Fiscal fairness, take the money and run

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.

2 thoughts on “Fiscal fairness, take the money and run

  1. Nice one! I wonder if Bill Gates Sr. has always held this view or has he now come around to this thinking after realising that after all those years of careful tax planning he still has more money than he could ever spend – or want to spend – in his lifetime. There is never a shortage of news about offshore ‘island’ tax havens its good to see references to the ‘land-locked’ ones in
    the heart of Europe.

    1. Fran, the book the Gates Sr is quoted in, is from Lakoffs 2004 Don’t Think of an Elephant! Know Your Values and Frame the Debate. Lakoff is a well known progressive, and at least thats where I knew the Gates quote from. Not least because the paragraph before really frames my position on taxes. “Taxation is paying your dues…” It’s actually not clear since Lakoff doesn’t use direct quotations that Gates actually said all that, or it was summarized. I assume Lukoff got it from the 2002 Gates Sr co-authored book “Why America should tax accumulated fortunes”. I’ve not read that.

      While I’ve been in meetings with Bill Gates, while at IBM, I’ve never met or been able to talk to either Gates in social situation. Given Gates Sr was a philanthropist from fairly early on, and a lawyer I’m prepared to give Gates Sr the benefit of the doubt that he had come to this conclusion long before his son had amassed so much money. Thanks for you comment, and yes Luxemburg is an interesting example of on-shore, off-shore.

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