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Comment by pembrook | Hacker News Reader

It's amazing to me how strongly people want to believe there's some magical way that rich Americans are avoiding taxes by hiding money in exotic locales.

This was possible in the past for Americans, but it doesn't make sense anymore. That's the truth. The secretive Swiss banks and numbered accounts you read about in adventure novels as a kid are all reporting on US citizens now.

It doesn't matter how much resources Eric Schmidt has, the US government has more resources and power than Eric Schmidt. Especially given he's a widely known public figure, he'd be the perfect target of any investigation.

US taxes are already extremely favorable to the rich. Do you seriously think he'd risk his freedom and reputation over something so stupid?

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Uh what?

There is no "the US government has more resources" – like it's a big blob. It comes down to something like the IRS enforcement division, which is consistently getting kneecapped with budget cuts. So no, actually it really is between your 15 high priced lawyers and whatever team of 5 people the IRS has working your case with limited time because they're stretched thin.

FATCA compliance issues won’t just get the IRS on your back. You also have to deal with the US department of treasury.

The US treasury is not handicapped by regulation in the same way the IRS is. We’re talking extradition and jail time, not just having to pay back taxes.

The Venn diagram of banks where you’d feel safe storing millions of dollars and that would also be willing to help you defraud the US Treasury are exceedingly small. It’s just not practical.

> The Venn diagram of banks where you’d feel safe storing millions of dollars and that would also be willing to help you defraud the US Treasury are exceedingly small. It’s just not practical.

You only need 1. However, the solution isn’t to move money from your account to a bank which then hides what’s going in from the US government. The solution is to make a terrible investment say buying land from Bob for 10 million only to sell it to Sally for 5 million. Meanwhile an associate of Bob, Sally, or both moves 4 million to a holding company owned by you.

That gets 4 million in a secret account, let’s you offset capital 5 million in capital gains, and pays 1 million for money laundering.

Repeat as needed. Sure, 4 million in a hidden account is less useful day to day, but it’s insurance if you need to flee the country or happened to go bankrupt etc.

Your amounts are laughably low for the person who sparked this topic of discussion. Eric Schmidt has $14.2 billion dollars.

4 million in a stash account is nothing more than weekend vacation money.

Let's be honest, for most people hiding your money from the government, just means you can't access it anymore---which makes it essentially useless to you. For the current day mega-rich, they don't have any ties to the maffia, or other shady operations that would incentivize them having black-money funds.

Re-invest your money for low taxes, pay your taxes, and you will still be a billionaire next year, and won't have to every worry about black helicopters snatching you from your yacht.

As I said repeat as needed, some people move billions using such methods over time. And yea, doing this to money isn’t as useful day to day again as I pointed out, but that’s not what it’s for. We are talking insurance not tax evasion.

It’s a mistake to think of Money as a fungible assets without any distinguishing characteristics. Set aside 10% in ultra safe investments and your protected from market crashes but not the government freezing your assets, bankruptcy, or your ex wife taking you to the cleaners. Schmidt would be a fool not to set aside ~50 million in some hidden accounts specifically because it’s a small enough amount as to be meaningless today, but plenty of money to hide out comfortably in a non extradition country.

> The solution is to make a terrible investment say buying land from Bob for 10 million only to sell it to Sally for 5 million.

Or if you're Russian, a condo in Trump Tower, NY...

FATCA doesn't create tax obligations it has nothing intrinsically to do with tax it has to do with financial transparency, which yes can help to catch people who are evading tax but if you're structuring your affairs legally FATCA has no impact on your taxes.

I'm not claiming he is _definitively_ doing so, even just in part for tax purposes. Nor am I claiming he is not already able to use many advantageous tax loopholes in the US.

I only claim two things. One, that by most reasonable definitions, Cyprus is a tax haven -- there is even a recent sordid history there, exposed in The Cyprus Papers. And two, given tax havens are often used as a means to minimize tax in transferring wealth from one generation to the next [0] among other things, I think it's a dubious claim to say "There is no dodge" as you have so unequivocally done.

[0] Via Panama and Jersey, not Cyprus, but for example these schemes were used by David Cameron's father, and by Jimmy Carr before he bowed to public pressure -- all quite legal and non-magical, and I'm sure US citizens could use similar schemes, in spite of their global reach. https://www.theguardian.com/politics/2012/apr/20/cameron-fam...

Cyprus is not a tax haven. The Cyprus Papers were about people paying for Cyprus citizenship to get the benefits of being a citizen of the EU.

A casual search shows that plenty of tax advice and preparation organizations think Cyprus is a tax haven. And The Cyprus Papers show that the local authorities likely intentionally failed to enforce rules regarding PEPs. A culture of intentionally weak enforcement makes Cyprus an even more advantageous haven.

https://en.wikipedia.org/wiki/Panama_Papers

Also, https://www.icij.org/investigations/fincen-files/global-bank...

Banks saying one thing and doing another.

Yes and no. US taxes favor certain types of wealth accumulation and wealth accumulation over income. But US taxes aren't particularly good to the rich, certainly not by global standards and certainly not in many states.

There absolutely are sophisticated tax structures both domestically and internationally that do require a certain degree of scale to benefit from them, though past a certain point make less sense.

Panama papers mean nothing to you?

For an American? They mean nothing. The list of Americans in the Panama Papers is extremely small, and all of them shifted their money before 9/11.

It's simply not possible to do stuff like that anymore.

Thanks, I didn't realize what a small percentage the Americans were.

Cryptocurrencies get used for this purpose.

Switzerland perhaps, but there is still plenty of tax evasion going on in the middle east and Dubai for instance.

That being said, I think you are right about Schmidt. It can't be for something so simple, being that high profile.

Thee are other reasons to move local than hiding money, Cyprus is famous for agreeable estate tax. Seems a likely candidate given Eric Schmidt's age.

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