
The world is becoming less welcoming to tax dodgers - olliepop
http://www.economist.com/news/finance-and-economics/21677647-index-financial-secrecy-highlights-american-hypocrisy-mega-haven?fsrc=scn/tw/te/pe/ed/themegahaven
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vixen99
Let's be careful with terms. Dodging is avoiding - generally thought to be a
sensible activity.

'No man in the country is under the smallest obligation, moral or other, so to
arrange his legal relations to his business or property as to enable the
Inland Revenue to put the largest possible shovel in his stores. The Inland
Revenue is not slow, and quite rightly, to take every advantage which is open
to it under the Taxing Statutes for the purposes of depleting the taxpayer's
pocket. And the taxpayer is in like manner entitled to be astute to prevent,
so far as he honestly can, the depletion of his means by the Inland Revenue'

Lord Clyde: Ayrshire Pullman Motor Services v Inland Revenue [1929] 14 Tax
Case 754, at 763,764:

~~~
DanBC
Sure, everyone is happy with normal tax planning.

But some of these tax avoidance schemes are only legal because tax authorities
do not have the number of staff needed to investigate and prosecute all of
them. They use weird loopholes (which get closed, and which sometimes require
repayment of unpaid tax) and bizarre corporate structures which only exist to
avoid tax.

Tax avoidance has changed its meaning from normal tax planning to become that
gray not-yet-regulated area near outright tax evasion.

~~~
LordKano
_But some of these tax avoidance schemes are only legal because tax
authorities do not have the number of staff needed to investigate and
prosecute all of them._

There is a difference between something that is legal and something that is
illegal but difficult to prove. You seem to be conflating the two issues.

 _They use weird loopholes (which get closed, and which sometimes require
repayment of unpaid tax) and bizarre corporate structures which only exist to
avoid tax._

If tax law were not so onerous and burdensome, there would be no incentive to
crease these corporate structures and to manage business in such a way.

There is nothing legally or morally objectionable about using the rules,
written by your adversary, to your own advantage.

~~~
id
The state is not your adversary. Taxes weren't invented to harass and punish
you. This exact type of thinking is why we have this problem.

~~~
LordKano
The state is occasionally my adversary and occasionally my ally. When it comes
to the question of how much of the money that I earn must be surrendered to
prevent me from going to jail, the state is my adversary.

Taxes are routinely used to punish and influence people. Alcohol taxes,
tobacco taxes, fuel taxes, they all have the dual purpose of raising revenue
and discouraging behavior that the state wishes to limit.

~~~
TeMPOraL
> _When it comes to the question of how much of the money that I earn must be
> surrendered to prevent me from going to jail, the state is my adversary._

That's your choice. You could also see it as paying your dues, or even as
doing your part in maintaining your society. The optimal attitude is probably
somewhere between those views.

> _Taxes are routinely used to punish and influence people. Alcohol taxes,
> tobacco taxes, fuel taxes, they all have the dual purpose of raising revenue
> and discouraging behavior that the state wishes to limit._

Well, that's the point of having a state. It's often a good thing, especially
in the examples you mentioned. One of the most important function of a state
is to serve as a coordination enforcer - in situations when people, out of
their self-interest, would predictably chose something that aggregated over
the entire population leads to bad outcomes for everyone, the state is there
to alter the incentive landscape and make sure they chose the better thing.

~~~
LordKano
_You could also see it as paying your dues, or even as doing your part in
maintaining your society._

My duty is only to pay the minimum amount I am legally obliged to pay. Not one
cent more.

 _Well, that 's the point of having a state._

That is only one point of view.

Some people feel the purpose of the state is to protect us from ourselves. I
subscribe to the belief that the purpose of the state is to protect us from
each other.

Namely, if I want to knowingly ingest poison (tobacco, alcohol, heroin or even
drain cleaner), it's my decision to make. If someone wants to surreptitiously
lace wine with antifreeze and distribute it to others, the purpose of the
state is to stop/punish them.

~~~
enraged_camel
>>My duty is only to pay the minimum amount I am legally obliged to pay. Not
one cent more.

How much you are obligated to pay is the point of contention. Ideally,
everyone pays taxes proportional to the amount of benefit they get from public
services, programs and infrastructure, so that those things can be maintained.
The issue with tax-dodging is that it sidesteps this moral imperative by
taking advantage of a legal loophole.

~~~
LordKano
Taxes are not a moral matter. Taxes are a legal matter.

Governments are amoral entities. I'll clarify because the last time I said
this, it was misinterpreted...

Governments pass, enforce and obey laws. It is beyond the scope of government
to determine morality.

It's not legal for a group of us to say "Give us $X percentage of your income,
under these rules, or else we'll send men with guns to take you away." but
it's perfectly legal for a government to do it. Morality isn't the concern
here, legality is.

~~~
enraged_camel
>>Taxes are not a moral matter. Taxes are a legal matter.

Correct, but paying the appropriate amount for the services and programs you
benefit from IS a moral matter. Taxes simply happen to be the avenue through
which this is accomplished.

If you consume X dollars of government services and infrastructure, you should
pay X dollars in taxes, regardless of whether loopholes exist through which
you can pay less. Because if you pay less, you are doing two things: passing
the tax burden on others, AND causing harm to the services and programs. Both
of these are immoral. Therefore, not paying your fair share (note that I
didn't say "legal share") is immoral.

You know how there are certain actions that aren't illegal, but are clearly
against what's called "the spirit of the law"? This is one of those
situations. Tax breaks are always created to encourage certain actions or
facilitate certain results (e.g. Growth in a certain sector) but others figure
out how to take advantage of them through creative accounting practices.
That's when a tax break becomes a loophole. It's basically hacking the system.

~~~
LordKano
_Both of these are immoral. Therefore, not paying your fair share (note that I
didn 't say "legal share") is immoral._

Fairness is subjective. Morality is subjective. Legality is objective.

It's not "fair" that 51% of people get to decide which services to provide,
how much to pay for them, under which conditions to provide them, then use
force and the threat of force to compel the other 49% of people to pay for it.

I didn't ask for these services. I have no moral obligation to pay anything
for them and I have no legal obligation to pay anything more than the law
requires.

We don't legislate morality.

 _It 's basically hacking the system._

Agreed and it's not immoral to hack the system.

The state has every advantage. The state can write the laws. The state can
interpret the laws. The state has men with guns to enforce the laws.

Even with all of these advantages over the individual, sometimes the state
doesn't come out on top. That's a failure of the state, not the individual.

If you write the rules in your favor, interpret the rules in your favor and
enforce the rules in your favor, it rings hollow when you cry that it wasn't
fair that the little guy beat you using the rules that you wrote, interpreted
and enforced.

~~~
enraged_camel
>>Fairness is subjective. Morality is subjective.

There isn't much that is subjective about paying the appropriate amount for
the services and programs you benefit from. If you disagree that you should
pay $5 for a cup of coffee that costs $5, then we have some very fundamental
differences and can't come to any agreements in this debate.

>>We don't legislate morality.

On the contrary. Murder is illegal because we have decided as a society that
killing people without just cause is immoral.

>>I didn't ask for these services.

But you still benefit from them, either directly or indirectly. A homeless
shelter benefits you even if you aren't homeless, because it takes care of the
homeless and makes it a lot less likely for them to commit crimes for
survival. A fire department benefits you even if your house isn't on fire,
because they put out fires in neighboring buildings and prevent them from
spreading to and burning down yours. You are part of a society, and taxes are
required to maintain the proper operation of that society, whether you have
asked for it or not.

~~~
LordKano
_There isn 't much that is subjective about paying the appropriate amount for
the services and programs you benefit from._

Again, you used a subjective term "Appropriate".

You are attempting to present subjective opinions as objective facts. They are
not.

 _If you disagree that you should pay $5 for a cup of coffee that costs $5,
then we have some very fundamental differences and can 't come to any
agreements in this debate._

If I feel that $5 is too much for a cup of coffee, I am free to not buy it. To
adopt the statist's mentality and apply it to commerce, one could argue that
since people need jobs and Starbucks pays their employees well, it is a
societal good for Starbucks locations to be profitable and therefore, everyone
should have to pay for Starbucks coffee, whether they drink it or not.

I reject this notion.

 _On the contrary. Murder is illegal because we have decided as a society that
killing people without just cause is immoral._

The state regulates homicide, not for moral reasons but for reasons of social
stability. No prohibition on homicide would lead to mass scale killings and
retaliations.

 _A fire department benefits you even if your house isn 't on fire, because
they put out fires in neighboring buildings and prevent them from spreading to
and burning down yours._

Where I live, fire departments are volunteer organizations that are funded by
donations. I donate to them because I believe that the service they provide is
worth my money.

 _You are part of a society, and taxes are required to maintain the proper
operation of that society, whether you have asked for it or not._

My obligation to supply those funds is determined by the law and I'm only
obliged to pay the minimum required by law.

I pay my taxes, not because I have a moral obligation to do so. I pay my taxes
because I have a legal obligation to do so. In other words, if I don't the
state will send men with guns to take me away.

All of the homeless shelters, fire departments and police officers in the
world are worth less to me than my freedom.

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klausjensen
Link to the underlying report, this story is based on:

[http://www.financialsecrecyindex.com/introduction/fsi-2015-r...](http://www.financialsecrecyindex.com/introduction/fsi-2015-results)

...Something I think the journalists should have done in the story, btw.

~~~
iheartmemcache
If I could give you more than one upvote I would. The raw data is always
important, and the whole "we'll release the data in december" stuff is sketchy
(maybe it's an intentional press embargo to drum up publicity?). It seems like
the members of the organization are reputable academics, but I'll wait for the
professionals to come in and perform actual analysis.

If you putz around with their servers, you can get access to their 'source'
material:
[http://www.financialsecrecyindex.com/database/USA.xml](http://www.financialsecrecyindex.com/database/USA.xml)
insert any given country + xml, you should be fine. I have an archive I just
wget'ed that I'll SCP to one of my servers in a bit.

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jensen123
I have an old book here - The International Man by Doug Casey, which was
published in 1978. It lists the tax rates for several countries. For example,
the income tax went up to 75% in Japan, 71% in the Netherlands, 70% in Norway,
55% in Singapore, 80% in Sweden, 83% in the UK, 70% in the US and 56% in West-
Germany.

I'm wondering if maybe there might be a correlation between unreasonably high
taxes and tax havens? If the tax rate is reasonable, say 20-30%, then I
probably won't bother trying to evade taxes myself and I won't have much
sympathy with others doing it (greedy assholes!). However, if the tax rate is
like 70-80%, then yeah, putting some money in a tax haven becomes tempting and
I will have much sympathy with other tax dodgers.

~~~
illivah
what makes 20-30% reasonable? Just don't say "because it feels right".

~~~
raverbashing
Think of marginal rates (because the top rates only apply at the higher salary
ranges)

Would you like to get a $100 pay raise and get only an effective $20 pay
raise? Would you bother working more for that?

People will always have a sense of fairness. And we're not talking about the
very rich there (which usually pay a smaller effective rate), we're talking
about people with high earnings, but usually not millionaires.

~~~
xenadu02
At the hundreds of millions and higher club it's all a form of dick measuring
contest anyway, so yes... Those people would do what they do even if the tax
rate were 99%.

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lumberjack
The reason being? My guess is governments are finding it hard to balance their
budgets since many economies are performing short of what they predicted
pre-2008.

~~~
josefresco
From the article "The reason for the shift is the global, austerity-era push
for countries to share more information on tax arrangements. "

~~~
asift
We live in an "austerity-era" where government budgets continually expand.
Apparently a mere reduction in the rate of growth qualifies as austerity these
days.

~~~
drumdance
It's more about spending relative to GDP.

And when you look at income relative to GPD, the US is only just now returning
to it's historical average in eighties and nineties.

[http://www.taxpolicycenter.org/taxfacts/displayafact.cfm?Doc...](http://www.taxpolicycenter.org/taxfacts/displayafact.cfm?Docid=205)

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fleitz
Here in Canada even the Revenue Agency dodges taxes.

[http://www.cbc.ca/news/politics/federal-pension-board-
used-o...](http://www.cbc.ca/news/politics/federal-pension-board-used-
offshore-scheme-to-skirt-foreign-taxes-1.2824959)

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comrh
Aren't taxes a zero sum game? If one "dodges" any amount the state must make
up that revenue somewhere so the actors with finances and ability to best take
advantage of the system then end up not paying their fair share?

~~~
mathgeek
While it is essentially a zero-sum game, there are many alternatives to "make
up that revenue." Those include printing money, reducing expenditures, etc.

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snake_plissken
I read an interesting piece the other day. It posited that the true goal of
mass data collection programs like those run by the NSA and GCHQ is not to
stop terrorism but to gather information and track financial transactions so
that more taxes could be collected. I think the only piece of evidence
supporting the supposition was the fact that the data will be kept "forever",
so it wasn't the most convincing piece, but I liked the unorthodox nature of
the idea. I think it was on ZeroHedge but I can't find it at the moment.

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eip
"When the government is able to collect tax and seize private property without
just compensation, it is an indication that the public is ripe for surrender
and is consenting to enslavement and legal encroachment. A good and easily
quantified indicator of harvest time is the number of public citizens who pay
income tax despite an obvious lack of reciprocal or honest service from the
government."

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gtpasqual
Sorry to break it to you, but tax evasion will always exist.

There is a HUGE financial incentive to find alternatives and a simple example
would be cryptocurrencies.

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Chrossler
I don't like taxes either... That's why i just don't pay them

~~~
JonFish85
You work for Uber/Airbnb, don't you :)

