G20 finance chiefs launch plan to get multinationals to pay more taxes
financial sector in 2008, the technology industry consistently has been the most-profitable part of this country’s economy. In 2012, tech companies contributed almost a fifth of all profit reported by the corporations in the S&P 500 index, slightly more than the earnings of financial services companies. Yet if those same large companies report second-quarter results over the next few weeks that are in line with Wall Street expectations, finance will be well on its way to overtaking tech this year to once again become the U.S. industry that earns the most annual profit. The reasons go beyond the taxpayer-funded bailouts of large banks and insurers in 2008-2009, which helped put those companies back on their feet after losses on mortgage-backed securities decimated their balance sheets.
Since the start of the housing crisis, dozens of lawmakers, advocacy groups, academics, and industry stakeholders have offered visions of what our mortgage market should look like. In that time, weve seen a bipartisan consensus develop around increasing private capitals presence in the market while maintaining explicit government support for the segment of the market traditionally served by Fannie and Freddie. But details of any future housing finance system must still be worked out, and Congress has only begun debating legislation to reform the system. What do Fannie Mae and Freddie Mac do? The primary function of Fannie Mae and Freddie Mac since their creation has been to provide liquidity to the nations mortgage finance system.
A Comparison of Plans to Reform Our Housing Finance System
The plan was designed by the Organization for Economic Cooperation and Development and introduced at a meeting of the Group of 20 finance ministers in Moscow on Friday. The Paris-based OECD says that “national tax laws have not kept pace with the globalization of corporations and the digital economy, leaving gaps that can be exploited by multinational corporations to artificially reduce their taxes.” The new 15-point plan includes ways to close loopholes, for example that allow companies to stash profits from in offshore subsidiaries. Low tax payments by major multinationals have sparked public anger in Europe recently, especially as governments are struggling with high debts and low growth.