Which Way’s Up?

They missed Nevada, Wyoming, Delaware . . .

It seems that the banking laws in offshore tax havens are a little too strict for some in the U.S.   Apparently you have to give your name.  But that can all be taken care of with a simply romp to  . . . .Wyoming?  That’s right.  In Wyoming you can start a shell business anonymously and start a bank account for that business, also anonymously.  From the Economist article:

For shady clients, this is a far better proposition: what their bankers do not know, they can never be forced to reveal.

Ah yes.  Well if there’s a market for such things someone should make money off of it right?  The free market at work.

Nowhere is this more prevalent than in America. Take Nevada, for example. Its official website touts its “limited reporting and disclosure requirements” and a speedy one-hour incorporation service. Nevada does not ask for the names of company shareholders, nor does it routinely share the little information it has with the federal government.

There is demand for this ask-no-questions approach. The state, with a population of only 2.6m, incorporates about 80,000 new firms a year and now has more than 400,000, roughly one for every six people. A study by the Internal Revenue Service found that 50-90% of those registering companies were already in breach of federal tax laws elsewhere.

So all this time our shady citizens were taking their money to Switzerland, while the Swiss’ shady citizens were coming back to America.  

A money-laundering threat assessment in 2005 by the federal government found that corporate anonymity offered by Delaware, Nevada and Wyoming rivalled that of familiar offshore financial centres. For foreigners, America is a particularly attractive place to stash cash, because it does not tax the interest income they earn. Thus with both anonymity and no taxation, America offers them all the elements of a tax haven.

It seems the Caymans were just a slight of hand from the rich, and Obama fell for it.

On the campaign trail, Obama several times cited a single building in the Cayman Islands called Ugland House which notionally houses 12,000 corporations. He said: “That’s either the biggest building or the biggest tax scam on record.”

What about the 400,000 corporations in Nevada?  The 1-in-6 ratio?  That’s either the most CEO infested state in the Union or its the biggest tax scam in history.

Which Way's Up? Obama, Politics Corruption, Obama, Politics, risk-free investments, taxes

There is an entire industry devoted to this exact problem.  Many rich people step out of their bed every morning thinking, “I am rich and do not like paying taxes, who can I pay to lower my taxes?”

 The answer is anyone.  People like, Brent Bergan are featured in many an article from the heart of the housing boom.  Peter is “an attorney at Global Tax Network in Denver, which advises international corporations, individuals and small businesses on tax compliance.”  

Ah yes “tax compliance.”  That looks much nicer on the business card than “the kind of tax evasion that doesn’t get you thrown in jail”

Another guy you can pay to lower your tax bill,  Richard Cahan, insists that gone are the days where tropical tax haven can be use to evade income tax.  

Damn!  

what you find [instead] is most people setting up offshore trusts and offshore corporations for asset protection or divorce planning but no income tax evasion. They don’t want to go to jail.

So your job is to help them avoid jail?  Kind of like a mob attorney?  Let’s see I’m moving my assets around in a way that if not done exactly right . . . could land me in jail.  I better hire someone who knows how to walk the line of criminality without actually crossing it.

Please Mr. Cahan, go on.  

[My clients] come to me to ensure that their hard-earned wealth remains theirs and can be passed down to their families, as well as for legitimate and compliant offshore business planning.

Well that sounds nice.  Every American values the corporate responsibility that mega businesses to seek out “legitimate and compliant offshore business planning.”  Just make sure Mr. Cahan, that they are legitimate tax evasion methods.  I don’t want my tax evasion tainted by the scent of impropriety.  So where are you legitimately taking my money, anyhow?

many of [the legitimate offshore business planning hot spots] are the same tropical places which have gained notoriety as tax havens, and more recently, the home of flimsy corporate vehicles designed to evade taxes or conceal company debt.

I see.

Well nothing that’s made the news at least.  I don’t want to be associated with corporate crime.

Enron, for example, was recently revealed to have had 881 offshore subsidiaries, including 692 in the Cayman Islands alone, and many more in Turks and Caicos, Mauritius and Bermuda. Scandal-plagued companies like Parmalat and Halliburton used similar devices in the Cayman Islands, for one simple reason.

Tax Evasion!

Certain foreign countries have developed their own particular asset-protection laws, and they market themselves to people looking to set up offshore accounts,” says Thomas Wells, an attorney at Florida-based Berger Singerman

Right asset preservation, I keep forgetting to not call it tax evasion. Who am I preserving my assets from?  

What you find is most people setting up offshore trusts and offshore corporations for asset protection or divorce planning but no income tax evasion. They don’t want to go to jail.

I see a pissed off ex.  And from Uncle Sam getting his hands on my corporate profits, but not my income.  But wait, I’m the head of a large corporation is there anyway I can get my hands on corporate profits and put them in my bank account, but not in an income way because I heard Uncle Sam looks for that these days.

• Use a “Sham entity”

That seems like it could get a lot of people in trouble.

• You’re right.  Why don’t we just try to make middle-class people think that taxing the rich will inevitable lead to a tax on the poor?  Will that work?

Probably.

Which Way's Up? Politics Corruption, Politics, ridiculous, Stupid, taxes, the poor

Jim Powell is Senior Fellow at the Cato Institute, which puts him in the same category as these intellectual heavyweights.  Don’t get me wrong, I respect libertarians and agree with them a lot of the time (Cato is anti-Iraq war, anti-drug war, anti-patriot act), but constricting yourself to one narrow ideological idea often requires you to defend the seemingly indefensible from situations that 98 percent of Americans could not possible relate too.  Here is Jim Powell trying to rally the poor in support of the rich - because they need liberty too.  Read the entire article here.

Obama is continuing the crusade against offshore tax havens he began as an Illinois senator. He’s targeting places like the Bahamas, Cayman Islands, Isle of Man, Liechtenstein, Luxembourg, Malta, Monaco, Netherlands Antilles and Switzerland, which have low taxes.

Tax havens, international money laundering hubs and beautiful vacation spots, everyone of them - except Liechtenstein, but its fun to say so I could see traveling to Switzerland, just to ask directions to Liechtenstein.  (Side note: A fun drinking game is to chug a beer and say Liechtenstein and then repeat.  I guess its not a game so much as binge drinking.)

It’s wrong to think that a U.S. crackdown on offshore tax havens would primarily hit disgraced Wall Street high rollers who made fortunes peddling subprime securities. These tax havens are used by many of the biggest U.S.-based corporations to help minimize the massive tax liabilities imposed on multinational operations.

Won’t someone please think of the corporations!

To the extent these corporations are able to minimize their tax liabilities — along with other costs of doing business — their profits and stock valuations are higher.

I’m no high-priced crooked corporate accountant, but I’m pretty sure the government doesn’t tax losses.

Shares of these corporations are in millions of individual retirement plans as well as the portfolios of colleges, universities, insurance companies, hospitals and charitable institutions.

Ah yes, the “we’re crooks, but we did it all for you” defense.  I understand that about half the households in the U.S. own stock, but most of that is through employee sponsored retirement plans AND the ownership level drops off heavily in lower income households.  Yes higher shareholder value is good for everyone, but in a market that was primarily characterized by greed and crooks, I think some restraint is in order.  But don’t worry rich people, your super-expensive tax lawyer will find you a loop-hole, that’s what he’s paid for.  

Why would Obama choose to attack stock valuations now, after the stock market has already lost about half its value during the past year? Why, when the country is in a serious recession, investment portfolios have been hammered, the banking sector is in turmoil, and unemployment rates are rising, would Obama make it harder for U.S.-based corporations to do business?

Because he’s a socialist, haven’t you heard?  This is all part of his master plan to re-animate Lenin’s body so that he can “Crush Cap - i - tal - ism!”

Obama’s concern seems to be that corporations aren’t paying their fair share. But corporations don’t really pay taxes anyway. Corporate taxes are passed through to consumers like other costs of doing business — factored into the price of goods and services.  Trying to suppress offshore tax havens means generating upward pressure on the prices Americans pay for food, gasoline, clothing, computers, pharmaceuticals and thousands of other products that affect our daily lives. Why would Obama do anything to make life harder for American consumers in already tough times?

You got me there.  Maybe he’s just a D-Bag that hates us.  Oh wait, I know why, because he’s taxing profits, so instead of raising prices to keep their profits up, corporate big wigs could just take home a little bit less than a biggilion dollars.  Also, the biggest problem in this market is deflation.  This is a buyer’s market, so prices are in a downward spiral.  In fact a bit of upward pressure on prices could be a good thing for all of us.  

Moreover, corporate taxes amount to double taxation. Profits are taxed at the corporate level, and they’re taxed again when investors receive interest on corporate bonds, dividends on corporate stock, or when investors sell stock, bought with personal income previously taxed, that yields a capital gain.

Don’t you think the rich have been taxed enough.  Moreover, don’t you think compensation in the form of stock options should be essentially free?  I know the rich do.  Then they can finally fire some of their high priced tax lawyers.  

By reducing after-tax returns from investment, Obama will discourage investors from making their funds available. For all practical purposes, investors could go on strike as they did during the 1930s when a succession of soak-the-rich taxes made it hard for investors to estimate their risks and returns, and they remained on the sidelines. Without more capital, it’s almost impossible to create more private sector jobs.

I’m so tired of the” taxes on top-incomes held back recovery from the Great Depression” argument.  Taxes in the U.S. were historically high in the 40s through the 60s, a pretty prosperous time if I remember correctly.  In addition, FDR raised taxes from a top marginal rate of 25 percent to 65 percent.  Obama’s going from 35 to 39 percent.  That’s lower than all but 13 months of the Reagan administration.

Obama’s populist rhetoric suggests that he’s only going after the super-rich. Yet reportedly half of individuals earning over $250,000 a year are small business owners. During the past 15 years, small businesses have been creating over 90% of net new jobs — altogether, more than 20 million jobs. How smart is it for the heavy hand of government to come down on these employers?

That was debunked a while ago.  I feel bad for the guy I really do.  But someone has to step up the plate and fight for Goliath.  Talk to me when you’re working on Drug War reform.  I’ll be sure to give the Cato Institute some good will then.

Which Way's Up? Politics Obama, Politics, taxes