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On Mitt Romney's Millions In Cayman Island Offshore Tax Havens

Tyler Durden's picture





 

While the news that Mitt Romney has joined Warren Buffet in the "my secretary makes more than me" 15% tax club has come and gone, even as America appears largely confused or dismissive that Romney, at least on paper appears to be precisely the puppet that Wall Street wants put in charge, we are not so sure how it will react to discovering that in addition to all of the above, Romney also holds a substantial of his assets deep offshore, in the much maligned recently Cayman Islands. As a reminder, it has long been Obama's "tax-policy" to force repatriation of virtually all individual tax holdings held abroad, both legally and illegally, much to the detrimental collapse in the UBS business model. Yet apparently when it comes to potential future presidents, loopholes are quite welcome. Especially when as ABC reports, "the offshore accounts have provided him -- and Bain -- with other potential financial benefits, such as higher management fees and greater foreign interest, all at the expense of the U.S. Treasury." As a reminder: "Rebecca J. Wilkins, a tax policy expert with Citizens for Tax Justice, said the federal government loses an estimated $100 billion a year because of tax havens." But who needs taxes when America can just print all the money it will need to fund its deficit in perpetuity. Just ask the Neo-Keynesians. Perhaps all these are questions that the candidate that so hard is trying to channel Ronald Reagan and so far failing, can finally address once and for all, before he moves into one of his patented Obama bashing subject changing routing.

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More from ABC:

Although it is not apparent on his financial disclosure form, Mitt Romney has millions of dollars of his personal wealth in investment funds set up in the Cayman Islands, a notorious Caribbean tax haven.

 

"His personal finances are a poster child of what's wrong with the American tax system," said Jack Blum, a Washington lawyer who is an authority on tax enforcement and offshore banking.

 

On Tuesday, Romney disclosed that he has been paying a far lower percentage in taxes than most Americans, around 15 percent of his annual earnings. It has been Romney's Republican rivals who have driven the tax issue onto center stage. For weeks, Romney has cited a desire for privacy as his reason for not sharing his tax returns -- a gesture of transparency that is now expected from presidential contenders.

 

But tax experts tell ABC News there are other reasons Romney may not want the public viewing his returns. As one of the wealthiest candidates to run for president in recent times, Romney has used a variety of techniques to help minimize the taxes on his estimated $250 million fortune. In addition to paying the lower tax rate on his investment income, Romney has as much as $8 million invested in at least 12 funds listed on a Cayman Islands registry. Another investment, which Romney reports as being worth between $5 million and $25 million, shows up on securities records as having been domiciled in the Caymans.

 

Official documents reviewed by ABC News show that Bain Capital, the private equity partnership Romney once ran, has set up some 138 secretive offshore funds in the Caymans.

The official spin:

Romney campaign officials and those at Bain Capital tell ABC News that the purpose of setting up those accounts in the Cayman Islands is to help attract money from foreign investors, and that the accounts provide no tax advantage to American investors like Romney. Romney, the campaign said, has paid all U.S. taxes on income derived from those investments. Bain officials called the decision to locate some funds offshore routine, and a benefit only to foreign investors who do not want to be subjected to U.S. taxes.

And the reality:

Tax experts agree that Romney remains subject to American taxes. But they say the offshore accounts have provided him -- and Bain -- with other potential financial benefits, such as higher management fees and greater foreign interest, all at the expense of the U.S. Treasury. Rebecca J. Wilkins, a tax policy expert with Citizens for Tax Justice, said the federal government loses an estimated $100 billion a year because of tax havens.

 

Blum, the D.C. tax lawyer, said working through an offshore investment vehicle allows the investor to "avoid a whole series of small traps in the tax code that ordinary people would face if they paid tax on an onshore basis." Wilkins agreed, saying the "primary advantage to setting those funds up in an offshore jurisdiction like the Cayman Islands or Bermuda is it helps the investors avoid tax." "It helps U.S. investors avoid U.S. tax," said Wilkins, "it helps foreign investors avoid taxes in their home country, so it's not illegal or improper to set those funds up in a foreign jurisdiction, but it makes it more attractive to investors because it helps them avoid paying taxes on that income."

And so forth.

In conclusion all we can say is that just like our Treasury Secretary, who almost did not get appointed to the job after it was discovered he cheated on his taxes, only to blame it on TurboTax software, the next great tax avoidance symbol will be none other than America's next possible president. Only this time we fail to see how TurboTax - the Offshore Tax Avoidance EditionTM will get the blame.

Which only confirms, once again, that America always and forever, will get precisely the president it so richly deserves.

 


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Thu, 01/19/2012 - 11:11 | Link to Comment Clueless Economist
Clueless Economist's picture

Jim Cramer is bullish on GM!  He says the good news is that because some many people are squatting in their underwater houses, and not paying the mortgage, that they are flush with cash to buy a new car.

So deadbeats are good for GM? What a fecked up country we live in!

BOOYAH!

Thu, 01/19/2012 - 11:14 | Link to Comment Pladizow
Pladizow's picture

Every one but Ron Paul should just drop out, including Obummer!

Thu, 01/19/2012 - 11:15 | Link to Comment GMadScientist
GMadScientist's picture

Rational Expectation of #Winning!

Thu, 01/19/2012 - 11:27 | Link to Comment I think I need ...
I think I need to buy a gun's picture

i don't think the republicans are making a serious challenge this time around once again because the next 4 years will be worse then the 4 fucked up years we just experienced.......i think its rather obvious new funds will be available to steal come 2016

Thu, 01/19/2012 - 12:38 | Link to Comment Woodyg
Woodyg's picture

We'll know the repubs are serious when Jeb Bush enters a race......

Regardless of his last name he is the true repub power.....

He'd win Florida which goes along waybtomwinnng the white house -

He speaks fluent Spanish and is married to a Latina.....

If he siphoned off even 10% of the Latino vote from the typical spread he'd win......

And like cockroaches you can't get rid of the bush family.....

Which means The bushes expect the Oilybomber to win and Jeb to take it in 2016........

Thu, 01/19/2012 - 13:22 | Link to Comment Rollerball
Rollerball's picture

Unless they're going to hack the Diebold machines (again), Jeb has too many skulls & cross-bones in his closet from 9/11..  

Thu, 01/19/2012 - 13:32 | Link to Comment Bananamerican
Bananamerican's picture

Dudes, It's a little spooky (in a good way) but could we be heading for a Ron Paul candidacy?

Huntsman. gone

Bachman. gone

Newt. Neutered.

Perry. Nary

RomneyTron. No way mon for de CayMon!

Santorum. I submit that amerika is STILL not ready for a theocratic admin.

-----------It will be Ron Paul by default (of de others)--------

Unfortunately, RP will lose to Obanker. Amerika will resume it's date with destiny

Thu, 01/19/2012 - 15:24 | Link to Comment Woodyg
Woodyg's picture

I hate to tell you but even if Paul was the favorite he still wouldn't win as he is TOO OLD.

He is 76 and would be a full 8 years older than the next oldest president - Reagan - and many of us still remember how that worked out by the end.....

My funnest memories of Reagan was watching some of those last press conferences when he could barely remember his own name..........

But the basic point is that Americans won't vote for someone that old.....

It's too bad but the timing between his message and the economic facts on the ground needed to wake up the 'average american' was just off by a few years......

Thu, 01/19/2012 - 16:51 | Link to Comment Rollerball
Rollerball's picture

Amerikansbutwonts will be SOOLDed to vote AGAINST (primary motivator of "less worst") him , NOT because he's Reaganesque, but, because he's John F Kennedyesque.

Nobody gave a shit how old Hitler was -- as long as he could stomach the cocaine necessary to "Bernay's it".  

But you hang in there Woody:

http://www.youtube.com/watch?v=nfdxoD-m_ow

Thu, 01/19/2012 - 17:36 | Link to Comment Clycntct
Clycntct's picture

Why do you hate old people?(G)

 

I've got to disagree with you. But.

If and when that is the issue then it is a great issue to address.

The key to resolve your final point is what a great ad campaign is all about.

Get it to his running mate and the fall back issue closes the deal

 

 

Thu, 01/19/2012 - 19:52 | Link to Comment UBIGDummy
UBIGDummy's picture

If Ron Paul doesn't win.

I hope Obombya wins. 

If not for a peacefull elected revolution, then let Obummer cause the NOT so peacefull revolution ensue.  

Bring on Olabamba win, and Viva le revelucion.

Oh oh, is the DHS knocking on my door.  

 

Quick, hide!

Thu, 01/19/2012 - 12:39 | Link to Comment roadhazard
roadhazard's picture

Ya think? Would You want to be Prez now. I don't think Obama had a clue about what he was walking into until he sat in on the inside of the $700 billion dollah "starter" bailout plea. If there is a 2016 Government as we know it today then Hillary will be the next President because the repubicans will still not be able to come up with anyone. You heard it here first.

Thu, 01/19/2012 - 13:36 | Link to Comment chet
chet's picture

The GOP should be walking into the White House this year, but instead they've come up with the worst slate of candidates in living memory, and will likely lose.

As a youngish man (35), when I listen to the GOP I hear ideas from 30 years ago, aimed at bringing back some golden age they remember from 50+ years ago.  They need some sort of platform that addresses the future instead of endlessly offering verbal handjobs to Reagan's corpse.

Thu, 01/19/2012 - 13:52 | Link to Comment blindfaith
blindfaith's picture

It is called out of touch and don't give a rats ass either.

GOP winners make the mess and the DNC winners are blamed for cleaning up to slow.

I wish they would run Paul and Huntsman as DUAL presidents...Paul for national and Huntsman as international affairs, then we would have the two smartest men in charge and some real hope ( unless the lobist lobotmize them).  Who cares who the VP is...maybe that Joe-the-Plumer guy could do it.

Thu, 01/19/2012 - 16:55 | Link to Comment Baptiste Say
Baptiste Say's picture

Huntsman is a psychopathic moron eager as the rest of the GOODNESS insiders to bomb Iran.
He is not worth of standing alongside the man of peace Paul let alone serve as co/vice president with him.

Thu, 01/19/2012 - 14:19 | Link to Comment Nascent_Variable
Nascent_Variable's picture

On top of that, Reagan was an absolute disaster of a president, in spite of his small government rhetoric.  If anything, they've confused him with Eisenhower, who cut spending before reducing any taxes and kept both the debt and inflation extremely low.

Thu, 01/19/2012 - 15:19 | Link to Comment poor fella
poor fella's picture

That's exactly why EVERYONE should vote for Romney! There's no better way to put a stake in The System than when the U.S. enters an Appalachian-style depression caused by ever increasing corporate power and rampant globalization.

In a Romney world, states could cut minimum wage and give businesses tax exemptions, free buildings, and utilities paid for by those communities, at which time we'll reach UBER levels of wealth concentration.

If that's really The Plan, let's force them to turn up the heat - maybe us peon frogs will get the point and jump... probably not (sure there's some ace in the hole like, "FREE CABLE AND SHACKS FOR ALL")

Thu, 01/19/2012 - 17:40 | Link to Comment Clycntct
Clycntct's picture

Ehhh I think I'll hold off on cutting my throat for now.

Thu, 01/19/2012 - 11:31 | Link to Comment Gully Foyle
Gully Foyle's picture

Pladizow

Isn't there a ballot court case coming up where Obama has to produce his birth certificate? I think it's in georgia.


Thu, 01/19/2012 - 11:45 | Link to Comment Pladizow
Pladizow's picture

Not sure, I dont follow the subject.

I think we all Know what the truth is.

How can you ask a corrupt US gov to provide proof of a doument they are responsible for making and can reproduce at will?

Proof that Obama's Birth Certificate is a fake? - http://www.youtube.com/watch?v=3g30VCl_cgk

Thu, 01/19/2012 - 12:17 | Link to Comment Woodyg
Woodyg's picture

Except that it is states that make birth certificates not the us guv.....

But hey facts are no fun......

Like the fact that Obama is a corporatist thru and thru - he's no Marxist -

The Oilybomber never met a Bankster he didn't want to deep throat......

Not much difference between him and Romney actually - which is Exactly how corporate America wants it...

3 card Monte and We the People are the marks......

Thu, 01/19/2012 - 11:48 | Link to Comment chubbar
chubbar's picture

Yes there is, on the 26th in Georgia. Of course Obummer has filed another motion telling the court that the states have no right to ask for this information. He is also trying to quash the subpeonas for his BC info in Hawaii. What an asshole. Does anyone really believe that there is no fire with all of this smoke coming from his attorneys actions? He has spent in excess of 2 Million on these actions to keep his info out of the public eye. He is definitely a Manchurian candidate! Isn't it odd that the MSM has given no coverage to the fact that in a week the president is supposed to appear in a court proceeding to prove his citizenship? Really?

http://www.orlytaitzesq.com/?p=30494

 

Thu, 01/19/2012 - 12:33 | Link to Comment Woodyg
Woodyg's picture

He is the manchurian candidate - for the republicans!

Thu, 01/19/2012 - 13:39 | Link to Comment chet
chet's picture

You guys still barking up that tree?  Is it really that hard to believe that a black man was born in the US?  Happens every day.

Thu, 01/19/2012 - 11:43 | Link to Comment neilzep
neilzep's picture

Ron is the man.

HI Tyler,its Led Zeppelin from loser Tradestion.

Thu, 01/19/2012 - 11:18 | Link to Comment Pladizow
Pladizow's picture

Doop.

Thu, 01/19/2012 - 11:16 | Link to Comment EscapeKey
EscapeKey's picture

Yep, and as the GM auto loans are underwritten by the US government, in reality it's another GSE underwritten debt bubble.

Thu, 01/19/2012 - 11:19 | Link to Comment economics1996
economics1996's picture

This is a good example of why there should be no income tax, and a Fair/Flat tax adopted.  

Thu, 01/19/2012 - 11:28 | Link to Comment Mr Lennon Hendrix
Mr Lennon Hendrix's picture

"Fair"/Flat tax....

How about you have everyone "Gently" touch their toes.

If your State wants to have a flat tax, go ahead, but Federal Taxes are for chumps.

Thu, 01/19/2012 - 11:30 | Link to Comment WonderDawg
WonderDawg's picture

The FairTax is a no-brainer. It will be an uphill battle to get it implemented because it's been so misrepresented in what little media attention it's gotten, but if people understood how it would work, I think people would get behind it. The first result would be capital investments coming back to the US and an improvement in the dismal unemployment numbers. We could actually have a surge in manufacturing employment. Tax revenues would likely go up, as the shadow economy that pays no taxes would now be taxed. So many other benefits would come to light. It just makes sense, which is why the pols will fight it every step of the way.

Thu, 01/19/2012 - 11:37 | Link to Comment redpill
redpill's picture

Couldn't agree more, WonderDawg.  Even for those who are of the opinion we need to steadily cut expenditures until there is no income or consumption tax needed, in the mean time it makes a lot of sense to move to the FairTax model.

Trust me, Mitt Romney paying 23% on everything he consumes is going to be a hell of a lot more than whatever he's paying now.

 

Thu, 01/19/2012 - 11:40 | Link to Comment Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Why in hell would you want any taxes?!

Thu, 01/19/2012 - 11:43 | Link to Comment redpill
redpill's picture

I don't, but if we're going to have them we might as well collect them in a way that makes sense.

Thu, 01/19/2012 - 11:46 | Link to Comment Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Stop making sense!  Taxes need to be apportioned.  'Nuff said.

Thu, 01/19/2012 - 12:40 | Link to Comment Badabing
Badabing's picture

End Tax and just print, inflation effects the rich too, at the same inflation rate%.

Thu, 01/19/2012 - 13:05 | Link to Comment redpill
redpill's picture

Wrong.  The wealthy have more ability to use their savings to purchase assets as a hedge against the inflation.  Without those assets, you quickly become broke.  So it would actually make the current disparity in wealth worse and destroy the middle class completely.

Thu, 01/19/2012 - 14:28 | Link to Comment Badabing
Badabing's picture

What do they do now?

 

Inflation  gets them in the Caymans also.

Thu, 01/19/2012 - 14:41 | Link to Comment redpill
redpill's picture

They give their money to Goldman to front-run everyone.

Thu, 01/19/2012 - 16:32 | Link to Comment Badabing
Badabing's picture

No one saves any more not the rich, not the middleclass, no one.

Those days of a savings account are over if you don’t invest in something your going backwards.

Inflation hits everyone equally no matter how much you hedge. The only way out is physical gold.

Until the rules are changed.

Thu, 01/19/2012 - 13:31 | Link to Comment Belarusian Bull
Belarusian Bull's picture

That's right, if you are to pick, pick lesser of 2 evils.

Thu, 01/19/2012 - 13:04 | Link to Comment Woodyg
Woodyg's picture

So you want to live in a 3rd world nation?

What the hell is wrong with you people?

Thu, 01/19/2012 - 12:40 | Link to Comment Woodyg
Woodyg's picture

Paying a 23% consumption tax does not equate to a 15% cap gains tax.......

Math obviously isn't your strong suit.......

Thu, 01/19/2012 - 18:32 | Link to Comment redpill
redpill's picture

And reading comprehension apparently is not yours since I didn't say that.

Thu, 01/19/2012 - 12:13 | Link to Comment defencev
defencev's picture

If Romney complies with tax laws, I see no reason why his offshore accounts can somehow  make him  less eligible for US Presidency. After all, majority of people over here seem to recognize that US is broke and if some people (on smarter side) try to preserve their assets by moving them offshore, it just a sign of their intellect , the feature I personally welcome for the candidate to this job.

 Talking about possible tax laws,  Singapore is ideal , in my view. It does not tax its residents on any offshore earnings and onshore earnings are taxed in pretty straightforward way. And it does not tax at all nonresidents for investment earnings in Singapore. It takes just several minutes to fill their tax form. For example, interests and dividends are taxed (on onshore accounts). My local bank (HSBC Singapore) sends me in the end of the year the interests paid every month on my accounts (for non SGD both in the corresponding currency and equivalent in SGD). All I need to do is to enter this information in the tax form.

 I wish we had similar sytem in US.I assure you that whatever they collect over here from offshore investments does not cover a fraction of the cost of IRS beaurocracy they need to have to collect this staff.

Thu, 01/19/2012 - 12:49 | Link to Comment We need Geronimo
We need Geronimo's picture

Intellect?  Possibly.  Until you are running for president, then it's called tax-dodging.

Thu, 01/19/2012 - 13:23 | Link to Comment Archduke
Archduke's picture

I lived in Singapore. I love Singapore. but let's be honest: it's a tax haven.

it's a eurodollar offshore nexus, and the casino's real purpose is to launder

money stolen by the corrupt mandarins of the PRC and criminals worldwide.

Thu, 01/19/2012 - 12:18 | Link to Comment LetThemEatRand
LetThemEatRand's picture

The FairTax is a giant scam.  How convenient if you already have $1B in the bank that you only get taxed on what you spend from this point forward.   How about we claw back the ill gotten gains and then adopt a VAT system.

Thu, 01/19/2012 - 13:10 | Link to Comment defencev
defencev's picture

Your argument does not hold the water. Whatever I have on my bank account is not taxed under the present system. If you suggest, however, to tax assets rather than earnings, it is a completely different game.

Thu, 01/19/2012 - 11:13 | Link to Comment TuesdayBen
TuesdayBen's picture

Class Warfare, bitchez.  Just what statist Obooba wants.

Thu, 01/19/2012 - 11:17 | Link to Comment GeneMarchbanks
GeneMarchbanks's picture

Obama is not playing and somehow winning himself votes. No wonder people are calling an end to this freakshow before all the republicans win another term for Obamanation.

Thu, 01/19/2012 - 11:18 | Link to Comment GMadScientist
GMadScientist's picture

Ass-clown, differential taxation of hedgies and long-term holdings (define the class of people who have a large amount of money why don't you) is real class warfare.

Bain vs The Middle Class.

Thu, 01/19/2012 - 12:48 | Link to Comment TuesdayBen
TuesdayBen's picture

I'm no fan of Romney, but the bottom half in the US pays zero federal income tax, and then those among the bottom half who are aholes gripe about a guy who has more and is complying with the tax code.  Get out and earn some coin, losers.

Thu, 01/19/2012 - 15:27 | Link to Comment poor fella
poor fella's picture

I'd bet that most people not paying any taxes at all would love to be able to pay taxes, bills, and rent... it means they're doing something right by working and paying for amenities they enjoy.

 

That's another way to think about it.

Thu, 01/19/2012 - 18:19 | Link to Comment Clycntct
Clycntct's picture

 

"That's another way to think about it."

Some of us may be thinking that adding leeches to our neck because we are breathing is not a good Idea.

 Put a wall up and some of us may figure out how to bypass it.

 

Fri, 01/20/2012 - 10:58 | Link to Comment GMadScientist
GMadScientist's picture

Guess again...top 1% and also have an effective rate between 15-16%...stop playing apologist and make a real point, mental midget.

I guess a dipshit like you has never heard of sales tax? Or prop tax? Or license fees? Or FICA?

Clearly we should pay the bottom 50% more so they can share some of that awful tax burden too. I don't suppose you've actually looked at the numbers to see that everyone making more than $10k has a tax liability and that the bottom 50% have tax credits and write-offs that make their final tab zero. How is that different from Mittens taking advantage of the tax code in his way, skippy?

Do you find yourself envious of the Wal-Mart greeter and his freewheeling minimum wage lifestyle? Does that seem like a better deal than paying 15% to sit on one's ass collecting coupons and occasionally digesting companies from the inside out?

Would that we could all use other people's money to steal other people's money. What a wonderful world that would be.

You know who the biggest losers in the world are? People who need bailouts.

Thu, 01/19/2012 - 11:32 | Link to Comment kridkrid
kridkrid's picture

the statist obama vs, what... the non-statist Republicans?  Don't fall for it.

Thu, 01/19/2012 - 11:35 | Link to Comment Crassus
Crassus's picture

There's always been "class warfare" in the U.S.  It's only called that when the lower classes fight back.

Thu, 01/19/2012 - 11:13 | Link to Comment gojam
gojam's picture

Hail to the Thief !

Thu, 01/19/2012 - 11:19 | Link to Comment Deo vindice
Deo vindice's picture

Romney's tax return is going to be to him what Obama's birth certificate issue was for him.

The matter will never go away until he comes clean with the truth.

If Mitt can report it in April, he can report it in January.

Fri, 01/20/2012 - 11:02 | Link to Comment GMadScientist
GMadScientist's picture

Not true. By April, the field will have narrowed and the Repugnants will be susceptible to pig-in-a-poke logic...right now, the same info could kill that slimy sumbitch.

Thu, 01/19/2012 - 11:14 | Link to Comment GeneMarchbanks
GeneMarchbanks's picture

IRS fail. Which candidate wants to get rid of them again?

Thu, 01/19/2012 - 11:14 | Link to Comment nobusiness
nobusiness's picture

As a CPA I can assure you the ABC Article is a total hit job.  There is no tax advantage for a U.S. taxpayer putting money in a Cayman hedgefund.

There are significant advantages for UK and other foreign investors as they avoid being subject to US tax rules.

But for Romney the taxation is the same as if the fund was in NYC

Thu, 01/19/2012 - 11:18 | Link to Comment Pladizow
Pladizow's picture

If "There is no tax advantage for a U.S. taxpayer putting money in a Cayman hedgefund." then why do it?

Thu, 01/19/2012 - 11:20 | Link to Comment hedgeless_horseman
hedgeless_horseman's picture

 

 

I believe any advantages are (were) for the fund or foreigners, not the American tax investor.  He still has the right to have non-domestic money managers.

Thu, 01/19/2012 - 11:24 | Link to Comment tarsubil
tarsubil's picture

The advantage is for the fund that Romney put his money into?

Thu, 01/19/2012 - 11:23 | Link to Comment sabra1
sabra1's picture

do the Caymans have bank holidays?

Thu, 01/19/2012 - 11:27 | Link to Comment economics1996
economics1996's picture

 

Yes, when the dictator is overthrown and the new dictator takes a likening to other peoples money.

 

Thu, 01/19/2012 - 11:30 | Link to Comment Gully Foyle
Gully Foyle's picture

economics1996

Expendables 2:  Operation Cayman Takeover

Thu, 01/19/2012 - 11:23 | Link to Comment economics1996
economics1996's picture

ABC wants more laws restricting capital flight to foreign countries, so more plundering by politicians can occur.  

Thu, 01/19/2012 - 11:28 | Link to Comment nobusiness
nobusiness's picture

to allow foreign investors in.

 

There is a huge advantage from a business perspective and for foreign taxpayers but no tax advantage for US taxpayers.  There is also some protection from creditors.

Thu, 01/19/2012 - 11:29 | Link to Comment azzhatter
azzhatter's picture

Maybe Romney has a bugout plan overseas and he wants money offshore in anticipation of the collapse

Thu, 01/19/2012 - 13:13 | Link to Comment defencev
defencev's picture

Your question shows that you are total idiot brainwashed by Marxist propaganda. People move their assts offshore not to avoid taxes but to preserve them in case of US meltdown=default. Got it?

Thu, 01/19/2012 - 11:18 | Link to Comment Frank N. Beans
Frank N. Beans's picture

then why do it?

Thu, 01/19/2012 - 11:27 | Link to Comment economics1996
economics1996's picture

Because new investment opportunities present themselves that are hidden from the IRS and not taxable.

Thu, 01/19/2012 - 11:30 | Link to Comment nobusiness
nobusiness's picture

nothing is hidden.  The IRS knows all about cayman investments and if a US taxpayer does not report the investment they can loose 50% of the balance as a penalty.  You don't know US taxes.

Thu, 01/19/2012 - 11:55 | Link to Comment NooooB
NooooB's picture

Not really true. And there are LOTS of other tax havens right around the Caymans. Then there are the structural changes that hide from the IRS. For example, most of these people form corporations offshore. These entities have no obligation to report anything to the IRS. Only what is paid out to an American citizen, and that is on the individual to report.

Virtually ALL of the Caribbean, Haiti, Dominica, Bermuda, and Panama offer this type of service. (I have a friend that used to set these up in Panama).

That Plane that rich guy so and so flies around in isn't HIS. It belongs to his corporation. So does that mansion he lives in.

I have personally witnessed the money race to get cash offshore by boat. I have said this before and I will say it again. I wouldn't be motivated to be a spoiler on this except these very assholes are the ones claiming to be more all American than everybody else and provide such great service to our nation. all while screwing the rest of us. They are confusing the term "Patriot", with the term "Privateer". I don't mind them calling themselves "yankee" as it comes from the name Jan Kee. A Dutch pirate.

Thu, 01/19/2012 - 13:18 | Link to Comment defencev
defencev's picture

Bullshit. Offshore corporations are subject to US taxation. The rules are different. You,lazy motherfucker, has an energy and intellect only to post bullshit over here. If it was so easy to make money offshore, why would not you do it yourself? It is just cost nothing to pronounce yourself patriot and then demand to be fed by other people money. That is essentially what you promote by your post. With shits like you the country is doomed.

Thu, 01/19/2012 - 22:23 | Link to Comment Stuck on Zero
Stuck on Zero's picture

Which of the 21,000 tax attorneys who specialize in overseas tax avoidance do you want to unload on exactly?

Thu, 01/19/2012 - 11:36 | Link to Comment Stuck on Zero
Stuck on Zero's picture

There are huge tax advantages to putting your money in the Caymans.  The rich work it this way.  You have your raw gains placed in an overseas corporate shell account.  No taxes.  Now you must pay taxes on 90% of the money you repatriate.  So, you repatriate the money to a U.S. shell corporation which promptly transfers 90% back to another overseas account.  Rinse and repeat.  No taxes.  Additionally, you make your major purchases from your foreign accounts tax free.  For example, your home in the Hamptons will be owned by the foreign shell corporation.  Your mega Yacht you purchase in the Netherlands and move to Ensenada for six months before moving it to your Newport Beach villa.  It stays under a foreign flag with your shell company as owner.  I can put anyone in touch with a Rancho Santa Fe or Wilshire tax attorney to set this up for you.

Yes.  The rich do not have to pay taxes.  Only middle class "little people."

Thu, 01/19/2012 - 11:18 | Link to Comment hedgeless_horseman
hedgeless_horseman's picture

 

 

Thank you. 

Don't panic.  Dr. Paul can still beat him in a straight up fight.

Thu, 01/19/2012 - 11:15 | Link to Comment LasVegasDave
LasVegasDave's picture

Its his money, he can keep it wherever he god damned wants, and its nobody's freakin business

Thu, 01/19/2012 - 11:22 | Link to Comment Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Capone/Lansky 2012!

Thu, 01/19/2012 - 12:24 | Link to Comment Archduke
Archduke's picture

+a lot.  Lansky started the whole eurodollar laundering bonanza crap in the carribean.

Thu, 01/19/2012 - 16:28 | Link to Comment LFMayor
LFMayor's picture

At least some shit would get DONE.

Fri, 01/20/2012 - 11:04 | Link to Comment GMadScientist
GMadScientist's picture

You mean "some people". 

Thu, 01/19/2012 - 11:26 | Link to Comment tarsubil
tarsubil's picture

I wouldn't mind that so much if I got the same liberty with my money. Somehow, and I'm going out on a big limb here, I doubt that I will be granted the same privileges as those in the club.

Thu, 01/19/2012 - 11:51 | Link to Comment Ropingdown
Ropingdown's picture

I find it strange that ZH commenters find it anything but admirable that Bain (Mitt) bases many of its funds in the Cayman Islands.  Not a day goes by when commenters fail to mention something like "buy gold and put it in a Swiss vault" or such.  We are for freedom, but thing somehow our investments should be undiversified by jurisdiction?  We know that most hedge funds domicile their offerings in Bermuda or the Caymans. As for "getting the same liberty with my money," you have it.  It is perfectly legal to park your money in other countries provided you declare the income on your returns and submit the foreign account forms in June.  There is an additional form which will be required with your return beginning this year.  But for inside fees there is little motive to off-shore money.

Thu, 01/19/2012 - 12:12 | Link to Comment NooooB
NooooB's picture

That is naive. The motive is to have the money disappear from the IRS radar. Once it is in a corporation, the profit isn't reported to the IRS. They aren't filing returns on this profit. Morally they should but legally they don't have to. The IRS does not have jurisdiction over foreign companies. They get around the regulations by starting the company in another country which sometimes grants the owner/s citizenship or by putting a majority foreign persons on the "board of directors". Who are, of course, your foreign banker and foreign lawyer...

You will notice that a certain net worth usually guarantees an end run around most countries immigration policies.

Thu, 01/19/2012 - 14:58 | Link to Comment Ropingdown
Ropingdown's picture

I disagree with the idea that this is naive.  Many people, myself included, keep assets in other countries.  It doesn't disappear.  The only benefit, if any, is diversification.   You remember capital controls?  Your tax return still shows all your income, but you are free of the fear that some Nixon-like idiot will slap capital controls on individuals.  (Notice that they never slap them on corporations....)

Fri, 01/20/2012 - 11:09 | Link to Comment GMadScientist
GMadScientist's picture

I look forward to the day when your "offshore" money starts to resemble the rehypothecated crap at MF Global and await the inevitable crying about "fairness" and "justice" at which point we'll laugh and point out that it's beyond our jurisdiction, sorry!

 

Thu, 01/19/2012 - 12:35 | Link to Comment Archduke
Archduke's picture

Admirable?  it's just a despicable in the US, as it is in the UK with lord ashcroft.

 

It's not about the distribution of the funds.  Again, it's by the act of theft implied

by offshoring the assets while skipping to pay up on the interest implied by them.

what this means is that the missing interest, aka inflation, has to be paid by you

the lowly tax payer.  This is theft. it's externalising one side of the equation and

not balancing the other.

 

the other thing is that eurodollar offshore banking operations do not follow reserve

lending requirements.  here is the real rehypothecation problem.  there's no limit

to the recirculation of eurdollar pledges.  then that gets converted back into your

economy, as billion-dollar homes and superyachts that further drive inflation and

prices up off your back.

 

 

 

Thu, 01/19/2012 - 12:39 | Link to Comment MsCreant
MsCreant's picture

If Mitt the Shit was doing this kind of stuff AND advocating for getting rid of the US federal tax, he would really have my attention.

or try this on for size:

"I am using the law to avoid paying my money into a profligate governmental system. When I get in office I will make it job #1 to cut all this kind of spending so folks will not take their money out of the US system to evade taxes, like I feel I must."

Or even:

"I evade tax where I can, because I don't want to pay for killing people that have done nothing to me."

 

Thu, 01/19/2012 - 20:10 | Link to Comment StychoKiller
StychoKiller's picture

There you go, making sense again... :>D

Thu, 01/19/2012 - 11:29 | Link to Comment tmosley
tmosley's picture

Except he is being hypocritical.  If he advocated zero taxes, then I would be in agreement.  But he doesn't. He wants to live by one code and rule by another.  Fuck that.

Thu, 01/19/2012 - 11:53 | Link to Comment Ropingdown
Ropingdown's picture

What is hypocritical about domiciling investments in the country of your choice, reporting the income, and paying the rates the current US Tax Code specifies?  I don't get it.  What's the problem with that?  Every company uses that flexibility, as do most individuals with enough money to make it worth the trouble.  No, there is no point in splitting $1,000 and putting half of it in a Caymans-based fund.

Thu, 01/19/2012 - 12:36 | Link to Comment tmosley
tmosley's picture

He steals your money, and doesn't allow his own money to be stolen at the same rate.

Yes, hypocritical.  Confusing that hypocracy within a broken system is par for the course for politicians.

Thu, 01/19/2012 - 12:50 | Link to Comment tarsubil
tarsubil's picture

It really isn't that complicated. People still feel they should rule the world though and don't understand an ideology where you leave others the f alone.

Fri, 01/20/2012 - 11:13 | Link to Comment GMadScientist
GMadScientist's picture

There's more than a little hypocrisy in claiming that you're "for America" and "creating jobs in America" while enabling the offshoring of industries that accomplishes diametrically opposed goals.

 

Thu, 01/19/2012 - 12:40 | Link to Comment MsCreant
MsCreant's picture

You beat me to it in fewer words!

Thu, 01/19/2012 - 11:31 | Link to Comment Hohum
Hohum's picture

LVD,

True enough.  But it shows he doesn't give a rat's ass about creating jobs in the USA.

Thu, 01/19/2012 - 11:17 | Link to Comment Sudden Debt
Sudden Debt's picture

AND IT WILL SOON BE SPICED UP WITH THE UNUSED CONTRIBUTIONS FROM THE BANKS!!

It's good to be : A PRESIDENT CANDIDATE!

 

Thu, 01/19/2012 - 11:16 | Link to Comment Mr Lennon Hendrix
Mr Lennon Hendrix's picture

The Election is a long time off and now it's just "Money Man" Mittens, "Fat" Ginger, "Creepers" Rick, and Ron "Walking Tall" Paul.  I wonder how the PTB plan to keep the status quo?

Thu, 01/19/2012 - 11:17 | Link to Comment SeverinSlade
SeverinSlade's picture

This is why we need to elect Mittens!  The fact that he cheats on his taxes PROVES that he is serious when he says he wants to lower taxes for everyone!

Fuck, that damn [/sarc ] was still on.

Fri, 01/20/2012 - 11:15 | Link to Comment GMadScientist
GMadScientist's picture

People with sufficient net worth don't have to "cheat" they just have the rules re-written in their favor.

 

Thu, 01/19/2012 - 11:17 | Link to Comment Dr. Engali
Dr. Engali's picture

I by no means am a Mitt supporter. I am backing Ron Paul all the way. However, I can not blame anybody for  1) diversifying their assets to other locations and 2) doing what ever I can to minimize the taxes. If there is nothing in the law to prevent this , what is the problem? I don't think there is a person here that doesn't do what they can to lower their taxes.

Thu, 01/19/2012 - 12:44 | Link to Comment MsCreant
MsCreant's picture

See argument unfolding above. It is hypocritcal in so many ways.

(I am not the person who marked you down).

Thu, 01/19/2012 - 14:35 | Link to Comment Whoa Dammit
Whoa Dammit's picture

I don't blame"anybody" who is wealthy for using tax havens. However I do blame Mitt for using them, as he has spent most of his life running for president, whilst simultaneously taking advantage of business models that are ruining our country. 

Thu, 01/19/2012 - 11:19 | Link to Comment JPM Hater001
JPM Hater001's picture

Come on.  Why should this bother you.  You would do it if you were rich too...

Yup, and the only one that would make bringing that money home profitable is being ignored.  And they only one not being ignored is the one who doesnt want to bring it back.

What a mess.

Fri, 01/20/2012 - 11:17 | Link to Comment GMadScientist
GMadScientist's picture

Actually, no, I wouldn't. There are much less ethically dubious means to reduce tax liability available.

Thu, 01/19/2012 - 11:19 | Link to Comment Singularity05
Singularity05's picture

Who the F... cares its within the rules. Make the tax code clear and eliminate the bennys to the rich. I would be great in a debate if he said something to the effect.  It all depends on which way the wind is blowing that day.

Thu, 01/19/2012 - 11:19 | Link to Comment Singularity05
Singularity05's picture

Who the F... cares its within the rules. Make the tax code clear and eliminate the bennys to the rich. I would be great in a debate if he said something to the effect.  It all depends on which way the wind is blowing that day.

Thu, 01/19/2012 - 11:20 | Link to Comment aquagreen73s
aquagreen73s's picture

Can't wait for Ron to run as an independent. Obama - Romney - Ron. The debates should be sealed in the vaults maintained by the L Ron Hubbard freaks so that in a thousand years, there will be irrefutable evidence of the election in which American voters missed their last chance to save the republic. We'll all be gone, but it will be satisfying knowing that future historians will have a clear insight into the absolute stupidity of Americans to vote Donkey and Elephant all the way into the ground.

Thu, 01/19/2012 - 11:27 | Link to Comment s2man
s2man's picture

I don't think anyone can save the Republic at this point.  Its all going to fall apart on the next watch.  So why not let another clown get blamed as the next POTUS?  Then, bring in Ron to clean things up.

Thu, 01/19/2012 - 11:21 | Link to Comment grunk
grunk's picture

Gingrich: "You need to share me."

Ughhhh.

Thu, 01/19/2012 - 11:24 | Link to Comment Dr. Engali
Dr. Engali's picture

That guy is a big ass clown. I'm glad people are finally seeing this shit. It pisses me off that the primary people are so stupid that he could even be in the running.

Thu, 01/19/2012 - 12:41 | Link to Comment fuu
fuu's picture

It's like the 80's and 90's are totally gone from memory for most people.

Thu, 01/19/2012 - 11:32 | Link to Comment tarsubil
tarsubil's picture

No need to fight amongst yourselves. There is plenty of Newt to go around.

What a line! I mean seriously. What kind of guy comes up with that line?

Thu, 01/19/2012 - 12:56 | Link to Comment my puppy for prez
my puppy for prez's picture

Gingrich:  God's gift to all female zombie-vampires.

Seriously....has anyone really LOOKED at that Callista?  She makes me shudder.  She would be a great Star Trek alien character!

Thu, 01/19/2012 - 16:30 | Link to Comment LFMayor
LFMayor's picture

True dat.   And the ex looks like one of those homemade kool-aid popcicles, all the color and flavor sucked out and nothing but ice left.

Thu, 01/19/2012 - 11:28 | Link to Comment Mercury
Mercury's picture

People are fooling themselves if they think that "raising taxes on the rich" is going to make this kind of thing less common.

Europe has high taxes and pretty much everyone with two Euros to rub together spends a very large amount of time and effort trying to avoid them.  Europeans would probably end up forking over 110% of their income over to the government if they followed every line of tax code to the "t" anyway.

Wait until ordinary people discover that you can shelter assets buy buying PM and keeping it out of sight.

Thu, 01/19/2012 - 11:23 | Link to Comment Archduke
Archduke's picture

 

 

a proposal for the Corporate and Commons Capital Preservation tax restructure

by Archduke

 

First a quote from ZH: http://www.zerohedge.com/article/over-past-4-years-news-corp-generated-1...

 

 Over The Past 4 Years News Corp Generated $10.4 Billion In Profits And Received $4.8 Billion In "Taxes" From The IRS

 

How does Murdoch make money off the tax system? There are three basic elements, disclosure statements show.

One is the aggressive use of intra-company transactions that globally allocate costs to locations that impose taxes --

and profits to areas where profits can be earned tax-free.

For that Murdoch can thank laws and treaties that treat multinational corporations much more generously than working stiffs, such as those who make up the audience for his New York Post and for his British tabloids with bare-breasted women.  Working stiffs have their taxes taken out of their pay before they get it, while Murdoch gets to profit now and pay taxes by-and-by.

News Corp. has 152 subsidiaries in tax havens, including 62 in the British Virgin Islands and 33 in the Caymans. Among the hundred largest U.S. companies, only Citigroup and Morgan Stanley have more tax haven subsidiaries than News Corp., a 2009 U.S. Government Accountability Office study found

 

This further highlights why there's something fundamentally wrong with our tax structures. Allowing funds to move freely between national fiscal barriers, and taxing only profits and actually indemnising refunds on alleged losses leads to this sort of abuse.

 

 

Offshoring: the real shadow banking, or profits are not made where you think they are, and nor are losses.

 

to paraphrase Treasure islands by Nicholas Shaxson:  http://treasureislands.org/the-book/

The offshore business is at its heart about manipulating trails of money across borders.This practice is  known as transfer pricing.  To understand how it works consider bananas. The trade for each bundle transacted follows 2 distinct routes.  The first is the physical, where a farmer in Honduras collects it, sells it to a packer, then to a broker and they finally end up in M&S in Britain.  The second half of the trade, the money trail, is more convoluted.

It turns out the Honduran banana company has no assets and rents all its capital equipmentfrom its parent in the Cayman Islands, and the managerial exploitation costs are outrageous as is the rent at 10x its property value.  This front is in turn managed by a fiduciary trust that also is the majority owner of the Panamaian broker, who incidentally also operates barely at black, due to mispriced cost of leasing to a Manxx registered fleet, insurance to Bermuda, supply-chain management in Jersey and and marketting in Ireland.  Each of these is owned by another blind trust which is managed by financial holding company in Luxemburg, which incidentally owns the the banana's retail brand company, say FairFruit Inc based in Delaware. At the end of the day, none of the subsidiaries paid any tax, some were evencompensated for costs and which of course were carried back up the chains as interest expense, and a massive profit, 'de'-measurate' with the sale of a bundle of bananas, was entered in a Swiss bank account destined to the beneficiaries of the trust managed by the Luxemburg holding.

First we consider that in modern fiscal theory we tax profits alone, while losses are credited.  One of the keys here is understanding how both of these ideas are localised, ie within specific national jurisdictions, which the modern offshore multinational structure is designed to exploit.  Some would say evade or bypass, but I use exploit because it actually leverages loss into gain. One fundamental problem is in identifying where the lion's share of the profits are generated. Was it at production in Honduras? At the broker's in Panama? In the FairFruit HQ in the US?  Multinationals play with these numbers using the technique known as transfer pricing.

The corollary problem in offshoring is why are there losses at all if the banana retail nets a profit?  Which is to say if that if the banana's retail sale flow generates a net profit, is it fair to construct artificial localised losses in high-tax areas and deduct these from the loop, thus multiplying by far the amount of money from the actual sale?  Now recall the credit is money, and income tax credit is money just the same.  So compensating a local loss with tax break is in fact a public subsidy.

Where did the money come from to pay operating expense deductibles in the banana republics of Honduras, Panama, and the deregulated havens of Ireland, the Channel Islands and Britain? Why, from the poor taxpaying sucker, the underclass, who thus have subsidized enormous profits that far outstrip the global retail sale of the bananas.  Modern multinational corporations, you see, are not in the business of selling products.  In fact the banana bundle is only a pretext, the special purpose vehicle to fleece the public.  (but hey, keep the retail sale proceeds as well). The offshored multinational claims your cake and eats it too, and then taxes you for the crumbs.

 

 

Follow the Money, or money supply, fractional reserve, and debt as money.

 

Recall that in fractional reserve banking, every new dollar represents an unrealised asset,which is another way of saying a debt.  Yet fractional reserve means every asset is recirculated and reissued as we find new wants (often) and needs (rarely) to exploit from the transformation of those same resources. a forest can represent wood from trees, printing paper from wood, or rent from adventure tourism.   An asset value thus represents a forward in time of projected exploitation value.  But it's still only the same forest.

Each asset or debt, creates new money in the form of profit or interest depending on which side of the asset you're on.  Now the thing about interest is that it compounds. So while the monetary and debt growth is exponential, equivalent to interest on the issued tier-1 capital, the underlying resources are constant at best (sustainable) or for mining and extraction: depleting, minus depreciation, spoilage, and waste. Recall there is a limit to production and transformation: thermodynamics say that every step introduces waste and loss, so the underlying resources are more than likely trending to depletion than sustainability.  Sustainability is a difficult constant upward battle.

One resource however is guaranteed to be ever-present within the system, because it is the basis upon which the system is predicated.  That resource is human agency, which means labour and invention.   It is this process that drives innovation and what Karl Marx called creative destruction (contrary to popular creed, not Alan Greenspan).  When an asset is realised, and the debt of the forest netted by the sale of the trees, the fairy of innovation then can come into action and reprocess, realign, and rerecycle, spent capital into new opportunities.  Innovation then, is what drives interest, and its sister inflation.

 

 

a Conflict of Interest: pricing resource depletion, taxation, and the monetary base.

 

So what happens to the interest implied by the asset when I export the asset? that is the million-dollar question.  I can sell the forest at spot value, but the interest and inflation implied from the asset assumes that it stays within national borders, thus allowing it to compound with the invisible hand of potential innovation further down the road.  when I export either the lumber, or even its flip-side when I export the proceeds by offshoring profits to a foreign subsidiary, I deprive this local economy of the future realisations of innovation, either with the same lumber, or by depriving the fractional re-injection of the monies back into the economy through reinvestment.

This is the fundamental epiphany: that exports ultimately cost the economy, and short of depleting all resources to make up for it the only guaranteed dependable resource to cover it is human capital.  every export is a burden on the system and on human labour.  (to mirror the current ZH article, inflation is a result of the imbalance in fractional debt whose underlying assets were wrongfully inflated, mispriced, poached, or transfered out of the domestic economy).

 

So the question is, how can you be sure the price of an export makes up for the loss in capital and fractional interest thereof?  Hopefully an export sale brings cash value that makes up for it.  But what if I undersell at discount?  Worse, if instead of selling the lumber, what if I loan it to a foreign subsidiary for nothing.  I've still deprived the local economy of the lumber, but more importantly also of all the forward gains that creative destruction would imply had the lumber stayed home.  What if instead I send machinery?  What about sending labour?  How about sending money in the form of an injection of capital when I invest abroad?  Note that if my accounting-fu is strong, these acts of goodwill may be claimed as deductible expenses back home, so not only do I deprive the local economy of an fractional interest-making capital asset, and implied tax revenues for the commons, but I may also further penalise the commons by claiming a tax-credit paid by the public.

 

 

the Tragedy of the Commons, or a tax should definitely not encourage inefficiency

 

We have to get rid of this idea that we don't tax foreign transfers and that we subsidize losses.  That to me is the moral hazard of international corporate taxation.  The old fiscal theory was intended to promote risky investment by choosing to tax only profits, but instead it's turned into an orgy of abuse as profit and loss are terms subordinate to an entity's fiscal jurisdiction.  What we need to do is tax flows, specifically, flows that cost the commons missed opportunities.

Also, the  antiquated fiscal notion of the commons deserving a proportional share of your profits, which as we see is circumvented anyway, to me screams of injustice to liberal and libertarian principles.  You shouldn't be charged more because you're better at your business, in fact the opposite should happen: For an identical set of inputs, the more efficient company should keep the higher return, while the less profitable should be discouraged because it wasting an opportunity for the commons to make good on the asset, and hence the implied savings interest rate.

 

 

a Reverse tax, or don't tell us how much you made, rather tell us how much you put in:

 

I think instead, we should tax investment, not profits.  Recall that every dollar in the economy represents a forward on a real or imagined capital asset exploitation.  Thus investing a dollar actually means you are consuming an underlying resource, ie chopping down a tree or hiring a brainy scientist's grey matter.  This is what we should be taxing, because its consumption is at the expense of its better use by another investor or even by the commons.  The tree may prove more useful in its capacity to provide ecological services like erosion control, co2 sinkage, etc, while the scientist's brain may have been more useful enlightening younger generations in public university.  Thus we are taxing the opportunity cost of using or consuming a resource.

It's then up to the corporation, which pays a fixed cost for this asset use or resource depletion, to be efficient and make good on their use. The more efficient, the more profit they walk away with, and justly so.  The caveat, is that offshoring strategies, for example "investing" in a tax haven, hence moving those dollars away from the local economy, would tacitly imply denying the exploitable potential of assets back home, and thus should be taxed equally.  That is you are free to move funds to any more profitable foreign nation, but pay the tax on those funds first.

 

 

a Diligent tax, or all stakeholders have an interest in tracking the capital - the rest is your business.

 

The good news is that this tax need not be excessive.  Forget even notions of 25% capital gains.  I think the only way to fairly price the opportunity cost is to charge the base risk-free interest rate.  That's right: good old LIBOR or whatever rate of return benchmark of choice for your country.  This is actually a blessing in disguise.  Instead of having to predict about how much profit you'll make as a business and plan a taxpool ahead of time, you'll know how much you owe from the get-go.

The other blessing in disguise is that all of a sudden the taxman aligns with shareholder due diligence instead of being at a polar opposite.  All parties have an Interest to know where the money went. Imagine that, instead of the inefficiency of paranoid schemes to cook the costs and bake the books, companies can just pay down the meagre rate and get on with the business of making money.  As much money as they can, and they can keep all of it, without having to tell any but their stakeholders.  Unless they can't beat the LIBOR beta, in which case they have no business being, well, in business.

A possible side effect of that is that this will discourage high-leveraged ventures that misprice risk in lieu of savings.  This is a very good thing.  Instead of the current inflated opaque and volatile system which returns a pittance and fleeces the small investors for all their skin, this should imply a return to quality.  Remember when the savings interest rate was something around 5%?

 

Capital Controls, or how Keynes intended the original World Bank and IMF to operate

 

 

Keynes argued that there is natural conflict between democracy and traditional capitalism. In the face of a recession or depression, one would be tempted to lower interest rates to boost a recovery of local industry. International investors, however, would be tempted to seek areas of higher return. This apparent conflict is quelled if we choose to tax investment flows instead of profits, especially for developed countries undergoing a recession. In such a case the labour costs and thus inputs would be considerably lower, and a greater return on investment would be generated. Such a system would form its own elastic safety net.

 

To solve the frivolous volatilty of capital flight, it was envisaged that transfers of capital between individuals and corporations of different nations would be controlled.  Did you know old passports had a "foreign exchange authorisation" section which entitled or forbade currency transfers? These original Bretton Woods provision are all eroded now.  While I certainly believe in the economic virtue and morality of free capital movements, to borrow a GNU quote this is free as in free speech, not free as in free beer I think the circulation need to be fairly priced (ie taxed). There has to be skin in the game to discourage the inefficient offshore predation, speculation, and volatility.

 

I'm going to call it the Corporate & Commons Capital Preservation tax

(or CCCP tax - heehee), though it really has nothing to do with socialism let alone communism.  Rather it's a more sensible, efficient, purely marxist-capitalist, way to allocate risk and reward.

 

Thu, 01/19/2012 - 11:54 | Link to Comment prains
prains's picture

you will get flamed and the details are too dense for me (not smart enough) but like the premise, especially the idea

 

A possible side effect of that is that this will discourage high-leveraged ventures that misprice risk in lieu of savings.  This is a very good thing.  Instead of the current inflated opaque and volatile system which returns a pittance and fleeces the small investors for all their skin, this should imply a return to quality.  Remember when the savings interest rate was something around 5%?

 

anything that can shut down the paper flow of money away from the making of actual things of value and a return to the production of usable goods and quality count me in, I'll sweep the floors for the people who can make that happen.


Thu, 01/19/2012 - 12:26 | Link to Comment tarsubil
tarsubil's picture

Or just get rid of taxes and use sound money. 

Your idea sounds better than what we have now but that isn't saying much.

Thu, 01/19/2012 - 11:23 | Link to Comment LetThemEatRand
LetThemEatRand's picture

The U.S. is "broke" because it has been looted and the wealth moved overseas into the accounts of a few thousand super rich.  Yet even most people who realize that on some level believe the answer is to defund all social programs, which has been the plan of the looters all along.

Thu, 01/19/2012 - 12:47 | Link to Comment tarsubil
tarsubil's picture

How do you defund something that isn't funded to begin with?

Thu, 01/19/2012 - 12:55 | Link to Comment LetThemEatRand
LetThemEatRand's picture

Exactly.  The programs were unfunded because the money went to the oligarchs instead. Now, folks like you complain the programs are not funded and therefore we need to get rid of the programs.  Unless you are a $100 millionaire plus, you are bending over and asking for another by deciding that the solution is to stick it to the average Joe.  But I'm sure they appreciate your position.

Thu, 01/19/2012 - 14:27 | Link to Comment tarsubil
tarsubil's picture

They weren't funded ever. The vast majority of money promised didn't exist.

Thu, 01/19/2012 - 11:24 | Link to Comment mr. mirbach
mr. mirbach's picture

If I were hellbent to accumulate vast wealth I would want to be POTUS too for all of the international high level business network connections and clout that can be garnered from the position.

Thu, 01/19/2012 - 11:25 | Link to Comment I am a Man I am...
I am a Man I am Forty's picture

anybody can do what romney did, not illegal

Thu, 01/19/2012 - 11:29 | Link to Comment Archduke
Archduke's picture

it used to be.  before we broke down bretton woods capital controls,

tore apart glass steagall separations, and opened up the pandora's

box that is the eurodollar aka offshore market.

 

I see nothing wrong with transferring your money elsewhere if it's more

profitable, but pay the fair tax first, which is to say account for the

loss of interest that the capital flight implies.  pay the opportunity cost.

Thu, 01/19/2012 - 11:35 | Link to Comment Dr. Engali
Dr. Engali's picture

I do not understand the double speek of people who claim they want the competative freedom of currency that gold and other alternatives provide, yet they clamor for capital controls. Why is one freedom good and the other bad? It's a bit hypocritical in my book.

Thu, 01/19/2012 - 12:18 | Link to Comment Archduke
Archduke's picture

Gold is not freedom of currency.  It either restricts the rate of innovation to the rate of physical

extraction, or else makes for seriously unstable valuation and pricing.  No, fiat flexibility is here

to stay.

 

What I'm proposing is not quite capital controls as it doesn't control or restrict anything.

This is no more a restriction than a sales purchase tax.   You can buy as many wotsists as

you like.  What it does is ensure they're not duty free.  It's an economic dissuader against

deleterious waste;  or rather a persuader for profitable returns. 

 

What's interresting is what happens to businesses whose model depends on low-margin

high-volume models.  perhaps the beta will become the threshold by which we'll determine

what should be better funded as a public utility and managed by the commons, while the

more high-risk and high-return ventures will be left to the industrialists and entrepreneurs.

After all, it's not the job of goverment to take risks.  That's the job of venture capitalists.

 

 

Thu, 01/19/2012 - 12:35 | Link to Comment Dr. Engali
Dr. Engali's picture

You clearly do not understand gold nor it seems do you understand the destructive powers of fiat. If you look back over the course of the past 40 years you can not claim that fiat is stable.

Thu, 01/19/2012 - 13:16 | Link to Comment Archduke
Archduke's picture

fyi: this post is not about fiat vs gold.  it's about offshore vs onshore.

 

Thu, 01/19/2012 - 15:02 | Link to Comment Dr. Engali
Dr. Engali's picture

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Thu, 01/19/2012 - 12:12 | Link to Comment Ropingdown
Ropingdown's picture

We had capital controls for only a brief time.  The US has generally been without such restrictions.  Why should someone pay some "opportunity cost" based on where he puts his money?  Does this mean you think the money should be free of US taxes once moved?  You do realize that off-shoring money to invest elsewhere does not reduce US tax liability, right?  Resenting the government AND rich folks leaves you with just poor folks as your pals....and they'll take everything you have to make their benefits and civil service pensions and medicare work out for themselves.  Obama doesn't want you to get to that obvious truth, however.  It seems he's having his way. 

Thu, 01/19/2012 - 12:53 | Link to Comment Archduke
Archduke's picture

Yes, I'm arguing precisely this, that you should be absolved of all other

fiscal responsibilities save the opportunity cost of using a resource.

This would replace any other corporate tax, capital gains tax, subsidies.

The role of government is to provide those services to the commons that

make sense on the scale, ubiquity, and accountability of the commons.

Thu, 01/19/2012 - 11:26 | Link to Comment israhole
israhole's picture

All the pro-Israel, pro-war candidates are crooks.  It's no surprise to learn Romney is screwing America at every opportunity.

Thu, 01/19/2012 - 11:26 | Link to Comment Payne
Payne's picture

What a load of Cr***, every dime he recieves in divendend income must first have the corp tax rate applied.  The capital gains rate is the capital gains rate.  Companies operating off-shore do pay a lower tax rate so the effective rate of taxes would be lower to investors. Gee no laws have been broken the guy just did his best to not give money to the government without thinking first, that would be a good candidate for President of CEO.

Thu, 01/19/2012 - 12:53 | Link to Comment karzai_luver
karzai_luver's picture

Sorry , but no, that is not the standard for either of the positions you gave.

He is advocating for spending that he is not willing to support with taxes even though he has the means.

Anyone that advocates for spending in excess of tax collection is a fraud and unworthy of either POTUS or CEO.

 

 

Thu, 01/19/2012 - 11:26 | Link to Comment gookempucky
gookempucky's picture

Certainly as the other wall street role models ride on Pauls coat tails prroves ,that Pauls lfetime calls for reform are now copycat.

They are all douche's except Paul. Here is newtty trying to steal Pauls message on the gold standard.

http://www.mineweb.com/mineweb/view/mineweb/en/page72068?oid=143649&sn=Detail

Thu, 01/19/2012 - 11:29 | Link to Comment Texas Ginslinger
Texas Ginslinger's picture

If the wealthy are not sheltering some of their money offshore, they are fools.

Who of us wouldn't do the same if we had big coin..??

Thu, 01/19/2012 - 12:36 | Link to Comment Hobbleknee
Hobbleknee's picture

Yeah, but one of us are running for president, and if any of us did the same thing, we'd be in jail.

Thu, 01/19/2012 - 11:29 | Link to Comment Cage Rattler
Cage Rattler's picture

$100 billion is a bogus number. In May 2009 IRS Commissioner Douglas Shulman testifying before a U.S. House of Representatives appropriations subcommittee said that claims that the U.S. government and the IRS lose $US100 billion annually because of tax evasion by Americans who use offshore tax havens are "wild estimates" that "don't have much basis". Originally the number was claimed by Jack Blum around July 2001 - he subsequently admitted that he made up the number.

Thu, 01/19/2012 - 12:54 | Link to Comment karzai_luver
karzai_luver's picture

Yeah I amm sure that the big bucks are being spent to get the stuff offshore are out of the spirit of kindness and building up the natives over there.

 

BWHAAAAAAAAAAAAAAAAAAAA.

 

Thu, 01/19/2012 - 11:35 | Link to Comment Lotus
Thu, 01/19/2012 - 11:31 | Link to Comment azzhatter
azzhatter's picture

I'm 100% Ron Paul supporter but frankly don't give a fuck what legal means people use to avoid taxes. It demonstrates clearly how fucked up the tax code is. Fucking starve the beast

Thu, 01/19/2012 - 11:31 | Link to Comment Stax Edwards
Stax Edwards's picture

What is going on with the markets is nothing short of fascinating.  The FED has finally achieved alchemy via bots.  I love it when bid/ask size are single digits.

Thu, 01/19/2012 - 11:34 | Link to Comment bankonzhongguo
bankonzhongguo's picture

Face it.  The republicans want Obama to continue to be president.

Any political party that would back a banker (Romney) in an age of daily bankster fraud and games during a Depression is a party that has made the calculation that it is better NOT to even try to win the next election.

 

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