In a world that's as economically unequal as it can get, the Silicon Valley elite is being cocky as the king of spades. As Adrian Wooldridge from The Economist mentions, it's following in Wall Street moneybags' footsteps and flaunting its newly acquired wealth, usually by throwing ridiculously extravagant parties and multi-million-dollar weddings.

But where is this newly acquired wealth coming from? Is it just the result of breakthrough innovations that sell like hotcakes? "The tech tycoons have displayed a banker-like enthusiasm for hoovering up public subsidies and then avoiding taxes, Wooldridge argues.

Is the T-shirt-and-jeans crowd solely to blame?

The villain in the tax-avoidance story
Over the past couple of years, the likes of Google (GOOGL -0.13%), Apple, and Amazon remained in the spotlight, not just for their innovative products, but also for trying to cash in on several loopholes primarily in European nations' tax regimes.

For instance, the "Dutch sandwich" and the "Double Irish" loopholes enable tech giants to move money around the world through a series of shell corporations in Bermuda (where there is zero corporate income tax), Ireland, and the Netherlands. Throughout 2012,  according to the Financial Times, Google shifted nearly $12 billion to Bermuda by employing the above practices, 25% more than it did the previous year.

The big question is not why or who takes advantage of these loopholes, but why they still exist. What's more, they are actually legal. I am not implying here that tax avoidance is justified because it can be accomplished in the eyes of the law. What I am saying is that policy makers should stop pointing fingers at Silicon Valley and not drag their feet on international tax reform. Tax evasion and avoidance cost the EU around €1 trillion each year, and that's not just multinational tech giants' fault.

Who's to blame then?

Europe has taken significant steps toward tackling artificial tax fraud and evasion techniques. Recent amendments to key corporate tax legislation close loopholes in the Parent-Subsidiary Directive and prevent companies from exploiting differences in the way intra-group payments are taxed across the EU. Yet, a lot more needs to be done. Tax avoidance is a burning issue that needs to be addressed on a global scale once and for all.

In 2010, the Organisation for Economic Co-operation and Development, or OECD -- a group of the world's leading economies -- seemed bent on launching an all-out attack on some controversial transfer-pricing tactics -- methods of allocating profits into tax havens. However, it ended up issuing guidelines that let tech giants carry on with dodging taxes by stating that profit is generated in Mauritius and Bermuda and not the countries in which revenue was actually generated.

"The practical effect of the 2010 guidelines, unfortunately, was to ratify rather than challenge the movement of income to tax havens. That was a big step backwards," Michael Durst, an offshore tax arrangements attorney, told Bloomberg last year.

More importantly, a year after the OECD issued those guidelines, Caroline Silberztein, who called the shots at the OECD's Transfer Pricing Unit from 2001 to 2011, left to join the transfer-pricing practice at law firm Baker & McKenzie. And in 2012, former OECD tax chief Jeffrey Ownes went to work as an advisor for Ernst & Young, the accounting firm that companies such as Google and Hewlett-Packard consulted about how to manage changes in tax policies worldwide and form their offshore tax strategies.

In 2013, the OECD urged stronger international cooperation on corporate tax and put forward an Action Plan, which "will give governments the domestic and international instruments to prevent corporations from paying little or no taxes." The 44-page Action Plan is definitely a glimmer of hope. The actions outlined in the plan, if translated into law by OECD countries, could mark a turning point in the history of international tax cooperation and provide governments with the necessary means to prevent profit shifting.

Even so, late last year, more than 1,300 CEOs from 68 countries were surveyed by accounting firm PricewaterhouseCoopers. Only a quarter of them thought that current OECD attempts to overhaul the international tax system will bear fruit over the next few years while 40% didn't count on these efforts reaching consensus.

Final thought

The OECD requested input regarding its work on tax challenges of the digital economy and published the comments it received earlier this month. As expected, companies and organizations most affected by the proposed Action Plan took a stand against it.

The villains played their part. It's time for governments and decision makers to play theirs too, and make hay while the sun shines. The Silicon Valley elite will continue to behave as ruthless capitalists, but only for as long as we let it.