Tax Abuse, Gentrification and Financialisation of Housing

What is corporate tax avoidance?

Legal efforts to minimise tax obligations alongside overlaps with illegal corporate tax evasion

What factors allow for the expansion of corporate tax avoidance?

Globalisation allows capital to become more mobile meaning tax liabilities can be shifted more easily; governments and tax authorities also often burn a blind eye to tax avoidance to create environments for business investment and enhance global competitiveness

What are the key strategies for avoiding corporate tax?

To locate as much income as possible where taxes are low and as many costs as possible where taxes are high, this is achieved by exploiting differences in tax residency rules and creating multiple filings in multiple countries to reduce transparency; bespoke deals with governments can also be used

What is the wealth defence industry?

Professional service firms that provide tax services and technological knowledge to develop profit allocation strategies; they trace legislative changes and promote legal, accounting and financial vehicles to overcome national boundaries

Who are key players in the wealth defence industry?

The Big Four accounting firms of Deloitte, PWC, EY and KPMG are multi-jurisdictional and cross disciplinary able to provide tax advice; their size and global reach of auditories provides them with a better perspective on tax advice than smaller firms to form complex networks including offshore financial centres in aggressive tax planning strategies; individual top executives also play a significant role in determining levels of tax avoidance a firm undertakes

What was the Coalition governments perspective on corporate tax regimes in 2010?

The Coalition was committed to creating the most competitive corporate tax regime in the C20 to retain business investment and attract new investment; this may play a part in the ignorance of tax avoidance

How much did tax fraud cost the UK Treasury in 2018/9?

£20 billion

How many times higher was this than the cost of benefits fraud?

9x

How many more times staff work in policing benefits frauds than compliance with HMRC?

3.5x

Where has a special corporate tax rate been supplied since 2003?

In Ireland for Apple allowing for a special income tax rate of 2% or less; this allows Ireland to continue to compete for international business

What is a tax haven?

A country that imposes little to no tax on foreign individuals and businesses, this attracts offshore wealth and corporate profits by offering favourable tax rates, lack of transparency and strict financial privacy laws

What did the Panama Papers reveal when leaked in 2016?

There were thousands of anonymously owned companies across multiple jurisdictions including PWC entities in tax havens including the Cayman Islands, Gibraltar, Luxembourg and Mauritius

How do the Big Four interact with tax havens?

The Big Four are able to manage and maintain networks of tax havens allowing for the shifting of profits out of high tax locations to low tax ones; this is enabled by the complexity of tax regulations forming loopholes that can be exploited; there is a causal link between the size of corporations tax haven networks and their use of the Big Four

Why does the HMRC struggle to police tax avoidance?

It has seen cuts and lack of staff; there is a relative under-resourcing of HMRC as well as no penalties for promoting tax avoidance schemes; there are no government led investigations or drive to form a new regulatory system for tax avoidance

How is family inheritance defenced through risky futures?

Wealthy parents and wealth managers construct risky futures to justify strategies to manage and control access to family wealth through intergenerational tax avoidance; there is a common concern inheritance will corrupt the next generation so children are turned into good inheritors through trust structures only accessible for certain uses such as has home ownership, educations etc.; wealth managers capitalise on the figure of the successful entrepreneur who is naive about finance to protect ultra-wealthy dynasties

How is philanthropy a form of inheritance defence?

Philanthropy attempts to publicly demonstrate the legitimacy of wealth and also persuade younger generations to unite around a project of preserving family wealth, it turns the next generation into purpose driven, trained heirs to protect dynasties from public criticism and private corruption

What are the socio-economic ramifications of tax avoidance?

This leads to redistribution of the tax burden elsewhere, often onto low-income citizens and undermines the sustainability of public policies, infrastructure, education, healthcare and pensions alongside forming economic instability and undermining the tax system

How are housing recourses used to anchor wealth chains for wealthy elites?

The ultra-wealthy and corporations create chains across space and ground this in homes to be traded in pursuit of profit and offshore wealth gains; in Kensington and Chelsea 10% of homes are unoccupied and owned by wealthy elites who exercise buy-to-leave ownership where they acquire properties and leave them empty to not incur costs with acting as landlords and liquidate assets when advantageous market conditions occur; this can also be invested with illegally sourced wealth and then generate legitimate funds to increase house prices and empty the city

What are the origins of gentrification?

The term was first coined by Ruth Glass in 1964 referring to the invasion of the middle class into the disinvested inner city working class neighbourhoods of London where they renovated old properties and displaced original communities; it is a process distinct to local contexts, place, localities and scales

How were the first and second waves of gentrification characterised?

First waves were sporadic, localised and cultural forms of gentrification driven by local creative classes

How was the third wave of gentrification characterised?

State-led development in an attempt to regenerate disinvested areas and encourage investment

How have the fourth and fifth waves of gentrification been characterised?

Final waves of combined financialisation of housing with pro-gentrification urban policies to see the urban materialise as a form of financialisation capitalism; finance replaces the state in mediating urban space

What is the rent gap theory?

First coined by Neil Smith in 1979 the rent gap theory reveals the disparity between potential ground level rent and actual ground level rent capitalised under the present land use

What are the potential unequal impacts of gentrification?

Direct displacement as people can no longer afford rent or indirect displacement due to the pressure of changes to commercial infrastructure, cultures and behaviours experienced as exclusionary which lead to people being torn from social networks and the deepening of polarisation of urban housing markets

Which estate and where was regenerated in 2004?

Heygate Estate, Elephant and Castle

How was resistance to Heygate Estate gentrification characterised and what were the successes of this?

The Elephant Amenity Network attempted to influence local planning through shared information, pressures to local authorities and media coverage such as the BBC; the Achieve Group protests gain attention and show films in the estate to keep it open, the legal appeal also provides evidence to the court on displacement; the estate was demolished but resistance was successful in raising the media profile and challenging public interest of regeneration, it has inspired further rights for housing justice in London

Which estate and where was regenerated in 2012?

Carpenters Estate, Stratford

How was the Carpenters Estate impacted by the Olympics?

Residential displacement shows the ‘dark side of events’ as the three tower council estate was demolished to see over half of the residents displaced by 2012; this was at the expense of cohesive community and facilities, homes and gardens and a strong sense of place; this was seen as ‘social cleansing’ in the name of corporate objectives and the changing character of the place due to the Olympics

What kind of gentrification is taking place in Cape Town and what is the impact of this?

New-build gentrification sees rapid inner city change to create lifestyle enclaves aimed at global elites and promoting luxury residential use; as a result there has been socio-economic depolarisation, exclusionary displacement and a housing crisis in the attempt to create a ‘global city’ there has been a narrative centred around who is not wanted in the new urban hierarchy

How has resistance against displacement been characterised in New York?

Low-income residents are helped by public interventions such as rent stabilisation and regulation as well as publicly subsidised housing, vouchers and rental assistance; private strategies include house sharing, informal housing relationships with landlords, community organisation campaigns and homeownership; however, these techniques are precarious and may lead to displacement into the shelter system or homelessness

What is the financialisation of housing?

Housing is transformed from a space of protection and utility to an asset class to be invested in and generate profits this occurred through the opening up of mortgages and securitisation packages

What are global corporate landlords?

Investment trusts, private equity and large investment funds that target commercial real estate for investment to maximise rent, benefit from gentrification and extract profit; this often leads to poor living conditions and displacement

How do transnational wealthy elites play a role here?

Transnational wealthy elites can buy houses and apartments as safe deposit boxes to store excess capital; there is also the ability for businessmen and professionals to become super-gentrifiers and invest in highly valued locations to displace professional middle classes and create social polarisation with the super-rich elite separated from all others

How is super-gentrification occurring in Barnsbury?

A new group of super wealthy financial professionals move into Barnsbury to drive up house prices and change the fabric of the community due to emphasis on monetary values leading to exclusive restaurants, bars, expensive shops etc. supporting lifestyles of the super rich; the globalised economy provides huge salaries and bonuses as well as social capital connected by Oxbridge university education to create super-rich gated communities build around enclaves of extreme wealth in newly shaped areas

How does platform capitalism impact housing?

Operates primarily through Airbnb where capital is channeled into specific neighbourhoods close to the centre or regarded as ‘artsy’, this leads to new displacement often occurring faster than gentrification as a result of renting of prime residential areas which depletes the stock of affordable housing to price out locals and place them in unfair competition for accommodation, this also changes the character of touristic towns

How is platform capitalism impacting Athens?

Airbnb was welcomed in Athens post GFC as an opportunity to help cover housing tax and supplement income; this took advantage of a lack of Greek legislation on housing but led to a rise in rent prices with a particular impact on temporary student populations forced to compete in rental competition, this also changes land use and noise levels