American Tax Avoidance and Panama

Remember though, as Bloomberg News said back in January, before the “Panama Papers” were known: The World’s Favorite New Tax Haven Is the United States.

Kudos to MSNBC for writing up the story of the (lack of) Americans discovered in the “Panama papers”.

The Wall Street Journal earlier pointed out that 617 intermediary companies that were listed in the papers that operate here in the USA, but no details will be available until sometime in May. So far the only American directly implicated is Marianna Olszewski a financial “pundit” from NY.

article-doc-9n7p3-3x3xJf8qEp7439795a58657c8166-790_636x382[1]As I remarked in my original post about the Panama Paper release, this is no reason for Americans to feel smug. The MSNBC spells out the reasons for that, importantly because for the most part:

  • Delaware, Nevada, along with the U.S. Virgin Islands, are known in particular for loose regulations and low taxes. You can park your money in America behind a dubious corporate facade, without going “offshore”. America rates third behind Switzerland and Hong Kong as a popular tax haven, and far higher than Panama, at 13th. When you here about those massive corporations with billions overseas, it’s not actually sitting in banks in 3rd world countries, it’s often in “tax avoidance” holding companies, who have their cash here in the USA. It’s all bookkeeping entries a rather than overseas.
  • US Tax rates are already super-low, contrary to what you hear from Presidential candidates. Super-rich Americans have less need to seek tax havens because they have less to lose.

Many small and large American and foreign companies help wealthy clients set up offshore shell corporations — that itself is not illegal, as long as the those they set them up for are not trying to hide criminal proceeds or dodge tax obligation.

Remember though, as Bloomberg News said back in January, before the “Panama Papers” were known: The World’s Favorite New Tax Haven Is the United States. Remember, for each dollar a corporation or wealthy individual doesn’t pay, it has to get made up somewhere. That either means someone else pays it, or services get cut.

Fran Hendys offshore blog has good coverage of tax related issues, it’s her specialist subject, where as I just angry more people can’t see what is going on.

Panama Papers, don’t be smug

_89082388_cfoiqttwsaadnoj[1]I woke up early yesterday, after a few minutes decided to read my phone, and there was the blow-up over the “Panama papers”. I read the BBC’s excellent “live” page which in twitter-timeline style was posting news and highlights as they uncovered details.

And then I went back to sleep. There wasn’t anything really new here, it just confirmed what many people already knew, third world dictators, power junkies and desperate wanna-live-forever celebrities were cheating on a massive scale.

Later in the day many of my politically minded friends posted links, articles and critiques on facebook and twitter. Ultimately the leak is a big deal as it takes away on of the key value propositions of this type of activity, secrecy. Without secrecy, the sorts of deals, services and tax avoidance is sort-of-meaningless.

What most ordinary people have overlooked, or turned a blind eye to is that they more than likely benefit from similar schemes. If you’ve used the services of, or bought stuff from IKEA, Pepsi, Starbucks, Microsoft, been to Walt Disney theme park, then you too have benefited or contributed to tax avoidance. Indeed, almost everyone orders from Amazon, and in many cases, doesn’t pay tax that they would have paid had they bought the self same product from a local store.If you bank with Barclays, Citigroup, Deutsche Bank, HSBC, JP Morgan, then yep, same thing.

“The World’s Favorite New Tax Haven Is the United States.” Why? Because even American law firms dedicated to protecting the financial assets of the world’s elite say the US is a perfectly effective tax haven”

What make the Panama papers different, is it gives the tax authorities around the world the chance to go after individuals. Thats much easier and much more interesting than going after these big tax avoiding companies. As always, it’s divide and conquer.

Not doubt entirely coincidentally, when I collected my mail yesterday, I got a full FACTA request/disclosure from my bank, FirstDirect, a subsidiary of HSBC. So, they can make it very difficult for me to maintain a bank account back in the UK, and will directly report to the US Inland Revenue Service, I on the other hand can do nothing about their deliberate tax avoidance, that the UK and US Tax authorities know all about.IMG_20160405_073140