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You Pay For Tax Haven Bliss

Pivotfarm's picture




 

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You don’t benefit from it, but you pay for it as a result of the government losing out. Yes, the government complacently sits back and does nothing while tax havens enable people to put their money hidden away in some secret off-shore excuse for a bank while at the very same time the taxpayer ends up paying for what the state is losing out on. Why is it that it’s the little guy stuck in the middle that gets pushed around, shoved into a corner for him to have his nose pummeled by the taxes levied on him, instead of the ones that are putting the money away in those off-shore financial generators? It’s not as if it’s just a couple of dollars per person. No, the sum that every American citizen ends up paying because of that works out to roughly $1,259 extra on their tax bill. Yes, the state is hardly going to allow the shortfall to go amiss and it’s the average American that end sup picking up the tab.

According to research carried out by US Public Interest Research Group in Boston, there are some $150 billion in federal revenue and $34 billion in state revenue that goes down the plug-hole into some off-shore banker’s vaults. It’s all stashed away by wealthy corporations and high-net-worth individuals that want to (and therefore have the financial ability to) avoid paying their taxes in the USA. Estimates show that corporations account for about $110 billion of the total that is lost and private individuals make up what’s left.

93% of the profit made for corporations between 2008 and 2013 was through off-shore companies, meaning that they were paying no tax in the USA. Great, so now we understand just why (well, one of the reasons apart from the Federal Reserve blunder on Quantitative Easing and the far-from-wise handling of the economy by Ben Bernanke and his pals) the economy hasn’t actually budged an inch in the right direction.

The loony loophole that we are all paying for is that any corporation can avoid paying federal income tax on offshore profits. Easy, and you can’t even call it a loophole. It’s a clear-cut measure to allow those corporations to benefit from the non-payment of taxation in the USA. Not only do those corporations manage to avoid paying taxes in the USA on a federal level, but they don’t have to pay tax in the states where they are operating. Nice! Why not let us all set up our own corporation, or even better all Americans should join forces, create the People’s Corporation, headquarter ourselves in the Cayman Islands and then refuse to pay both federal and state taxes since we will be based offshore, operating within the USA and exploiting the so-called loophole.

290 of the top Fortune 500 companies in 2013 held $1.6 trillion of their profits in accounts located in tax havens. That was an increase from $1.1 trillion in profits in 2009. Nice little earner this business, isn’t it?

If you live in California, New York and New Jersey, then you’re suffering the most since it’s in those states that there are the most tax dodgers.

But, it’s fighting a losing battle sometimes where all of this is concerned. Do we really believe that the people that earn the most, those that have their own savings in offshore accounts are really going to put an end to his? Taxes were never made to be fair. They were intended to share the money (that was the idea) and provide for those that needed it so that we had a better world. The real reason taxation might have been invented is to filter the money of the people through the hands of those that meet in the corridors of power. Ah! Well, as the humorist Will Rogers once said “it’s a good thing we do not get as much government as we pay for”. Always look on the bright side of life…

The average American ends up paying that shortfall in government revenue simply because without that money the state cuts spending, increases taxes and establishes an order of priority of who gets what and how much is dished out.

Remember as someone once said, you don’t pay taxes, they take taxes!

Originally posted: You Pay For Tax Haven Bliss

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Thu, 05/01/2014 - 12:22 | 4716415 thurstjo63
thurstjo63's picture

I find it amusing that he talks about a shortfall in revenues. Like most of us expressly voted to use our money on the numerous useless government  programs!?! When we get to expressly vote how our money is spent, then we can have a conversation about someone not paying their fair share.

Thu, 05/01/2014 - 12:15 | 4716376 kurt
kurt's picture

Its amazing how so few took the bait. What we're supposed to do is express outrage that somebody, a rich guy, is making you pay his baggage fees. This will then create a groundswell of taxpayers screaming for the IRS to "go get 'em!" As Legal Eagle points out, the government is not going to reduce your taxes by the amount they squeeze out of the Caymens nor are they going to curtail their increases to spending...war anyone?

Thu, 05/01/2014 - 11:37 | 4716164 BarnacleBill
BarnacleBill's picture

Somebody down below complained that offshore tax-havens were only for the rich. That's only partly true. It's too complicated a topic to go into at length here, but as I noted in my post of 23.06 last night, the fault lies entirely with the high-tax nations. There is a cheap way of avoiding one's taxes, and an expensive way. In Cayman anybody can form a company for a couple of thousand dollars, and many do. That's the cheap way. It's a silly thing for an amateur tax-dodger to do, because the IRS will find out and put him in jail. The expensive way - the only safe and recommended way - is to pay a US tax-expert to arrange his clients' affairs so as to conform with the IRS Code.

In last night's post I gave a link to a short blog I wrote for "Barlow's Cayman" in January last year. I won't strain the ZH editors' tolerance by giving another link, but will simply mention that in that same January I wrote "Lunching with the stars", which took a light-hearted glance at one of the practices that were common in the Bahamas forty-odd years ago. (Do not try this at home without a professional present!)

Thu, 05/01/2014 - 14:56 | 4717125 Common_Cents22
Common_Cents22's picture

What's the deal w/ the Puerto Rico tax situation?  I see some articles where a few financial elite are relocating there.   John Paulson has invested $1billion for upscale resorts.  He is sellin the gold miners, shovels.    Peter Schiff said he's moving his office there.

Thu, 05/01/2014 - 09:45 | 4715669 Comte d'herblay
Comte d'herblay's picture

Once again:  NO CORPORATION pays ANY TAXES whatsoever.  They are conduits for the government.  You are at one end of the pipe, and the government is at the far end of the pipe. The Pipe (corporation) merely takes from one end and passes it on to the other end, the governments.

If you stop thinking in terms of who to tax behind the tree, and get some edumacation about a Profit and Loss Statement, you will see, 1) taxes of all kinds listed in the Expense section of the P & L on separate line, and 2) the Top Line, "Income", will eventually reflect the increase in prices YOU PAID for the amount of Income taxes the corporation collects and then passes on to the various governmental agencies.

When are you going to finally learn this simple economic fact?   Whether the Corporate income tax rate is 100% of net income, or .0001% of net income, it is YOU the Buyer of that corporations' products and services that pay ALL the taxes. And all the other expenses of production???

Jeesssus h Christ how many times does this have to be posted for the uninformed to get it??

 

 

Thu, 05/01/2014 - 10:01 | 4715738 MrPalladium
MrPalladium's picture

"NO CORPORATION pays ANY TAXES whatsoever.  They are conduits for the government."

Many studies have been done on this issue and the consensus is that corporate tax rate increases are born by the corporation in the short run but by the corporation's customers in the long run. The bigger issue of course is the massive amount of payroll tax that the corporations and other employers collect on behalf of the government. Taxes are a burden on commerce and in the modern world constitute a toll for keeping civil peace while funding the mechanism of oligopoly legislative protection and subsidy for existing businesses of sufficient size to command a seat at the legislative table. Unlike the third world, corruption in the U.S. is written right into our statutes and laws.

Thu, 05/01/2014 - 11:25 | 4716011 legal eagle
legal eagle's picture

It is a non-starter to say that regular folks pay for the taxes avoided by tax dodges offshore when the government would use those taxes to increase spending and increase bailing out their crony friends -- those taxes would not be used to reduce taxes.  You assume a balanced budget or fixed baseline spending, which has not been the case in the US for my lifetime.

My taxes went up considerably this past year, is that because of the poor spending habits of the government or is that because some folks escaped taxes by parking their money offshore?  I tend to think it is the former. Governments are parasitic and, in the US, the government does not respond to the will of the people.  Our government is running all over the world doing all sorts of horrible things with our tax dollars, and gifting tax dollars to cronies on Wall Street and K street as well as whatever dictator they support at the moment.  Most of the folks I have helped come clean through voluntary disclosures of offshore accounts lived abroad, paid their taxes abroad, and did not know they had a US filing obligation.  Yes, there were 10% who purposefully escaped income tax on the earnings from their savings, after first paying significant income taxes in the US on those savings (when they earned it), and property tax, and sales tax, and, and, and.  My 7 year old understands that my working for $100, and giving $50 to the government for the morons in Washington to hand out to their buddies and start wars is outrageous.  I will worry about filling holes in the dike when our government stops stealing from us and partying on.

There are Mexican Americans who worry that if they declare their money their kids or family will be kidnapped in Mexico.  This happens all over Central and South America.  There are white South Africans who know that declared inheritance from apartide era estate pllaning will be confiscated in South Africa.   There are reasons for keeping funds offshore, their are legitimate reasons why folks want to keep their affairs private, and why would we trust our governments to do anything in your best interest?  The biggest threat to our physical and financial well being is our governments.  I can tell you from working in Switzerland and the Cayman islands that the very people you think are there to protect us, including people all accross the US government, have dynasty trusts in these jurisdictions and hire clever lawyers like me to keep those funds offshore legally.   The whole system is fucked up, really.  Hypocrites, all.

 

Thu, 05/01/2014 - 09:21 | 4715604 Vendetta
Vendetta's picture

I thought profit was supposed to be shared with shareholders.... guess not.

Thu, 05/01/2014 - 08:54 | 4715503 Uncle Remus
Uncle Remus's picture

Bull. Shit. Wrong fucking question. Taxes ARE the problem - period.

Thu, 05/01/2014 - 12:03 | 4716198 Emergency Ward
Emergency Ward's picture

Who is pissed at Blade [Wesley Snipes] for trying to keep his money out of the hairy hands of the greedy IRS?  Bush's Injustice Department sentenced him to prison and Obama's Injustice Department denied his appeal and threw him into prison.  Debtors prisons belong to a savage and cruel age of the past -- they have made a return in America today.

The idea that YOU are paying for it ?!?  Where is PivvetFarm's brain?

Thu, 05/01/2014 - 08:33 | 4715417 MrBoompi
MrBoompi's picture

Fair taxation for all should reduce most people's tax burden, I thought even the "taxes are theft" crowd could agree with that. How else are we supposed pay for the largest military and the largest empire on the planet? Surely cutting spending for this can't be done! Surely we can't just create the money out of thin air! Surely offshore tax havens are necessary for the benefit of mankind!

Thu, 05/01/2014 - 00:34 | 4714966 Kreditanstalt
Kreditanstalt's picture

Amazing!  Here's someone actually defending government taxation!

And..."the taxpayer ends up paying for what the state is losing out on. "????  What?  What?

Not if the state cuts its spending.

Thu, 05/01/2014 - 03:07 | 4715098 The Abstraction...
The Abstraction of Justice's picture

If you want to incorporate into Switzerland or the Cayman islands, or the Isle of Man, it will cost a significant amount of money - that is to make the tax savings off-limit to the poor. Only the rich can benefit. So its not the case of defending taxes, but taxes that are imposed on the poor by the rich.

Thu, 05/01/2014 - 05:23 | 4715178 tonyw
tonyw's picture

"without that money the state cuts spending, increases taxes"

the state never cuts spending, year on year the debt increases.

Thu, 05/01/2014 - 08:58 | 4715513 SAT 800
SAT 800's picture

It's very crazy stuff; hard to believe anyone is this dense. .Gov is just going to keep clawing away moar and moar from anyone they can; it doesn't make a damn bit of difference if there's a "tax haven" or not.

Thu, 05/01/2014 - 10:10 | 4715798 JRobby
JRobby's picture

Wait until they roll out the national sales tax (VAT, Activity Tax etc.)

A tax is a tax. File a zero return and buy lottery tickets.

 

Thu, 05/01/2014 - 00:01 | 4714920 kanoli
kanoli's picture

What is this OECD propaganda doing on Zero Hedge?

Thu, 05/01/2014 - 11:22 | 4716083 SAT 800
SAT 800's picture

I don't know; it's disgusting. I'll make a note not to waste time reading anything by this Pivotfarm entity again.

Thu, 05/01/2014 - 09:43 | 4715682 Comte d'herblay
Comte d'herblay's picture

Thank you!

 

Sportsguychestbump!!

Thu, 05/01/2014 - 07:39 | 4715315 Seahorse
Seahorse's picture

More newspeak methinks

Public Interest Research Group = Govenment Interest Research Group

Thu, 05/01/2014 - 07:10 | 4715265 H. Perowne
H. Perowne's picture

The pimps are allowed to spew so this place doesn't become an echo chamber. Same reason the shills are downvoted, mocked, made to look the fool . . . but never banned. Better to know your enemy by their own words, and deal out just enough rope so that they can cinch those thirteen knots nice and tight.

Thu, 05/01/2014 - 03:00 | 4715095 ebear
ebear's picture

comic relief

Wed, 04/30/2014 - 23:49 | 4714899 atomicwasted
atomicwasted's picture

Because being able to keep something you own and keeping a government from stealing it is bad?  WTF has happened to ZH?

Thu, 05/01/2014 - 07:25 | 4715292 Tom_333
Tom_333's picture

There is currently a secular world-wide trend towards a socialistic way of thinking in the western world and much so in the U.S. Much because a majority of the people voting have never seen or experienced real socialism. It was more prevalent in the -80ies and could be experienced for real in stagnant controlled hell-holes like DDR and great swaths across Europe.

Since then there is a new crop of naive and gullible voters being lured by their politicians who secretly work with oligarchs utilizing weird demagogery and race-baiting to push quasi-socialism as a way to promote their own power.

This will keep up for some time until enough voters have had time to live and experince real-life socialism. Argumentation based in facts does not change this. We need a another decade to feel the full effects of oligarchic quasi-socialism and stagnation before general population return to their senses.

Thu, 05/01/2014 - 00:20 | 4714948 UselessEater
UselessEater's picture

Good Haven! Even The Government Does it. "the Future Fund has no fewer than 43 subsidiaries in foreign tax havens.... what the blazes is the Australian government doing malingering about in the Cayman Islands? Is it avoiding paying tax to itself?"

http://www.smh.com.au/business/good-haven-even-the-government-does-it-20... 


Wed, 04/30/2014 - 23:06 | 4714798 BarnacleBill
BarnacleBill's picture

As a long-retired Manager and sometime Director of the Cayman Islands Chamber of Commerce, I am naturally going to say nice things about Offshore tax-havens. After all, Cayman is one of the major international financial centers and tax havens. In my retirement I write commentaries for my personal blog, some of them on the topic of tax-havens. I offer a link to one below - and, from it, this excerpt:

"It’s a sad fact of life that most high-tax nations are controlled by people whose self-interest mocks all notions of decency. Arguably, the less money left in their hands, the more humane place the world would be. As it is, their budgets provide for the  destruction of health, education and infrastructure in the Middle East.

"And/or in Black Africa, which is being mooted as the next victim of the high-tax NATO nations. More millions of lives will be ended, and more trillions of dollars will be diverted away from the provision of health care, education and sorely needed infrastructure at home, into the bank accounts of the wanton destroyers of the quality of life in other countries. Most of the money will be channelled through Offshore tax-havens, yes, but always with the full knowledge and consent of the rulers of the high-tax nations and their tax-collectors."

 

http://barlowscayman.blogspot.com/2013/01/offshore-tax-havens-what-they-...

Thu, 05/01/2014 - 09:01 | 4715529 SAT 800
SAT 800's picture

good heavens. well, that's interesting.

Do NOT follow this link or you will be banned from the site!