Paradise Papers leak: U-M experts can discuss
University of Michigan experts are available to comment on the disclosure of the Paradise Papers by the International Consortium of Investigative Journalists—13.4 million leaked files that reveal the offshore activities of some of the world’s most powerful, including Queen Elizabeth II, several members of the Trump administration, Mexican billionaire Carlos Slim and Colombian president and Nobel Peace Prize winner Juan Manuel Santos.
Cindy Schipani, professor of business law at the Ross School of Business, is an expert on corporate governance, with a focus on the relationship among directors, officers, shareholders and other stakeholders.
“This disclosure is particularly interesting given the current discussion of tax policy. This exposes how very wealthy individuals and corporations have been able to shield wealth from the U.S. taxing authorities, adding more steam to the argument that it is less wealthy individuals who bear a greater tax burden.
“And to the extent the hidden wealth of public officials has been exposed, citizens have grounds to distrust tax policy. Conflicts of interest raise serious questions regarding whose interests are being protected. Furthermore, the links to Russia, in light of the current investigations, also raise alarming red flags.”
“The leak may not derail GOP's tax reform, but it should give pause to current proposals which impact the middle class - those who are not able to take advantage of the tax havens. Or, it could at least open a discussion about taxing offshore moneys in connection with the discussions about an overhaul.”
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Reuven Avi-Yonah, the Irwin I. Cohn Professor of Law and director of the International Tax LLM Program, specializes in corporate and international taxation. He has served as a consultant to the U.S. Treasury Department and the Organisation for Economic Co-operation and Development (OECD) on tax competition, and is a member of the steering group for OECD's International Network for Tax Research.
His research has included the intersection of tax law and human rights, and in 2016 co-authored the paper: Taxation and Human Rights: A Delicate Balance discussing how the ability of rich residents of developing countries and multinational corporations operating in those countries to evade or avoid taxation is directly linked to violations of human rights in those countries, as well as how some techniques used to achieve adequate revenue collection risk violating other human rights like privacy and the legitimate protection of trade secrets.
“In a better world I have no doubt this kind of revelation would have an impact on legislation that is designed to reward the kind of behavior that is exposed by the Paradise Papers. For example it would make it more difficult to pass legislation allowing Apple to pay a maximum of 12% on 230 billion stashed in tax havens instead of 35%.
“But I am sure the GOP will just say that the revelations bolster the case for cutting taxes for giant multinationals and the super rich. Whether tax reform happens depends entirely on the push and pull of interests within the GOP and the influence of various lobbying groups and I doubt the Paradise Papers will have an impact on this.”
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