Trouble in Paradise
November 6, 2017 11:23 AM   Subscribe

5 November 2017 - the ICIJ leaks a literal treasure trove of documents related to the piggy banks of the 1% Wilbur Ross, Bono, Trump, Apple, and Queen Elizabeth II are among over 120k people variously implicated in leaked documents pertaining to an estimated $10 trillion dollars in funds. posted by aspersioncast (70 comments total) 47 users marked this as a favorite
 
Lock them up!
posted by Abehammerb Lincoln at 11:29 AM on November 6, 2017 [7 favorites]


Way off topic but kinda related: is Wilbur Ross actually Eddie, the Iron Maiden mascot?
posted by NoMich at 11:34 AM on November 6, 2017 [12 favorites]


What has been will be again,
what has been done will be done again;
there is nothing new under the sun.
Ecclesiastes 1:9
posted by KleenexMakesaVeryGoodHat at 11:36 AM on November 6, 2017 [9 favorites]


this what plutocracy looks like
posted by entropicamericana at 11:36 AM on November 6, 2017 [10 favorites]


I don't think Eddie would offshore his profits to avoid taxes.
posted by curiousgene at 11:37 AM on November 6, 2017 [4 favorites]


Does someone have reference to a good primer on the legality of offshore investing?
posted by materialgirl at 11:37 AM on November 6, 2017 [1 favorite]


The legality really depends on where you are and how many lawyers you can afford . . .
posted by aspersioncast at 11:40 AM on November 6, 2017


Apple's hiding of funds in Jersey is one thing, but is it necessarily the case that the individuals listed as having foreign investments in the document leak are "implicated" in something illegal? Some of the funds in my (US-based) IRA account are invested in mutual funds that own foreign stocks and bonds. Does this mean I have "offshore investments" that could "implicate" me in something illegal or improper? In other words, I'm asking whether perhaps many of the "implicated" people here were simply diversifying their portfolio, and not necessarily engaging in tax avoidance, legal or otherwise.
posted by beagle at 11:43 AM on November 6, 2017 [2 favorites]


And the CBC
posted by GuyZero at 11:49 AM on November 6, 2017 [4 favorites]


Right, beagle's question is close to mine. Does this come down to establishing a company's intent to avoid paying taxes?
posted by materialgirl at 11:51 AM on November 6, 2017


Also, I haven't seen any evidence in reports so far that Trump hismelf is "variously implicated" unless that includes implication by association of three of his cabinet members.
posted by DevilsAdvocate at 11:54 AM on November 6, 2017 [1 favorite]


The intent of these companies is to keep money offshore until the law changes and the money can be repatriated at lower rates, which might be this year if the tax bill passes.
posted by miyabo at 12:01 PM on November 6, 2017 [2 favorites]


It seems being a former Canadian PM is a lucrative gig.
posted by Freelance Demiurge at 12:05 PM on November 6, 2017


Wilbur Ross, Bono, Trump, Apple, and Queen Elizabeth II

It's like a sucky Travelling Wilburys
posted by Beardman at 12:08 PM on November 6, 2017 [47 favorites]


Bono verse from Reddit:

[–]cool_itch_effect [+1] 1600 points 5 hours ago
Where the spreadsheets have no name...

[–]flightless_mouse 499 points 2 hours ago
I have climbed the highest mountains

I have run through the fields

Only to steal from you

Only to steal from you

[–]Karate_Scotty 278 points an hour ago
But they still haven’t found where my taxes are

[–]Kwanzaa246 [+1] [score hidden] 51 minutes ago*
I have embezzled, from your country

I have hid my, wealth away

Beyond your cities walls

Only to steal from you

But You still haven't found

What I've stolen from you
posted by doctor_negative at 12:33 PM on November 6, 2017 [20 favorites]


Well, don't bang too hard on Bono, artists have special tax exemption under Irish law. For some reason this also includes footballers.
posted by Abehammerb Lincoln at 12:48 PM on November 6, 2017


yes - there are very legitimate reasons why people would have these sorts of offshore accounts - mostly to invest in US based taxable partnerships. Like if I'm the Duchy of Lancaster and I want to invest in Private Equity or Real Estate in the US the way I do that is by buying into an offshore partnership. Its actually also how many tax-exempt US based organizations make their investments as well.

In theory the taxes get paid whenever the earnings are repatriated back to the home country of the parent. However what makes this a vector for tax avoidance/evasion is that you can keep the money offshore and do things with it that aren't allowed. like lease your rolex from it.

You probably aren't investing your US mutual funds in foreign stocks through these kinds of structures tho.
posted by JPD at 12:50 PM on November 6, 2017


artists have special tax exemption under Irish law.

Only for sales of their art, though. Not for investment income.
posted by explosion at 12:53 PM on November 6, 2017 [2 favorites]


I thought this Vice interview on the topic was pretty excellent.
posted by tobascodagama at 12:53 PM on November 6, 2017 [2 favorites]


t necessarily the case that the individuals listed as having foreign investments in the document leak are "implicated" in something illegal....


Right, beagle's question is close to mine. Does this come down to establishing a company's intent to avoid paying taxes?

Did you RTFA about the complicated tax structures these people and corporations set up?

This is not a fucking diversified IRA. This is plunder from the poor to the rich.

Every social ill that society 'can't pay for' ; "no money for schools" "no money for health" "no money for the environment" "no money for reforms x,y,z" can be traced - not exclusively, but significantly - back to these fuckers.

A single horrible event, like a rape, a murder, a racist/sexist assault will have MeFites (rightly) coming out in droves if someone is an apologist for the event.

These people stymie justice, equality, health and happiness for tens of millions of people every year with their theft. Tens of millions of people have their lives destroyed by this theft!

Think about every horrible event you've ever read about in the newspapers that has happened to an invididual. Every single horrible event. This is FAR more serious than any individual assault you've ever read about, but because it is systemic and the violence is done at arms length, with paperwork, no-one gets het up.

GET HET UP.
posted by lalochezia at 12:56 PM on November 6, 2017 [120 favorites]


"It makes me smart."
posted by farlukar at 1:05 PM on November 6, 2017 [4 favorites]


My favorite is the very posh law firm getting all offended at the suggestion that they’ve helped their clients do anything illegal.

No fuck nuts, we know. It’s immoral. That’s the problem.

And at some point, laws don’t protect you from public anger.
posted by schadenfrau at 1:13 PM on November 6, 2017 [21 favorites]


Thomas Piketty reckons that bout 10% of the world's payments are missing, and are probably sitting in a place like this.
posted by nothing.especially.clever at 1:13 PM on November 6, 2017 [5 favorites]


What money is it The Queen is investing? Surely it's not tax payers?

Have to say I think about this situation every time there is a celebrity telethon, if more of the rich paid their fair share then there would be less need for the poor to have to fund the even poorer.

Also find it very hard to believe that you can pay an accountant lots of money, your tax bill/rate drop, and not realise they may be doing something like this.
posted by 92_elements at 1:14 PM on November 6, 2017 [4 favorites]


My first thought is this is like WWI, but instead of the entanglements being between nobility's various incestuous blood lines, its just banking related.

It's like capitalism has become the new monarchy.
posted by mrzarquon at 1:43 PM on November 6, 2017 [11 favorites]


Does this mean I have "offshore investments" that could "implicate" me in something illegal or improper?

Probably not. But I suppose "implicate" was a poor choice of words. And nothing so far points directly at Trump, just a number of the people around him.
posted by aspersioncast at 1:45 PM on November 6, 2017


Economist: A massive trove of data on offshore transactions is leaked
These revelations, however, are a far cry from what could be found on the darkest pages of the Panama Papers, which contained details of serious money-laundering lapses and secret accounts held by corrupt politicians and public officials, stuffed with money whose provenance took some explaining.
...
the focus on Bermuda risks reinforcing the stereotype that the real culprits are small, palm-fringed islands, when it is in fact the much larger, onshore financial centres, such as London and New York, that offer the most attractive combination of respectability and secrecy—making them magnets of unparalleled power for the world’s tainted money.
posted by Nelson at 1:54 PM on November 6, 2017 [5 favorites]


This by James O'Brien is exactly what I feel.
There's this worrying trend away from the welfare state and into a everyone for themselves mentality in England.
posted by 92_elements at 2:07 PM on November 6, 2017 [2 favorites]


Sorry that link contains mention of a rather nasty court case. Not sure if it needs a warning or not?
posted by 92_elements at 2:23 PM on November 6, 2017


We need to change the culture so that paying taxes is considered an act of swagger and self-aggrandizement, a dick-swinging display of conspicuous consumption, like lighting a cigar with burning currency.
posted by Western Infidels at 2:29 PM on November 6, 2017 [7 favorites]


I wonder just how much information about elite malfeasance we're willing to take before actually doing something.
posted by doctornemo at 2:33 PM on November 6, 2017 [2 favorites]


Sorry for the derail, but can this be the last time a FPP refers to it as Grauniad? It's an in-joke that's not really funny, and goddamn I am tired of slights against honest journalism, even if it's only a gentle ribbing or whatever the Metafilter equivalent of that is. I'm so heartbroken about people I consider good friends and decent humans (who just happen to hold different political views) totally buying into the "fake news" talking points of the day. I'd rather we not foster that here as well. It's not the same thing, or even in the same league, but I don't think we should add to the disinformation campaign we're all trying to get to the other side of, by fostering the implication that this news source is somehow "less than" because they published writing with typos in 2007 or what the fuck ever.
posted by slagheap at 2:36 PM on November 6, 2017 [17 favorites]


Grauniad survived a 450+ comment MeTa thread, it's not going anywhere.
posted by Space Coyote at 3:26 PM on November 6, 2017 [15 favorites]


Following on the James O' Brien thing, as the Portuguese arm of the investigation is the weekly Expresso, who's still withholding names of journalists and columnists involved in the cover-up of the BES/GES situation since the Panama Papers were released, I don't expect a thing to come from it that affects these parts.
posted by lmfsilva at 3:37 PM on November 6, 2017


I assumed most people still calling it 'The Grauniad' these days did so out of whimsy or a kind of affection, rather than a slam? I know I do. (Frankly it's such a memetic affectation at this point that I suspect its etymology is lost to many.)
posted by halation at 4:01 PM on November 6, 2017 [3 favorites]


Unbelievable. Somebody please mail me my MeFi Curmudgeon Status card. I'll not mention it again, but I will fester silently.
posted by slagheap at 4:04 PM on November 6, 2017 [4 favorites]


I assumed most people still calling it 'The Grauniad' these days did so out of whimsy or a kind of affection, rather than a slam?

If guess if I wanted to be mean to them, I'd call them "The Blairdian"
posted by lmfsilva at 4:07 PM on November 6, 2017 [6 favorites]


It is incredible to me how much the Economist is downplaying this, actually.
posted by aspersioncast at 4:54 PM on November 6, 2017 [4 favorites]


Well, don't bang too hard on Bono, artists have special tax exemption under Irish law. For some reason this also includes footballers.

Bono spends his life lecturing countries on giving more to the developing world - including Ireland. I am not sure where he thinks that money comes from if not taxes. And the moment Ireland changed our law on artists to ensure that it covered those it was intended to and wasn't just subsidizing superstars who can afford to buy castles (like Bono) U2 just fucked off to another country and he lectured us about that too. So, as far as I am concerned, you can't bang on enough about Bono and his fecking hypocrisy. (He has also had tantrums over such things as planning regulations when they don't go his way.)
posted by lesbiassparrow at 6:01 PM on November 6, 2017 [20 favorites]


And...because I'm not done, Bono and other members of U2 bought a hotel in Dublin at knockdown rates from a government agency in the middle of Ireland's financial crisis, in a sale that seems a bit dodgy, but was certainly got them a bargain. Bono is the epitome of do as I say, not as I do, and has the gumption to berate anyone who dares to call him on any form of rapacious financial behaviour.
posted by lesbiassparrow at 6:15 PM on November 6, 2017 [11 favorites]


Tens of millions of people have their lives destroyed by this theft!

But is this theft? That's probably more a question between you and the place you claim citizenship, and/or home.

No fuck nuts, we know. It’s immoral. That’s the problem.

Morality by tax code seems a problem to me.

But if it really is just immoral, according to you, this really is just a big yawn. It puts this whole thing on the level of divorce or gambling.
posted by 2N2222 at 10:02 PM on November 6, 2017


2N2222: Morality by tax code seems a problem to me.

Huh? schadenfrau was saying it's immoral independently of whatever the tax code happens to allow it. The wrongdoing was tax-related, but that doesn't mean we're having the tax code itself dictate our principles.

But if it really is just immoral, according to you, this really is just a big yawn. It puts this whole thing on the level of divorce or gambling.

I think there may be a miscommunication around the word "moral" here. Like for you, "morality" connotes blue laws or something. Whereas a lot of people simply use it as roughly synonymous with ethical/good/etc. Would you consider murder "immoral", or would you instead say it's wrong in a way that has nothing to do with "morality"?
posted by InTheYear2017 at 6:54 AM on November 7, 2017 [6 favorites]


I agree with InTheYear2017 that getting hung up on some over-specific definition of "morality" does not seem like a useful or interesting take on the topic.

I like the way that John Christensen, the interviewee in that Vice piece I linked above, formulates the problem:
It seems that tax avoidance in the last 30 years or so has become the norm—regarded as good practice. Of course, tax avoidance is a full-on attack on democracy.
posted by tobascodagama at 8:15 AM on November 7, 2017 [11 favorites]


And the moment Ireland changed our law on artists to ensure that it covered those it was intended to and wasn't just subsidizing superstars who can afford to buy castles (like Bono) U2 just fucked off to another country and he lectured us about that too.

"You'd rather sail the ocean
Than make a big decision"
posted by Legomancer at 8:29 AM on November 7, 2017


Bono verse from Reddit:

[–]cool_itch_effect [+1] 1600 points 5 hours ago
Where the spreadsheets have no name...

Maybe "Where The Thieves Have No Name"? (Until now when some of them have been exposed...)
posted by WalkingAround at 8:38 AM on November 7, 2017


Of course, tax avoidance is a full-on attack on democracy.

Our laws expressly permit using offshore subsidiaries to defer the recognition of income. In light of that, it's hard to see how doing what the law contemplates and permits is an "attack on democracy." Importantly, deferral of trade or business income isn't a "loophole": it was a conscious policy decision made after much deliberation and debate.

That's why this leak won't have any more traction than the Panama Papers leak vis-a-vis the US. So far, nothing has been shown that we didn't already know.
posted by jpe at 8:52 AM on November 7, 2017 [1 favorite]


The timing for the US with the new tax proposal from the GOP is interesting though. It's stuff we "already knew", but seeing offshore schemes documented in explicit detail helps inform public opinion. Unfortunately it looks like the proposed tax code will actually make it easier and more appealing to hide profits offshore, not less, so that's awkward.
posted by Nelson at 9:35 AM on November 7, 2017 [2 favorites]


Lots of things are technically legal while still being an attack on democracy. The 3/5 compromise, restricting suffrage to white male landowners, voter ID laws, etc.
posted by tobascodagama at 9:38 AM on November 7, 2017 [7 favorites]


The law, in its majestic equality, permits the rich as well as the poor to choose the tax jurisdiction for their income.
posted by zippy at 11:07 AM on November 7, 2017 [11 favorites]


Charles Pierce: Bono? Really? Making sense of the Paradise Papers.
What is in the Paradise Papers is exactly what John Adams so deplored in his letter to Patrick Henry—an American-style oligarchy, a homegrown empire of unaccountable privilege and power. It’s all the more dangerous here because, while subjects of the British empire didn’t harbor realistic ambitions to become royalty, all Americans are designed at birth to believe that they all can become as rich as the people who are hiding their money in Cayman banks or Lithuanian shopping malls. We are told we have the purchase of possibility. And this creates an amnesiac country; who even remembers what was in The Panama Papers any more? The distance between this world and the world of the Paradise Papers grows greater every day, but that larger world still warps the orbit of ours, in hundreds of invisible ways.
posted by homunculus at 1:17 PM on November 7, 2017 [1 favorite]


Paradise Papers spark political backlash over offshore finance
Appleby, the “offshore magic circle” law firm at the centre of the new leak after the computer servers in several of its offices were hacked, is very different from Mossack Fonseca, whose data featured in the Panama Papers.

The New York Times, a member of the International Consortium of Investigative Journalists, the global network behind both sets of revelations, contrasted the “predominantly elite” clients of Appleby with those of Mossack Fonseca, which it said “appeared to be less discriminating in the business it took on”.

It said, however, that in among the “dull reading” of the new documents, there were some that revealed how multinational companies avoided taxes and how the super-rich hid their wealth...

Offshore centres have, at least in part, shaken off their reputation for secrecy in the wake of an international transparency drive which will result in the automatic exchange of tax data by more than 100 other countries, a process that began in September.

The US has not joined the new system, although it is automatically exchanging certain information under its own automatic exchange rules, known as the Foreign Account Tax Compliance Act.

In June, the OECD said “massive progress” had been made over the past year as it revealed there would be no significant offshore centres on the blacklist of “unco-operative tax havens” it had prepared for the G20 group of leading countries.

Angel Gurría, secretary-general of the OECD, said on Monday that the problems shown in the leaks were a “legacy issue” and there was now “quite literally no place to hide”.

But while the OECD is largely satisfied by the progress made by the offshore centres, some governments would like to go much further.

European governments have been split over plans to draw up a tax haven “blacklist”, with London, in particular, opposing some of the efforts. There might also be a renewal of pressure to open up trusts to greater public scrutiny, an issue on which the UK is strongly opposed to further action on privacy grounds.

There could also be a revival of the pressure on British Overseas Territories and Crown Dependencies to introduce central public registers of company ownership.

This proposition, a long time goal of former prime minister David Cameron, was dropped by the previous government, but Britain’s Labour party has signalled it would continue to push for it.
EU plans adoption of tax haven list in December: EU's Toniste - "The European Union plans to adopt a blacklist of tax havens in December, Estonia’s finance minister said on Tuesday at the end of a meeting of EU finance ministers in Brussels."

Why the Paradise Papers matter - "Even if all these schemes are found to be legal — and some may not be once the tax authorities investigate them — the conclusion surely is that they should be illegal."
And that should include banning transactions with these jurisdictions. EU moves towards a blacklist of 53 tax havens go in the right direction but need to be much firmer on what sanctions blacklisted countries would suffer... the widespread use of offshore structures, including by those with no untoward motive, makes it easier for everyone to hide money.

It is hard to think of an offshore structure that cannot also be used to avoid taxes in addition to whatever (minor) legitimate use it may have. That in itself is a count against them.

The small islands under criticism protest that they comply with information and transparency requirements. That is true, up to a limit. There is now a system for the automatic exchange of tax information between different jurisdictions' tax authorities.

That is an improvement from not long ago; though not one that happened without resistance. And it falls fall short of the public registries of beneficial company ownership the UK once called for and the opposition wants the government to demand from UK dependencies.

The offshore financial centres are right to say that they give tax authorities of relevant countries access to such information. They are also right to say that if the governments of those countries want to change or better enforce their tax rules, it is up to them to do so.

The primary responsibility indeed lies with the governments of rich countries to legislate and enforce their laws appropriately (including to stop opportunities for hiding money onshore).

But the low-tax financial centres are hardly blameless: they benefit hugely from the failure of larger countries to do the right thing.

And with their insistence on privacy — the notion that as long as they share information confidentially with other tax authorities, they are doing enough — they collude with those who want to keep the tax-dodging industry alive.

This is because all tax authorities rely, to a large extent, on self-reporting. While the taxman can do a much better job to ferret out tax dodgers — and should everywhere be better funded to do so — this is harder to do when it is easy to camouflage something that is taxable (say, investment income or a VAT-liable transaction) as something that is not.

And that is what webs of offshore company structures facilitate. Public registries of ultimate beneficiaries would crowd-source the taxman's information problem by bringing to light potential abuses. It would bring regular focus on what is now only episodically exposed through leaks such as the Paradise Papers.

Another problem is that very few countries tax wealth directly (most taxes are on income or transactions). That means individuals are typically under no requirement to report their wealth to tax authorities.

Putting that wealth offshore then makes it much easier to hide the income from the wealth, and much harder for tax authorities to track it down to demand the tax that is legally due.

Between $US8tn and $US10tn of the world's wealth, about one-tenth of the total, is estimated to be kept in offshore jurisdictions.

Gabriel Zucman and his colleagues show that this is largely the wealth of the very rich. They also estimate that even in Scandinavia, the richest 0.01 per cent of the population pay 25-30 per cent less tax than they should.

A much broader use of wealth taxes would help. This does not need to mean a higher overall tax pressure: income and transaction taxes could be lowered correspondingly.

But a legal requirement to report one's wealth — on the threat of jail in extremis — would make it much easier for tax authorities to target their investigations productively so as to identify taxable income as well.
also btw... posted by kliuless at 4:26 AM on November 8, 2017 [4 favorites]


Always baffled that no one's managed to make this a nationalistic rallying cry, since it works for so many other talking points: If you don't want high taxes, move somewhere else.

But it's a crime-filled environmental disaster over there, you say? Where power is the only law? And they don't have paved roads, and children die of preventable diseases?

I wonder why that is.
posted by aspersioncast at 7:32 AM on November 8, 2017 [6 favorites]


Another piece of current politics relevant here: the planned repatriation tax holiday. American companies like Apple and Oracle have been hiding money offshore for years for this day, the day they get to bring it back to the US and give it to their shareholders. And pay a paltry 10% tax on it instead of the 20-35% they're supposed to. It'll be pitched as a great thing for America, all this money coming back to the US to re-invest. The reality is much more cynical.

BTW, Wilbur Ross is nowhere as rich as he's been telling everyone. His lies are apparently some mix of ego and fraud.
posted by Nelson at 7:48 AM on November 8, 2017 [2 favorites]


"You can make the corporate tax base inelastic by apportioning global profits proportionally to sales. That's what US & EU should do."

It's definitely a good proposal, but not an easy solution. Even within the US, where the Constitution creates some uniform boundaries for the states, there is a huge variance in application of formulary apportionment from state to state (even when the laws are identical). I personally think it's a good policy option to pursue, but the complexity of making it happen and then maintaining and enforcing it should not be understated.
posted by melissasaurus at 8:33 AM on November 8, 2017


wait till you see how people book sales.

I'll charge you 1 dollar for your iphone that's brick until you pay 999 to my manx software licensee to download a key.
posted by JPD at 9:18 AM on November 8, 2017


Offshore cash helped fund Steve Bannon's attacks on Hillary Clinton: Robert Mercer, whose spending assisted Donald Trump’s election win, used tax haven of Bermuda to avoid US taxes

The seven Republican super-donors who keep money in tax havens: Paradise Papers show these men, who invest heavily in Super Pacs, share a presence offshore if not a love of Trump

Democracy Now interview with the author:

Billionaire GOP Backer Robert Mercer Used Offshore Profits to Fund Breitbart & Attacks on Clinton

Trump’s Commerce Secretary Owns Stake in Russian Companies While He Oversees Potential Sanctions
posted by homunculus at 2:44 PM on November 8, 2017 [2 favorites]


I'm finally catching up on this, and...am I the only one who feels like this is kind of flying under the radar? Have we become so inured to giant document dumps that confirm how despicably immoral even the most philanthropic rich people are that we just shrug and move on?
posted by mostly vowels at 7:51 PM on November 8, 2017 [4 favorites]


am I the only one who feels like this is kind of flying under the radar? Have we become so inured to giant document dumps that confirm how despicably immoral even the most philanthropic rich people are that we just shrug and move on?

You are not the only one. Yes, that is what we do. Outrage fatigue.
posted by davejay at 8:03 PM on November 8, 2017


Total outrage fatigue. When the Panama Papers dropped, only some things felt like they were coming apart at the seams.
posted by aspersioncast at 6:14 AM on November 9, 2017


One reason you're not seeing more is the story is incredibly complex. It will take weeks or months for all this stuff to be sifted through. The Panama Papers took weeks. Also many of the stories coming out of this one are pretty complex and of murky legal status.

Anyway, here's a new story: Endowments Boom as Colleges Bury Earnings Overseas. "American universities are using offshore strategies to swell their coffers, skirt taxes and obscure investments that could spark campus protests."
posted by Nelson at 11:22 AM on November 9, 2017 [2 favorites]


They don't pay taxes, so therefore they aren't skirting taxes.

Tax-exempt non-profits investing in pooled vehicles through offshore structures is about the most (only?) legitimate use for an offshore vehicle for a US based entity. Its a convenient way to deal with an ultimately well intentioned but poorly implemented law designed to prevent a different kind of tax evasion.

The real issue with these particular vehicles isn't the endowments avoiding taxation, it the management companies they've hired using these vehicles to defer incentive compensation profits for their partners until they can be realized at a more convenient time. For example David Tepper moved to Florida from New Jersey before he unwound a massive amount of deferred comp. He ultimately agreed to settle with NJ, but there are plenty of people who get away with it.
posted by JPD at 8:10 AM on November 10, 2017


JPD, if you read the fine article it talks in detail about what taxes a non-profit educational institution are skirting by using off-shore tax shelter.
When schools earn income from enterprises unrelated to their core educational missions, they can be required to pay a tax that was intended to prevent nonprofits from competing unfairly with for-profit businesses.
posted by Nelson at 8:39 AM on November 10, 2017 [2 favorites]


No. That is incorrect. Or rather a very bad parsing of what creates taxable income for an endowment. Using third party offshore structures is keeping in the spirit of the tax law.

If i invest my endowment in a US domiciled public equity mutual fund or even a separate account any and all of my gains are tax exempt. If I invest that same dollar in a pooled vehicle that invests in public equities and uses some leverage in the form of shorting stocks, and I invest that money in the US domiciled fund rather than the the offshore version, some of my gains can become taxable. If I invest offshore I remain non-taxable.
posted by JPD at 10:08 AM on November 10, 2017


I read that times article the day it came out and said "wow - this is a pretty shitty article that doesn't understand why non-taxable entities would invest in offshore fund vehicles. I bet someone will post it on MetaFilter."

et voila.
posted by JPD at 10:09 AM on November 10, 2017 [1 favorite]


I understand you read the New York Times article and think it's just wrong. OK.

More reporting on other topics: Canadian scalper's multimillion-dollar StubHub scheme exposed in Paradise Papers. Should you need another reason to hate StubHub. The ICIJ page has a roundup of lots of stories. The Guardian's list is good too. Even the Wikipedia page is pretty solid. This is a very long story, more of a slow burn than a big burst.
posted by Nelson at 10:48 AM on November 10, 2017 [2 favorites]


No I didn't read the NY Times and think it wrong. I actually know how these structure work and why they exist.

If you believe Endowment income should be taxable, I have no problem with that. I think redistributing away from Harvard to Cal State Fullerton or something would be wonderful. However, our tax code says endowments are non-taxable. Our tax code also says non-profit entities can't generate certain kinds of income in order to prevent for profit entities from masquerading as non-profits. Unfortunately those laws make it difficult for legitimate non-profits to legitimately invest in legitimate investment products without the fudge of the offshore corporations. This is very settled tax law.

And the reason why The Paradise Papers has fizzled far more than it has burned is that primarily the examples it cites are similarly legitimate reasons why someone would be invested offshore. There is literally almost no reason why a non-taxable US entity or a foreign entity would invest in a US domiciled pooled vehicle. This doesn't mean they are avoiding taxes, because they don't owe any taxes.

Now, there are plenty of illegitimate offshore entities, but mostly those thrive because foreign nations don't tax un-repatriated income which creates massive loopholes like leasing your rolex from a Mauritian Asset Manager you funded and have been hired to manage. If you enforce global taxation for both personal and corporate income most of this goes away. And that would be good.
posted by JPD at 1:10 PM on November 10, 2017 [1 favorite]


How Corporations and the Wealthy Avoid Taxes (and How to Stop Them)
We can stop offshore tax evasion by shining some light on darker corners of the global banking industry. The most compelling way to do this would be to create comprehensive registries recording the true individual owners of real estate and financial securities, including equities, bonds and mutual fund shares.

One common objection to financial registries is that they would impinge on privacy. Yet countries have maintained property records for land and real estate for decades. These records are public, and epidemics of abuse are hard to come by.

The notion that a register of financial wealth would be a radical departure is wrong. And the benefits would be enormous, as comprehensive registries would make it possible to not only reduce tax evasion, but also curb money laundering, monitor international capital flows, fight the financing of terrorism and better measure inequality.

The onus here is on the United States and the European Union. Why do we allow criminals, tax evaders and kleptocrats to ultimately use our financial and real estate markets to launder their wealth? Transparency is the first step in making sure the wealthy can’t cheat their way out of contributing to the common good.
63% of the foreign profits of US firms are made in tax havens.
posted by kliuless at 9:38 AM on November 11, 2017 [1 favorite]


"Spectacular slide deck on scale of corporate tax arbitrage"
posted by kliuless at 9:00 PM on November 13, 2017 [1 favorite]


Senate Dems Demand Investigation Into Wilbur Ross’ Conflicts Of Interest
posted by homunculus at 12:18 PM on November 14, 2017 [1 favorite]


-What the foreign direct investment data tell us about corporate tax avoidance
-The global offshore system means we can't trust foreign direct investment figures and other basic data
-World Inequality Report launches on December 14 (The World Wealth and Income Database)
-China to set up system to monitor its firms overseas: "China's state planner issued guidelines on Tuesday for monitoring the overseas activities of Chinese firms and individuals to prevent tax fraud, money laundering, illegal financing, and activities damaging to the country's reputation."
posted by kliuless at 7:22 PM on November 28, 2017 [1 favorite]


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