medicineman
New Member
And you thought the rich paid their fair share:
NH4 writes "70 mostly tiny nations, like the Cayman Islands, Bermuda, and Jersey, offer no-tax or low-tax status to the wealthy so they can stash their money out of the reach of the tax authorities back home. These jurisdictions are called tax havens. The 3 million shell companies set up in these tax havens are now home to $11.5 trillion in assets, including 26% of all US stocks and 31% of all of the world's assets, not counting additional trillions of dollars parked in these countries by multinational companies rather than individuals. The US alone probably loses about $60 billion a year in tax revenues as a consequence of the use of tax havens more than the total value of all foreign aid in the world and approximately $255 billion is lost in taxes globally. In the late 1990s, negotiators from industrial nations reached an agreement to pressure tax haven countries to stop facilitating money laundering, drug dealing, and tax evasion. The deal was championed by the Clinton administration, but was squashed by the new Bush administration. After 9/11, though, the Bush Administration realized that terrorists and drug dealers use the same international financial channels as tax dodgers, and it has become less supportive of bank secrecy and other non-disclosure policies. If you have enough money, it's pretty easy to find places to stash your assets. But how do tax havens help you reduce taxes? Here are a few examples. Let's say you want to purchase stocks or other US assets but don't want to face steep tax rates if you resell them at a profit. Set up a shell corporation in the Caymans, move your money into a corporate bank account there, buy the stocks or assets through the shell company, and when you resell them you pay a 1% tax instead of 30+% in the US. (You need some of that money back for personal expenses? Borrow it from your own company at interest, make interest payments to yourself, and then take the interest payments off your federal income tax.) Or let's say you want to start an import-export business, taking goods across the US-Canadian border. Instead of making a profit in the US or Canada, and paying US or Canadian tax rates, you technically (on paper) export the goods from, say, Canada to Bermuda and then from Bermuda to the US, with 95% of the ultimate mark-up taking place in Bermuda. The Canadian and US "companies" make very little profit and pay very little in North American taxes, while the Bermuda "company" makes a terrific profit and pays almost nothing in local taxes. If ordinary middle-class people can figure out way to avoid taxes by shipping their money off-shore, you can only imagine what giant corporations with thousands of lawyers and accountants on their payrolls and business activities in dozens of countries can dream up. Can anything really be done to limit the effectiveness of tax havens in cutting US and European taxes? A pioneer opponent of tax evasion through tax havens, Sen. Carl Levin (D) of Michigan, has joined with Sen. Norm Coleman (R) of Minnesota to sponsor the Tax Shelter and Tax Haven Reform Act. Levin and Coleman determined that respected accounting firms, banks, investment advisors, and lawyers have become high-powered engines behind the design and sale of "abusive tax shelters." The investigation and subsequent hearings uncovered evidence that these tax advisors cook up one complex scheme after another, package them as generic "tax products" and then devise elaborate marketing efforts to peddle these products to thousands of people across the country. The proposed Act would enable the Treasury secretary to designate a tax haven as "uncooperative" with Internal Revenue Service investigations. Though not a panacea, the bill, soon to be reintroduced in the current Congress, would give tax investigators new weapons in the fight against "abusive" shelters. But if tax havens have rendered income taxation progressive in name and on paper only, perhaps it's time to consider alternative forms of taxation, like consumption taxes or financial transaction taxes, which would be more difficult for giant corporations and the rich to avoid. Hey Vi this give you any Ideas?
NH4 writes "70 mostly tiny nations, like the Cayman Islands, Bermuda, and Jersey, offer no-tax or low-tax status to the wealthy so they can stash their money out of the reach of the tax authorities back home. These jurisdictions are called tax havens. The 3 million shell companies set up in these tax havens are now home to $11.5 trillion in assets, including 26% of all US stocks and 31% of all of the world's assets, not counting additional trillions of dollars parked in these countries by multinational companies rather than individuals. The US alone probably loses about $60 billion a year in tax revenues as a consequence of the use of tax havens more than the total value of all foreign aid in the world and approximately $255 billion is lost in taxes globally. In the late 1990s, negotiators from industrial nations reached an agreement to pressure tax haven countries to stop facilitating money laundering, drug dealing, and tax evasion. The deal was championed by the Clinton administration, but was squashed by the new Bush administration. After 9/11, though, the Bush Administration realized that terrorists and drug dealers use the same international financial channels as tax dodgers, and it has become less supportive of bank secrecy and other non-disclosure policies. If you have enough money, it's pretty easy to find places to stash your assets. But how do tax havens help you reduce taxes? Here are a few examples. Let's say you want to purchase stocks or other US assets but don't want to face steep tax rates if you resell them at a profit. Set up a shell corporation in the Caymans, move your money into a corporate bank account there, buy the stocks or assets through the shell company, and when you resell them you pay a 1% tax instead of 30+% in the US. (You need some of that money back for personal expenses? Borrow it from your own company at interest, make interest payments to yourself, and then take the interest payments off your federal income tax.) Or let's say you want to start an import-export business, taking goods across the US-Canadian border. Instead of making a profit in the US or Canada, and paying US or Canadian tax rates, you technically (on paper) export the goods from, say, Canada to Bermuda and then from Bermuda to the US, with 95% of the ultimate mark-up taking place in Bermuda. The Canadian and US "companies" make very little profit and pay very little in North American taxes, while the Bermuda "company" makes a terrific profit and pays almost nothing in local taxes. If ordinary middle-class people can figure out way to avoid taxes by shipping their money off-shore, you can only imagine what giant corporations with thousands of lawyers and accountants on their payrolls and business activities in dozens of countries can dream up. Can anything really be done to limit the effectiveness of tax havens in cutting US and European taxes? A pioneer opponent of tax evasion through tax havens, Sen. Carl Levin (D) of Michigan, has joined with Sen. Norm Coleman (R) of Minnesota to sponsor the Tax Shelter and Tax Haven Reform Act. Levin and Coleman determined that respected accounting firms, banks, investment advisors, and lawyers have become high-powered engines behind the design and sale of "abusive tax shelters." The investigation and subsequent hearings uncovered evidence that these tax advisors cook up one complex scheme after another, package them as generic "tax products" and then devise elaborate marketing efforts to peddle these products to thousands of people across the country. The proposed Act would enable the Treasury secretary to designate a tax haven as "uncooperative" with Internal Revenue Service investigations. Though not a panacea, the bill, soon to be reintroduced in the current Congress, would give tax investigators new weapons in the fight against "abusive" shelters. But if tax havens have rendered income taxation progressive in name and on paper only, perhaps it's time to consider alternative forms of taxation, like consumption taxes or financial transaction taxes, which would be more difficult for giant corporations and the rich to avoid. Hey Vi this give you any Ideas?
