Pandora papers: biggest leak of offshore data exposes financial secrets of rich
theguardian.com
theguardian.com
Some of the people who defend the ultra-rich are also the ones who claim to be in favour of free markets. A small bit of economic orthodoxy is that for free markets to work, parties need to be informed (and externalities priced in, but that's another story). This is not just in terms of "this is the price of bananas" but also in terms of knowing eg what various salaries are, which businesses are profitable, etc.
How can we have free markets when we don't even know who owns what?
As for taxation, there needs to be an overhaul. Things need to be simpler, and I say this as someone who has used international tax advisors. There's no reason the tax guy's diagram of your business should be more complicated than your own diagram. Moving profits to other countries shouldn't be possible, or rather, it should be more fixed by the nature of the business than by the desires of the CFO. We simply hear too much about "selling IP rights" to subsidiaries and similar schemes that are clearly meant to lower tax rather than increase revenue. Granted some things will be legitimate, but it's important that some vague concept of fairness is adhered to. This again goes back to transparency. We invented corporations to help improve society, so we ought to know what kinds of things people are doing with them.
Edit:
Perhaps the way to see it is, if you say "we make money by selling coffees in the UK" you would expect that entity to report a tax structure that contains a bunch of coffee and UK related entries. Reporting to investors ought to mirror reporting to the taxman.
Free markets exist regardless of how you choose to assign property to people. Be it violence or consensus. Ownership is to be decided by the parties involved in the exchange. 3rd partys are an easy solution.
No, ownership is to be decided by governments who use force to protect property rights. They may take advice from the parties involved in the exchange, they may decide that neither party involved in an exchange was the owner.
For instance, in most jurisdictions, a dispute between two (claimed) property owners can only be decided by them, in full agreement, with the courts stepping in only when a stalemate is reached.
But the judge can only decide the dispute, and can't, for instance, arbitrarily issue an order giving the property to a 3rd party, or decide a dispute where one of the parties haven't first come to the court seeking that resolution.
Similarly, a property owner can summon police to help enforce their property rights in the case of a trespasser, but police can't arbitrarily enforce the rights of 3rd parties without request.
I think it's easy to say this, but I'm not sure the history of corporations bears this out. Technically, the first corporations were colonial expeditionary forces (like the Dutch VOC) that were sent to Africa and the Caribbean to control various types of precious resources and we all know what happened there.
I guess it all depends on who "society" is in your statement, because someone has always has to lose in a corporate structure.
A lot of the shifts towards a more humane version of capitalism came through outside forces like organized labor (i.e. the 40 hour workweek, the establishment of child labor law, etc.). These were not things that corporations volunteered, it took lots of people threatening to stop the system in order to achieve many of the benefits we enjoy today. We'd still be working 7 days a week starting as small children if those outside forces didn't establish many of those fundamental changes for us.
Uhm, who says that? Corporations were always created by people who wanted to cooperate to pursue their common interests.
And to this end, the only reason to create a corporation is to make society better. If they're not, we have the ability to revoke their charters, and we should use that more.
I'm sorry but this is patently false, the reason to create a corporation is to capture profit.
Want to make society better? There are numerous non-profit and government organizations that broadly aim for this goal which do not turn a profit. The goal of a corporation is to sell goods or services, and hopefully those goods or services do in fact better society. However, this is far too often not the case to make the argument that corporations exist to improve society. Look at how much control corporations have over our society today, they're practically invincible and indemnifiable in our current culture because they're so much more insulated legally than individuals.
The fact that corporate charters are never revoked points to the laws being in the corporations favor, not the citizens’
From where I stand, corporations should be afraid of the societies that grant them their charters.
This encourages entrepreneurship. I don't think you'd see as many people trying to build widgets if they had to put their family's home on the line.
In exchange for those protections, we get widgets.
For international finance, early 20th century oil played a special role, not adequately described here.
As far as the parent comment about corporations "killing people" .. this is true but naive.. since the Romans and before, brutality was the norm, not the exception. Every educated person and most others knew about extreme forms of collective abuse, it had happened again and again. The very formation of civilization, including merchant and trade functions, was generally meant to be an improvement on past forms. Rarely, but with serious circumstance, some merchant company would rape and murder their way to fortune for a while. But karma is a bitch as they say, and those things did change. The tame history I cite above, was specifically aimed at making a better economic engine, for profit by ownership, which upon consideration was the chosen path.
Also, their reorganization after each first generation of underhanded practices became recognized, otherwise attention could not have been as well diverted from the ability to leverage greed even more so than leverage the resources of the smaller investors.
Good historical reference sections on Wikipedia:
https://en.wikipedia.org/wiki/London_Stock_Exchange
>During the 17th century, stockbrokers were not allowed in the Royal Exchange due to their rude manners. They had to operate from other establishments in the vicinity, notably Jonathan's Coffee-House.
https://en.wikipedia.org/wiki/Philadelphia_Stock_Exchange
https://en.wikipedia.org/wiki/Tontine_Coffee_House
https://en.wikipedia.org/wiki/New_York_Stock_Exchange
NYSE of course is where lots of the money ended up from the international slave trade, and not just from sales in North America.
Seems to me that's what allowed NYC to take the place of London as the world's financial center, since the UK frowned on slavery much eartier than the US.
Also early 20th century oil might have been the only thing with as good or better return than slavery had generated.
Assigned reading will frequently be listed on syllabi. Older versions can be found through the Wayback Machine, if posted online (and from the early 1990s through about a decade ago, many were, unfortunately, integrated school information systems have largely hidden these behind registration walls).
https://www.worldcat.org/title/organizing-america-wealth-pow...
Archive.org don't appear to have this, though ZLibrary / LibGen do.
https://openlibrary.org/works/OL4468926W/Organizing_America
Which links to: https://archive.org/details/organizingameric00perr/
It was a massive public money raising campaign to build war ships, guns and hire mercenaries, all under the guise of "exploring exotic commercial opportunities overseas".
It's not a guise when other countries monopolize trade routes. It's simply a cost of doing business.
EDIT: in "The World's First Stock Exchange" [1], the author outlines this historical context of conflict between Netherlands and Spain, which spurred the VoC and - considered to be - the first stock market.
[1] https://www.goodreads.com/book/show/18847884-the-world-s-fir...
It's more that at one point during the industrial revolution, it became common that someone would make a private venture, incorporate it, and from there the law granted a number of modern considerations that we still live with. I'm thinking of limited liability and its effect on bankruptcy.
I don’t know the definitive origin, but one of Cæsar’s reforms in the Lex Julia was to require collegia be approved by the Senate (or Emperor) to be considered a legal body. The concept of corporations traces to at least then, almost certainly earlier, since corporate personhood is a logical result of the process of creating a legal system.
The novelty of the English and Dutch trading companies wasn’t their corporate personhood, but their distributed ownership as a joint-stock company.
Sources - Caesar, Life of a Colossus and Augustus, First Emperor of Rome by Adrian Goldsworthy.
They both work in most contexts.
I do think both (intellectual property and corporations) can actually be good for society if properly regulated, I just don't think that was the original intention, nor the current status quo and it won't naturally develop in that direction without concerted effort.
At the same time, markets do "work". That is, the results of market interactions are what you might expect from market interactions: Accumulation of capital in fewer hands, economic cycles of various kinds, some motivation for innovation and lots of innovation for exploitation, war, scams and such...
And you even didn't say anything controversial, hardly any options, but simple facts and conclusions drawn from the facts.
We can even bring out the comments by the Chicago school of economics - the birthplace of neoliberal free market ideology. Who with assistance from the government 'helped' south American countries by implementing more free markets than in USA. And as the result those countries imploded both politically and economically, and what does Chicago say? well obviously markets were not free enough.
They laugh at communist who say failed soviet counties were not communist enough, yet they do exact same thing with their experiments (actually, the difference is that they inflicted it on other countries).
Which begs a question, if neoliberals believe in what they preach then why they only export it?
I think you're kind of gesturing at the concept of "perfect competition", which is rigorously defined and does have technical requirements [0], one of which is perfect information. But it actually doesn't really apply to the tax situation of the owner.
In other words, for political and ethical reasons, there's a lot of reform that can and should be done, but I wouldn't dress up the argument in the form of "economic orthodoxy", unless you're talking about actual economic orthodoxies like lowering corporate income tax and preferring VAT to personal income tax.
edit: I should soften my confidence here, it's been a while since I did economics. At least, I've never heard of transparency extending beyond the good or service being a requirement for perfect competition... do you have a source for that, or can you clarify how it would affect things?
[0] https://en.m.wikipedia.org/wiki/Perfect_competition#Idealizi...
Those are more political ideologies than anything.
By economic orthodoxy, I simply mean that it's a fairly common economic teaching that bad things happen when parties are uninformed. For instance Akerlof lemons is about information asymmetry.
I'm not referring to any specific model (monopolistic competition etc) but to the general observation that a fair few economic models point out that having wrong information causes problems.
Akerlof lemons have zero to do with knowing the salary of the CEO of the lemon company.
We're talking about this https://en.wikipedia.org/wiki/The_Market_for_Lemons right?
This would be a nice simple GAAR: you pay either the current corporate rate or 20% of the GAAP profits you report in your stockmarket statement, whichever is the larger.
Good point, but take a number. We can't have free markets because most "regulation" is set up to favor some side or the other. There isn't even and fair competition. What we have is government sanctioned winners (and losers).
Before we get to who owns what, let's talk about how Uncle Sam can shamelessly put his thumb on the scale (read: bias and corruption) and too rarely be called out for doing so.
My opinion, the left will only be happy with a 100% income tax and socialism.
There isn't any evidence that tax rates much higher than those we currently have have been any obstacle to growth. Perhaps in theory, but many countries around the world and across history (including the United States!) have had much more progressive taxation regimes and it hasn't "kill[ed] the incentive for starting companies and becoming wealthy."
Which countries? And what happens when another country becomes more competitive than the US from a tax perspective? Will it destroy the country? certainly not. Will the US continue to be the world reserve currency and lead the world? Again, no.
> And what happens when another country becomes more competitive than the US from a tax perspective?
This is a really important point and I'm glad you brought it up. The progressive taxation regime has been undermined over the past 30-40 years by the "Washington consensus" - the idea that free flows of goods and capital are paramount and that it should be US policy (as well as the policy of the IMF, World Bank, etc.) to pursue such ends via trade agreements and in exchange for loans. The issue is that free flows of capital leads to the exact problem you describe: a global race to the bottom on tax rates and a general nihilism about the possibility of an equitable tax regime. The long term challenge, then, is about building transnational agreements that are about more than just free flows of goods and capital: they must address issues of taxation as well.
Almost by definition, somebody living paycheck-to-paycheck is spending all their income. So their sales tax bill is going to be basically whatever the sales tax rate is applied to their income (e.g., a 7% sales tax rate applied to all of their income). Somebody who saves some of their income isn’t spending that portion, so in a year their sales tax bill will be smaller than the sales tax rate (e.g., if they save 10% of their income, then they’re only paying sales tax on the 90% that they spent). You could say this isn’t hard enough of the rich, or it’s too hard on the poor. Usually “too hard on the poor” is an easier argument to make.
There are solutions, such as exempting food or other necessities (the poor probably spend a bigger portion of their income on food, so exempting food helps them more), or adding a luxury tax on things that the poor don’t buy, etc. Of course, then there’s an effort to define what should count as a necessity or what should count as a luxury. When I was a teenager, California sales tax did not apply to packaged food, but did apply to food bought at a restaurant. But there were exceptions to both of those cases: there was a snack tax that applied to some packaged foods (the list changed each year) so that some packaged foods were still taxed; and packaged food sold at a restaurant was exempt (I worked at Cinnabon, hot cinnamon rolls were taxed, after thirty minutes on the hot plate we let them cool down, refrosted and packaged them and they were no longer taxed; if somebody asked for packaged rolls when we were out, they got hot rolls in the box without paying sales tax).
It’s also true that “income” isn’t always the interesting number. Somebody with a million dollars in the bank and no income doesn’t pay income tax, but they do pay sales tax. Of course, if the money came from wages in a previous year, they paid income tax then. If the money was an inheritance, it might have been taxed but the US keeps changing the details of the estate tax.
Because raising taxes isn't going to keep someone who would already be considering starting a business from starting a business.
Do most people who start a business actually become wealthy?
How can you say that? Have you polled everyone starting businesses? This very thing happened to me with a distribution business in which taxes, and the potential for them being raised, made the business unprofitable compared to the same business running in China.
> Do most people who start a business actually become wealthy?
Subjective and impossible to calculate but by all means because not everybody can find a way we should kill it for everyone right? Because not everyone is smart enough to become a medical Dr, we should ban the profession or implement pay caps right?
Huh. Made me wonder if advocates of IP reform could claim improved tax sanity as a benefit.
Happily, not an original thought.
Here's the first hit via ddg:
Intellectual Property Law Solutions to Tax Avoidance [2015]
https://www.uclalawreview.org/pdf/62-1-1.pdf
"Multinational corporations use intellectual property (IP) to avoid taxes on a massive scale, by transferring their IP to tax havens for artificially low prices. Economists estimate that this abuse costs the U.S. Treasury as much as $90 billion each year. Yet tax policymakers and scholars have been unable to devise feasible tax-law solutions to this problem. This Article introduces an entirely new solution: change IP law rather than tax law. Multinationals’ tax-avoidance strategies rely on undervaluing their IP. This Article proposes extending existing IP law so that these low valuations make it harder for multinationals to subsequently litigate or to license their IP. For example, transferring a patent for a low price to a tax-haven subsidiary should make it harder for the multinational to demonstrate the patent’s validity, a competitor’s infringement, or entitlement to any injunctions. The low transfer price should also weigh toward lower patent damages and potentially even a finding of patent misuse. Extending IP law in such ways would thus deter multinationals from using IP to avoid taxes. Both case law and IP’s policy justifications support this approach."
Also...
> How can we have free markets when we don't even know who owns what?
Yup. Open markets require symmetrical information.
Great. Let's add more paperwork to the incorporation/reporting process.
> As for taxation, there needs to be an overhaul.
Taxation has a hard time changing the current laws because these are revenue for government. It can't do an overhaul but it can make new rules/regulations. Great, more paperwork.
> Moving profits to other countries shouldn't be possible, or rather, it should be more fixed by the nature of the business than by the desires of the CFO.
More paperwork, regulations, rules and advisors. That should simplify your tax diagram.
> Perhaps the way to see it is, if you say "we make money by selling coffees in the UK"
Many economic players are way more complex than a company selling coffee in the UK. These also happen to be the most influential and important nodes in your economy.
tldr: Tax is a really complex issue. ICIJ is, surprisingly, not that transparent in its funding and the people doing the funding/leaking these documents; I'm really doubtful they are doing it because they have "good hearts" or on any goodwill to help "society".
Many of the systems required to create a more complete accounting of assets already exist. For example, in the United States financial institutions already generate 1040s for profits/losses/dividends on financial assets; it wouldn't be particularly difficult for those forms to also include the actual assets themselves and their values. Local governments already collect property taxes (which, at various points throughout history have included a lot more than just property - such as cars/boats/etc.; equipment, etc. - so the infrastructure already exists to tabulate these other categories too) - it wouldn't be hard to transmit that data. I'm not arguing that it wouldn't take any work to have a transparent accounting of who owns what, but it's certainly not impossible - after all, we do it for income and no one seems to bat an eyelid. Not to mention that we live in an age of fast and easy electronic communications. Transparent wealth accounts have existed before in much more difficult circumstances (e.g. wealth taxes imposed on war profiteering by various governments after WWII) and it didn't prove to be an insurmountable burden.
> Taxation has a hard time changing the current laws because these are revenue for government. It can't do an overhaul but it can make new rules/regulations. Great, more paperwork.
Taxation is law - in fact, the tax code and how it is structured is probably the most important part.
> More paperwork, regulations, rules and advisors. That should simplify your tax diagram.
There is already an incredible amount of paperwork, regulations, rules and advisors involved in the gaming of the global tax system that already occurs. More transparency around asset ownership would help lead to a simpler global tax regime, not a more complicated one.
Certainly, given we’ve been to the moon, will be on mars soon, and are standing on the brink of cures for some of the worse diseases we could figure it out. But then you’ve removed a measure of privacy. Why does everybody need to know what everybody else owns? Then comes the difficulty in tabulating this data. The rich will pay someone to do it. The rest of us will spend even more time each year figuring out everything we own vs got rid of that year.
Progressive taxes are a failure. Millions of words are in the current tax code and it still failed. Why add more words? Flat tax, no deductions, pull it at the income source. QED.
OR, we can keep futzing around trying to implement a “fair” tax code, only to find out in the end it’s impossible
I don't think such a system of accounts would need to be publically accessible. It could work similarly to income taxes - where the public is able to look at robust aggregate data, the IRS is able to collect taxes as necessary, and central banks are able to make good monetary policy based on real data.
> The rest of us will spend even more time each year figuring out everything we own vs got rid of that year.
For the vast majority of wealth that the vast majority of people own (property and financial assets), nothing would be required because (as I mentioned above) there already exist reporting mechanisms for those types of assets.
> Progressive taxes are a failure. Millions of words are in the current tax code and it still failed.
Why do you think progressive taxes are a failure? Taxes used to be much more progressive during a period of much higher growth (1950-1980). Over the last 40 years we've gradually made the tax system more regressive by lowering rates and inserting more and more loopholes (which primarily benefit the wealthy)
OK, what will this do? Nothing.
> For the vast majority of wealth that the vast majority of people own (property and financial assets), nothing would be required because (as I mentioned above) there already exist reporting mechanisms for those types of assets.
Again, it sounds like you’ve changed nothing.
> Why do you think progressive taxes are a failure? Taxes used to be much more progressive during a period of much higher growth (1950-1980). Over the last 40 years we've gradually made the tax system more regressive by lowering rates and inserting more and more loopholes (which primarily benefit the wealthy)
For a few reasons, including the left constantly saying they’ve failed and they don’t have enough money. Another reason is income tax was originally meant for the wealthy, then inflation caught up. With an inflationary currency taxes implemented for the rich only will eventually apply to all, as income tax does today but didn’t before. Not to mention the massive overhead to process all of this data, we literally picked the most complicated way to do this.
It will do several things. First of all, having robust publicly available aggregate data will spur better debate about the equitable distribution of wealth. Second, it will allow the IRS to easily collect wealth taxes should congress authorize those. Third, it will enable Central Banks to make better decisions - right now we're flying mostly blind, so to speak.
> For a few reasons, including the left constantly saying they’ve failed and they don’t have enough money.
I don't think "the left" is saying that income taxes have failed. I think "the left" is saying that income taxes are no longer as progressive as they once were for a number of reasons: (1) top tax rates are much lower than they once were; (2) income and capital gains are taxed differently; the low (and flat) rate of capital gains taxes mean that the wealthy pay effectively lower tax rates; (3) the huge number of loopholes introduced into the tax code predominantly help the wealthy and make the overall income tax regime more regressive than it would otherwise be.
I think the left also argues that income isn't the most accurate measure of an individual's capacity to pay taxes.
> Another reason is income tax was originally meant for the wealthy.
This is simply not true. Income taxes were introduced by most developed countries in the first half of the 20th century as (1) a check on inequality; (2) a reasonable way to expand the tax receipts of the federal government from something like 10% of national income to the 40+% of national income that countries require in order to invest in anything but purely regalian state functions. It has little to do with inflation, and tax brackets are constantly adjusted for inflation in every country that has implemented one. On the other hand, income taxes are progressive so by design they hit the wealthy harder (and always have done).
> Not to mention the massive overhead to process all of this data, we literally picked the most complicated way to do this.
The IRS budget is very small.
That point aside, progressive taxes are meant to tax people according to their ability to pay. A flat tax can never accomplish that. Most progressive taxes fall under three categories: wealth taxes, inheritance taxes, and income taxes. You need to collect a certain amount of data for all of them.
> I don't think such a system of accounts would need to be publically accessible.
Which one is it? Public or not?
> I don't think "the left" is saying that income taxes have failed. I think "the left" is saying that income taxes are no longer as progressive as they once were for a number of reasons
Yes, which I alluded to. Now tell me, when will this end? As I said, we have an inflationary currency, so of course todays taxes will not be enough in the future. Which is why this system is a joke to me. Why are you surprised the taxes are not enough anymore?
> This is simply not true. Income taxes were introduced by most developed countries in the first half of the 20th century as (1) a check on inequality; (2) a reasonable way to expand the tax receipts of the federal government from something like 10% of national income to the 40+% of national income that countries require in order to invest in anything but purely regalian state functions. It has little to do with inflation, and tax brackets are constantly adjusted for inflation in every country that has implemented one. On the other hand, income taxes are progressive so by design they hit the wealthy harder (and always have done).
https://en.wikipedia.org/wiki/Legal_history_of_income_tax_in...
The first income tax applied to those making more than $600/yr, which means the poor didn't pay. Today, the poor still pays, as that limit was never updated to the new "wealthy" level. Also because the left wanted a larger taxable base, for more $$$$.
Please avoid "other countries" as we're talking about the US and I have no clue or care about other countries tax codes or history.
> That point aside, progressive taxes are meant to tax people according to their ability to pay. A flat tax can never accomplish that.
How so? If you tax everybody at the same low rate, say 15%, then every can pay? Whatever the minimum bracket is in the current system, use that. This will result in less tax revenue, which is why the left hates this system.
Another way to put all of this, if you want Obamacare, lets open up those medical records to the public so we can decide if:
a) we can afford you being on it
b) if your conditions are correctable
The aggregate data would be public and the underlying data points would not be. Just in the same way it's possible to have a robust discussion of income equality but I can't look up how much money my neighbor earns.
> Yes, which I alluded to. Now tell me, when will this end? As I said, we have an inflationary currency, so of course todays taxes will not be enough in the future. Which is why this system is a joke to me. Why are you surprised the taxes are not enough anymore?
No, this is not true. Income tax brackets are updated every year, and always have been, to account for inflation.
> The first income tax applied to those making more than $600/yr, which means the poor didn't pay. Today, the poor still pays, as that limit was never updated to the new "wealthy" level. Also because the left wanted a larger taxable base, for more $$$$.
The 19th-century income tax only lasted a few years, was not particularly progressive, raised very little revenue, and generally bears little to no resemblance to our current income tax. The income tax we have today dates to the early 20th century.
> Please avoid "other countries" as we're talking about the US and I have no clue or care about other countries tax codes or history.
But we should care about other countries because their experiences can inform ours.
> How so? If you tax everybody at the same low rate, say 15%, then every can pay? Whatever the minimum bracket is in the current system, use that. This will result in less tax revenue, which is why the left hates this system.
If you want to construct a modern state, you need progressive taxation to raise the 40-70% of national income a year in tax revenue (all "developed" modern states do this. Places like India and South Africa don't, which explains a lot...). If you believe we should go back to a 19th-century state which collects low taxes and does little redistribution, (1) inequality would balloon; and (2) I've got bad news for you, because most people in the United States support significantly more progressive taxation. (Not to mention that the United States would quickly fall behind the rest of the world due to lack of investment in education, which is one of the primary drivers of productivity growth.)
So now leaves the question, what does this report look like?
> Just in the same way it's possible to have a robust discussion of income equality but I can't look up how much money my neighbor earns.
Who's having these discussions? Certainly not the entirety of the political landscape is involved. This is a leftist idea, so perhaps the people on the left are having a robust discussion about wages, but the people on the right and some of the moderates (like myself) are tired of people saying they don't make enough (being self made from a poor family myself). Your idea here is yet another extension of this. You want to know what people make and own so you can determine how much tax they should pay, and if they're paying enough. I can short circuit this for you. We all know the left wants more taxes, the right wants less, and the majority of the moderates are siding with the right right now. We can safely avoid this massive headache and know the outcome desired by all parties involved.
> No, this is not true. Income tax brackets are updated every year, and always have been, to account for inflation.
OK you missed this one completely so I'll walk you through it a bit more. The value represented by the currency never changes. However the representation of that value does change over time and with an inflationary currency it keeps increasing. So the reason the the tax brackets and taxes are increased or updated, is because they need more money to get the same value from taxes as the previous year. With the left wanting to implement full on socialism, this will never end and we will go broke as a nation. Or put more simply, when 100% tax is implemented, and we need more, what happens then?
> The 19th-century income tax only lasted a few years, was not particularly progressive, raised very little revenue, and generally bears little to no resemblance to our current income tax. The income tax we have today dates to the early 20th century.
OK?
> But we should care about other countries because their experiences can inform ours.
No.
> If you want to construct a modern state, you need progressive taxation to raise the 40-70% of national income a year in tax revenue (all "developed" modern states do this. Places like India and South Africa don't, which explains a lot...). If you believe we should go back to a 19th-century state which collects low taxes and does little redistribution, (1) inequality would balloon; and (2) I've got bad news for you, because most people in the United States support significantly more progressive taxation. (Not to mention that the United States would quickly fall behind the rest of the world due to lack of investment in education, which is one of the primary drivers of productivity growth.)
So how did the US become the greatest nation prior to high taxation? How come high taxes was literally the trigger that started the rebellion? Some people have an idea that the only way to a prosperous nation is via socialism, and to those people I'd say they're brainwashed as the schools in the US have been doing for about 4 decades now.
My point remains, if we continue on this path, and seek to justify further taxes we will ultimately end up with 100% income tax. And that's really the point of all of this, to implement socialism.
You can slice and dice the data how you like. Again, exactly how we currently do it with income data.
> Who's having these discussions? Certainly not the entirety of the political landscape is involved.
The entire political landscape is involved, as evidenced by your comment that you want lower taxes.
> You want to know what people make and own so you can determine how much tax they should pay, and if they're paying enough.
This is literally the goal of progressive taxation.
> We all know the left wants more taxes, the right wants less, and the majority of the moderates are siding with the right right now.
Polls show overwhelming support for increasing taxes on the wealthy.
> OK you missed this one completely so I'll walk you through it a bit more.
$1 doesn't have any inherent value by itself. The value of a dollar is determined by what you can exchange it for. $1 in 1921 was significantly more valuable than $1 in 2021 - you could buy a lot more with it. This is called inflation. As long as inflation remains relatively low and predictable, it doesn't really matter in the abstract whether something costs $1 or $10 or $100 (if inflation rises quickly, that's another story of course!) There exists a metric called the Consumer Price Index which measures this inflation, and therefore the value of a dollar across time. Income tax bracket cutoffs aren't increased over time in order to raise more revenue. They are increased in order to raise the same amount of revenue after adjusting for inflation. But again, this doesn't mean anything, because inflation theoretically increases the price of everything - wages, prices, etc.
> Or put more simply, when 100% tax is implemented, and we need more, what happens then?
The United States had a top marginal income tax rate of 80-90% for most of the period 1950-1980. The United States economy grew much faster during this period than the period 1980-present, when top marginal tax rates were much lower. The point isn't to implement a 100% income tax. It's to make the tax system more progressive, which enables further investments in education, research, and health care, which fuels growth.
> So how did the US become the greatest nation prior to high taxation?
By most economic measures, the United States wasn't the strongest country in the world until the first half of the twentieth century. Some of the reasons for that include lower levels of inequality with respect to education in the late 19th century compared to most European nations; the earlier implementation of progressive income taxes compared to those nations; greater investments in education compared to France and Germany (and especially the UK) that led to higher per capita productivity; not suffering as much economic damage from the two World Wars; etc.
> How come high taxes was literally the trigger that started the rebellion?
The revolution had nothing to do with high taxes (taxes were very low, in fact - see https://taxfoundation.org/taxation-representation-american-r...). It had to do with unfair taxation. And that's exactly what this whole argument is about: the wealthy pay unfairly low taxes because of tax havens and an inability to properly tax wealth.
For free markets to work, we need the following:
-Bankruptcy without bailouts to clear dead wood.
-Abolish patents as these simply limit free market competition and are a ploy to try to claim ownership on something that usually is one tiny fragment of human knowledge.
-Public tax records for everyone. Sunlight is the best disinfectant (and the best way to allocate resources)!
-Wealth tax instead of income tax.
I would also..
- allow government to compete on the free market.
- allow government to force-purchase static businesses that are profitable but not innovating.
- require government to monitor such port folio and privatize where innovation is failing. Privatization of this kind should not be rushed and aim to get good value for the assets.
- print money against the new government assets minus earnings from privatization
So then we should disallow government from regulating the market? There is a conflict of interest in your conjecture.
I and many other people have a laundry list of skills that I could offer to others only if I fill out piles of paper work.
If little jimmy wants to wash 1 car he needs to register a business and get the business bank account?
If big Joe has 100 car washes and he is earning a stable income without expanding or innovating to much government could make a bid on it and offer him a job.
If say the US gov wants to force-purchase the google search engine it should pay handsomely for it. Say 1800 billion. Alphabet would do just fine bidding on the advertisement slots and selling them to their customers. (Such a large purchase should probably involve a referendum)
It is our government. If we want it to sell beer in town hall it should be up to us. If you and many others are against it it obviously shouldn't happen.
So why call it free market?
"Profits for the taxpayer" - did you get a penny of the "profits"? The only people who profited were the executives of the bailed out companies - who deserved to lose their jobs, not double their wealth.
Can you explain how they were rekless?
If i go to cassino and bet my life saving on black that's rekless. If I go to cassino and bet your life savings then 50% of times I am genius investor, or 50% of times i am really really sorry for your loss.
The problem is that those corporations are playing a game they cannot loose. Its only logical for them to push risk (therefore profits) more and more. They themselves created 'too big to fail' term.
I am not trying to make excuses for them, they are the people who captured regulatory institutions, and de-facto are self regulating - and in practice we all know where that leads. They are responsible for what happened and is happening.
Think this one through, what’s the incentive to invent or make a thing of there’s no protection? Because someone wants to?
That would do wonders for businesses to simplify the tax schemes and really moves the taxation portion to the individuals.
I’m sure like any tax reform this has edge cases and stuff I know I haven’t considered but wouldn’t the upside be taxation happens more uniformly as a result?
- use of public highways (reimburse in proportion to wear-and-tear, etc).
- use of public regulatory agencies like the FCC and FAA (to permit broadcast spectrum and airspace to be useful resources without everyone grabbing all of it all at once).
- very expensive use of US military to enforce international law, or to protect assets in foreign countries.
- use of publicly funded education to train their workforce.
I could probably go on for pages and pages but these are probably the big ones we spend the most money on.
I think a few months of this system and most corporations would be BEGGING to go back to simple income tax where they can game the system and scam their way out of paying what they owe.
Just something to keep in mind.
Why would we need to know who owns what in order to have a free market?
1. Establish profitable company in your home country.
2. Establish 2nd company in a tax haven country.
3. Give 2nd company some kind of ownership, and then pay rental fees, licensing fees, or simply set up a high interest loan that the 2nd company loaned the first.
4. Once you set up a way to make it look like you owe the 2nd company tons of money, now your 1st company no longer is "profitable" and actually in debt losing money, which means it doesn't need to pay taxes on the massive profit it's making.
While I believe it's legal it hinges on bad ethical practice. But many large companies do this, such as cruise ships and I think Apple.
Let's not give up without even trying.
If the same owner is behind both, and there seems to be no other reason that avoiding taxes, guilty.
If the court can prove that they did not handle with the intent of the law, it can still be decided that this is fraud. In a common law system this is not possible.
You can obfuscate fraud. But don't try that post-modern horseshit "what is being, man" on us.
When licensing costs are paid to a shell company with 3 employees in a country that is neither the place where the HQ are or where the company originates from, that's fictive.
It's like having a very small company with only a few people. There won't be any HR because that kind of overhead isn't something you can afford or make use of. So you work 'for the boss' and if you need something your boss is also the person who makes the decisions. But when the company gets bigger, you now get HR between you and the boss, and suddenly you are insulated. You work for the company, and are beholden to HR. Every step after that is just more insulation, more min-maxing and just making things worse for the sake of scale. Usually.
In this case, it’s not shell companies, the studios actually have in-house expertise (=shooting most of the movie) while the movie mostly drives the scenario and the actors, so it’s harder to define what is illegal.
McDonalds also has a franchise system, although it’s easier to control whether the pricing offered to the franchisees is constant or proportional to benefits.
But the shady stuff is sure there, and shady. UK high end property market seems to be a Monopoly-esque money laundering machine, with the extra inconvenience of having physical real estate attached to it.
Maybe one good replacement market for NFTs.
What do you mean?
Possibly not a concern with many EU countries, but with some for sure: the legal system is also stable, doesn't change on the whims of the politicians, and appears to be genuinely un-politicised.
Since Finance heavily relies on parties promising huge contingent payments to each other, having a trustworthy and reliable arbiter is key. If I enter into an agreement where I pay upfront, and I'm guaranteed insurance-type payments for 20 years into the future, the legal apparatus is the backstop to my claims.
[0] https://platform-production.s3.amazonaws.com/therules-134-Ci...
As the document whispers, what the City of London is, is a massive financial hub, that accommodates the offices and sales arms of many tax planning companies which sell professional services in London that would design structures to tunnel profits to various Crown Dependencies.
But you would find such services in any supercity. London is simply sitting at the crossroads of multiple hubs so it facilitates a lot of what's despised — but in itself, there's no haven in town!
This is literally their entire economy lmao.
Are you sure about that?
If the EU enforces what they preach and Ireland loses its tax haven state they could lose a huge chunk of their GDP.
Company 1's directors have to do what is in the best interests of the company. If they choose to sign up to a high interest loan which will take all their profits, that isn't decision-making in the best interests of company 1. That's the point they can be put in prison.
I just don't quite understand how nobody is prosecuting them...
An action done on behalf of Company 1 which slightly hurts company 1 but provides large gains to company 2 would be illegal (unless they can argue that it was part of a larger strategy to benefit company 1).
It’s called “transfer pricing” and it’s been going on for decades: https://en.wikipedia.org/wiki/Transfer_pricing
Short of a revenue (as opposed to income) corporate tax or VAT, it’s a very tricky problem to address. Maybe an excise tax on foreign remittances to match the highest corporate bracket.
Or you just scrap corporate tax entirely because it’s a terrible idea anyway.
If you scrap corporate tax would rich people hold all their wealth in corporations so as not to pay any personal income tax?
So please order that custom yacht now, all you HN unicorns.
It only redistributes work toward what rich people want.
Investing into something actually useful would be much better.
Scenario A: yacht is bought - economy is redirected toward luxurious yacht building, people get paid to work on building a yacht
Scenario B: investment into housing - economy is redirected toward house building, people get paid to build houses
scenario A can be a good one only when this people would be unemployed and seeking a work otherwise. Or if you think that building luxurious yachts is more important than alternatives.
What a catastrophic idea. Do you want economy tuned to the tastes of the vain, wasteful, and capricious? In such economy there is no car, real estate, mobile phone, or clothes for you.
As long as creating a legal fiction is a mere matter of having someone else do paperwork, you either need to extract tax from legal fictions, or kiss a big chunk of taxable activity goodbye.
The two main tax avoidance strategies would be people running and retiring overseas just before selling, or never selling and waiting for the cost basis to be reset upon their death.
Spending would turn into various non-monetary and indirect compensations. It is going already but would get even more efficient.
It's genius, and we all go along with it because how can you hate art and imagination? It's such a fundamental side of human nature. By turning its output into pseudo-goods, we think we're moving up in the civilization scale, whereas we're just enabling a parasitical accumulation of capital.
* Set up a company in the country where you'd like to pay taxes, and give it all of your intellectual property.
* Set up subsidiaries in the countries where you don't want to pay taxes. Have them pay licensing fees to the first company for the IP, making sure to set the licensing fee high enough that the subsidiaries don't make much profit.
* Now most of your profit lives in the first country, no matter how much business you do elsewhere.
A concept invented by and for lawyers. Call it imaginary property.
If the middle ground uses a term to describe a thing, then the wings have to use it as well. Or there has to be a real push by someone spending a lot of money on advertising to recast the concept. If someone goes around at the individual level making a thing of talking about "imaginary property" they are just going to look like an isolated crank. It isn't helpful.
Tax-evasion done by money-transfers based on fictional value attributions of something. Seems exactly like "imaginary property" to me.
I agree with both of you. I think the concept has to be recast, and that's going to be a very hard thing to do. I think a lot of money and effort was spent to cast these things as "Intellectual Property" in the first place.
However, it was on HN that I first saw the term "Imaginary Property", and I've seen that more and more lately. So there's hope. If usage of the term grows exponentially, it might happen.
(Talking as someone who likes the concept of private property).
Then the owners will just get less salary but will have the corporation pay for their housing, transport food etc.
How does that help in making the system fair?
[https://www.oecd.org/tax/beps/]
Groups where the ultimate parent is responsible for roughly over 1Bn in revenue are required to submit Country By Country Reports covering all cross border transactions their details and their transfer pricing methodology, and, in many cases, the underlying documentation of those transactions (contracts, loan agreements etc.). These are digitally submitted via your local jurisdictions Tax authority and shared with all member countries. Companies as part of that group are required to lodge more detailed information at a local level on just their cross border transactions with others in the group. This allows for some level of check that information being reported is globally consistent between tax authorities, who are then able to identify and place controls on unwanted behaviours.
There's another post in this thread about changing IP law itself to disincentivize these arrangements. Seems like a good idea.
For example, in TFA it's mentioned that the Blairs bought an offshore company that owned a building in London; they really bought the building, but doing it this way allowed them to avoid property taxes in the UK that relate to ownership transfers ("stamp duty"). They could then hire out offices, and if they do that through the offshore company that "taxable income" would similarly disappear. Her Majesty's Revenues & Customs might eventually object to the arrangement, but if the offshore owners are not known, what are they going to do, bulldoze a historical central London property? Obviously not.
Seize the property and auction it off to the highest bidder. The process would be quite similar to a foreclosure. The problem the UK has is more that the stamp duty has countless loopholes. If he doesn't actually owe tax, then legally that's the end of the discussion.
I have little faith that all the loopholes in a stamp tax can be closed. It would be much easier to enforce a property tax system. Events are abstract and ephemeral, but real property is tangible and immovable.
Survey the area to assess a property tax each year. Mail the assessment to the property's address, and include a unique account number for payment. You can audit that all land in the tax jurisdiction has been assessed, and that all assessments have been paid. The only thing you really need to be careful about is what criteria you use for the assessment. Market value is relatively safe for that.
For example: councils don't actually set their council tax rates by band. They set one rate which is the Band D rate. The rates of the other bands are then set based on fixed %s from that rate and the highest English rate (H) is only 200% of the Band D rate.
The value of the lowest valued band H (based on the 1991 price levels) property relative to the highest band D is 3.6x. So right away we see that as a % of property value the typical household (D is the most common) in any given place pays more than the highest valued local properties. Of course it is also the case that band H is open-ended.
There is then the fact that these are set and collected exclusively locally. That means that some of the lowest council tax rates in the country are in some of the richest places. Westminster and Wandsworth have Band D council tax in the £800s, Blaenau Gwent is over £2000!
Well, it was meant to look like a property tax, while at the same time ensuring it would disproportionately affect the lower classes, for sure. It was a Conservative measure, after all (which Tony Blair was obviously "intensely relaxed about", since it directed money to local authorities Labour controlled, hence it was never repealed). As wikipedia reports: "the Valuation Tribunal Service [...] states that: "The tax is a mix of a property tax and a personal tax".
> They set one rate which is the Band D rate.
Yeah, and they can't even be arsed to figure out if a Band D property in 1991 is still a Band D today - the roof might have fallen off since then, but hey, who's got time to do periodic surveys? Local councils have better things to do, obviously.
Second your intuition is correct, often people do break the law at this point, it's just very hard to detect without files like this which is why the previous Panama/Paradise leaks have led to so many prosecutions and tax recovery actions. They made clear what otherwise was secret.
A common tactic is using the funds to buy property in which you then live as a tenant. In most countries (certainly in the UK) tenancy contracts are purely bilateral and non-public. There is no way for the government to know whether you are:
1) living in a property owned by a third party ownership company that you genuinely have no links to - btw many rich people do this for at least some of their homes so it's not like its an inherently suspicious activity. You can rent whole houses in central London for 10s of thousands a week.
2) living in a property owned by a company of which you are secretly the beneficial owner and paying market rent (to yourself). This may be allowed under some very carefully structured circumstances but usually not.
3) Like 2 but not actually paying rent. Definitely not allowed.
Technically they could find the difference between 2 and 3 if they audited your outgoings but they would first have to have a reason to even start doing that. It's not like you can take a tax deduction for rent, so this doesn't even show up on your taxes, they would literally have to pull your bank records to look for the expected outgoing rent. Telling the difference between (1) and (2) is impossible without the secret ownership information.
Another favourite is to use offshore accounts to buy things like jewellery, clothes, furniture, almost anything that isn't registrable property (i.e. anything other than real estate or vehicles). That is certainly illegal since you're taking a benefit which should be counted as income and taxed but good luck proving that.
The money still changes hands. Once you realize enough growth, you do a stock buyback. those stocks you issued to yourself? poof.
The magic of finance.
I still don't get the "poof" part. So we're saying C2 is paying C1 for its stock, and I imagine that revenue doesn't count as income for tax purposes since C2 now "owns" part of C1 in return. As I see it, that means C1 is effectively getting a loan from C2, putting part of itself as collateral. It can spend the loan to grow, which is nice, sure. Let's say it does that. Now you're saying C1 performs a stock buyback? Wouldn't that mean it has to pay more for the stocks (since they rose in value)? It'd have to bring that money from somewhere... but where? I mean all it can do at this point is pay back the money it got from C2, but then it's even, right? There's nothing left over after that, it's just repaying a loan as I see/understand it.
This is the hell created by multi-jurisdictional legal fictions. Short of a multi-national crackdown, being able to nail down the vagueries a bunch of well compensated international accounting firms and lawyers can get up to is unlikely at best.
If I'm understanding this correctly, there are 2 things I'm taking away from this:
1. Cyclic ownerships should be illegal.
2. The investors (i.e. the public, for a public company) are getting scammed here. But it's not because of tax avoidance, but because company valuations (and therefore share prices) are just utterly meaningless, and people are... too oblivious to this? I mean, a "growth" in valuation would (to me) be coupled to increase in the company's net assets. So if company 1 sells a lot of its product and its valuation rises... that means it's gaining assets somewhere. Either that increase in assets is due to sales revenue at home (in which case it'd be getting taxed normally) or it's the stake it has in company 2, and presumably company 2's valuation is growing. But company 2's valuation is just coupled to company 1's, so there's no logical reason for it to rise independently. If it does, and the company is getting rich that way, that just means to me that people are behaving irrationally and paying more for the same thing, and that's what's making companies richer (rather than tax avoidance)? Alternatively if you look at it as company 2 having revenue and thus company 1's stake increasing in value, wouldn't there be an eventual tax on that money before any person can realize it at home, and thus shouldn't that correct the stock price downward? Or am I completely misunderstanding something here?
Edit: I think I'm seeing one way this works: the stock price does get corrected downward, but not enough to cancel out the growth, since the offshore company did gain material assets. But then who (as in which person) is getting rich without paying taxes at home, exactly? Either C1's shareholders are selling long-term capital gains taxes (in which case the complaint is about long-term capital gains taxes) or they're doing it short-term (in which case they're still paying income-equivalent taxes). Who's avoiding taxes here?
Apple's easy to pick on, they're one of the richest companies in the world and should pay more taxes. But for companies that are less successful, it's entirely possible that the second company is actually losing money. Without an appropriately sized army to track through the 200th company (tracking transactions between two companies is simplified to make the tax evasion easy to understand. Real world tax evasion is dramatically more complicated.)
This is why I support taxes such as those that France levies on digital revenue originating within their country. I also think it makes sense to wholly eliminate corporation taxes (which are not only avoidable, but are a form of double taxation) and replace them with these revenue taxes.
[1] https://www.ato.gov.au/general/tax-and-corporate-australia/a... [2] https://www.smh.com.au/politics/federal/tech-giants-pay-reco...
DISCLAIMER: Not a tax expert
Not true for Apple of course... but an appeal to ethics won't work either, the laws need to be adapted. Business ethics itself is a funny term anyway.
When you get barely rich, like single digit millions, the banks will start to offer you "family office" services. They basically just take care of everything for you. You send them all your money and all your debts (even your phone bills and stuff), and they promise to make sure there is more at the end of the year than the start. They invest for you, they do accounting and file taxes for you. You give them limited power of attorney so you don't even see the tax forms.
If you ask how it all works, they tell you it's really complicated and you should just focus on doing whatever it is that made you rich and let them worry about managing the money for you. Sometimes they do ethical stuff, sometimes not, depending on which bank and which consultant you hire.
I'm not excusing the people who are here, just explaining how some people who you thought were good people end up in these leaks.
Regardless of if people really are completely ignorant of their own finances and financial strategy I think they are still responsible for it. If I told a judge that I wasn't paying attention to my toxic chemical collection which I kept on the front lawn next to a neighborhood park I wouldn't expect that defense to protect me from legal liability.
I wonder about this. Complexity increases fees, so it's not difficult to imagine that people are willing to offload their finances to advisors, who then use overcomplicated tax avoidance strategies to increase their slice of the pie, as well as lock their customers into their services as much as possible.
It wasn't too long ago that we had a financial crisis caused, in part, by financial products that were too complex to price or analyze for proper risk mitigation.
I also doubt these delegations are to mainstream banks. I think "special services" probably need to be engaged and there's no plausible deniability on what you're looking for when you engage them, even if you ignore the names and number of offshore accounts you run.
People who got rich through business or politics undoubtedly know what's being done on their behalf, because they couldn't have achieved their success without financial literacy.
But if you told me a champion boxer, football player or musician didn't know how their finances were organised? That could be believable.
Everyone knew before and after the rich don’t pay taxes. We don’t need more evidence, we need action.
Are these exclusive?
* We don't require additional evidence, we need action.
What the fuck is with HN these days? Quit the snide bullshit.
Not everyone reads things the same way, even if you think it's the obvious and only way to interpret something. If they did, there would be a lot less misunderstandings online.
Someone pointing out ambiguity is possibly helping you refine your point and message, so if you encounter it maybe try to read it less as someone being a pedantic asshole and instead someone helping you express your message more successfully. At a minimum it will likely help you keep a good attitude or emotional state, which is nothing to sneeze at.
There is no ambiguity, just verbal gymnastics played by those who want to comment in bad conscience as if they have somehow furthered the conversation.
Or is it? My reaction this time was “meh, this again”. I’m more and more desensitised. If anything, I found it demoralising.
So maybe it is actually counterproductive.
It’s more that without someone taking it to the next step, it is in vain. It feels like yet-another report in what the world will be like if we don’t stop CO2 emissions. It will be very bad. There are so many reports like that, I dont bother reading them anymore. More desertification. More hurricanes. Hotter summers, colder winters. Droughts and floods, death and disease.
Meanwhile CO2 emissions are still increasing YoY.
Reminds of this explanation of the soviet era 'hypernormalization':
"The word hypernormalization was coined by Alexei Yurchak, a professor of anthropology who was born in Leningrad and later went to teach in the United States. He introduced the word in his book Everything Was Forever, Until It Was No More: The Last Soviet Generation (2006), which describes paradoxes of Soviet life during the 1970s and 1980s. He says that everyone in the Soviet Union knew the system was failing, but no one could imagine an alternative to the status quo, and politicians and citizens alike were resigned to maintaining the pretense of a functioning society. Over time, this delusion became a self-fulfilling prophecy and the fakeness was accepted by everyone as real, an effect that Yurchak termed hypernormalisation."[0]
Immoral? Debatable. But the lack of action is because of the lack of a crime.
The action should be to propose new legislation that changes what taxes are collected, where, and when.
The main crimes exposed in these are money laundering rather than tax evasion.
What is the argument that what they're doing is moral? How is anything about tax avoidance ethical?
This is a bit odd for two reasons.
1. Taking steps to minimize your taxes is neither ethical or unethical, it's just basic common sense. It's like choosing to buy the cheaper apple when you go to the store. The whole reason why we have sin taxes and tax breaks is because legislators believe that it influences behavior and so they create this byzantine tax code in order to try to manage behavior. I guess whether you believe contributing to your 401K or claiming the mortgage interest deduction is immoral depends on your ethical code. To me, this is a category error -- if you think financial management can either increase or decrease your morality then you have a very decadent (and broken) moral code.
One can argue that such a complex tax code is bad policy, because it results in such a complex system that you need teams of lawyers to really understand it and take advantage of it, meaning that for ordinary people it's not worth it and the economy as a whole wastes far too much on tax professionals. But that never seems to stop anyone from clamoring for tax breaks for their pet cause.
2. The whole point of globalism as an enterprise is to support (and encourage) cross border capital flows. It is a system intended to allow foreigners purchasing up capital in the home country and home citizens doing the same overseas. These cross border capital flows finance trade deficits (without them, there would be no trade deficits).
But different nations have very different tax codes so this encourages a race to the bottom. Much like outsourcing labor. This race to the bottom effect is not some secret that requires an expose, it is an intended feature of the system. Why I am shocked, shocked, that americans would invest their money in the jurisdiction that yields the greatest tax-adjusted return. Just shocked!
This is why many people (such as myself) are opposed to globalism, but we are painted as silly xenophobes who don't want to eat French Brie. Well, OK, you wanted globalism -- this is globalism. And the only alternative to globalism is nationalism. Now one can make a claim that globalism as a value system is unethical and that only nationalism (or even better localism -- let each region have its own currency and borders and trade policy -- is ethical), but an individual who is stuck in a legal code that encourages and subsidizes globalism is not acting ethically or unethically when he buys a cheap TV from china, a car from Japan or sends his money to the Bahamas, as he is stuck with the tab of globalism (low interest rates, de-industrialization, political unrest, decline of solidarity, undermining of democracy, global financial crises) so he may as well enjoy the benefits -- access to the benefits of low wages in China and to the benefits of low taxes in the Bahamas. If you think one is unethical, then what about the other? And if you are being paid wages or earning returns determined by competition from the world, why not take advantage of cheap products and cheap taxes overseas? You cannot create your own private economic system just because you think the current one is a disaster.
Bottom line, if you don't like this type of tax arbitrage, then put a stop to it by discouraging (taxing) cross border capital flows. It would also put a stop to outsourcing and cheap TVs as well, and you would be instantly painted as a nationalist trade-war fighting xenophobe, but this is how you solve the problem, not by appealing to people to "buy American" or "store their wealth" in America with some faux ethical argument. Appeals to personal virtue to pay more than is needed (whether for TVs or taxes) ring pretty hollow.
FWIW, I like localism the most due to the psychological/cultural/scaling effects that it produces and hopefully, there's a minimally harmful way to get there without getting stuck in a nationalist rut.
This is a complex topic in a country where many pressure groups are fighting over policies.
In terms of immediate winners and losers, on the pro-globalism side, the winners are:
* investors that benefit from the race to the bottom
* the professional and managerial classes whose salaries rise as companies become more centers of management/coordinate/design with productive labor formed elsewhere
* service workers in select urban areas dominated by business services and consulting sectors
The losers are:
* blue collar workers
* service workers in smaller urban areas and rural areas
But in terms of long term effects, the losers are the vast majority of society, because de-industrialization creates a lot of social pathologies as we became a society with a shortage of meaningful work, the decline in solidarity hurts the nation's ability to coordinate to solve problems and deliver services efficiently, and the global supply chains are fragile, with many points of failure.
But the larger point is that the proponents of globalism are those who espouse liberalism, from the university professor who believes humans are isolated machines that maximize lifetime utility to those committing street violence against "fascists" -- that is, anyone who believes in national solidarity. This array is effectively the shock troops of globalism. It is one large movement fundamentally rooted in the idea that the purpose of life is to enjoy yourself as much as possible before you shuffle off to the grave, rather than being a part of a chain of being with your ancestors and grandchildren, in which the purpose of life includes making sacrifices for your group in order to contribute to your group's overall long term success.
Thus a society gripped by liberalism is one in which everyone defects. Consumers don't buy american made goods out of a commitment to the wellbeing of their society. Companies don't hire american workers out of a commitment to their fellow countrymen's wellbeing. Taxpayers do whatever they can to offshore wealth. It's everyone for themselves, and those types of societies just don't last very long. This is why we see liberal democracies in Western Europe and North America being rapidly eclipsed and outcompeted by well organized nationalistic societies in Asia.
It is for these reasons that societies have historically put up boundaries and exacted punishment on defectors and adopted institutions to inculcate loyalty and patriotism. When those borders are knocked down and the institutions subverted, don't be surprised when you are stabbed in the back by your countryman who doesn't give a sh*t that you and he are citizens of the same country.
> And it looks like globalism does help increase that if the goods your country produces are uniquely positioned in some way
You are talking about gains from trade. The issue is not gains from trade but trade deficits -- e.g. one way trade. These large Global capital inflows are not used to finance trade, they are used to finance trade deficits.
Who cares about the "spirit" of the law if the law doesn't work?
Any half wit can intend to create a law that functions in a certain way (has a certain "spirit"), but who cares if it doesn't do what it's supposed to do?
Frankly, I don't know of much else like that leak in history in terms of its global impact.
The top 10% of taxpayers pay 70% of the tax. Focusing on Tony Blair's 300k Stamp Duty avoidance is a penny-rich, pound-poor move.
In history books, you get a sense sometimes that there were eras in which stuff like this sent people into the streets in rages. In which governments were voted out or overthrown, in which meaningful legislative responses were made. Or, you know, riots.
But I look around after reading those books and wonder what makes us so different. It's weird to live in this era. I read a Guardian article like this and look at the staggering sums, this entire "shadow financial system" devoted solely to one notion: I'm going to take as much as I can, in whatever way that I can, regardless of legality, and I'm going to give nothing back because I sincerely don't believe I owe anything back -- oh, and I'm going to keep it all a secret.
And I look around and not only don't see any riots; I sometimes get the feeling that people are actually envious, sometimes even respectful of the ingenuity it takes to manufacture these schemes. It's tough.
The only silver lining I can think of is what all the secrecy says: we're not just doing this in the open because we're still afraid we'll end up like the Romanovs if too many of you get angry. I think that while they're still afraid, there's still some hope.
EDIT: Reading some replies. It's weird to have to say this to such a smart crowd, but I'm not advocating riots as such; I'm advocating a substantive response. Of course riots are "bad" in some sense, but my observation is really about the odd contrast between the huge size of the "stimulus" (theft of wealth, much of it yours, on a staggering scale) and the tiny size of the "response" (newspaper articles and web forum discussions), especially when contrasted with other historical periods. So while I wouldn't "want a riot", seeing one would make me go "well, that makes sense".
What riots did you participate in? If none, are you among the ones you assume to be envious?
I like the photo of Ilham Aliyev and his wife though. He looks like a villain from James Bond movie.
YMMV, but I'm 2L deep on local beer and it's not making me trust The Man yet.
If it isn't the former, the plan is working technically.
Bread and circuses was politicians getting into debt or Emperors dilapidating the treasury to buy the support of the masses, I don’t think that’s really the case here.
It’s more that if people are prosperous and safe they stop caring enough
I would like you to think about this paragraph.
Now think about UBI. Now think about Modern Monetary Theory.
I see an attempt at distinction without a difference.
On a sidenote, this is why I always preferred Brave New World over 1984. Easier to keep the population in control by keeping them satisfied.
This is the true power of the media. It isn't whatever lies or truths they may tell, though those are impactful in their own way... it is the way they decide what we think about at all. The true power of the media is to inflate some tiny incident that happened to one person to a national-scale, multi-week crisis... and to be able to take national-scale, multi-decade crises and bury them to the point that it's right down there with "conspiracy theories" to think about them.
If you pay attention, you can see this sometimes in action. They'll push a story expecting a certain reaction, but if they don't get the reaction they expect, poof, it's gone. There's always a huge pool of stories to draw from, far larger than they need to send any message they want without having to necessarily lie at any point. They just have to control the spotlight of attention to get the results they want.
Sometimes HN denizens talk about breaking out of the filter bubble. This might be a better way of thinking about it... instead think of it as breaking away from the attention spotlight being pushed on you by the media. Almost the entire world is taking place outside that spotlight.
They have us divided and fighting each other so we're too busy to see the real cause of our discontent.
So much truth has been censored and replaced with lies in the last 2 years. But no one is calling them on it? There isn't even an apology or a retraction.
It's not news.
It's propaganda.
When it’s not opinion pieces they are usually promoting someone’s book or hyping up some Lifetime special.
Even before reporting really started circling the drain I always noted how wrong the news got technology stories, and I wondered if all the other topics were just as off.
What makes further consequences happen? Powerful people taking an interest. The media is the fourth estate, but only insofar as their actions trigger reactions in the first-through-third estates. For a news story to “continue to happen”, it needs a patron in a position of power to actually care about what was reported, and act in response, in a media-visible way. News coverage is, and always has been, a feedback loop between journalists and the public figures they cover.
Which implies that if something is a “taken as a given” practice among pretty much everyone with power, then reporting on it won’t get any powerful patron riled up, and so won’t get anything done to feed back into the news cycle.
Democracy continues to function, separately from all this; voters read the news, get angry, and pressure their congressman, who then pushes for change in the house, causing ripples in the bureaucracy. But none of that is able to be framed in an incendiary “continuing coverage” format, because there is no heroic narrative to democracy, only the snowball effect of small actions — so the regular news media doesn’t attach to it at all, so it seems to just drop off the face of the Earth.
But it’s still happening; it’s just happening in a way you can only perceive with “I watch C-SPAN” glasses on.
I find this complacency we have bizarre because the average working poor person seems pretty miserable looking at their phone and eating fast food. The Panama Papers could offer clues for why they work so hard and never seem to have a single penny at the end of each month after the bills are paid. But the Big Mac and the Juul Pod and their Facebook feed makes them too tired right now to care…there’s a new show on Netflix a friend told them about and maybe that will make them happy for a few hours.
Snowden changed the discourse, but it wasn't a catalyst for change, unfortunately. I guess we're just not ready to change. When we are, maybe we'll look back at these events as early precursors that showed stress in the system before it snapped. Or we'll view them like we do the Luddites: trying to reverse the inevitable course of history.
In my experience seeing a black neighborhood errupt in protests after seeing another black man killed - while I personally think that black man in particular was not innocent - that neighborhood was ready to riot. The police in that area were brutal, abusive, and racist. The people in that area were subject to segregation that saw them receive worse education and job opportunities than the white neighborhoods. The government was unresponsive to their needs and, on the contrary, viewed them as a nuisance bringing down property values, and hurting their stats on standardized test scores. Then a black man was killed and they said they'd had enough of this, and then everyone says "the went to the streets because that man was killed" - which is both true and irrelevant. A small breeze will knock down a house of cards, but the fact that the house is made of cards is more important than the fact that the breeze caused it to collapse.
Lots of crooks in power, sure, but if you know history that's how it's always been. How human societies typically work like that, and maybe they have to.
The numbers look big, but in terms of dollars per citizen, how much money are we really talking about?
I'm not sure what you intended with this, but it's a really good empirical question. Since we have no reason to believe any one of these "leaks" is exhaustive, we don't ever know the true denominator, so we can't estimate dollars-per-citizen with any confidence.
But we do know the realities of being poor. So if the true dollars-per-citizen-per-year figure turns out to be as little as, say a thousand dollars, I think a lot of people would be justified in eyeing their pitchforks. Hell, an extra fifty dollars a month in the developed world would make a massive difference for millions who struggle.
Personally, I believe that the true number is very plausibly in this range.
It's an honest question, and I am genuinely curious of the numbers in these revelations. How much bigger the real number is we can only guess.
> Hell, an extra fifty dollars a month in the developed world would make a massive difference for millions who struggle.
Sure, but that assumes such a system is possible, and that it is desirable. I'm doubtful on both.
I recently watched this video[0] that shows how public perception over cars has been influenced over many many years into what we now have (and we now perceive as normal). I feel like it's somewhat related.
They mention King Abdullah II of Jordan, but how likely do you think it is that there could or would be any consequences for him? It seems highly unlikely.
Also, they mention that Putin is not named directly in these papers, but we can be pretty certain that he's been involved in all sorts of financial skullduggery. Yes, they say that some of his close associates are mentioned, but even if it can be tied directly to Putin with 100% certainty it would have little to no effect in removing him from power as his power over Russia at this point is too strong for such allegations to have any effect.
And Who benefits from making Zelinskiy look bad?
EDIT: Maybe we're not more shocked because we suspect that if we knew the whole story it would actually be much worse than this?
Very simple, USA orders global sanctions on the guy, and we will all see what next stupid thing it will provoke him into.
All these Magnitsky acts are silly, and useless when they keep going against accessories to the criminal regime, while not going against that criminal regime itself, and especially the chief motherfucker in charge.
The few times USA has ever attempted to sanction heads of states personally were few African states, Norko, and Philippines
yes that's absolutely damning. typical Putin /s
can you share more of your conclusions based on absence of evidence?
Obviously I'd prefer it if they obeyed the laws and faced justice, but that seems not to be the world we live in. I'm not going to risk my comfortable life rebelling against them to make it more likely either. Instead, maybe the right move is to just keep pushing the quality bar higher.
Since birth they are made to believe that the miraculous democratic republic they live in gives them agency, and that the reason they actually don't have agency is because their fellow citizens are stupid and can't vote for the right things.
The result is a feeling of justified helplessness. There's no feeling of outrage at the greedy tyrannical ruling class, because after all either you or your neighors "chose" them.
And if taxation laws are unjust, it's your neighbors' fault. They voted for red while blue would obviously have your best interests in mind. Nevermind the fact that both red and blue are part of the same wealth and social class, who benefit from the same laws.
Not to mention it prevents political violence at the expense of causing extreme violence in foreign nations. As long as its not us, right?
I would say with this that unfortunately democracy = capitalism in the world we live in. And its really capitalism that causes those things, rather than democracy itself. I dont want to give the impression I hate democracy as an idea, just how we've implemented it.
I find it difficult to agree with this sentiment. Social mobility might have decreased in the last four decades. But in the longer perspective there has never been a more egalitarian and meritocratic social structure than in our time. And that structure exists mainly in the democratic states of the world.
people who say this are actually not saying the literal meaning of that sentence. I believe they mean that they observe ever increasing levels of wealth amongst some people, but not themselves or their friends/peers. Therefore, they equate the fact that they are not at the same relative level of wealth as some wealthy people, and thus, conclude that it must be that poverty is increasing.
And there are democracies out there today that aren't capitalist, in the true meaning of that word:
https://en.wikipedia.org/wiki/Rebel_Zapatista_Autonomous_Mun...
https://pdfhost.io/v/Hrr2IgtuS_SocialContractoftheDemocratic...
Is there any evidence that there is any system of government that does so less?
Calling our democratic Republics simply "Democracy" is another cool helplessness-inducing newspeak trick. That language implicitly positions the system on the extreme-end of citizen-agency, so logically everything else must be more authoritarian.
In fact, assuming you live in one of these so-called "Democracies", think about how much your country's laws and policies impact you, and then think how much effort and input you provide to deciding those laws and policies. The ratio is most likely ridiculous.
We always say "direct democracy doesn't work because people don't care about every issue", but there's an universe of possibilities between Democratic Republic ("chose between red and blue every five years") and simplistic direct democracy ("country-wide majority vote on every government decision").
Do you have any suggestions on how to improve the system?
1. Automatic jail time for anyone, who held public office after they leave on the assumption that must have done something. Side benefit: prisons would improve drastically.
2. Absolutely random election for every office in the land. This should spice things up. Side benefit: we would quickly find out what exactly they higher ups want to do about overpopulation of the planet.
3. Term limits for congress. It will never happen, but it is nice to dream.
I think overall I would prefer more short-term legislative experiments—the impression I get is that people (especially at the US federal level) try to write law or create programs ostensibly for the long-term, and I'm curious what a short-term experiment with reflection and re-evaluation would look like. E.g., trying sortition for one two elections, or a law that establishes term limits but has an expiration date.
https://en.wikipedia.org/wiki/Politics_of_Switzerland#Direct...
"The discourse" is increasingly unglued from any kind of ground truths. The pandemic has just made that far more obvious. It's just people refighting the same wars.
> Or, you know, riots.
The US had a huge number of riots over the last year, and violent (but as yet unarmed) protestors stormed the federal and some state capitols. (There was also armed but not violent protest, https://www.bbc.co.uk/news/world-us-canada-52496514) Several cities briefly had "autonomous zones" and at least one police station burned down.
In fact, it's precisely during this time that the Feds were hitting the printing press the hardest, directly increasing wealth inequality and thus, the US Black population being on average way poorer[1] and poverty indirectly being the number one cause of death, lowering US Black citizens' life expectancy more than US White citizens.
And yet 0 riots or public outcry about that, while countless more Black people will die because of these policies than the few who die of police brutality.
[1]: https://www.brookings.edu/blog/up-front/2020/12/08/the-black...
> In 2019 the median white household held $188,200 in wealth—7.8 times that of the typical Black household ($24,100)
I used to think this. But now I think: maybe the ‘dent’ I’ve been looking for is essentially just excitement and hype, which isn’t change. The narrative that change happens through the mass public getting angry, forcing politicians to respond, is overblown at best. I think the boring truth is that nearly all progress in this area (and there is progress) happens through countless bureaucrats diligently working for years on court cases and regulation changes to make it harder for people to get away with this stuff. For such bureaucrats, a leak like this is going to be relevant and valuable for years, long after the media has moved on. The people implicated in the leak didn’t want the leak to happen, and there’s a reason. Sure, most are probably too powerful to get prosecuted and put in jail, but it does curb their options for future shenanigans, and they will probably lose some money. Sanctions do work. I think it’s probably always been this way too – the exciting, romantic parts of history (marches, revolutions) are the exception, we just pay more attention to them.
At the same time, as regulation gets more complex, it creates new ways to be exploited. The same way more source code means more possibilities for bugs. The bureaucrats play a catch-up game and they are always at a disadvantage.
It used to work. As recent as a couple decades ago at least. The Arab spring that swept Middle East and parts of North Africa in 2010s comes to mind.
Protesting and going to the streets, depending on where you are in this world, feels more like a dying art today rather than the stuff of revolution we've associated them with in the past. Feels wrong just typing that.
Maybe we've just become insensitive to it all and do not have the will to fight governments.
Maybe our collective thoughts and ideas are more homogenous than ever before.
Should we hope this continues? Probably. If the situation deteriorates to the point that revolution becomes palatable the result would be mass human suffering.
The WTO always brings a decent sized chunk of protest when it comes - but the biggest protest in my memory is Occupy Wall Street which ended up being incredibly peaceful and polite and thus absolutely ignored by the media. The largest one before that was probably the '92 LA Riots which I was born just late enough to not notice.
Most of the more media grabbing protests of my life time have actually been sports related - the Red Sox winning and the Stanley Cup Riot. I don't know how true your statement really is.
Which country has been better off after Arab spring?
A nation-wide strike, now that would get attention.
Because that kind of show is how the ideas it promotes are normalized, which is the foundation on which other action is built.
Yes.
> It seems that, in the developed world at least, ideas are promoted and normalized via mass media and/or the Internet
Sure, and mass protests are how marginalized groups leverage the selection biases of the mass media for their message.
The thing that's changed is that the people in power are no longer taking the implicit threat seriously. The dog is snarling at them, yet somehow, it's unthinkable that they're about to be bitten.
[0] https://en.wikipedia.org/wiki/15_February_2003_anti-war_prot...
I don't think we have - the outrage machine seems to be growing. Wasn't there widespread violent protests for most of the year leading up to the election last year?
The problem is for the most part people's outrage and hatred has been redirected toward their fellow citizen and away from the ruling class, which is clearly not a coincidence.
I guess what I'm less sure about is the inevitability that you're painting it with. Seems a bit "whiggish" [1], in my reading, if for no other reason than seeing brighter days on this front in the past than in the present and immediate future.
Wikipedia has an article on outcomes from the 2016 Panama Papers [1]. Lots of boring things.
I see what you mean about whiggish (good word). But well, I do think it is more or less inevitable that there will be outcomes that certain people don’t want, otherwise they wouldn’t have been trying to hide their finances from regulators. And I would speculate those outcomes will probably be pretty positive, if added up together, such that the journalists and whistleblowers involved in the leak should feel immensely proud. But my main point is that the extent of general public outrage over the original data leak is irrelevant to how positive the eventual outcomes will turn out to be.
In which ways do you think it was brighter on this front in the past?
[1] https://en.m.wikipedia.org/wiki/Reactions_to_the_Panama_Pape...
People have Netflix, the Internet, and video games all cheap and at the touch of a button; opioids, antidepressants, and illicit drugs are socially acceptable and easily obtained, sometimes even at a government subsidy; and almost nobody is physically starving or lacking rudimentary shelter (even the poor in America are fed, clothed, and housed to an extent almost unimaginable compared to the shattering destitution experienced in most of human history).
This was not the case in the past, when so many more people were subject to backbreaking manual farm and industrial labor, the real chance of starvation, malnutrition, or outright poisoning from unregulated industrialized food, cramped conditions in drafty, moldy buildings, grim disease, and worst of all, nothing to distract you from it all. One's free time was spent thinking about how unfair it all was, not watching TV. When people are stuck at the bottom of Maslow's pyramid, they have nothing better to do then get mad and start rioting.
But as long as the bread and circuses continue to be effective, the will to riot in the streets is gone. Who cares if a billionaire sneaks in a second yacht on the side? I can just open a bag of Doritos I bought for pennies and switch to the Kardashians. The strange thing is, would we not consider this positive progress?
And nothing happens...
Time and time again someone I the "high society " gets killed, there are a couple of marches and everything stays the same. It's as if the actual majority of the population was fine living in this shithole.
It's so depressing.
Just to add on: I also believe that this is why we see virtue signaling so strongly today. The impact of one’s actions is quite secondary, for all the reasons you mention. So the illusion of change is just another circus for the mind to pass another hour.
I still think we live in the greatest point in time in human history, but this is a super interesting and equally concerning possibility.
Many Americans are effectively wage-slaves - unable to quit their jobs, because they rely on the income and have nearly no savings.
Rent has to be paid. Food has to be bought. Car insurance, taxes, dentist appointments - you can't stop making money, because you can't stop paying money.
Moving costs an up-front investment that you don't have. Land is expensive, and even if you had the skills to build your own lodging, it has to be up to code.
Pivoting to self-employment might seem easy in the age of Uber, but the reality is that it is incredibly difficult to earn yourself a living without playing by somebody else's rules. In the past, you could decide to earn a living as a fisherman simply by fishing and selling your catch. Handy with a hammer? Supplement your income on an ad-hoc basis by helping out your neighbors.
The stress of dealing with everyday life can be so overwhelming that the only thing a person has juice left for at the end of the day is turning on the television, scrolling twitter, and eating those Doritos. And that television (and even twitter) isn't telling you any ways out of the invisible, ubiquitous cycle you're stuck in.
One theme is scarcity (and the ingenuity borne of it). People didn’t have a lot, so they needed to be clever with what they had. They worked incredibly hard, and invented/sought out tools to make their lives physically easier. They toiled for most of their lives, but they saw their known tool get easier as time went on (upgrading from jute to nylon netting, hydraulic winches instead of manual cranks, sonar instead of trial and error).
The people who worked (what seemed to me to be) the worst jobs had a common refrain: “the best thing about X is nobody tells me to do <hard thing> at <unreasonable time> in <unreasonable conditions>. I’m my own boss, make my own decisions, and it keeps me happy.” They owned all the highs, lows, and war stories of business ownership.
Also, a fun anecdote. They asked one guy “what would you tell somebody young who’s new into fishing?” He thought hard, then said “I would tell them to study hard and become a doctor or a lawyer or something, if they’re interested in money”. Made me chuckle!
Anyways, this is to say that it’s always been hard to seek out self employment or total self sufficiency. Generally, you could always trade off comfort for autonomy [1]. Nowadays, we as a society have made inhabiting that material discomfort nearly illegal, as you imply. We raised the floor of material suffering, but the emotional and psychological floor is only elastically attached to that material floor, with an elasticity coefficient that seems to vary widely from person to person. It seems to have been a monotonic transformation so far, but time will tell.
[1]: https://www.granolashotgun.com/granolashotguncom/hp5pmb0n95u...
Specifically in the USA it's even worse, since jobs are linked to healthcare.
If people are happy with the status quo, and it turns out that they were wrong about the nature of that status quo ... that still isn't necessarily a reason to do anything.
We’ve had people in the streets in rage, riots, and legislative responses to lots of things recently, though not the things that tend to animate the upper-middle class tech-libertarian crowd, which is out of touch with the day-to-day concerns of...pretty much everyone else.
Whether those responses will be meaningful is disputed in the moment and will only be clear with historical distance.
And as some in this ‘smart crowd’ will tell you, large and amoral tech corporations are a key reason we have much of the artificial wealth and technocratic elitism we enjoy and speak from.
Would our lives be any different if the king of Jordan had paid his taxes? Would the UK be better off if Blair hadn't found a way of saving a couple hundred grand off his latest real estate purchase? Etc
Also I have no shame in admitting I'd do exactly the same if I had that kind of money.
If all of those who make a couple million a year who also avoid their taxes were to pay them, yes.
Not always, but generally that only happens when enough people can’t feed their kids. We’re still too comfortable to risk it all. There’s also the issue of mass surveillance which can kill an uprising in the cradle.
[1] German only: https://de.wikipedia.org/wiki/Park_am_Gleisdreieck
I was a British Army brat and we were stationed in Rheindahlen near MG at the time. The Berlin Corridor was pretty grim. It was a long straight concrete road with barbed wire fences on both sides. At the Berlin end we parked up in a large concrete plaza and presented passports through a metal hatch. Then we were allowed into the city. Berlin in 1980. I really wish I was older and could give a better impression of the place at the time but there are probably plenty of writers who can do the same and far better. It seemed to me at the time to be the same as any other (West) German city but a bit bigger! I think we were allowed a short trip to the East side via CP Charlie.
The Berlin I visited back then had bigger fish to fry than a contentious autobahn!
When you're barely getting by, or worse, have had family members die of starvation, it's more offensive, and you have less to lose, and so more likely that you'll take out the pitch fork and hit the streets.
I think your somberness comes from an idealized, perhaps even fanciful look at the Human Condition. Personally speaking riots and even street demos against this are not what is needed here, but rather a significant amount of Human Capital into opting out of this system and creating a viable alternative.
Your pessimism is a symptom of a much bigger problem, not the source of the illness. Once you realize that you cannot reform this system you will be able to re-direct your energy toward that end and maybe find solace in the fact that we still live in the best time to be alive, if only because the amount of possibilities.
Read better history books. A bunch of people yelling into the air is not how change is effected.
Really the culprit here is the French revolution, back when things were physically rooted so if you could storm the palace and burn your debt the debt would really be gone. All the French organs of power were located in this city filled with seething people. But that is not the world we live in today. If you storm the whitehouse, you just trespassed on a famous building, you haven't captured the center of power. If you tear down a statue, you just lose popular support, you are not overthrowing anything by attacking the physical statue.
Power is not in buildings and it's not obtained by yelling.
Moreover the resentment of incredibly privileged people complaining that they are not as privileged as someone else is not how you gain popular support.
Yes, envy is still a powerful motivator, but the achillees heel of envy is that it's hard to unify a group of people who are driven by resentment. They constantly turn on each other. It's a very tricky thing, and if you are a would-be Napoleon, then shouting at birds isn't how you convert envy into a stepping stone for power.
I think this is an accurate assessment (at least for the US). One of the only logical reasons as to why we as a society allow this is that there are enough individuals that aspire to be these insanely wealthy folks that we make sure that these scenarios remain possible.
Ironically, robbing your country and hiding your cash has become the American dream. For example, if I were to say:
“Aspiring to be like Elon Musk is genuinely the most pathetic way to spend a human life imaginable.
His fortune is built on apartheid and all of the torture and death it entails. Yes, Elon Musk and his family should rightly be judged morally as being active participants in the system that tortured and murdered countless black Africans. The fact that his family (and the money that they extracted from South Africans) left South Africa as soon as segregation started to wane is indicative of this.
He isn’t some sort of hero or genius, or even supervillain. He’s just managed to become what nerds masturbate to when they picture their (nonexistent) futures.
Finally, the wealth that he holds is only his because of his staff figuring out how to avoid paying for your roads, hospitals, schools, parks, research etc. He is only rich because you are not. To want to be like Elon Musk is like wanting to be a tumor attached to a nearly-dead host.”
Here’s what will happen, because this is the internet:
People with <0.00000001% of his net worth will jump in with one of a small handful of responses:
(These are all paraphrased but you never know, some might be verbatim)
1. I bet he actually does pay fair taxes…
2. Actually, I think his family didn’t profit from apartheid because…
3. Because you’ve used emotionally charged language in this post, I’m going to treat everything written here as patently false. While my decision to ignore what you’ve said is entirely based on my emotions, it is your fault for not being nice enough to me/Elon.
4. Fuck you. You owe him respect because [insert business here] has or will save the world someday, or not. It’s up to him. And while I’m not advocating for being afraid of him, in the back of my mind I get anxious about him being displeased every time I see him criticized and the best way to assuage that anxiety is to dunk on a stranger.
5. I don’t think we should use Elon as an example here because he’s such an easy target. The fact that he has so many “haters” is, to me, proof positive that he’s a saint. In fact, since criticizing him makes you a hater and everything haters say is False (as in the Boolean value), no criticism of him is True.
6. Any combination of the above + “I am/know somebody who is a Tesla shareholder, therefore it’s good”
While it might seem that I’ve meandered away from the topic at hand, I haven’t. The weird impulse to defend the uber-wealthy is precisely why we allow billionaires to run amok.
However i appreciate his zeal in creating an impact in a sector that would had otherwise not happened so fast. Not saying that he is solely responsible and deserves all the credit, however he understood how the system works and focused on doing some change.
Even people higher up in the food chain do not necessarily have all the power to effect change within a short span.
> But I look around after reading those books and wonder what makes us so different.
Quality of life improvements. Basically, ye olde historical riots yielded immediate and noticeable improvements for the people: rollbacks of food prices (there were a couple of riots over beer price hikes!), shorter workdays, work-free days, workplace safety measures, the likes.
In modern days, outside of affordability of healthcare, systems are so ossified that even a violent revolution won't make much actual change. Just look at BLM - decades of peaceful and finally violent protests and yet, nothing much has materially changed as a result. So why should someone take part in a riot and risk arrest when there is no hope of stuff changing for the better?
Another big factor is decades of anti-union brainwashing. Hard to organize a mass protest when anything even remotely tied to collective organization got branded as communist/anti-patriotic and thus as "bad, avoid it" and that was indoctrinated from school age onwards.
https://www.icij.org/investigations/panama-papers/what-happe...
Portland. Minnesota. Missouri. Berkeley. There are riots, currently about social justice, but the fight for a living wage is brewing because homelessness and poverty is on the rise. People need to have less to lose, and we're gettin' there.
Directly following that event, we all got distracted with the race politics that suddenly came to the forefront.
Wrong. Someone here from a third-world and small country. Some people got prosecuted because of these leaks. I'm pretty sure some people out-there are packing their bags and heading toward an exit. Legal process is very slow but it does exist and now that everything is public, there is a high risk of being prosecuted.
But there are always "but"s.
1. This was done legally and lawyers have made sure that every step is legal.
2. These people own the political/legal system (ie: Putin).
3. These people are dead, on the run, broke, already in jail, used third-parties and hid their identity, etc...
I do think this reporting does make an actual real life difference. Though cracking down on IRA exploitation is obvious low hanging fruit and a very simple one sentence type change in law.
Not saying we should maintain the status quo but if we want "substantive change" it would be helpful to start with reality.
https://www.ntu.org/foundation/tax-page/who-pays-income-taxe...
What are billions of us going to do now? As a group any action takes significantly more effort. Protesting to have any impact needs significant organization and involve millions. And even then, what's it gonna change but show up on the media? Anything else requires significant investment of one's time into organizing something. Precious time out of the little free time we have outside of work. The system is well made to protect the powerful. Power itself needs to be more decentralized, and get back closer to the people. But that doesn't work because we have countries with millions of people competing against each other. So there's no easy solution that I can see.
Perhaps some form of online voting and more agile democracy and communication between politics and people along with further decentralization.
Still, it's disheartening.
Corruption means a politician becoming wealthy in an inappropriate way from their position of power. Even if they were to pay taxes this is still a huge negative for society. Wherhers it's the president of Azerbaijan or Nancy Pelosi, it's should rise to the level of criminal enrichment if properly investigated.
On the flip side are people who made their money legitimately and employ legal strategies available to them to minimize their tax bill. I have a hard time moralizing this because we all do it. Be it writing off donations, using tax loss harvesting, holding on to investments just long enough to not trigger capital gains taxes, etc - we all use strategies available to us to pay no more tax that we have to. I would expect nothing else from a more wealthy person. I would be totally fine if society made moves to close loopholes but I can't blame people for leveraging loopholes that exist because we should all do that.
But in any case, would your opinion change if the tax resident or provider wrote the tax law that got passed? In Mossack Fonsaco’s case that is what they did in a variety of island nations.
The first step in the right direction, then, is for people to become aware of these highly unsavory (but legal) practices. It's not going to be an easy fight. The kind of people that setup multiple shell companies to obfuscate the ownership of their assets have worked deliberately to extract wealth and game the system to a level that is unimaginable (at least for me before I heard about the related Panama Papers story that broke a couple years ago).
Ultimately, as we approach a global society with insane levels of wealth inequality and where public infrastructure and social safety nets have started to come apart at the seams, it's imperative that these "loopholes" get closed. Otherwise, we're going to be revisiting Feudalism in 21st century western democracies. Sadly some people seem to want that. They see it as a kind of gilded age lords and their servants.
The vexing thing is that everyone thinks that they are going to end up on the "lord" side of this duality. I think this is the biggest lie of the 20th and 21th century; that this game is in any way, shape or form a fair one. The game is rigged and while everyone seems to recognize this on some level, almost everyone is trying to keep it rigged in the delusion that they be the masters one day.
The fools.
You can still blame for bribing politicians to create these loopholes in the first place.
Yes but many of the tax loopholes are just the result of the corruption of power (legal or not). It's only obvious to the people who benefit from it, so no one bats an eye.
* their abysmal greed and asocial psyche: When you already have billions, what does it matter if you pay any percentage in taxes? How does it have any material or imaterial impact on your quality of life if you contribute back to society a fraction of what it gifted you with?
* their deep fear of the societies they plunder: most people do accept some spread in wealth distribution if it is somehow "legitimate" and "kosher". Hidding their tracks and actions in complex constructions is how to engineer top-heavy, artificial, pyramids of wealth and power that exceed what would be acceptable under the cleansing light of transparency
I don't think welfare should be based on philanthropy, but I do think some billionaires are still philanthropic, e.g. Bill Gates.
I think there is also the situation where these tax arrangements arise out of a lack of thought, rather than conscious greed and asociality.
If you pay a team of accountants and say "save me money", they're going to do everything possible to minimise your tax, some methods which should be classed as tax evasion, not avoidance.
I don't expect billionaires to have a conscience. I vote for our system to stop damage from people acting without a conscience.
Billionaires shouldn't get a pass because of 'philanthropy'. That is an extra contribution that any person can make if they choose and can afford it.
Paying your taxes - that is, contributing back to society to keep it functioning in a healthy, balanced way, is not only a requirement of civilization (in my view) it's even in these ultra-rich peoples' self-interest: they help to maintain the stability that underpins their massive wealth.
we are now in 2021, or the "modern era" as we claim. we know for a fact that broad based welfare and individual economic freedoms can perfectly coexist in well regulated societies.
philanthropy should become the exception, not the rule, practiced again by forward looking humanists that identify and remedy blind spots rather than being a crutch to a systemically broken system.
You're responding to a comment I didn't make. Bill Gates is a philanthropic person. That's not to say I think he shouldn't pay tax, or Microsoft not be the target of antitrust regulation. I also said welfare shouldn't depend on philanthropy.
> Paying your taxes
Billionaires (and high net worth individuals) are paying their taxes, even though what they count as "paying their taxes", should really count as tax evasion.
I don't think appealing to the conscience of billionaires and high net worth individuals is effective. The rules need to change, and be enforced.
In the EU, such tax evasion is built into the system [1]. This should have been solved already. It's an open secret; I don't find these data dumps revelatory at all.
[1] https://www.theguardian.com/business/2014/nov/05/-sp-luxembo...
If you spend huge amounts into your de-facto own NGO's and use that to buy ridiculous amounts of land. This is not anything like contributing back. Its just charity-washed wielding of power. Because these "philantropists" still determine how their "donations" are actually used.
It is kind of insane that this is even allowed. How do you plan to tackle money laundering, corruption, and transparency when you cannot even figure out who owns the property in the first place?
We let this happen. We don't have to.
https://www2.gov.bc.ca/gov/content/housing-tenancy/real-esta...
As we can see demonstrated by this story, some folks do have things they want to hide. Tech employees supporting efforts to violate people's privacy at mass scale, collecting data about people to feed advertising-dependent business plans, and creating conditions for data breaches that leak personal information, please take note.
It's shared amongst journalists worldwide who analyse it for a few weeks/months.
Then they all release on the same day. It allows local coverage and doesn't give those mentioned a heads up.
https://www.icij.org/investigations/pandora-papers/power-pla...
> ...more than 130 billionaires from Russia, the United States, Turkey and other nations.
But you right, zero politicians from the US appear in the Pandora Papers themselves.
Not like Delaware seems to exist for any other reason.
It's also worth noting that earlier this week, this came out as confirmation of insider trading by the policy makers, who are even less elected than Erdogan https://www.ft.com/content/b899a77f-9853-4d20-ad84-21848b7e7...
ICIJ: stop being the gatekeepers.
That would be a massive break of journalistic integrity.
IMHO, releasing the raw data in its entirety protects the journalists; if you're the gatekeeper, you automatically become a target.
They are journalists not vigilante hackers.
There were no earth shattering mass arrests and government topplings, but it's unrealistic to expect such a thing.
E.g. In Denmark, the country’s tax minister cited the Panama Papers to justify hiring hundreds of new employees to bolster the fight against tax fraud.
It was high news and had consequences. There is much work to be done, but 'nothing changing' is not the case.
I guess you are referring to Daphne Caruana Galizia. That would still be singular, though.
I see a lot of positives,
Panama and paradise leaks were from one firm, this is from 14 different ones and by far the largest one in terms of number of documents, that's progress.
More transparency is always good , as an immediate impact asset owners like the British crown are now going to be lot more careful who they are buying from, the optics of enabling laundring is quite important for such buyers.
Removing such buyers from the market for dictators will limit who they can deal with making it more difficult and likely less lucrative for them in dealing with property
If I had such level of riches I'd invest in stocks, companies, research, properties etc.. I'm certain it would open more job opportunities.
You do not like that they move money offshore, and that is for a good reason, the super rich have so much resources that they can unilaterally distort the economy. The more concentrated the wealth the more fragile is the economy and the more is dependent on the mood of a few lucky people.
There are mostly used to conceal the actual owner of those assets, if nothing else.
Why?
Their country might be a terrible place to invest in.
Also: define what "their country" actually means.
I think a much better take on this would be "I'd rather they invest their money in productive endeavors, that benefit society and/or humanity in general".
On other words, I agree with your general sentiment (the money should be put to good use), but find the "their country" part completely weird.
You can wait around for four years til a new set of old rich people get voted into power (maybe they'll be blue/red this time!!!!) and hope they get rid of the loopholes they all use. Maybe a couple more """revolutionary""" politicians will be elected who VERBALLY DISMANTLE AND DESTROY a couple billionaires in a senate hearing (OMG SO AWESOME!!!). Decide for yourself if you think anything will change.
There does exist a great equalizer, but I won't mention it. I like staying unb&.
[0] https://www.theguardian.com/world/2017/oct/16/malta-car-bomb...
https://press.princeton.edu/books/paperback/9780691183251/th...
Heh this is totally affordable for regular jack offs like me. Perhaps someone will create a public benefit corporation (benefit for the irony), democratize access to these schemes for everyone, draw the ire of government when tax revenue plummets and lead to new laws enacted.
Like it is the case now, the work was done by hundreds of journalists spread across dozens of media outlets around the world. It is true that one Maltese journalist that worked on it was killed and it is completely accurate to call her Panama Papers journalist, but calling her the "original leaker" is just inaccurate. She also went through decades of various forms of intimidation before Panama Papers came out. I'm not talking just about death threats, IIRC her pet was found killed, her house was broken into, etc.
For all I know, the original Panama Papers leaker was never identified beyond John Doe pseudonym, and is presumably still out there.
Taxation is really hard to enforce in the modern World. The biggest problem is that small, local companies cannot compete with big ones because they don't have resources to overcome taxation.
For me it make sense more sense to abandon corporate tax at all and make sure that all the resources, public services that company uses in a given country are paid by the company. If company uses trucks, it should pay for roads, etc.
I don't think that Facebook that operates from US and uses US resources and services should pay CIT tax in, say, France. If it uses internet infrastructure, just make Facebook to pay for it fair amount and that's all.
No, City of London only exists as it is, because the rest of the country let it do its thing and destroy the fabric of the society.
It's not hard to enforce taxation when those who make the laws actually intend to have it enforced. Right now, those who write and enforce the law keep siding with those who evade taxes. Maybe we should change the people in power, and that is not that hard. The problem is that most media are owned by the ones who evades taxes, so the level of noise made these scandals remains under control.
[0] https://www.forbes.com/sites/toddganos/2019/09/19/worlds-bes...
Plus, it's as if the Treasury is not aware of all these dealings. You can't move USD between any institution in this world without the US Treasury knowing about it...
Australia's ABC TV will be doing a "Four Corners" program on the subject tonight.
https://twitter.com/ICIJorg/status/1444703221558259714
https://www.icij.org/investigations/pandora-papers/power-pla...
> The media has failed. Many news networks are cartoonish parodies of their former selves, individual billionaires appear to have taken up newspaper ownership as a hobby, limiting coverage of serious matters concerning the wealthy, and serious investigative journalists lack funding. The impact is real: in addition to Süddeutsche Zeitung and ICIJ, and despite explicit claims to the contrary, several major media outlets did have editors review documents from the Panama Papers. They chose not to cover them. The sad truth is that among the most prominent and capable media organizations in the world there was not a single one interested in reporting on the story. Even Wikileaks didn’t answer its tip line repeatedly.
https://panamapapers.sueddeutsche.de/articles/572c897a5632a3...
These people got rich by living in a society that gives them language, concepts, ideas, a rich foundation of knowledge to draw from, social stability. All this requires a social contract whose benefits they are willing to reap but whose costs they are quick to discard.
I think the German constitution hat something the lines of "Eigentum verplichtet", roughly translated "property obliges".
It's really a shame that these gentlepeople that benefited so much from a stable society are willing to go to such lengths to keep society from their fair share. And that they don't even have any immediate need for the wealth their are hiding is all the more frustrating. This is all done for the sake of a bigger number on a virtual accounting sheet, not because it is required to create anything of value.
This money could instead to productive purposes; education, rehabilitation and reintegration of criminals, child care, rewilding of abandoned industrial wasteland, the list goes on an on and on.
Instead it's hidden in the most convoluted financial constructs, all the while benefiting people - lawyers and banker and yes, also software engineers, I know because I've earned my pound of flesh - that themselves have ambitions to 'become rich', as if that were of any use in itself.
It would be only half as enraging if ordinary people that are barely able to just scrape by on a full time job were in a position to make use of such shenanigans. I guess that would almost make it 'fair'. But as it is, "tool" like these allow for superwealthy people to have a lower tax range than your regular car mechanic or plumber or service employee.
And this just breaks it for me.
What is the point of having 10 super cars or a 100 room mansion? Showing off to other shallow people?
It's certainly arguable whether this is good or not, but I can see the appeal for a rich football fan to buy his own team and the best players and play fantasy football, but in real life. I am sure a lot of people here, if given billions, would try to tackle their own pet issue. Having billions available makes having a noticeable impact on the world much easier, if that's what you want to do, you need billions.
> What is the point of having 10 super cars or a 100 room mansion?
What's the point of having 10 pairs of shoes? You could say that some are better in some specific circumstances, but you probably don't really need all of them. How many people here have a 64-core CPU that is almost never fully used? Or people that have an offroad vehicle that will never see dirt? Your examples are the same behaviour, just at a different scale.
It's a serious question, and intended to bypass the distraction and debate about despair. What is the obstacle?
I think you should start with explaining those first.
Thing is, it's probably easy in theory, but very hard in practice.
So that it doesn't affect their source of income? (The taxes we ordinary ppl pay)
Maybe because the people actually want to tax the rich? And because the politicians who evade taxes don't intend to pay their fair share anyway?
I just read the comments, though, and somehow nothing seemed strange, I just thought some more information emerged after a few years.
I could not find any leak yet, just the interpretation of it.
https://www.theguardian.com/news/2021/oct/03/pandora-papers-...
I am extremely skeptical about the veracity of leaks like these. To see where they come from, look to see whose leaders are NOT included.
Not to start a flamewar but its increasingly blatant bullshit like this that makes me extremely wary of modern news media. The disingenuous implication here is that in all 11.9MM documents there were only ties to conservatives. It's lying without telling a lie. In fact this paragraph serves no purpose except to push a political agenda and take a dig at the British analog to Trump, who seems to get the same treatment in media.
This cannot be just leaks keeping consistently popping up like that.
I am trying to guess whose doing it may be?
GP’s argument, I believe, is that if these techniques were usable by you and I they’d close the loop holes quickly. The reason why they’re not usable by the plebs is immaterial to the basic point. Tax code is very much a “rules for thee and not for me” area of the law.
It's different than taking a loan against 300k USD in FB shares, because that you can use for everything...ranging from buying a Ferrari to starting a new business.
Interest rates will naturally be higher.
nope, you can withdraw it. https://www.mrmoneymustache.com/2021/01/29/margin-loan-ibkr-...
Also, there's nothing functionally different between:
1. having 500k in stocks and borrowing $250k from it
2. having 500k in stocks, selling half of that to get $250k, withdrawing $250k, then rebuying $250k worth of the stocks using margin
Is that intentional from IKBR? I guess if they knew they'd raise their interest rate. If people start using this method more and more then it will disappear. Seen this pattern over and over again in many fields.
> having 500k in stocks, selling half of that to get $250k, withdrawing $250k, then rebuying $250k worth of the stocks using margin
Risking money in the financial markets vs. risking them (or again using them) in the real markets are 2 very different things.
There is no equivalent for the SP500 in real life, also real life is very illiquid compared to financial markets.
Plus unless you are very wealthy financial institutions tend to look down on people who want to spend money or have the arrogance to think they can start a business, they always punish such behaviors with higher interest rates.
Also once the money is out of the trading platform and into your checking account you could buy real bitcoin on Coinbase, withdraw to private wallet, flee to South America and never be heard from ever again
if you search around this method has been around for a while, so it's not some sort of glitch. Plus like I said earlier, it's not any different than using the money to buy stocks.
>Also once the money is out of the trading platform and into your checking account you could buy real bitcoin on Coinbase, withdraw to private wallet, flee to South America and never be heard from ever again
I don't think you understand how this works. They still have your stocks. If you flee to south america they don't really care. Should you fail to meet your maintenance margin your stocks will be liquidated to pay back the loan.
>Plus unless you are very wealthy financial institutions tend to look down on people who want to spend money or have the arrogance to think they can start a business, they always punish such behaviors with higher interest rates.
I think you're ascribing ill will where there isn't any. Banks charge high interest to business and/or personal loans not because they hate poor people or whatever, but because they're risky.
I don't mean to accuse bankers, if anything I meant to stress that this method has something which doesn't add up .
Think about it , even if your net worth is 1M you still have to go through a conversation with the bank before they loan you money. They want to know your intentions, what are you going to do with it and so forth. They size you up, and the 1M net worth doesn't even count as a tool to reduce the burden of questions.
This method instead : you post some securities and you get a loan with no questions asked. It seems too good to be true or intentional from the financial institution side as it completely sidesteps the due diligence process.
It's not any different than going to a pawn shop and getting a loan, no questions asked. They don't ask any questions (aside from any mandatory AML/KYC ones) because they don't need to. The combination of easy to sell/liquid stock and the margin requirement makes it very unlikely that they'll lose their money. If you have $100k worth of stocks, SEC/FINRA regulations means that you can borrow up to $50k, and your portfolio can drop another $25k before they start liquidating your holdings. At that point you still have $75k worth of collateral for $50k worth of loans, so the chances of them losing money is slim.
Collateralized lending is very common such that its not newsworthy.
1. Does this actually work? AFAIK you avoid capital gains, but at the same time you need to pay estate taxes.
2. According to wikipedia bezos is 57 years old. Using the figures from SSA[1], he still has 26 years to live. The 20 year treasury rate (ie. risk free rate) is 1.99% (annualized). Applying that rate over 26 years gets you 66.9%. That doesn't seem like much of a savings over the long term capital gains rate of 20%. The numbers make more sense if you use 3 or 5 year treasuries, but that also exposes you to interest rate risk in the future.
[1] https://www.ssa.gov/oact/STATS/table4c6.html
>This technique is legal for anyone, but good luck convincing Goldman Sachs to loan you money based on 0.001% of Facebook’s outstanding shares.
They'll happily loan you money based on the equity in your home though. https://en.wikipedia.org/wiki/Reverse_mortgage
https://www.bloomberg.com/news/newsletters/2021-07-26/money-...
But - as you rightly point out - if that was the case, these loopholes would be closed first thing in the morning. These are loopholes created by the extensive lobbying of an exclusive club of people that do not want this to be available for the common plebs, but exclusive to the rich boys (and gals) club.
Some alliteration fetish.
Panama - well, Mossack Fonseca was in Panama.
So far all that's known is some bank accounts that are suspicious. That's a far cry from committing a crime. Yes it should be investigated further, but nobody has uncovered an actual crime yet.
Note that in many places at least some politicians are obligated to list their income, what they own etc. Which is made public. While for regular citizens such info is private.
Even if somehow not strictly illegal, then Babiš part seems really suspicious if true.
https://www.occrp.org/en/the-pandora-papers/anti-graft-czech...
> Babiš has goaded rivals who have used offshore companies to evade public scrutiny. Shortly after the 2016 publication of the Panama Papers, based on a leak of offshore documents, he said: “I think everyone who does business knows that Panama is not exactly a territory where they do business transparently.”
(...)
> In 2009, Babiš sent 15 million euros to a shell company in the British Virgin Islands that had just been set up for him. That money appears to have been invested in the French Riviera, including a chateau just outside Cannes. But how it got there wasn’t straightforward.
When you get money from the offshore (as dividends or whatever) you pay taxes on that income, like normal ppl.
What happens with the money between these moments is different story though. Depends on how the money are spent. And to my understanding, if they used to buy a property, say in US, the offshore still pays the US property taxes.
Say you own a company in the UK which sells widgets, but you also own an offshore company that also sells widgets. If you are dealing with a Chinese company, you could use the offshore company to do the deal, paying little to no tax. The money then resides in the offshore company and has never gone through the UK - either as a business or personal. As an individual you could own a credit card that you use to spend in the UK, which goes back to the offshore company. In additional, the offshore company could buy property in the UK and no tax is paid. There are various other tricks and nuances that can be employed to help minimise tax paid - completely legally.
I can even give opposite examples, like when someone comes to the US to run a startup in California. For the country of their origin they definitely opened an offshore corp (in the US in this case) and don't pay taxes on it (they still pay to the US gov though). It's just more convenient to have a US corp rather that a corp in their home country, and not because of taxes which may be higher in the US.
The broader question and sentiment of this piece is: how exactly have people who supposedly work in Public Service amassed such wealth when these positions are paid so low, and what lengths will they go to do so, especially in developing countries. The subtext being if their are conflicts of interest in their investments which happen to also be tied to offshore havens.
This outrage is warranted, because it underscores how tiered the legal system is World wide (The US is least represented in the Pandora release but 2 Federal Reserve Presidents have just stepped down due to insider trading [0]) for those closest to power, whereas tax evasion is one of the most effective ways to get a criminal indictment for the average citizen in most of the World.
0: https://wgno.com/news/business/dallas-feds-kaplan-to-leave-i...
For those closest to the power, the easiest way to get around the law... is to follow it to the letter.
Biggest, and most famous Russian mafiosos live in the open in London, while diligently paying taxes on their multi-billion ill gotten wealth, and without using any offshore structures, or shady law firms at all.
And the British establishment, Downing St., is very happy with this arrangement.
What people forget about these things is that those offshores are a refuge for at most second grade rogue economic players, whose main rationale hiding their wealth is to hide it from other much bigger gangsters, and mafias from their home countries.
They themselves choose places like London not because it's a rich city to live in, but because of London offering much better protection from being gunned down in broad daylight than cities in their home countries.
I'd agree but not for the reason(s) you've outlined, what they they will do is get their crimes legalized. Or, if they get caught as in the case with Christine Lagrade [0], they will get convicted but serve no sentence and remain in their position. Proving that selective application of the Law, nepotism and the failing up method is as prevalent as ever within these circles.
The City of London Corporation is nearly autonomous to the greater UK with it's own political and legal framework [1], and given it's incredibly checkered past, you'd do well to keep that in mind when you decide to be an apologist for Russian tycoons and oligarchs.
To be clear: I'm not against wealth or the wealthy, I'm merely pointing out the hypocrisy (and my disdain) for those who use their relation to the State for their own largess.
0: https://www.bbc.com/news/world-europe-38369822 1: https://en.wikipedia.org/wiki/City_of_London_Corporation
Highly doubt it. A targeted assassination would be as easy in London as anywhere else.
Usually, those folks come from money to begin with, which makes the situation even worse.
I saw this a lot living down in Texas, state congressional pay is so low that you basically have to come from money in order to run and hold state office (base pay is $7.2K annually and tops out at $40k for a two year period, depending on how many days they're in session, basically minimum wage). Even though it's technically not a full-time job, it's demanding enough of one's time that they need a prior career with enough flexibility in order both hold office and make extra income, which excludes the vast majority of the population.
Czech Prime Minister Andrej Babis, one of his country’s richest men, rose to power promising to crack down on tax evasion and corruption. In 2011, as he became more involved in politics, Babis told voters that he wanted to create a country “where entrepreneurs will do business and will be happy to pay taxes.”
The leaked records show that, in 2009, Babis injected $22 million into a string of shell companies to buy a sprawling property, known as Chateau Bigaud, in a hilltop village in Mougins, France, near Cannes.
Babis has not disclosed the shell companies and the chateau in the asset declarations he’s required to file as a public official, according to documents obtained by ICIJ’s Czech partner, Investigace.cz. In 2018, a real estate conglomerate indirectly owned by Babis quietly bought the Monaco company that owned the chateau.
Sounds like at the very lest it was unreported. We have half the story, which in a lot of cases sounds like fraud. The other half of the story is in tax documents.
ETA: The other thing is a lot of these people have the power to fix these systems that enable corruption, and like Babis, publicly say they will. But are they going to fix the system if they're using it?
But my prior is, that if the public knew about it (in general "these are the ways the elites use to pay less tax than you", as well as specifically "this career public official actually amassed $100m wealth on $100k salary"), the laws would change (e.g. introduction of wealth tax, or equalization of capital and labour taxes).
> “If the Jordanian monarch were to display his wealth more publicly, it wouldn’t only antagonize his people, it would piss off Western donors who have given him money,”
...
> Marwan Kheireddine, Lebanon’s former minister of state and the chairman of Al Mawarid Bank, also appears in the secret files. In 2019, he scolded former parliamentary colleagues for inaction amid a dire economic crisis. Half the population was living in poverty, struggling to find food as grocers and bakeries closed.
> “There is tax evasion and the government needs to address that,” Kheireddine said.
> That same year, the Pandora Papers reveal, Kheireddine signed documents as owner of a BVI company that owns a $2 million yacht.
> Al Mawarid Bank was one of many in the country that restricted customers’ U.S. dollar withdrawals to stem economic panic.
> Wafaa Abou Hamdan, a 57-year-old widow, is among the regular Lebanese who remain angry at their country’s elites. Because of runaway inflation, her life savings plummeted from the equivalent of $60,000 to less than $5,000, she told Daraj, an ICIJ media partner.
Edit: please articulate why you disagree with my comment instead of downvoting, as this comment is on topic and downvoting should be reserved for irrelevant or offensive comments.
These discussions assume people didn't pay taxes before purchasing assets elsewhere.
Cute.
Now imagine you have millions or billions of dollars. You do not want to hand over 50% of your income to tax authorities, especially if a legal way exists not to. And if you make the current legal ways illegal, the money will just keep flowing to invented ways. There will never be a way to avoid this, unless you have a centralized AI super computer that cannot be manipulated by fallible humans watching everyone’s cash globally and enforcing strict rules. And that will never happen.
Most of the Panama Papers revelations were not illegal behavior. This article says most of this is perfectly legal. I’m not sure what the scandal here is other than humans don’t want to give half their money away to the government.
Those people are comfortable, well into the top 10% of earners. And I think it's nice that they don't spend money hiring a slimeball tax accountant to help avoid paying their part to society. I think it's sick that there are people making 6 or 7 figures a year helping cunts to save 7 or 8 figures a year that should be going into schools and infrastructure, and it's even sicker that those people are looked up to because they drive nice cars and wear expensive suits.
But that's not what these papers are about - they're about systematic secretive theft, from all society, on a massive scale. And this at a time when people are still dying from hunger and deprivation even in the richest countries.
Remember, of course, that there are two ways to fix this.
Maybe we should be paying politicians less and having a cap on their net wealth instead.
And before you say anything - there are plenty of very very competent people who would do the job, just not the rich.
Now imagine you have millions or billions of dollars. You do not want to hand over 50% of your income to tax authorities, especially if a legal way exists not to. And if you make the current legal ways illegal, the money will just keep flowing to invented ways. There will never be a way to avoid this, unless you have a centralized AI super computer that cannot be manipulated by fallible humans watching everyone’s cash globally and enforcing strict rules. And that will never happen.
Most of the Panama Papers revelations were not illegal behavior. This article says most of this is perfectly legal. I’m not sure what the scandal here is other than humans don’t want to give half their money away to the government.
Yeah, there are no perfect solutions to the problem, yet that doesn't mean tat our current imperfect solutions don't work to deter and reduce it, if anything it shows that these imperfect solutions need to be expanded upon, not discarded due their inherent human imperfection
Yes, but the army of parasites whose livelihood depend on the inefficiencies you describe beg to differ, and do so most efficiently.
Congratulations! You've been placed on team "no one's allowed to complain about things that were bad in the past and also things will never get better and plus anyway it's not illegal".
Are you sure that's the team you want to be on (Y/N)?
For a large number of people, this is very clearly a crime.