Another View On How To Reduce Corporate Tax Avoidance

Joe Stiglitz suggested that raising the taxes on capital gains and dividends would be one way to compensate for the taxes lost by the growth in corporate tax avoidance.  They are the ones who benefit from lower after tax profits so it makes good sense to raise those taxes.  We could also do what is suggested in this article.  We could tax corporate revenues instead of profits.  That would be complicated but it would end the use of tax havens in which corporate profits escape taxation.

The exploitation of tax havens by global corporations, however, is only one of many problems that accompany the rapid pace of economic globalization.  The nation state is becoming less relevant in a global economy.  Unfortunately, the nation state is the only democratic form of government that we have to manage the global economy and it is not up to the task.  Corporate control over the nation states has never been stronger.  They are faced with a difficult choice.  The can team up with their corporate clients, and do what they can to serve their interests, but eventually that will lead to political reaction.  We are seeing much of that today in many countries. The alternative is to strengthen international organizations which might do a better job of managing the global economy.  That will not be easy to do, especially when most nation states have adopted the strategy of teaming up with their domestic corporate interest groups.  It would also put technocratic institutions, that are removed from democratic control, into very powerful positions.  We are at a very dangerous point in which our existing institutions have become less able to serve the interests of their body politic, and in which there are no good alternatives to the nation states.  Without a good plan to deal with these problems we are likely to get political chaos and government system that develop in response to chaos.