Tax Secrets Of The Wealthy.

Most Americans fear being audited by the IRS based on the knowledge that, if it is deemed that they have not paid their fair share, they could face penalties, garnishment of wages and/or possible imprisonment. Yet some of the wealthiest Americans and multinational corporations apparently have no such fear. It’s not enough that these people and organizations have used their wealth to lobby Congress to create a myriad of tax write-offs and corporate welfare schemes. Many find tax shelters to avoid paying taxes altogether.

According to the Financial Secrecy Index created by the Tax Justice Network, “An estimated $21 to $32 trillion of private financial wealth is located, untaxed or lightly taxed, in secrecy jurisdictions around the world.” The organization uses the term “secrecy jurisdictions” rather than the more common “tax havens” because the secrecy provided by these jurisdictions does more than aid tax avoidance. The secrecy is key to such illicit activities as fraud, money laundering, insider trading, and avoidance of regulations. Moreover, it allows the wealthy to hide their assets while forcing those less fortunate to subsidize their needs and to shoulder their nations’ resulting debt.

In other words, most of us are making up for the taxes that the wealthy refuse to pay.

Even some of those at the highest levels of the US government have taken advantage of secrecy jurisdictions. For example, in the Panama Papers (a list of the wealthy who used the services of a Panamanian law firm to set up tax shelters) Donald Trump’s name shows up 3,450 times. And, recently, The Intercept published a story revealing the use of one of the world’s most secret tax havens by Senate Majority Leader Mitch McConnell and his wife, Elaine Chao, both of whom have avoided taxes while cashing US government paychecks! Former Massachusetts governor, GOP presidential candidate and current Utah senate candidate Mitt Romney also has reportedly taken advantage of multiple tax havens.

Many of the wealthy don’t even have to send their money offshore to evade taxes. Some of the most active tax shelters are right here in the United States! As reported by The Washington Post, “Contrary to popular belief, notorious tax havens such as the Cayman Islands, Jersey and the Bahamas were far less permissive in offering the researchers shell companies than states such as Nevada, Delaware, Montana, South Dakota, Wyoming and New York…” Indeed, The Washington Post found that US regulations for setting up shell companies are more lax than any country in the world, except Kenya!

Ironically, all of this is aided by a financial industry taxpayers saved from bankruptcy after the financial crash of 2008. According to the Tax Justice Network, “A global industry has developed involving the world’s biggest banks, law practices, accounting firms and specialist providers who design and market secretive offshore structures for their tax- and law-dodging clients.”

It’s not unlikely that such tax evasion will eventually have disastrous economic consequences for the US. But, when it does, the wealthy will simply pull up roots and relocate to another country where they can resume their form of legalized larceny leaving the rest of us to clean up their mess.

The Panama Papers? Why Not The Delaware Papers?

While the Panama Papers exposed thousands of politicians and billionaires who have used off-shore tax havens to hide trillions of dollars from taxes, the leaked papers will likely have little effect on Americans. It’s not that American corporations, billionaires and politicians are any more trustworthy than their foreign counterparts. It’s just that they don’t need to hide their money in the Cayman Islands when they can hide it in a much safer and less transparent refuge…the United States.

That’s right, the US is quickly becoming the world’s capital for money-laundering and tax shelters. Outside of Kenya, the US is now the easiest country in the world to open an anonymous shell corporation. No need to move your money off shore; no need to hire a Panamanian law firm; no need to place your trust in the economy of a third world country. Instead, you can open a shell company in Delaware, Nevada or South Dakota that will allow you to invest your money anonymously.

A recent article in the Washington Post noted that, if it weren’t for such schemes, the US Treasury would annually collect an additional $36 billion from wealthy individuals and an additional $88 billion from multinational corporations. That’s $124 billion a year that could be used to pay for public schools, to rebuild our crumbling infrastructure, and to improve public transportation!

And US citizens are not the only ones who are taking advantage of our lax tax laws.

According to, the US has become the world’s largest tax haven for wealthy non-residents. You see, Congress, in an attempt to encourage more investment in US securities, made it easier for non-residents to invest through “pass through” or “disregarded” tax entities. These are the same vehicles the Koch brothers and their wealthy rightwing friends are using to influence elections without disclosing the source of their funding.

Through these LLCs, non-residents can easily open US financial accounts and make investments in securities without paying US taxes on the income they earn. They can avoid US capital gains taxes. Further, the investors in these entities can operate businesses outside the US while taking advantage of US corporate tax write-offs and incentives. Thanks to a variety of treaties, non-resident investors can reduce their tax liabilities in other countries, as well. They can transfer income to other, lower tax nations. All the while their investments are protected by the full faith and credit of the US. Their US bank accounts are even protected by the FDIC! Best of all, the investors in these entities can all remain anonymous.

So if you’re expecting the Panama Papers to reveal names like Charles Koch, David Koch, Sheldon Adelson, Mitt Romney, or Donald Trump alongside such people as David Cameron, Vladimir Putin and the House of Saud, don’t hold your breath. Like me, you’re probably going to be sorely disappointed.

Today’s Corporate CEO No One To Look Up To.

The CEO of a corporation is supposed to act as the rudder of the ship; a leader; someone that sets an example for the rest of the corporation’s employees. But, increasingly, CEOs set an example of greed and unethical, even criminal, behavior.

According to a recent study by the Institute for Policy Studies (IPS), in 2012 the CEOs of large corporations were paid approximately 354 times as much as the average American worker. Worse, about 40 percent of the CEOs were fired for cause, paid fines or settlements for fraud, or resorted to asking the government to bail out their companies.

Some leadership!

The IPS study also found that about 30 percent of corporations led by the highest-paid CEOs were subsidized with taxpayer money. By taking advantage of a variety of tax deductions and loopholes, CEOs have been able to increase corporate profits while reducing or eliminating corporate taxes. And since most of these corporations are multinational, many have created P.O. Box “headquarters” in offshore tax havens to shelter corporate profits. By “gaming” the tax codes, the CEOs are able to pocket the savings for themselves.

Moreover, most CEO compensation is based on share price. That may seem like a good idea that encourages CEOs to work for the benefit of stakeholders. But the real reason for such compensation plans is self-interest. It’s easy for a CEO to make decisions that will increase sales and share prices over the short term, yet mortgage the company’s future. Unfortunately, many CEOs simply don’t care about the future because they don’t plan to be with the company more than 2-3 years. That’s all the time they need to be set for life.

But many want even more.

Unwilling to settle for multi-million dollar salaries, stock options, perks and a long list of benefits, some corporate CEOs create what amount to elaborate Ponzi schemes and a variety of high stakes gambling schemes using investors’ money. When their schemes fail, they seldom face charges and, even when they’re indicted, they’re seldom subjected to jail time. On those rare occasions when they are, “jail” often looks more like a country club and their sentences are often reduced or commuted.

Worse, when unscrupulous CEOs are fired, resign or are forced out, they almost always receive “golden parachutes” consisting of full retirement benefits and large lump sum payments allowing them to walk away with tens of millions in ill-gotten gains subsidized by investors and middle class taxpayers.  Meanwhile a high school dropout from the inner city who steals $50 can serve years of hard time.

It makes one wonder whatever happened to the nation that once proudly proclaimed “all men are created equal.”


As the Teapublican House, led by witch-hunter-in-chief, Darrell Issa, looks under every rug and in every nook and cranny for dirt on Fast & Furious, Benghazi, Tea Party applications for non-profit status, the NSA, and anything else that can be used as a hammer against the Obama administration, the real work of Congress languishes.

The House still has not resolved the federal budget and the debt ceiling. It has not yet brought sanity to the nonsensical sequester cuts. It has not proposed a single bill to create jobs and lower unemployment. It has not proposed a bill to rebuild and modernize our infrastructure. It has not yet passed a bill to reduce or eliminate the waiting time for veterans’ benefits. It has not yet passed an immigration bill.

The House has not considered tax reform to eliminate loopholes that would prevent multinational corporations to stash cash in offshore tax havens. It has not passed a bill to end the senseless gun violence. It has not passed a bill to close loopholes in background checks or to control the straw buyers who provide guns to gangs and drug cartels. It hasn’t even proposed a solution for climate change caused by increasing CO2 emissions.

Teapublican congressional representatives have largely ignored all substantive issues. Instead, they have focused on trumped-up “scandals,” the repeal of “Obamacare” and a myriad of restrictive social issues all revolving around women’s vaginas. As always, they seem fascinated by the “evils” of sexual orientation and the rights of the unborn.

Meanwhile, they ignore the rights and the needs of the already living.

How The Wealthy Avoid Taxes.

Last fall’s presidential election shed light on the issue of offshore tax havens. Thanks to the fact that, as a presidential candidate, Mitt Romney was forced to reveal his income tax returns, many people now better understand how the world’s wealthiest people avoid taxes by stashing their often ill-gotten fortunes offshore.  According to the Tax Justice Network, up to $32 trillion in assets are stashed in a country where the owner of those assets has no legal or tax residence.

The primary reasons for sending assets offshore? Tax avoidance and money laundering.

Most of the countries housing the assets are chosen for their secrecy, their low tax rates and willingness to help the wealthy get around the laws of their own countries. Of course, Switzerland is the most famous of these tax shelters and, not surprisingly, the largest in terms of offshore assets. Others, in descending order, are Hong Kong/Singapore, Ireland/Channel Islands, Caribbean/Panama, the United Kingdom, the United States (yes, some time in the 1980’s, we changed our tax laws to create tax havens for non-US citizens), Monaco/Dubai/Luxembourg and assorted other playgrounds for the rich.

An investigative series on offshore money by the International Consortium of Investigative Journalists exposed the extent of “the global offshore money maze.” And it’s not just shady business tycoons who take advantage of offshore tax havens. Those who stash their money in other countries include royal families, bankers, celebrities, lawyers, politicians, doctors, publishers, mercenaries, hackers, drug lords and more.

The practice may not be illegal. But it is unethical and highly destructive to the countries where the money was obtained. Meanwhile, people like you and me make up for the taxes the wealthy avoid.