The tax avoidance crackdown could lead to a fall in the markets

Without cooperation across nations, multinational companies could avoid tax payment in high tax rate countries by transferring profits within the companies. However, currently nations work together to crack down the tax avoidance system. The companies will have to pay higher taxes in the future. This definitely will affect the companies' earnings; moreover, it could also affect the financial markets, especially the equity market. Additionally, their abilities to pay back loans may be affected by the reduction in their earnings after tax. Therefore, the governments could reduce their budget deficits, but if the pension funds are affected by the fall in the financial markets due to the reduction in companies' earnings after tax, the governments may have to increase their deficits to help the pension funds.