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Comment by echelon | Hacker News Reader

Russia and China score extremely well, and the US is the second worst?

Is it fine when the ruling class can get away with moving money?

Who funded this?

It's completely logical: the Russian and Chinese ruling classes want to hide their ill-gotten money from taxes, from journalists, and from being arbitrarily seized by greedy officials and well-connected rivals. Thus, they move money from the somewhat transparent Russian and Chinese institutions to the safety of more murky Western economies.

Recognizing "classes" in society is so XIX century, we should move away from that.

Re: the original concern - that website's methodology is very vague and intermixes a number of very distinct criteria. That's why their overall result looks bogus and they even have a page to yell at the critics preventively [1].

[1] https://fsi.taxjustice.net/en/introduction/method-and-concep...

The US has a few states that allow you to set up a shell company with very pretty much no proof of identity. It’s one way that South Dakota is apparently a big tax haven now.

https://www.npr.org/2021/10/03/1042885263/pandora-papers-wea...

Planet Money has done an episode on this sort of thing in the past where they found it much easier to open a shell business in the US vs the rest of the world. https://www.npr.org/2021/10/06/1043746410/we-set-up-an-offsh...

That's a red herring honestly, because you can't actually do much with that entity until you get a tax ID (from the IRS) and a bank account (where KYC is very tight). The point being that from a tax standpoint these "anonymous" companies are pretty useless. They can however obfuscate ownership of assets.

Example: sure you can transfer your house into South Dakota LLC, and yes when someone looks up the ownership in records, they won't be able to see who owns that house, but there is no tax being avoided.

How's it work if you own the house (purchased by a transfer from ??? to your lawyer) and then sell it (funds sent to your lawyer and then to ???) ?

Probably couldn't get a US mortgage without that tax ID or bank account.

If you rent it out, I guess the contract should be with the LLC and then you run into the tax ID/LLC issues, but people will probably sign a lease with whomever and pay whomever they're told (whether it's the LLC or not).

It depends on what tax you’re theoretically trying to avoid (Your definitely not avoiding property taxes). if you don’t pay tax on the rental income, or capital gains your breaking the law, the question is if the auditors show up, are you really going to be safe? And the answer is possibly? But it would take a ton of work and breaking a whole bunch of other laws along the way (offshore banking relationships in non-cooperation countries, mail drops, repatriation of assets problems etc) , and at the end of the day the government will just put a lien on the house until they’ve gotten what they want.

Yes, the US is so secret we know exactly how much is hidden and where. Meanwhile Russia is so transparent, wealth hoarding oligarchs can't even exist. /s

> Russia and China score extremely well, and the US is the second worst?

This is a list of countries that benefit from capital flight from countries such as Russia and China.

> Who funded this?

https://taxjustice.net/our-funders/

Page 18 of https://taxjustice.net/wp-content/uploads/2021/03/Tax-Justic...

It's basically funded by European grants so it does not seem fishy.

Honestly, I know nothing about them but the largest donor on that list is a USA based NGO..

$2 million Ford Foundation Grant: https://en.wikipedia.org/wiki/Ford_Foundation

Not too surprising to me, honestly.

Wealthy Russians and Chinese are hiding their money in the West (UK, US, Canada) precisely for that reason. London (AKA Moscow-on-the-Thames) is famous for happily taking in and protecting that dirty money.

The "City of London" is indeed the bankster behind the worlds tax havens...

It's a pathetic joke. The US has very little real financial secrecy. The Feds have trivial access to all financial transactions inside of the US if they have cause to need to look. Beyond that, the majority of US wealth is contained in the stock market and land, both of which tend to reveal the wealthy due to public records (which is how we know how much land Bill Gates has been accumulating and how many shares of Tesla Elon Musk owns). The US has a small number of unknown super wealthy because of that, whereas China and Russia are extraordinarily opaque by comparison. The US also requires its politicians to report their wealth within a range. Now try to get that kind of information from Putin or Xi.

Yeah, I do taxes for a living, and people seriously underestimate how hard it is for anyone to hide a substantial amount of money that was made in the U.S. As soon as you want to do anything with it besides hide it under your mattress, there's going to be a record of it that either the state or federal government can obtain.

I think the idea is to hide from other countries. So if you are a wealthy Chinese you have a much better time hiding your money in Delaware than in Paris for instance.

+ taxes, its less tax efficient to put assets in France than it is in the US - so why would you?

This reminds me of a term used on one of those expat/sovereign man blogs: "Redundant Array of Independent Jurisdictions". The idea being that you have citizenship from Country A, reside in Country B, and run your finances through Country C, so you have no single-point-of-failure in governance over your life/assets.

The main issue is certain US states, such as Delaware, allow you to set up anonymous shell companies. Anonymous shell companies are a bit like BitTorrent. Sure, there are legal uses, but there are a lot more illegal ones.

Planet Money did an episode in which they registered just such a company in Delaware: https://www.npr.org/sections/money/2016/03/16/470722656/epis...

How much money did they manage to launder with their shell company?

Honestly this is not the main issue at all.

This is a bad analogy (so bear with me), Let's say you want to operate an anonymous private mail server, having an anonymous shell corp is like registering your domain name anonymously. Sure an important piece of the puzzle but nothing close to achieving the whole objective. You then need acquire all the other pieces of the puzzle anonymously as well (which is incredibly hard - especially without committing innumerable crimes along the way).

Seperately, I listened to the podcast, those two are financially literate.

I have a friend in DE who works for a company whose main reason for existence is setting up shell companies to hide luxury assets for rich Europeans and Russians (planes, yachts, etc)

No we score extremely well and Russia and China are some of the worst. Privacy in finance is a great thing, KYC and reporting requirements are massive violations of privacy and intolerable.

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