Cover of the report
The corporate shills call it "tax optimization." It is better known to ordinary people as fraud.
European Union member state tax laws are largely constructed as dodges for corporate malefactors. We already know this about US tax law. Here, the public outrage cannot be translated into policy changes until Republican legislative dominance is ended. Even then, the Liberal Republican wing of the Democratic Party, so slimily exemplified by Rahm Emanuel and Tim Geithner, will have to be outmaneuvered by the Democratic wing of the Democratic party.
But for right now, the Europeans are giving us a good lesson in how to win the public debate over ending corporate tax evasion. Service Employees International Union (SEIU), together with three European labor federations and the British non-governmental organization War on Want, have just released Unhappy Meal: €1 Billion in Tax Avoidance on the Menu at McDonald's.
While McDonald’s poor working conditions are well-known, this report is the first to shed light on the company’s tax record. It relies on primary data drawn from the financial accounts of the company and its subsidiaries as well as press and research reports.
Ireland, Luxembourg and the Netherlands are three EU member states whose lax tax regimes have drawn adverse European Commission attention. McDonald's uses a shell game in Luxembourg to diminish its European member nation tax payments by more than 90%, the report indicates. It isn't illegal, but it is despicable.
Le Monde reports:
The EU executive has already opened an investigation into tax agreements made between multinationals and member states, such as those between Fiat and Amazon in Luxembourg. The three unions and the British non-governmental organization called on the Commission to extend this investigation to McDonald's.
Amazon runs the same scam. So does Fiat. An enormous hue and cry is being raised in the European Commission as the sheer magnitude of more and more tax evasion is disclosed. Possibly some change will come of it. The present report adds to the pressure by indicting one of the least popular multinationals, McDonalds, as guilty of the same swindle.
In a different article, Le Monde notes that even the Tory-led coalition government in Britain is sickened by the massive tax avoidance of multinationals:
In the UK, it could soon be the case: the British government will introduce a 25% tax on profits generated by corporations that are "artificially transferred to another country."
The fascinating detail in the report reveals how funds are shuffled from one tax jurisdiction to another with ever-diminishing tax payments as the result, and goal, of the paper scrambling. If American tax law is so porous as to let multinationals skip their civic obligations, at least the Europeans are threatening to squelch some of these maneuvers.
Senate Democrats Sherrod Brown and Elizabeth Warren, and Independent Senator Bernie Sanders, have kept alive the notion that the Democratic Party should stand for fair corporate taxation, especially of foreign-held profits of US firms. The Obama White House has upheld the principle in its recent budget as well.
But the major noise about hidden subsidies to multinationals is being raised across the pond, not here. Vladimir Nabokov jestingly remarked that a certain novel could be regarded as "young America corrupting old Europe." In corporate tax policy it seems he was a master diagnostician.