The Tax Justice Network in the UK and the USA - Case Study Example

Civil Organizations and Tax Evasion The Tax Justice Network (UK and USA) Course Code Date of Submission Student Name Table of Contents 1.0.Introduction 3 2.0. Justice Network-UK 4 3.0.Tax Justice Network-USA 4 4.0.Goals of Tax Justice Network 5 5.0.Actions and roles of The Tax Justice Network 6 6.0.Organizations Guidelines 7 7.0.Conclusion 8 References 9 1.0. Introduction Countries experience loses to multinationals and individuals through increasingly aggressive use of tax avoidance schemes. Various press reports has continuously highlighted the low tax paid by well-known multinational companies. Tax avoidance and tax evasion are two different concepts that have been used interchangeably. Basically, tax evasion is illegal and punishable by law while tax avoidance is legal. Tax avoidance is the legitimate minimizing of tax by using methods approved by the Internal Revenue Service (IRS). Most multinationals avoid paying taxes by taking legitimate deductions and sheltering income from taxes by setting up employment retirement plans which are legal under the state tax codes or IRS. Some of the methods of tax avoidance taking tax credits for spending money for legitimate purpose such as taking a work opportunity tax credit or setting tax deferral plan such as Individual Retirement Arrangements (IRA) plans to delay taxes to a later date. However, tax evasion is an illegal avoidance to pay by individuals, trust or corporations. In most cases, tax evasion involves a deliberate misinterpretation of the true state of the company’s affair to the tax authorities in an attempt to reduce the tax liability. The misinterpretation includes dishonest tax reporting such as declaring less income or profits. Moreover, tax evasion includes the shifting of various company activities and profits to low cost countries to avoid tax. Therefore, researchers and activities have come up with the Tax Justice Network that is concerned about tax avoidance, tax evasions, tax havens and tax competitions. The TJN has the purpose of identifying tax havens and addressing issues concerned with tax avoidance and evasion. This essay will illustrate the Tax Justice Network UK and Tax Justice Network USA; ad identify the organization’s goals, guidelines, and actions. 2.0. Justice Network-UK The Tax Justice Network (TJN) is an advocacy group that consists of a coalition of researchers and activist that have a share concern on tax avoidance, tax competition, and tax havens. From the 2009 reports, the Tax Justice Network international Secretariat Limited is a UK company that is controlled by Tax Justice Network Association. Launched in 2003, the core mission of the TJN UK is to ‘change the weather’ on a wide range of issues. The TJN is dedicated to conducting a high-level research, analysis and advocacy in international tax and in the international aspects of financial regulation. The role of the TJN UK is to map, analyze and explain the role of tax and the negative impacts of tax evasion, tax avoidance, tax havens, and tax competition. The core goals of the TJN-UK are to create understanding and debate and to promote reform, especially in developing countries. The berserker tactics was the major tactic used by the TJN after its launch. 3.0. Tax Justice Network-USA Tax Justice Network USA has the role of promoting tax justice and tax cooperation, including policies that address tax avoidance and tax evasion. Moreover, the TJN USA develops and implements policies that address financial transparency in the US government, corporations, and financial institutions. The TJN USA operates as a not-for-profit and non-partisan organization that brings together organizations, social movements, and individuals working towards similar goals. From the report released by the organization, tax loopholes, subsidies and deductions makes 39% a quaint notion. According to TJN USA, the rate is not an issue. According to TJN USA, the US has a US approach to taxing MNCs that enables the MNCs to shift their profits around the world to evade the responsibilities in the US. With partnering organizations, TJN-USA launched the Financial Accountability and Corporate Transparency (FACT) coalition in April 2011. The organization has seen a tremendous progress in exposing individuals and corporations that use offshore tax havens to avoid paying taxes. Most of the Media reports and hearings in Congress of the TJN-USA on the tax strategies applied by Apple, General Electric, Google, and Microsoft have infuriated the public. On a global scale, TJN-USA has raised issues among both developing and developed countries. The organization seeks to make changes on the tax policies that include: Requiring country by country reporting by international companies of the sales made, profits and revenues earned, and taxes rewarded in every operaional jurisdiction. Eliminating possible loopholes in the US tax system that incentivizes corporations to shifts profits and jobs offshore. This initiative will ensure than the corporations that benefits from resources, protections and US market pay their share of taxes. Fostering, standardizing and implementing anti-laundering laws. Requiring ownership information of all business entities, foundations, and charities, and trusts. TJN uses the information to find who actually controls these entities. In addition, the information is essential and availed to the public. 4.0. Goals of Tax Justice Network TJN USA draws on the collective expertise to research, design and push original new agenda-setting positions. The organization seeks to be berserkers by opening up new spaces and opportunities for others to enter. The organization challenges the conventional wisdom, relish debates, and attracts media attention. The organization takes position of current new and issues without seeking stakeholder consultation. In each area of the organization’s work, TJN USA seeks to incubate new projects while building new communities the specific issue. The objective of this is to spin off the issues for others to take lead, and free the organization to move on to other frontiers. TJN USA takes a ‘let 1000 flowers boom’ approach to seek the control of activities of others as little as possible. Instead, the organization seeks to influence and motivate individuals by playing the role of a think tank, enabler and incubator. Moreover, organization’s campaigning activities are carried by a separate sister organization: the Global Alliance for Tax Justice that maintains links between various organizations and people around the world. One of the greatest strengths of the TJN goes beyond the fact that the organization has been proven right about the issues. The organization has endeavored to appeal across the global political spectrum. However, according to TJN, the problem of Tax haven is corruption of the global markets. Because of this, the actions of TJN have taken on a broader range of issues. 5.0. Actions and roles of The Tax Justice Network Country by country reporting This action was initiated by the non-aligned movement in 1960’s that was launched as a civil society by TJN in 2003. Mostly developed by Richard Murphy, country by country reporting has taken the world by storm. Global Alliance for Tax Justice TJN had a core campaigning elements but later decided to spin off the GAT J as part of the organizations long-term strategy to focus on research and advocacy. Finance uncovered Finance uncovered is an action initiated by TJN and has become a large self-standing and successful financial journalism training program. Corruption In 2007, TJN released an article titled; Mirror, Mirror on the Wall, Who’s the most corrupt of All. The journal had a radical new tax haven focus to the alternative traditional views of corruption which remained unheard during that time. Human rights Human rights are a potential project for the TJN. Currently, the action is being incubated has seen a rapid take-up by most activists. The aim of this action is to take on a life of its own, possibly with a dedicated organization. The operating model used by the organization has enabled the TJN to become more radical and gain original positions that directly challenges the world’s most powerful vested interest. TJN states that tax is not tied to the provision of good schools or hospitals that most people care about. With this in mind, the core mission of the TJN is to change the global conservation. 6.0. Organizations Guidelines The actions of the TJN conform to the guidelines provided by the Organization Economic Cooperation and Development. One of the core guideline is transparency. It means that every corporation should be transparent in all their activities. In case of the TJN, the organization must conduct a detailed examination of the activities and activities of everyone within the supply chain to ensure that their practices do not have adverse effects on human rights. As one of the most important players, and possibly the important single player in bring tax justice all over the world since 2003, TJN’s international network claims credit for playing a vital role in creating a coherent intellectual framework that has enables the understanding to tax havens. 7.0. Conclusion The solution of tax avoidance and evasion is straight forward. Multinationals should demonstrate aspects of integrity and commitment to corporate responsibility by adopting clear corporate standards on tax payments. Various Tax Justice Networks outline that the standards should include commitment to publish the necessary accounting information, refrain from using profit-laundering methods created without substantial economic reasons, lists every country in which the corporation trades and the amount of profit derived from its business within these jurisdictions, and provide a clear statement of profits booked for tax purposes. When organizations make such commitments, there would be transparency in the company’s affairs making the business to demonstrate its commitment to genuine social responsibility. References Battle lines drawn between OECD and Tax Justice Network. (2012). International Tax Review, 23(4), 23. Read More