Paradise Papers (& Panama Papers)

rick_chasey

I mean, take one example i'm very familiar with; Trafigura, having been caught dumping toxic waste off the west coast of Africa, with their owner being put under house arrest, decided to move their office from London to Geneva to avoid the scrutiny.

There's another trader (who shall remain nameless, lest I fall foul of their lawyers), who has all their traders in a big financial hub. They are all the trading decision makers, etc. But they decide to name them as brokers, and have a bunch of graduate execution monkeys in a tax haven who actually punch in the trades and book them who are officially the 'traders' specifically for tax reasons.

Now, what's the value add there?

Lack of transparency and tax havens go hand-in-hand.

pinno

This is the FT Editors comment on the tax haven issue. It's quite long but there are some notable points and if you are not a subscriber, you wouldn't be able to see it.

"The free flow of capital is a hallmark of modern capitalism. Major economies can function as they do because capital moves freely across most national borders. This makes the world a more prosperous place, but at a cost: it creates opportunities for aggressive tax accounting, outright tax evasion, money laundering, and sanctions-busting.

The Paradise Papers — 13.4m financial documents belonging to offshore law firm Appleby — have revealed many cases of avoidance, some of them aggressive. As eye-opening as some of these cases may be, the papers contain no obvious instances of criminality. The line between tax evasion and tax avoidance is sometimes thin, but it is rarely invisible.

The fact that the Paradise Papers contain little or no direct evidence of criminality does not mean their publication was pointless. As more information enters the public domain about who owns what and where, it becomes easier to reform tax regimes to make them more efficient and equitable, and to pursue actual criminality.

The papers’ focus on offshore centres, however, is a distraction from the most important point. There is more money laundering in London and New York than on small Caribbean islands. Hundreds of British shell companies are implicated in £80bn of money-laundering scandals, according to a report released this week, calling for an overhaul of the UK’s “light touch” regulatory regime. Transparency International UK, a non-governmental organisation, has said the UK is home to a network that operates much like the companies at the heart of the Paradise and Panama papers.

If advanced economies want to prevent aggressive tax avoidance, they should look first to their nearest neighbours. Ireland, Luxembourg and, to a lesser extent, the Netherlands all have tax codes that have facilitated elaborate avoidance structures created by major multinationals. The European Commission is right to test the waters with regard to Ireland’s tax regime for Apple, arguing it constitutes illegal state aid. There is progress elsewhere. More G20 nations are implementing plans drawn up by the OECD to tackle “base erosion” and profit shifting. The rules are designed to improve transparency, close loopholes and restrict the use of tax havens, and collect up to $240bn a year in lost revenue.

If national governments want to stop corporations shifting their profits offshore, there are other measures they can take. The US, for example, could eliminate the “check the box” rule that permits American companies to exempt their foreign subsidiaries from corporation tax. These rules were introduced 20 years ago as a simplification measure, but they were swiftly repurposed by tax planners to circumvent the anti-tax haven rules.

Successive attempts to withdraw the check-the-box rule were beaten back after lobbying by businesses. Broader US tax reform also presents an opportunity to tackle the issue of multinationals shifting profits to tax havens. The latest proposals would effectively levy a global minimum tax of 10 per cent, with the aim of discouraging companies from shifting profits to tax havens.

The Paradise Papers have provided a certain amount of entertainment, covering as they do the activities of individuals from The Queen to Formula One driver Lewis Hamilton. They will make a bigger contribution if they draw attention the convoluted structure of global tax regimes, and how those structures sap governments of funds while making criminality harder to detect."

Stevo_666

mamba80 wrote:

Stevo 666 wrote:

Matthewfalle wrote:

I'm not sure if this has too many big words in it for Rick and Moonchicken but it's worth a go.

https://iea.org.uk/everybody-is-outrage ... t-they-do/

PS: MF - had a full read of this now. That is a very good article and recommended reading for the 'indignant and ignorant' squad before someone kicks off about offshore centres and tax next time round.

I m amazed, so instead of avoiding/evading tax and being hyper secretive, they are actually helping the small investor by giving them a greater choice of funds to invest in... and to top it all, if they closed down, we d all be poorer?
who could possibly have come up with this theory?

"The Institute of Economic Affairs (IEA) is an influential right wing think tank based in Westminster, London, United Kingdom"

Which part of the article specifically do you disagree with or think are factually wrong?

Stevo_666

Rick Chasey wrote:

Stevo 666 wrote:

Rick Chasey wrote:

Stevo 666 wrote:

As mentioned in my first post, if you think that the rules are sub optimal, try to get them changed. You can't have two sets of rules for the same thing, one of which is your arbitrary/subjective rule.

Where have I said anything but?

I’m just realistic enough to know some people are cheap enough to still try and dodge via weird structures and loopholes, so I encourage public pressure on those who do so, to keep pressure on these tax havens to be more transparent and to keep people quite honest.

Ultimately taxation is about public spending, so the public rightly ought to have a say on how the take occurs in order to have the spending.

What is 'weird' about the funds described in that link?

You seem to be coming at this with the preconception that it is all murky and dishonest. Simply not the case.

Much higher propensity for murky money to be found in tax havens. They go hand in hand with a genuine lack of transparency.

Define a tax haven. Where do you draw the line between tax haven and non tax haven?

If you are going to bang on about the alleged evils of tax havens you have to be able to explain what is the target of your displeasure.

briantrumpet

I didn't find a direct critique of the IEA report, but an academic takes on tax havens here:

http://www.taxresearch.org.uk/Blog/2017 ... ax-havens/

Free markets, if they were to exist are dependent upon everyone having equal access to capital, the market and information. Unless that happens economic theory is quite explicit about the fact that, first of all, free markets do not exist and, second, abuse of markets is taking place. And let me be clear: tax havens exist to make sure that there is unequal access to capital because the rich hide theirs away from view in these places.

rjsterry

briantrumpet wrote:

I didn't find a direct critique of the IEA report, but an academic takes on tax havens here:

http://www.taxresearch.org.uk/Blog/2017 ... ax-havens/

Free markets, if they were to exist are dependent upon everyone having equal access to capital, the market and information. Unless that happens economic theory is quite explicit about the fact that, first of all, free markets do not exist and, second, abuse of markets is taking place. And let me be clear: tax havens exist to make sure that there is unequal access to capital because the rich hide theirs away from view in these places.

We're not allowed to mention that source as Stevo considers them 'biased' (i.e. too left wing)

rick_chasey

Stevo 666 wrote:

Rick Chasey wrote:

Stevo 666 wrote:

Rick Chasey wrote:

Stevo 666 wrote:

As mentioned in my first post, if you think that the rules are sub optimal, try to get them changed. You can't have two sets of rules for the same thing, one of which is your arbitrary/subjective rule.

Where have I said anything but?

I’m just realistic enough to know some people are cheap enough to still try and dodge via weird structures and loopholes, so I encourage public pressure on those who do so, to keep pressure on these tax havens to be more transparent and to keep people quite honest.

Ultimately taxation is about public spending, so the public rightly ought to have a say on how the take occurs in order to have the spending.

What is 'weird' about the funds described in that link?

You seem to be coming at this with the preconception that it is all murky and dishonest. Simply not the case.

Much higher propensity for murky money to be found in tax havens. They go hand in hand with a genuine lack of transparency.

Define a tax haven. Where do you draw the line between tax haven and non tax haven?

If you are going to bang on about the alleged evils of tax havens you have to be able to explain what is the target of your displeasure.

Bluntly, it deprives states and their respective publics of tax revenue.

https://ftalphaville.ft.com/2015/10/21/ ... uxembourg/

Good summary there of the case against Luxembourg.

Each year financial secrecy — the lack of effective exchange of information between offshore banks and foreign authorities — deprives governments around the world of about $200 billion. It’s important to understand that we’re not talking about tax competition, but of theft pure and simple: Switzerland, Luxembourg, or the Cayman Islands offer some taxpayers who wish to do so the possibility of stealing from their governments. It is their choice, but there is no reason that the United States, Europe, or developing countries should pay the price for it. Financial secrecy — like greenhouse gas emissions — has a costly impact on the entire world, which tax havens choose to ignore.

Luxembourg’s embrace of tax evasion — let’s not beat around the bush, leaked documents obtained by the International Consortium of Investigative Journalists demonstrate that’s exactly what’s happened — has led to some odd economic distortions.

Aside from the tax receipts stolen from other countries, the perverse result has been soaring inequality within the Luxembourgish population. Test scores are more unequal there than almost anywhere else in the rich world. Since 1980, the poverty rate has doubled, the unemployment rate has steadily increased from about 2-3 per cent in the 1980s and 1990s to over 7 per cent today, and as if that weren’t bad enough, the average take-home pay for actual workers in Luxembourg including commuters hasn’t risen that much.

(Ironically, Luxembourg is home to the non-profit Luxembourg Income Study, which does excellent research on inequality and the divergence between the rich and the rest.)

In his data appendix, Zucman compares the Grand Duchy to his native France. (Recall that about a fifth of everyone who works in Luxembourg commutes from France.) From 1990-2010, real GDP grew at an average rate of 3.9 per cent per year in Luxembourg and just 1.5 per cent per year in France. Yet real employee salaries grew at an annual average rate of just 0.4 per cent in Luxembourg and 0.9 per cent in France. The story looks a little different if you focus on 1970-1990, but even then, French workers experienced greater real income gains in 1970-2010 than their Luxembourgish peers.

While Ireland does have legitimate attractions for multinationals looking for a European base, particularly its educated, English-speaking workforce and a developed pharmaceutical industry — no one is investing in Luxembourg or the Caymans because they are attracted by the risk-adjusted returns of stakes in local businesses. They’re just pass-throughs for investors keen on minimising tax. Zucman again:

i.e. inefficient allocation capital for the pure purpose to avoid, and this essentially deny the local government of, tax.

Stevo_666

Pinno wrote:

This is the FT Editors comment on the tax haven issue. It's quite long but there are some notable points and if you are not a subscriber, you wouldn't be able to see it.

"The free flow of capital is a hallmark of modern capitalism. Major economies can function as they do because capital moves freely across most national borders. This makes the world a more prosperous place, but at a cost: it creates opportunities for aggressive tax accounting, outright tax evasion, money laundering, and sanctions-busting.

The Paradise Papers — 13.4m financial documents belonging to offshore law firm Appleby — have revealed many cases of avoidance, some of them aggressive. As eye-opening as some of these cases may be, the papers contain no obvious instances of criminality. The line between tax evasion and tax avoidance is sometimes thin, but it is rarely invisible.

The fact that the Paradise Papers contain little or no direct evidence of criminality does not mean their publication was pointless. As more information enters the public domain about who owns what and where, it becomes easier to reform tax regimes to make them more efficient and equitable, and to pursue actual criminality.

The papers’ focus on offshore centres, however, is a distraction from the most important point. There is more money laundering in London and New York than on small Caribbean islands. Hundreds of British shell companies are implicated in £80bn of money-laundering scandals, according to a report released this week, calling for an overhaul of the UK’s “light touch” regulatory regime. Transparency International UK, a non-governmental organisation, has said the UK is home to a network that operates much like the companies at the heart of the Paradise and Panama papers.

If advanced economies want to prevent aggressive tax avoidance, they should look first to their nearest neighbours. Ireland, Luxembourg and, to a lesser extent, the Netherlands all have tax codes that have facilitated elaborate avoidance structures created by major multinationals. The European Commission is right to test the waters with regard to Ireland’s tax regime for Apple, arguing it constitutes illegal state aid. There is progress elsewhere. More G20 nations are implementing plans drawn up by the OECD to tackle “base erosion” and profit shifting. The rules are designed to improve transparency, close loopholes and restrict the use of tax havens, and collect up to $240bn a year in lost revenue.

If national governments want to stop corporations shifting their profits offshore, there are other measures they can take. The US, for example, could eliminate the “check the box” rule that permits American companies to exempt their foreign subsidiaries from corporation tax. These rules were introduced 20 years ago as a simplification measure, but they were swiftly repurposed by tax planners to circumvent the anti-tax haven rules.

Successive attempts to withdraw the check-the-box rule were beaten back after lobbying by businesses. Broader US tax reform also presents an opportunity to tackle the issue of multinationals shifting profits to tax havens. The latest proposals would effectively levy a global minimum tax of 10 per cent, with the aim of discouraging companies from shifting profits to tax havens.

The Paradise Papers have provided a certain amount of entertainment, covering as they do the activities of individuals from The Queen to Formula One driver Lewis Hamilton. They will make a bigger contribution if they draw attention the convoluted structure of global tax regimes, and how those structures sap governments of funds while making criminality harder to detect."

The editor clearly doesn't know what he is talking about if he thinks that US check the box rules simply allow US companies to exempt their foreign subsidiaries from corporation tax. The issue there is with the US system which taxes repatriation of foreign profits (e.g. dividends) at nearly 40% - this is why so much US overseas corporate cash and profits remain parked outside of the US rather than repatriated. Pretty much every first world country exempts foreign dividends from corporation tax. The Trump proposals may change this however.

As for the Dutch, Lux and Ireland cases, this is simply a case of small countries designing competitive tax regimes to attract overseas investment - and in many cases it worked. It's called tax competition and most countries do it. The problem here is that the less competitive cou tries don't like it. That's life however, much as many governments and people on here will try to deny it.

rick_chasey

Here are 300 economists' take on tax havens.


http://www.theweek.co.uk/71544/tax-have ... economists

A letter signed by 300 economists has derided the low tax jurisdictions as serving "no economic purpose" and called for new measures to prevent them from being used to help the rich and powerful avoid paying their fair share.

"Tax havens basically allow companies and certain individuals to free-ride on the rest of humanity," signatory Dr Ha-Joon Chang, of the University of Cambridge, told the BBC

Stevo_666

briantrumpet wrote:

I didn't find a direct critique of the IEA report, but an academic takes on tax havens here:

http://www.taxresearch.org.uk/Blog/2017 ... ax-havens/

Free markets, if they were to exist are dependent upon everyone having equal access to capital, the market and information. Unless that happens economic theory is quite explicit about the fact that, first of all, free markets do not exist and, second, abuse of markets is taking place. And let me be clear: tax havens exist to make sure that there is unequal access to capital because the rich hide theirs away from view in these places.

Tax Research.org is run by the famously unbiased Richard Murphy:
https://en.m.wikipedia.org/wiki/Richard_Murphy_(tax_campaigner)
Tax 'campaigner' and a founder of Corbynomics.

Stevo_666

rjsterry wrote:

briantrumpet wrote:

I didn't find a direct critique of the IEA report, but an academic takes on tax havens here:

http://www.taxresearch.org.uk/Blog/2017 ... ax-havens/

Free markets, if they were to exist are dependent upon everyone having equal access to capital, the market and information. Unless that happens economic theory is quite explicit about the fact that, first of all, free markets do not exist and, second, abuse of markets is taking place. And let me be clear: tax havens exist to make sure that there is unequal access to capital because the rich hide theirs away from view in these places.

We're not allowed to mention that source as Stevo considers them 'biased' (i.e. too left wing)

Have a look at his profile. He's worse than Margaret Hodge...

Stevo_666

Rick Chasey wrote:

Stevo 666 wrote:

Rick Chasey wrote:

Stevo 666 wrote:

Rick Chasey wrote:

Stevo 666 wrote:

As mentioned in my first post, if you think that the rules are sub optimal, try to get them changed. You can't have two sets of rules for the same thing, one of which is your arbitrary/subjective rule.

Where have I said anything but?

I’m just realistic enough to know some people are cheap enough to still try and dodge via weird structures and loopholes, so I encourage public pressure on those who do so, to keep pressure on these tax havens to be more transparent and to keep people quite honest.

Ultimately taxation is about public spending, so the public rightly ought to have a say on how the take occurs in order to have the spending.

What is 'weird' about the funds described in that link?

You seem to be coming at this with the preconception that it is all murky and dishonest. Simply not the case.

Much higher propensity for murky money to be found in tax havens. They go hand in hand with a genuine lack of transparency.

Define a tax haven. Where do you draw the line between tax haven and non tax haven?

If you are going to bang on about the alleged evils of tax havens you have to be able to explain what is the target of your displeasure.

Bluntly, it deprives states and their respective publics of tax revenue.

https://ftalphaville.ft.com/2015/10/21/ ... uxembourg/

Good summary there of the case against Luxembourg.

Each year financial secrecy — the lack of effective exchange of information between offshore banks and foreign authorities — deprives governments around the world of about $200 billion. It’s important to understand that we’re not talking about tax competition, but of theft pure and simple: Switzerland, Luxembourg, or the Cayman Islands offer some taxpayers who wish to do so the possibility of stealing from their governments. It is their choice, but there is no reason that the United States, Europe, or developing countries should pay the price for it. Financial secrecy — like greenhouse gas emissions — has a costly impact on the entire world, which tax havens choose to ignore.

Luxembourg’s embrace of tax evasion — let’s not beat around the bush, leaked documents obtained by the International Consortium of Investigative Journalists demonstrate that’s exactly what’s happened — has led to some odd economic distortions.

Aside from the tax receipts stolen from other countries, the perverse result has been soaring inequality within the Luxembourgish population. Test scores are more unequal there than almost anywhere else in the rich world. Since 1980, the poverty rate has doubled, the unemployment rate has steadily increased from about 2-3 per cent in the 1980s and 1990s to over 7 per cent today, and as if that weren’t bad enough, the average take-home pay for actual workers in Luxembourg including commuters hasn’t risen that much.

(Ironically, Luxembourg is home to the non-profit Luxembourg Income Study, which does excellent research on inequality and the divergence between the rich and the rest.)

In his data appendix, Zucman compares the Grand Duchy to his native France. (Recall that about a fifth of everyone who works in Luxembourg commutes from France.) From 1990-2010, real GDP grew at an average rate of 3.9 per cent per year in Luxembourg and just 1.5 per cent per year in France. Yet real employee salaries grew at an annual average rate of just 0.4 per cent in Luxembourg and 0.9 per cent in France. The story looks a little different if you focus on 1970-1990, but even then, French workers experienced greater real income gains in 1970-2010 than their Luxembourgish peers.

While Ireland does have legitimate attractions for multinationals looking for a European base, particularly its educated, English-speaking workforce and a developed pharmaceutical industry — no one is investing in Luxembourg or the Caymans because they are attracted by the risk-adjusted returns of stakes in local businesses. They’re just pass-throughs for investors keen on minimising tax. Zucman again:

i.e. inefficient allocation capital for the pure purpose to avoid, and this essentially deny the local government of, tax.

You haven't defined anything really, sorry.

If your definition of a tax haven is a country that tries to deprive another of tax revenues then every country pretty much is a tax haven because in one way or another, all are trying to attract investment using a variety of fiscal tools. And one countrys loss is anothers gain.

Some countries don't like the tactics that other are using to compete so call their competitions tax havens and as mentioned above, unfortunately that's life.

So again, how do you define a tax haven?

Stevo_666

Rick Chasey wrote:

Here are 300 economists' take on tax havens.


http://www.theweek.co.uk/71544/tax-have ... economists

A letter signed by 300 economists has derided the low tax jurisdictions as serving "no economic purpose" and called for new measures to prevent them from being used to help the rich and powerful avoid paying their fair share.

"Tax havens basically allow companies and certain individuals to free-ride on the rest of humanity," signatory Dr Ha-Joon Chang, of the University of Cambridge, told the BBC

See bits in italics - goes back to the old moral judgement point, assuming that it is those nasty rich people at it again and making a judgmental and baseless reference to a 'fair share'. And ignoring the law. And the reality of human nature.

While you're at it, define a 'fair share'.

pinno

Stevo 666 wrote:

Pinno wrote:

This...detect."

The... it.

You can bang the drum about apparent legality and the rules etc etc but governments are moving to try and tighten the rules. If laws are added to make life for tax havens and those who use them more difficult because they see an opportunity to cash in on those rules (it would have to have unilateral agreement to have any effect), then one might argue that governments are being harsh - a view that you may purport to seemingly.
If they did that, would I care? Not a jot.

Do you honestly think that tax havens shouldn't have more transparency?
Do you honestly think these havens are being used for legitimate purposes?
Do you think that 'aggressive tax avoidance structures' are not being deployed to divert funds from nation states?
Do you think that tax havens serve a useful service in terms of aiding commerce for the greater good? Not for the prosperity of individual companies but the prosperity of the people at the bottom of the heap; the consumer.

This is where we cross the line into morality. Whether something is legitimate or not does not necessarily make it right. I want to know what you think of tax havens not whether certain uses are within the law or not.

rjsterry

Stevo 666 wrote:

Rick Chasey wrote:

Here are 300 economists' take on tax havens.


http://www.theweek.co.uk/71544/tax-have ... economists

A letter signed by 300 economists has derided the low tax jurisdictions as serving "no economic purpose" and called for new measures to prevent them from being used to help the rich and powerful avoid paying their fair share.

"Tax havens basically allow companies and certain individuals to free-ride on the rest of humanity," signatory Dr Ha-Joon Chang, of the University of Cambridge, told the BBC

See bits in italics - goes back to the old moral judgement point, assuming that it is those nasty rich people at it again and making a judgmental and baseless reference to a 'fair share'. And ignoring the law. And the reality of human nature.

While you're at it, define a 'fair share'.

TBF, that is the journalist you are taking issue with, not the economists. Aside from that one quote from Dr Chang, we don't know what they actually wrote.

I thought one good point that the FT Editor made was that aside from all the celebrity stuff, the release of these documents has brought the subject into the public eye again, which will make it easier for any politicians wanting to adjust regulation to do so. If nobody is making a fuss about it then it will go to the bottom of the list.

briantrumpet

Stevo 666 wrote:

rjsterry wrote:

briantrumpet wrote:

I didn't find a direct critique of the IEA report, but an academic takes on tax havens here:

http://www.taxresearch.org.uk/Blog/2017 ... ax-havens/

Free markets, if they were to exist are dependent upon everyone having equal access to capital, the market and information. Unless that happens economic theory is quite explicit about the fact that, first of all, free markets do not exist and, second, abuse of markets is taking place. And let me be clear: tax havens exist to make sure that there is unequal access to capital because the rich hide theirs away from view in these places.

We're not allowed to mention that source as Stevo considers them 'biased' (i.e. too left wing)

Have a look at his profile. He's worse than Margaret Hodge...

And of course the IEA is completely unbiased.

Anyway, play the ball, not the man. No-one's views should be dismissed simply because they are left- or right-wing, but only because their argument is disprovable.

Stevo_666

mamba80 wrote:

Stevo 666 wrote:

Matthewfalle wrote:

I'm not sure if this has too many big words in it for Rick and Moonchicken but it's worth a go.

https://iea.org.uk/everybody-is-outrage ... t-they-do/

PS: MF - had a full read of this now. That is a very good article and recommended reading for the 'indignant and ignorant' squad before someone kicks off about offshore centres and tax next time round.

I m amazed, so instead of avoiding/evading tax and being hyper secretive, they are actually helping the small investor by giving them a greater choice of funds to invest in... and to top it all, if they closed down, we d all be poorer?
who could possibly have come up with this theory?

"The Institute of Economic Affairs (IEA) is an influential right wing think tank based in Westminster, London, United Kingdom"

It allows better returns overall which is what investing is about isn't it. And eventually these profits are taxed when the domestic investors realise their gains, but after the wonders of compunding have taken effect.

Stevo_666

Pinno wrote:

Stevo 666 wrote:

Pinno wrote:

This...detect."

The... it.

You can bang the drum about apparent legality and the rules etc etc but governments are moving to try and tighten the rules. If laws are added to make life for tax havens and those who use them more difficult because they see an opportunity to cash in on those rules (it would have to have unilateral agreement to have any effect), then one might argue that governments are being harsh - a view that you may purport to seemingly.
If they did that, would I care? Not a jot.

Do you honestly think that tax havens shouldn't have more transparency? There is qiite a lot already - see the exchange of information regs which are very extensive, plus domestic disclosure regs and extraterritorial taxation (CFC regs).
Do you honestly think these havens are being used for legitimate purposes?
Do you think that 'aggressive tax avoidance structures' are not being deployed to divert funds from nation states? In some cases yes but there you are assumimg that this is pretty much all that is happening. Wrong, and this sort of tax planning exists outside of the countries that most people see as 'tax havens'
Do you think that tax havens serve a useful service in terms of aiding commerce for the greater good? Not for the prosperity of individual companies but the prosperity of the people at the bottom of the heap; the consumer. That isnt what they are there for, just like a lot of other things. But in terms of improving the living standards of the people who live in many of these places, I dare say it is pretty effective. And that's the job of governments of not just tax havens but any country.

This is where we cross the line into morality. Whether something is legitimate or not does not necessarily make it right. I want to know what you think of tax havens not whether certain uses are within the law or not. Morality doesn't come into it - see my first post on this thread. If you don't like it, campaign for a law change, although may be difficult to stop freedom of movement of capital for legitimate purposes.

Some comments above.

Now your turn as Rick has dodged the question. Define a tax haven.

rick_chasey

Find this defence of tax havens so odd.

What actual productive economic value do they add?

Stevo_666

rjsterry wrote:

Stevo 666 wrote:

Rick Chasey wrote:

Here are 300 economists' take on tax havens.


http://www.theweek.co.uk/71544/tax-have ... economists

A letter signed by 300 economists has derided the low tax jurisdictions as serving "no economic purpose" and called for new measures to prevent them from being used to help the rich and powerful avoid paying their fair share.

"Tax havens basically allow companies and certain individuals to free-ride on the rest of humanity," signatory Dr Ha-Joon Chang, of the University of Cambridge, told the BBC

See bits in italics - goes back to the old moral judgement point, assuming that it is those nasty rich people at it again and making a judgmental and baseless reference to a 'fair share'. And ignoring the law. And the reality of human nature.

While you're at it, define a 'fair share'.

TBF, that is the journalist you are taking issue with, not the economists. Aside from that one quote from Dr Chang, we don't know what they actually wrote.

I thought one good point that the FT Editor made was that aside from all the celebrity stuff, the release of these documents has brought the subject into the public eye again, which will make it easier for any politicians wanting to adjust regulation to do so. If nobody is making a fuss about it then it will go to the bottom of the list.

Which goes back to the point I made about trying to get law changes people don't like the situation.

Unfortunately as has been amply demonstrated here, people don't really understand what it is that they don't like in this case. Suppose you could say it is a bit like a tax version of the Brexit vote

Most of the tools to deal with real abuses already exist.

As I mentioned above, restricting freedom of legitimte capital movement and investment may be a bit difficult.

rjsterry

Stevo 666 wrote:

mamba80 wrote:

Stevo 666 wrote:

Matthewfalle wrote:

I'm not sure if this has too many big words in it for Rick and Moonchicken but it's worth a go.

https://iea.org.uk/everybody-is-outrage ... t-they-do/

PS: MF - had a full read of this now. That is a very good article and recommended reading for the 'indignant and ignorant' squad before someone kicks off about offshore centres and tax next time round.

I m amazed, so instead of avoiding/evading tax and being hyper secretive, they are actually helping the small investor by giving them a greater choice of funds to invest in... and to top it all, if they closed down, we d all be poorer?
who could possibly have come up with this theory?

"The Institute of Economic Affairs (IEA) is an influential right wing think tank based in Westminster, London, United Kingdom"

It allows better returns overall which is what investing is about isn't it. And eventually these profits are taxed when the domestic investors realise their gains, but after the wonders of compunding have taken effect.

Isn't the argument that some of the larger corporations are choosing not to repatriate offshore profits, but just hoarding them? They still get the benefit of a rising share price and avoid that 40% rate in the US.

Stevo_666

Rick Chasey wrote:

Find this defence of tax havens so odd.

What actual productive economic value do they add?

What exactly do you mean by a tax haven Rick? Not sure I can give a proper answer without knowing exactly what you are referring to

briantrumpet

Why not just let wikipedia do it? https://en.wikipedia.org/wiki/Tax_haven

Or Investopedia? https://www.investopedia.com/terms/t/taxhaven.asp

pinno

Stevo 666 wrote:

Pinno wrote:

Stevo 666 wrote:

Pinno wrote:

This...detect."

The... it.

Now your turn as Rick has dodged the question. Define a tax haven.

I did in a previous post.

Do you think that tax havens serve a useful service in terms of aiding commerce for the greater good? Not for the prosperity of individual companies but the prosperity of the people at the bottom of the heap; the consumer.

That isnt what they are there for, just like a lot of other things. But in terms of improving the living standards of the people who live in many of these places, I dare say it is pretty effective. And that's the job of governments of not just tax havens but any country.

You didn't answer the question. My suggestion was that if tax havens are used to divert potential revenues of Nation States, then what benefit do they have. Not within the countries which operate as a tax haven.
So, on that basis what benefit do they have in terms of increasing revenue for Nation States and what benefit do they serve the average me, Joe Bloggs?

Again, i'm not talking about the private accounts of individuals, I am talking about large corporations using them to reduce their tax burden (legitimately or not).

Stevo_666

rjsterry wrote:

Stevo 666 wrote:

mamba80 wrote:

Stevo 666 wrote:

Matthewfalle wrote:

I'm not sure if this has too many big words in it for Rick and Moonchicken but it's worth a go.

https://iea.org.uk/everybody-is-outrage ... t-they-do/

PS: MF - had a full read of this now. That is a very good article and recommended reading for the 'indignant and ignorant' squad before someone kicks off about offshore centres and tax next time round.

I m amazed, so instead of avoiding/evading tax and being hyper secretive, they are actually helping the small investor by giving them a greater choice of funds to invest in... and to top it all, if they closed down, we d all be poorer?
who could possibly have come up with this theory?

"The Institute of Economic Affairs (IEA) is an influential right wing think tank based in Westminster, London, United Kingdom"

It allows better returns overall which is what investing is about isn't it. And eventually these profits are taxed when the domestic investors realise their gains, but after the wonders of compunding have taken effect.

Isn't the argument that some of the larger corporations are choosing not to repatriate offshore profits, but just hoarding them? They still get the benefit of a rising share price and avoid that 40% rate in the US.

Not really, these profits have already been taxed in the countries where the subsidiaries of the US MNC are located. Typically the US tax on reptriation (mainly dividends) is around 40% but with a credit for the foreign taxes paid. So effectively it is taxing the same profits again where the US tax rate exceeds the rate in the subsidiarys country - which is nearly always. As mentioned above, no other first world country taxes overseas dividends like this.

Hence the very logical decision of US MNCs to leave their after tax profits and cash in overseas subs rather than pay dividends back to the US. The Trump tax reform proposals may change all of this however.

Stevo_666

Pinno wrote:

Stevo 666 wrote:

Pinno wrote:

Stevo 666 wrote:

Pinno wrote:

This...detect."

The... it.

Now your turn as Rick has dodged the question. Define a tax haven.

I did in a previous post.

Do you think that tax havens serve a useful service in terms of aiding commerce for the greater good? Not for the prosperity of individual companies but the prosperity of the people at the bottom of the heap; the consumer.

That isnt what they are there for, just like a lot of other things. But in terms of improving the living standards of the people who live in many of these places, I dare say it is pretty effective. And that's the job of governments of not just tax havens but any country.

You didn't answer the question. My suggestion was that if tax havens are used to divert potential revenues of Nation States, then what benefit do they have. Not within the countries which operate as a tax haven.
So, on that basis what benefit do they have in terms of increasing revenue for Nation States and what benefit do they serve the average me, Joe Bloggs?

Again, i'm not talking about the private accounts of individuals, I am talking about large corporations using them to reduce their tax burden (legitimately or not).

As mentioned to Rick, one nations loss is another nations gain.

See my comments above on tax competition, which most countries do. Countries compete for investment and tax revenue whether you like it or not (this is a part of my job and I see it happening). Just some dont like the tactics of others and try to take their ball home, so to say. They need to be more competitive is the short answer.

If you live in a country that has competes for and won investment and generated revenues and jobs, then it benefits you. Especially if you get a job because of it

Unfortunately your last effort didn't work. 'Somewhere you can out money and get taxed less' would make an IS A a tax haven

Stevo_666

briantrumpet wrote:

Why not just let wikipedia do it? https://en.wikipedia.org/wiki/Tax_haven

Or Investopedia? https://www.investopedia.com/terms/t/taxhaven.asp

I was asking Rick and Pinno.

Although if only it were that simple - as with many things in tax.

pinno

Pinno wrote:

Stevo 666 wrote:

Pinno wrote:

Okay...burden?

Question for you - how do you define what is and what is not a tax haven?

What it says on the tin surely? (without looking it up)
A haven: place where people can place money in an account provided by an organisation within the boundaries of that geographical location which is more favourable in terms of taxable monies (?)
Perhaps even, registration of a yacht or say a business for the same purpose.

briantrumpet

Stevo 666 wrote:

See my comments above on tax competition, which most countries do. Countries compete for investment and tax revenue whether you like it or not (this is a part of my job and I see it happening). Just some dont like the tactics of others and try to take their ball home, so to say. They need to be more competitive is the short answer.

If you live in a country that has competes for and won investment and generated revenues and jobs, then it benefits you. Especially if you get a job because of it

I know we've had this discussion before, but what you call being "more competitive" others would call a "race to the bottom", being driven by businesses that answer to shareholders, and people who hide enormous wealth from scrutiny, rather than being decided by democratic means.

TheBigBean

Stevo 666 wrote:

TheBigBean wrote:

The author of the IEA piece seems to have forgotten to mention that a UK based fund wouldn't be taxed on the dividends it receives, so the additional tax would be much lower. He also seems to have forgotten to mention the plethora of other fund types.

Still it is good to know that Hamilton's circular VAT avoiding lease structure was all in the name of market efficiency.

A UK fund would be taxed on most other forms of income however.

Ok, so let's look at another form of income - interest. What happens to UK tax receipts as a result of offshore funds holding debt? They go down. That's convenient - how many funds in Luxembourg, created for market efficiency of course, hold shareholder debt in the UK? Thousands. This is the single biggest reason to create a Lux fund. Ignored by the author.

Finally, look at capital gains. Sure, the offshore fund is better than an onshore fund, but the most tax advantageous structure is likely to be for investors to hold the shares directly themselves. The author suggests that if this was the case, that is what they would all do.