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.

Greed, taxes and a lack of empathy

It’s tax time in Travis county and Austin, that means it’s the annual hand wringing and whining because the property values are up again, by huge amounts.

gop_greed_over_people_badge-r5803b6831b244f1ab8d9e1519c522292_x7j3i_8byvr_324[1]Taxes are all relative. The total of tax paid is still stunningly low compared to the quality of life and services you get for that. Yes, property taxes are high, but sales tax is relatively low, there is no state income tax, and while the Ledge and Republicans have you convinced that Federal Taxes are high, and money being wasted on drug taking, idle, work shy, “minorities”, it doesn’t matter that that is or is not true, taxes are not really high.

I have never had children in school in Austin, and will never have. I would guess I’ve paid over $60,000 for that choice alone. I’m guessing when most people complaigning were born or arrived in Austin, there were already schools? If thats true, someone paid for them. Probably a lot of people paid taxes for them and couldn’t use them as they were still being built. I’m guessing when they arrived the city had services, roads and other common amenities. How did they get there, someone paid taxes for them.

Those complaining are simply paying for the next generation and you are paying so that those families who can’t afford private education, have some expectation of having children who have a chance in life, and don’t become a burden on the same tax paying society.

I think the problem many of us have, is, those that complain about taxation seem out of touch or sheltered by comparison and lack empathy or sympathy for the real challenges. While I don’t know you, or anything about your quality of life, I’m guessing you don’t worry about water, food, and live in fear because you live in a dangerous environment? All the facilities, effort, and labor that goes into providing the conditions that allow you to live that way, were in general, provided by taxation. Usually that taxation was provided by someone else, your forefathers, others, the people that founded your city etc.

Too many people these days lack empathy, they are, in some respects selfish. They demanding they keep more of THEIR income, and not understanding that if they had to pay their fair share for the free facilities they get to use, in what is essentially a pretty dam good 1st world life, would be paying way over 50% of their total income in taxes. Even if taxes stayed the same, that would mean real cuts being made. Those cuts almost always are targeted at the people who will complain least, because they often are in real fear, too busy getting by.

Yep, I hate the way property taxes are done in Travis County, it’s a sham. Businesses are not assessed fairly, there are too many suspicious valuations. However, while my income has stayed relatively flat since I arrived in Austin from the UK via New York City, my total gross income is still way up and I do not participate in any tax avoidance schemes. So when the politicians promise homestead exemptions, reducing the tax bill etc. they are doing nothing but pandering to the lowest common denominator, and increasingly that represents a generation who don’t understand how good they have it.

insidious greed – HSBC

If you’ve not been following along today, it’s well worth reading back through the BBC Business Live News feed on the HSBC Tax Avoidance scandal. It is indeed the perfect example of the sort of insidious greed that is destroying society today.

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It’s not just the “me” culture that is all around us, but the industry and culture that is behind it. Rather than pay taxes now, there is a whole industry on tax-avoidance. It’s become an accepted practice, mostly illegal, certainly immoral and to deflect interest in their actions, just like with the bully at school, they deflect criticism and investigation away from their own failings, by making a big deal about those who can least defend themselves.

The amount of tax avoided, mostly illegally, by the HSBC 7,000 will have gone along way to dealing with many of challenges that the UK is currently facing, and the austerity measure they are taking.

Add to that the same offshore tax dodges being employed by large companies, and the industry of sleeze ball consultants, awarded for advising, aiding, and making this possibly, doing everything from advising, writing, and ultimately even joining governments to implement tax policy that facilitates this has got to stop.

It’s easier to blame welfare cheats, immigrants, in fact anyone than themselves. Here in Texas we have both past Governor Perry, and current Governor Abbott continually railing against the Federal Government. Under Governor Perry, we had the HHSC(Ed: no relation) contract scandal, with the State going with a no-bid contract, with little oversight and unclear results to again go after the “little people“. It’s much easier to make them the problem than deal with the problem of insidious greed of the wealthy and their legions of shills.

hsbc taxWatch this extract from the BBC Panorama show to get a quick summary, or read the summary here.

Property Tax, Travis county, Austin

There are a number of threads running through the posts on this blog about Austin and Texas. One key aspect of them is how things get paid for, and what gets paid for. Since Texas(bigger than Germany, approx. 7/8 the Population of Germany) has no income tax, as boasts about it’s low corporate taxes, apart from the 6.25% sales tax, property tax is key.

(c) http://www.tax-rates.org
(c) http://www.tax-rates.org

Property tax, the valuation and assessment of properties has become both increasingly complex, and for many long term residents, unaffordable. Among those arguing for greater density in Austin, there are calls for better transportation, more affordable rents etc.

The fact that Caesar Chavez currently has more high rise development than any other street in America, added to all the stories and blatant self promotion that Austin in #1 in this, no.1 in that, highest ranked for everything has lead to a typical Texas business friendly “gold rush” over the last 10-years, eight of which have been presided over by rail-or-fail Mayor Leffingwell.

All this has lead to massive gentrification of the core and central neighborhoods. Development and re-development in itself isn’t evil, it’s the nature of the development and the context it’s done in. However, when that development is done by forcing people who’ve spent their adult lives in a neighborhood out, because they can no longer afford among other things, the property taxes, thats just plain wrong and bordering on financial exploitation.

Imagine, you were a hard working manual worker, domestic, construction, yard, office, transportation, etc. in the late 1970’s in Austin. A very different place. South of the river was mostly for the working poor, as a legacy of the cities 1920’s policies, east of I35 for the racially segregated families. You’ve struggled in the heat with no central a/c, poor transport options, typical inner city problems. Your do what you can to plan for your retirement, depend on federally provided health programs and finally you get to retire in your late 60’s.

Then along comes the modern, gold rush Austin. A few people, often like me, move into your neighborhood because we want something authentic, real rather than remote, urban sprawl neighborhoods. Sooner or later, business spots the opportunity to take advantage of the low property prices, the neighborhood starts to pick-up and before you know it, your meager retirement can’t afford the property taxes that are now annually more than the price of your house from 40-years ago.

Few people seem to understand the emotional, and stressful impact of having to even consider moving, let alone being financially relocated in your reclining years. It changes virtually every aspect of your life. One possible solution to this, and some of Austins other problems is the “accessory dwelling”. I’ll return to ADU’s in a subsequent post, it isn’t a simple as just making then easier to get permitted an built though.

With the City of Austin, typically for Texas, siding with business and refusing to challenge commercial property tax appraisals, the burden falls on private homes. That’s why it is important for everyone to protest their appraisals until the existing system changes.

If you don’t understand how the system works, and more importantly, why you need to protest, the Austin Monitor has a great discussion on soundcloud.

While I can see my obvious bias, as I said in my July 4th post, I for one would rather opt for a state income tax, even if that meant I would end up paying more tax. That though is very unlikely to ever happen in Texas, and so until then we have to push back and get to a point where businesses and commercial property owners pay their fair share.

Why bias? Well, I’m in my 50’s, I won’t be working for ever, and my income will then drop off sharply. At least as it currently stands, I plan to stay were I am.

Happy 4th to all my US Readers…

My yearly token protest
My yearly token protest
Happy 4th of July. This was my token yearly protest at 6:30am this morning, throwing a tea bag into Lake Austin from the Congress (bat) bridge. No taxation without representation!

The reality is I pay little tax in Texas, not counting what the State takes from the federal government. However, I for one would be willing to pay state income tax if it helped fix the deep inequalities in the property tax, which have arisen from people like me moving to Austin, and driving huge increases in property taxes. The state of Travis county property taxes is in itself deeply unjust for those that have lived through the lat 30-years in their same houses and now find assessments leaping up yearly by the maximum allowed. My property tax appeal will be heard in August.

Not withstanding my complaints and attempts here to understand the massive bias to big business in Texas, and the unjust social impact that regulation has on minorities, and more recently, women. I really like it here. Happy 4th!

Nickel and dimed to death

nickel-and-dime-SME-analytics[1]On a recent visit to London I was disappointed and confused by the hotel checkout invoice. For a bar bill for 2-drinks was listed as 5-separate things, including a £2 convenience charge for service after midnight, a service charge, the drinks, and, err, the tip I’d left. At least to my memory none of this was shown on the original bar tab, just the drinks and the tip.

This so reminds me of flying. I’ve remarked before that flying with United Airlines, where I don’t have any frequent flyer status, is like being nickel and dimed to death. You are confirmed on a flight, but nothing else, seats, drinks, boarding, checked luggage, etc. etc. can all be bought. When you are done, you are left feeling “dirty”.

We’ve all bought event tickets online, if the price is between $10-$20, you can actually end up paying more in fees and taxes that the ticket price. Which is ridiculous if you think about it. It’s happening more and more.

Yet, shouldn’t the original price include pretty much everything? After all, for years bills and receipts have covered the cost of doing business in every other way. They don’t list Social Security and Medicare; their property and income taxes; establishment running costs, or, their profit.

I work in the computer industry, the fact we’ve enabled this level of minute tracking, made it easy to add on charges left right and center, doesn’t mean that businesses should break everything out. Yes, I understand in the case of the airline industry, a lot of the charges are optional, and it’s allowed a lot more frugal traveler’s to take trips. But this race to the bottom on prices, show the cheapest price you can legally claim, then add fees, surcharges, taxes etc. can’t end happily.

This blog post has another perspective, oh great, Obamacare for breakfast?