all the taxes we are required to pay in the US and every country where we operate.”

Sanders, in his 2016 presidential campaign and in this one, has routinely talked about closing loopholes and capturing some of the billions in profits that multinationals have kept overseas in tax havens and out of the Internal Revenue Service’s reach.

Amy Klobuchar, the Minnesota senator who is also running, has taken a different approach. She has tied a proposed increase in the corporate tax rate, to 25 percent from the current 21 percent, to plans to rebuild bridges, roads and airports nationwide. About $400 billion of her trillion-dollar infrastructure plan would be financed by the tax increase.

Former Vice President Joe Biden, who officially entered the race on Thursday, has not issued a formal proposal on corporate taxes. In remarks last May, however, he blamed a “yawning” income gap for tearing the country apart. “We have to deal with this tax code,” he said. “It’s wildly skewed toward taking care of those at the very top. It overwhelmingly favors investors over workers.”

In surveys, more Americans support raising the corporate tax rate than lowering it or leaving it unchanged. And several Democratic candidates, like the former housing secretary Julián Castro, invoke “fair share” rhetoric in speeches or vow to undo the recent Republican tax law. Others, like Sen. Kamala Harris of California, have focused more on the individual income tax and reducing the burden on working families.

But raising the headline tax rate on corporations will not eliminate the corporate zero-rate club, which also results from companies taking advantage of loopholes and the way global profits are taxed.

Two years ago, Trump appeared at a sold-out rally in working-class Youngstown, the seat of Mahoning County, and delivered a message full of economic reassurance.

“I was looking at some of those big, once incredible job-producing factories,” the president said. “Those jobs have left Ohio. They’re all coming back. They’re all coming back. Don’t move. Don’t sell your house.”

But it has not entirely worked out that way.

General Motors, one of the companies on the zero-tax list, recently idled a large plant near Youngstown that produced the Chevrolet Cruze, a decision that helped increase the company’s stock price even as GM paid no federal taxes on $4.32 billion in income.

“What was promised to these people was more jobs,” said David Green, president of United Auto Workers Local 1112, which represents workers at the plant, which is in Lordstown. “When you give them the tax break and they take the jobs away, that’s like a double whammy. That’s a lose, lose.”

Lordstown is in Trumbull County, where the unemployment rate was 6.6 percent in March and many of those who work are eligible for public assistance. “Working people can get free cheese? The system is broken,” Green said.

Notwithstanding Trump’s entreaty two years ago that local workers stay put, Tyler Savin, a real estate agent, said the idling of the plant had added to his home listings and that many sellers would not get their asking prices as they leave Ohio for other GM locations.

Savin, 22, was among the customers last week at Tommy Dogg’s Bar and Grill in nearby Niles, the birthplace of both Ryan, the local favorite-son candidate, and William McKinley, a Republican president who was known for imposing tariffs on foreign goods.

Savin likes Sanders, Biden and former Rep. Beto O’Rourke of Texas, but will ultimately vote for whoever the Democratic nominee is, he said in a whisper lest pro-Trump patrons overhear.

“I think corporations should pay their taxes, like Amazon,” he said. But he said health care and support for abortion rights were more important to him.

Jeff Williams, 57, who manages a convenience store on the midnight shift, had heard about Amazon’s tax breaks on the radio. Last week, as he sat outside his home in Niles catching the first warm rays of the year, he also was doing some comparison.

He was treated for cancer, heart disease and two hernias last year but was not able to deduct his expenses, he said. Amazon, meantime, availed itself of a full suite of tax breaks. “Amazon doesn’t pay taxes, but I pay taxes,” Williams said.

Akron, about an hour west, is faring better economically. Mayor Daniel Horrigan will not confirm or deny it, but Amazon is believed to be the company he has recruited to move into Akron’s Rolling Acres Mall, a once-thriving shopping center that closed in 2008, becoming a symbol of both the recession and the retail disruption caused by online shopping.

Amazon would not comment on whether it planned to open a facility there.

Horrigan has been working to invigorate the economy of Akron, historically known as the Rubber City for its role in tire manufacturing. The tire jobs have mostly moved elsewhere.

Goodyear, which made the list of 60 by paying no federal corporate income taxes, employs 64,000 people worldwide, but only 3,000 of them remain in Akron, mostly in the company’s headquarters. A spokesman said the company’s 2018 tax situation stemmed from “historical losses in U.S. operations.”

The Democratic Socialists have close to 100 members in Akron, many of them supporters of Sanders. Those attending last week’s meeting ranged from a stay-at-home mother who said she had not been able to pay her water bill for a year to a college professor, David Pereplyotchik.

Pereplyotchik, 37, said he believed the group should come up with a viable alternative to the corporate tax and wage system in the United States.

“If we’re fighting for something, what version of the thing are we fighting for?” asked Pereplyotchik, who teaches philosophy. “It seems like if you just make them pay employees more, they’re just not going to hire employees.”

Robertson, the carpet cleaner, has his own idea: nationalizing the companies. “I think forcing them to pay higher alone is inefficient,” he said, “and taxation alone is inefficient.”


2019 New York Times News Service

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Bernie Sanders releases 10 years of tax returns, details millionaire status

WASHINGTON - U.S. Democratic presidential contender Bernie Sanders released 10 years of tax returns on Monday, providing details of his growing status as a millionaire fueled by a sharp jump in income from book royalties since his losing 2016 White House run.

Sanders, a U.S. senator who routinely rails against the "millionaires and billionaires" he says have rigged the system to protect their wealth and power, had an adjusted gross income of $561,293 in 2018, $1,131,925 in 2017 and $1,062,626 in 2016, the returns showed.

Sanders augmented his Senate salary with book royalties in each of those years, particularly in 2016 and 2017 when he made more than $800,000 each year in royalties. Sanders has published three books since the start of his first White House run, including bestsellers "Our Revolution" and "Where We Go From Here."

In 2009, the first year of returns Sanders released on Monday, he had an adjusted gross income of $314,742.

Sanders had faced mounting pressure to release his taxes, with critics saying the democratic socialist's millionaire status undercut his populist economic message. He made no apologies for his financial well-being, telling the New York Times recently that "if you write a best-selling book, you can be a millionaire, too."

On Monday, Sanders took a more measured tone in releasing his returns, making reference to his upbringing in a Brooklyn family of limited financial resources.

"These tax returns show that our family has been fortunate. I am very grateful for that, as I grew up in a family that lived paycheck to paycheck and I know the stress of economic insecurity," Sanders said in a statement accompanying the returns.

'TRANSPARENCY'

The interest in presidential contenders and their taxes has jumped since Republican President Donald Trump shattered decades of tradition during the 2016 campaign by refusing to release his returns - a stance he has continued since entering the White House.

Several in the growing field of Democratic 2020 contenders, including Senators Kirsten Gillibrand, Amy Klobuchar, Kamala Harris and Elizabeth Warren, and Governor Jay Inslee of Washington, have released their 2018 returns in recent weeks. Most other Democratic contenders have pledged to do the same soon.

But the question had become more pressing for Sanders, who only released one year of returns during his 2016 campaign, as he moved into a strong early position in polls and fundraising among Democrats seeking the 2020 nomination to challenge Trump.

"As a strong proponent of transparency, the senator hopes President Trump and all Democratic primary candidates will disclose their tax returns," Sanders campaign manager Faiz Shakir said in a statement.

Sanders faced criticism for only releasing his 2014 returns during his 2016 Democratic primary battle with Hillary Clinton, a millionaire whom he often derided for giving paid speeches to Wall Street.

The tax returns released on Monday showed Sanders paid a 26 percent effective tax rate on his adjusted gross income in 2018. His effective tax rates in 2016 and 2017, his other high-earning years, were 35 percent and 30 percent, respectively.

As part of his policy agenda, Sanders has proposed a big expansion of the estate tax, lowering the threshold where it kicks in to $3.5 million from $11 million, and placing a 77 percent tax rate on the portion of estates worth more than $1 billion. (Reporting by John Whitesides; Editing by Peter Cooney)

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US taxpayers must return millions after mistaken refunds

WASHINGTON -- Taxpayers in the US state of Louisiana got an unexpected windfall when a computer error issued their tax refunds a second time, local media reported on Saturday.

The state's Department of Revenue cautioned recipients of the wrongly-paid windfall: "Do not spend it." If they have, they must pay the money back in 30 days.

"An error in an electronic payment system caused 66,780 state individual income tax refunds issued on Tuesday, March 12 to be issued a second time on Wednesday, March 13," the department said on its website.

The duplicate refunds totaled more than $26 million, it said, adding that the state is working with financial institutions to recover the overpayments directly from recipients' bank accounts.

New procedures were put in place to prevent the error from happening again, the department said.

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France tries to set trend with internet tax bill

PARIS -- France will introduce a bill Wednesday to tax internet and technology giants on their digital sales, and thus curb efforts to pay global levies in countries with lower tax rates.

The bill, to be discussed by cabinet ministers before being submitted to parliament, is a proposal by Economy Minister Bruno Le Maire to have companies pay a tax of three percent on much of their digital sales in France.

The government hopes the move will catch on abroad despite an earlier failure to reach consensus at the European Union level.

Paris says it is seeking "common ground" on the issue with fellow members of the Organization for Economic Cooperation and Development (OECD) in a bid to for a worldwide agreement later this year.

"The amount obtained from this three percent tax on digital gross sales in France from January 1, 2019 should soon reach 500 million euros ($566 million)," Le Maire told the French daily Le Parisien.

'GAFA' TAX

The so-called GAFA tax has a French acronym that indicates it was inspired by US giants such as Google, Apple, Facebook and Amazon, and targets digital companies with global annual sales of more than 750 million euros ($849 million) and sales in France of at least 25 million euros.

"If these two criteria are not met, the taxes will not be imposed," Le Maire said.

The 3 percent levy is to come on top of taxes already owed by the companies concerned.

The new tax will cover areas such as advertising, websites and the resale of private data, Le Maire said.

About 30 companies from the US, China, Germany, Spain and Britain would be affected, Le Maire said.

"There will also be a French firm and other originally French firms that were later bought by big foreign companies," the minister added.

For Le Maire, taxing GAFAs "is a question of fiscal justice" as "digital giants pay 14 percent less tax than small- and medium-sized European companies".

He emphasized that "as soon as the OECD agrees on new international tax rules, these will replace our French tax."

LOW-TAX NATIONS

Under EU law, Internet giants can choose to report their income in any member state, prompting them to choose low-tax nations such as Ireland, the Netherlands or Luxembourg.

The low tax rates have aroused anger in many European countries, but the 28-member bloc is divided on how to resolve the issue.

Ireland, which hosts the European headquarters of several US tech giants, leads a small group of otherwise mostly Nordic countries that argue that a new tax could lead to reprisals against European companies in the United States.

But Paris argues the measure would be a vote-winning accomplishment for mainstream EU politicians before European parliamentary elections in May, in which anti-Brussels populists could do well.

Germany is concerned that agreeing to the tax could affect auto exports to the United States.

Policymakers worldwide have struggled over how to tax internet giants that dominate their sectors but who often report sales and profits in low-tax jurisdictions to reduce their tax bills.

Britain, Spain and Italy are also working on national versions of a digital tax, while Japan, Singapore and India are planning schemes of their own.

The head of Google France, Sebastien Missoffe, has said his firm is ready to pay a new tax, but pointed to difficulties in assessing, for example, how much any one country might receive from worldwide advertising.

A spokesman for Facebook told AFP that, as of last year, all advertising revenues generated from French clients were now registered as French income.

The French bill is being presented as the government seeks ways of paying for financial relief measures to ease the "yellow vest" protests that have roiled the country for three months.

But for Raphael Pradeau from the anti-capitalist Attac lobby, the proposed tax is "symbolic and does not solve the problem of massive fiscal evasion."

"It's as if we accept that such firms can practice tax evasion in return for a few crumbs," he said.

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Taxing the rich, an idea gaining ground in the United States

NEW YORK -- Long out of favor in the United States, the idea of taxing rich individuals and corporations to pay for healthcare or to combat inequality is gaining ground among Democratic politicians.

While the United States reveres free enterprise and is home to the world's largest number of billionaires, such tax proposals have been gaining traction in political circles in recent weeks.

More than one Democratic contender in next year's presidential elections are campaigning on some plan to tax the wealthy.

And they have been encouraged by famous billionaires such as Bill Gates and Warren Buffett, the world's second and third wealthiest people, who worry about America's severe wealth inequality.

Vermont's left-leaning Senator Bernie Sanders was among the first in the recent wave. During his 2016 presidential campaign he called for higher federal income taxes to pay for free college tuition and universal healthcare.

Massachusetts Senator Elizabeth Warren has proposed a two-percent wealth tax starting at $50 million in earnings. New York Senator Kirsten Gillibrand is calling for a levy on financial transactions, and Sanders says inheritances should be taxed up to 77 percent.

With the Democrats now in control of the House of Representatives, the undisputed media star of the freshman class, Alexandria Ocasio-Cortez, is leading the charge: she has proposed a tax of 70 percent on any income over $10 million to help pay for a proposed "Green New Deal" to de-carbonize the US economy and help prevent catastrophic climate change, while offering universal healthcare and guaranteed employment.

This so-called marginal rate of 70 percent is not unprecedented in the United States, but was last at that level 1981. The current top marginal tax rate is 37 percent.

Raising corporate taxes is another Democratic priority, a subject inflamed by the recent controversy over Amazon, which has reported no federal income tax expenses for the past two years. That has stoked debate over highly profitable companies that do not pay into government coffers.

Some Republicans have pushed back, with outspoken and media savvy Ocasio-Cortez drawing the most fire.

Grover Norquist, an anti-tax activist who has long pushed Republican lawmakers to pledge never to raise taxes, warned in January against soaking the rich, saying such taxes "always slip down to hit the rest of us."

But Joseph Thorndike, a historian specializing in US tax policy, said a reversal of the post-war trend of cutting taxes is within sight.

'SOCIAL TENSIONS'

"Something is happening here," he said. "We are beginning to have a discussion about that that we haven't had since the 1960s or even the 50s."

Top marginal tax rates in the United States were very high following World War II, maxing out at 94 percent. They began to fall in the 1960s and were slashed again under President Ronald Reagan in the 1980s.

In late 2017, Donald Trump and the Republican majority in Congress cut corporate and personal income tax rates, despite unanimous Democratic opposition which denounced the tax overhaul as a giveaway to the rich.

Trump, himself a billionaire, has attracted widespread scorn for refusing to disclose his own income tax returns, and accusations that his family maintained its wealth by evading taxes, an accusation he denies.

Why has the debate changed?

Yawning income gaps are one reason, Thorndike said.

"People are willing to tolerate rich people getting richer as long as middle class people are also doing better," he said. "When the middle and laboring class is stagnating, that creates social tensions."

Trump himself may have been catalyst.

While most major changes in US tax policy came in times of crisis -- wars or deep recessions -- Trump's unconventional presidency could mark "a sharp enough break" to bring about change, Thorndike said.

A Morning Consult poll conducted late last month for Politico found 74 percent of voters were generally in favor of higher taxes for the rich, while 73 percent favored this for corporations.

Furthermore, 90 percent believed such tax revenues should go to pay for healthcare or infrastructure.

But this apparent consensus masks significant divergences between Democrats and Republicans, and the tax issue remains very sensitive, analysts say.

The modest changes are sometimes a hard sell for the public while the "anti-rich" rhetoric of some Democrats could alienate certain voters, Thorndike said.

But Kenneth Scheve, professor of political science at Stanford University, said "there is a set of voters and politicians who are trying to innovate and respond in ways the country has not traditionally responded to."

"For the Democratic primaries in 2020, this is going to be a key feature of the debate," he said.

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Yellow vests' back on France's streets to challenge Macron

PARIS - Thousands of "yellow vest" protesters returned to the streets of France Saturday to protest against President Emmanuel Macron's policies, clashing with police in several cities in a challenge to his bid to quell the movement.

Police fired tear gas and water cannon to push back protesters at Place de la Bastille in Paris, one of the regular protest sites, as some demonstrators threw stones from a building site.

The local prefecture reported 223 arrests in Paris.

The interior ministry estimated numbers for the 11th week of protests were at 69,000 across France, compared to 84,000 last Saturday.

In Paris, the official count was 4,000 demonstrators against 7,000 the previous weekend.

Clashes erupted too in western France in Nantes and Evreux and in the southern city of Montpellier, where a police officer was injured by "a pyrotechnic device" said a statement from the local prefecture.

In Paris and other cities, the yellow vest movement had called to continue the protests into the night. But police quickly dispersed several hundred protesters in the capital's symbolic Republique square using tear gas, water cannon and stun grenades to clear the area, AFP journalists said.

The protests erupted in mid-November over Macron's economic reforms, but have since grown into a wider rallies calling for the resignation of the former investment banker who critics say is out of touch with the economic struggles of ordinary French people.

Interior Minister Christophe Castaner on Twitter criticised "rioters disguised as yellow vest protesters" after Saturday's clashes.

'KEEP THE PRESSURE ON'

The weekend's protests against Macron's tax and social policies came as divisions appeared among the yellow vests -- named after the high-visibility vests they wear -- as to where to take the movement.

In a new political development, a 31-year-old nurse named Ingrid Levavasseur said this week she would lead a yellow vest list of candidates for the European elections in May.

An initial survey in the wake of the announcement suggested they would garner a respectable 13 percent of the vote.

But not every protester appeared to welcome this development.

"There is a hard core that is ready to keep fighting," said 42-year-old Gilbert Claro from the Paris suburbs. But the movement "is not meant to be political", he added.

"We have to keep the pressure on in the streets," to get their demands accepted, said Virginie, an activist in her 40s who said she had been involved in the protests from the beginning.

She and many other protesters want a citizen-sponsored referendum so ordinary people can have more of a say in government policy.

This idea has been consistently rejected by the government, although Macron made some concessions last December in a bid to end the protests.

Recent opinion polls suggest that he has regained some of the ground lost during the crisis, as he has put his case at a series of town hall events around the country.

The "great national debate" he initiated in response to the protests has nevertheless been dismissed as a public relations operation by many yellow vest protesters.

A "masquerade", said Mathieu Styrna, a 36-year-old carpenter from northern France in Paris for the protests. His impression, he said, was that the participants had been selected.

NIGHT PROTESTS

Outside Paris, several thousand protesters were marching in Bordeaux and Toulouse in the southwest, two of the cities where support for the movement has been consistently strong.

In Bordeaux, police fired tear gas and water canon to break up small groups of protesters tossing fireworks and bottles as night fell.

In the Mediterranean port city of Marseille, members of the CGT union joined the protests and about a thousand protesters turned out in the eastern city of Lyon.

In the north, officials in the city of Evreux, Normandy, reported clashes there and damage to the police and Banque de France buildings.

For the first time on Saturday, riot police using controversial defence ball launchers (LBDs) that shoot 40-millimeter (1.6-inch) rubber and foam rounds were equipped with cameras.

A French court on Friday refused a bid brought by France's League for Human Rights (LDH) and the CGT to ban the weapons, blamed for serious injuries suffered by some demonstrators.

The police authority in Paris announced the introduction of the cameras in a move for greater transparency.

On Sunday, supporters of the government will stage their first "red scarf" protest to represent what they say is "the silent majority" defending "democracy and its institutions" and denouncing the violence of the yellow vests protests.

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