Justin Trudeau beamed as he explained why he felt the need to put together Canada’s first cabinet with an equal number of male and female members. “It’s an incredible pleasure for me to be before you today … to present a cabinet that looks like Canada,” Trudeau said in his first statement as Canada’s 23rd prime minister.
AMERICA, it appears, will go over the fiscal cliff after all, if only for a few days. But if all goes as planned, the worst of the cliff, a withering combination of tax increases and spending cuts, will be avoided.
A deal nearing completion in the Senate would make permanent the tax cuts first enacted by George Bush in 2001 and 2003 and due to expire tonight, except for the wealthy. The marginal rate for individuals earning more than $400,000 and couples earning more than $450,000 would rise from 35% to its pre-2001 rate of 39.6%, while deductions would be curbed for some people earning as little as $250,000. Estate taxes would go up, but not to pre-2001 levels, while rates on capital gains and dividends, now 15%, would go up to 20%, still less than their pre-2001 rates.
When Google established its international tax scheme, it followed a path well worn by other multinational companies. The company booked its sales from outside the U.S. at its international headquarters in Ireland. Most of that profit was then sent on to the Netherlands, largely free of tax. From there, the money went on to a well-known tax haven, the sunny islands of Bermuda. By the time the technology giant parked its money there, it had reduced its foreign tax bill to the low single digits. The scheme, known in tax avoidance circles as the “Double Irish” with a “Dutch Sandwich,” helped Google save billions in taxes. Last year, for example, Google registered $4 billion in sales in the United Kingdom, but only paid $10 million in taxes in that European country.
Multinationals and the rich alike have long utilized tax havens from the Cayman Islands to Singapore — territories that collect low or no taxes on international businesses — to hide money and avoid hefty tax bills. Apple, Facebook and Pfizer have all purportedly employed a version of the “Double Irish.” And a study released by the Tax Justice Network in July found that wealthy individuals have stashed between $21 trillion and $32 trillion in offshore accounts. The lower sum is the size of the Japanese and U.S. economies combined. What’s more, analysts see growth in the hedge fund industry, which means more business for tax havens.