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HOW TO HAVE A BILLION DOLLARS AND NEVER PAY TAXES
ITEM: More than a hundred media outlets around the world, coordinated by the Washington, DC-based International Consortium of Investigative Journalists, released stories on the Panama Papers, a massive collection of leaked documents from Panamanian law firm Mossack Fonseca exposing a widespread system of global tax evasion.
Or, if not tax evasion, then at least tax avoidance. Which I mention because legally there’s a big difference between the two, as Vox helpfully explains:
Incorporating your hedge fund in a country with no corporate income tax even though all your fund's employees and investors live in the United States is perfectly legal. So is, in most cases, setting up a Panamanian shell company to own and manage most of your family's fortune.
So while a lot of the activity covered in the Panama Papers may not be technically illegal, the real takeaway (apart from the actual illegal stuff) is how widespread tax avoidance is, how much it is growing, and how willfully complicit many powerful politicians in powerful countries have been in allowing it to happen.
Which is probably an important thing to consider in places like the US where we regularly argue over deficits, the growing wealth gap, and how much we should be taxing the wealthy – especially if yr argument for lower taxes is so the wealthy can reinvest the profits back into the economy instead of, say, stashing the wealth offshore tax-free and in some cases hiding it.
The story is still developing – and not unexpectedly, the denials are flying – so we’ll see what else comes out as a result of the leak, but for now, I’d recommend:
1. This overview from Vox
2. This BBC report
3. This article from Wired that looks at the monumental effort that led to the story’s release:
Model citizen, zero discipline
This is dF
Or, if not tax evasion, then at least tax avoidance. Which I mention because legally there’s a big difference between the two, as Vox helpfully explains:
… there's a big difference between tax evasion — illegally refusing to pay taxes you owe, and then taking advantage of secret accounts to try to hide the money and get away with it — and tax avoidance, which is hiring clever people to help you find and exploit legal loopholes to minimize your tax bill.
Incorporating your hedge fund in a country with no corporate income tax even though all your fund's employees and investors live in the United States is perfectly legal. So is, in most cases, setting up a Panamanian shell company to own and manage most of your family's fortune.
So while a lot of the activity covered in the Panama Papers may not be technically illegal, the real takeaway (apart from the actual illegal stuff) is how widespread tax avoidance is, how much it is growing, and how willfully complicit many powerful politicians in powerful countries have been in allowing it to happen.
Which is probably an important thing to consider in places like the US where we regularly argue over deficits, the growing wealth gap, and how much we should be taxing the wealthy – especially if yr argument for lower taxes is so the wealthy can reinvest the profits back into the economy instead of, say, stashing the wealth offshore tax-free and in some cases hiding it.
The story is still developing – and not unexpectedly, the denials are flying – so we’ll see what else comes out as a result of the leak, but for now, I’d recommend:
1. This overview from Vox
2. This BBC report
3. This article from Wired that looks at the monumental effort that led to the story’s release:
… beyond those revelations—and there will likely be more as the reporting around the Panama Papers continues—the leak represents an unprecedented story in itself: How an anonymous whistleblower was able to spirit out and surreptitiously send journalists a gargantuan collection of files, which were then analyzed by more than 400 reporters in secret over more than a year before a coordinated effort to go public.
Model citizen, zero discipline
This is dF