Early this month I posted this entry on “fiscal fairness” about paying taxes. This week two items have come up that show why the tax avoidance situation has become unsustainable here in the US and in the UK.
First up in the US in the story that Facebook founding backer Eduardo Saverin’s renunciation of his U.S. citizenship. It really doesn’t matter what he says, Eduardo benefit from the system in place here in the US, and now he is about to get billions of US$ from the Facebook IPO, On advice of counsel, he’s established residency in Singapore, where there is no capital-gains tax. Eric Liu has a good piece on time.com
Then there is Vodafone in the UK. In the UK Private Eye, satirical and investigative magazine #1312, the Eye has uncovered evidence of what it says is total collusion between Vodafone and the head of the Tax authorities in the UK. There has been lots of coverage of the let-off of Vodafones tax bill, but this is the first news of a link that shows how they did it. They’ve managed to get of billions of UK pounds in taxes by using an offshore tax haven in Luxembourg, and making billions in interest and paying little or no taxes. The problem with this for the US, is that Vodafone owns 45% stake in Verizon Wireless. Private Eye isn’t online, but here is a summary.
The problem with both these examples is that although they may be legal, although thats questionable, in both cases it is in essence asset stripping the economies that enabled to make the money in the first place. If everyone did the same thing, then the countries that are target of this manipulation prohibit the next generation from benefiting the same infrastructure you did.
Eric includes on his article a saying attributed to Bill Gates sr. You can read it in full here. Eric write this as “Bill Gates Sr., the father of the father of the first great high-tech fortune, often points out that there is no such thing as a self-made man. We need a country where the dream isn’t to escape to a tax-free island but to be like the elder Gates: responsible, reciprocal, and a citizen of the United States”.
Think of it this way, paying tax is buying civilization.