Explaining the contortions that multinational corporations put themselves through to avoid taxes is a journalistic challenge. Here’s one way to overcome it.
Explaining the contortions that multinational corporations put themselves through to avoid taxes is a journalistic challenge.
For many years, economists have thrown around big numbers, indicating the scale of the problem. Experts estimate the tax avoidance tactics of multinationals have cost governments around the world $100 billion to $240 billion a year — equivalent to 4 to 10 percent of global corporate income tax revenues.
I know. Because that was the challenge I confronted when I was invited to give a TEDx talk. How to explain complex worldwide tax schemes without gazing out into an audience of glazed over eyes?
The International Consortium of Investigative Journalists first delved into the esoteric world of corporate tax avoidance four years ago, with a project called LuxLeaks. We received a large number of leaked files which turned out to be confidential tax agreements from Luxembourg, awarded to more than 350 global companies.
The names of many were familiar — Pepsi, Disney, Burberry, Skype, Koch Industries, Ikea — but the jargon was not. As well as technical language, most of the leaked papers included baffling organizational charts that looked like this:
It took us a while looking through tax arcana, but eventually we began to see patterns. We saw that many big businesses were using commercially unnecessary “internal loans” to trigger interest payments from one subsidiary company to another.
Why? This was the means by which multinationals were able to shift profits made in high-tax countries into tax havens — or, more often, into exotically structured subsidiaries that were not subject to tax.
But understanding these arrangements was only half the challenge. ICIJ and its partner journalists then had to describe them to readers and viewers. And because the maneuvers were so intricate, it was difficult to explain any single example without slipping into the rarefied language of tax professionals. We had to translate.
Our first step was using images. We found one of the most effective reporting techniques — pioneered by ICIJ member Edouard Perrin — involved filming expeditions to the Luxembourg offices where multinationals purported to run their multibillion-dollar lending operations.
This footage showed that many of these locations were empty, or near-empty, drab, small, single rooms. When film crews came knocking, startled office managers appeared to know little about the companies at these addresses.
Whatever their official designation under Luxembourg tax law, the viewer could plainly see that these premises had none of the trappings associated with a substantial corporate enterprise.
It was a powerful way of conveying the artifice at the heart of tax avoidance activities in this tiny European Union member state.
We’ve kept honing our story-telling skills, knowing that the seeming impenetrability of these schemes helps protect them from scrutiny.
In 2016, ICIJ published the even more revealing Panama Papers, which helped topple heads of state and led to major investigations around the world. An interactive game, Stairway to Tax Heaven was a primer that helped explain some of the steps in tax avoidance.
Last year, ICIJ returned to this topic. On this occasion we had received another leak that revealed still more tax secrets of well-known global corporations. This work became known as the Paradise Papers, and one of our main reporting focuses was tax avoidance in Ireland and the Netherlands. Several multinationals were featured, including the aformentioned Apple and Nike.
As with the earlier LuxLeaks and Panama Papers investigations, the details were complex. So, we decided to make an animated primer, explaining how international tax rules could be manipulated. With the help of artist Rocco Fazzari, we put together this short animation involves the fictional burger restaurant chain, Snax Haven, its expansion around the world, and the tax advices it received along the way. Here it is again:
After Paradise Papers was published, TEDx Glasgow asked if we could convert some of our reporting into a short talk. At first, this seemed an impossible task. But we decided to give it a go.
And with the help of a brilliant public speaking coach in Scotland called Cordelia Ditton, we came up with the idea of using audience participation. It sounds crazy, but in the end we think it worked surprisingly well.
One viewer responded: “Brilliant. Despite being about taxation, I did not slip into a coma,” Here’s some other feedback:
— Lorraine Hannah (@LorraineHtweets) June 1, 2018
A brilliant explanation from @sbowers00 of how the @ICIJorg investigated the #panamapapers & #paradisepapers. Start with the basics: follow the money. He’s turned the audience into the global tax economy. #awesome #TEDxGla2018 pic.twitter.com/9mxGDBUzFq
— DIGIT (@digitfyi) June 1, 2018
Now if you’re persuaded, you can take a look yourself.
If you have ideas about different ways we can tell ICIJ stories, let us know about it. We’re always interested!