Times have to change — New Economic Thinking

Why Corporate-Led Globalization is Unsustainable

Profit shifting...
"International coordination is the most sensible way to address the [taxation] problem.
If Apple makes 10% of their global sales in France, then France could say, for example: 'we're going to consider that 10% of Apple's global profits have been made in France. And that's what we, France, are going to tax'. irrespective of where Apple's employees are located, or intelectual property, or irrespective of... All of that would become irrelevant. And so a reform like that, what economy is to call formulary apportionment,  which is a very powerful way to curb profit shifting. In the system that I describe, where you apportion global profits, based on where sales are made, you remove any incentive for firms to shift profits. It becomes impossible for them because, in practise what happens is that, France or any country, decides where the profits are taxable. Today we let multinational companies, basically, decide where. And if you let them decide, they'll decide to put their profits in Bermuda (tax haven). If you decide for them, by saying that you are going to look at where you made your sales (not something that multinational companies can manipulate), then it becomes possible to tax multinational firms. The beauty with this type of approach is that you don't need any international coordination. That is, any country, unilaterally, could say, tomorrow that's how we are going to tax multinational companies."