It's not really a conspiracy. You just need to know the right people intimately.
I live in a country with a thoroughly dysfunctional banking system which, by most accounts, fall right in the middle of the global income bracket.
Yet I know a ton of people in the upper-middle and lower-upper class and they all have the following characteristics of their wealth, which _do not_ appear in most wealth statistics:
* One or multiple bank accounts in offshore tax havens, with the US being the most important
* Multiple properties, whose real ownership is hidden by being assigned to family members, friends, and relatives
* A lot of overseas trips to buy things that are normally horribly expensive due to to import restrictions.
* A deep, thorough understanding not only of tax law, but also personal connections with people who work in tax agencies to understand when to avoid (legally), when to evade (knowing the tax agency won't pursue evasions under a certain currency amount) and when to get into convenient tax amnesty regimes.
Again, these aren't phenomenally rich people and they're easily hiding away 50-85% of their net wealth. By most metrics these people's income would, in theory, put them in median American lifestyle. Yet it's obvious that their standard of living _easily_ puts them in the top 2-5% of a developed country, with the addition that labor costs are so cheap that they can afford services even pretty wealthy people in other places cannot.
This is a classic in Latin America, and I have no reasons to believe it's any different elsewhere; the instruments are just different.
It's hasn't been a conspiracy theory since the Panama papers came out. Everyone is now aware of the extent rich people go to use tax havens and are rightfully upset. They make record profits, encourage irresponsible consumerism, and don't even pay their fair share for the damage they inflict upon the world.
Furthermore there's a reason rich people flock to places like Delaware, Washington, or California. Those states all have tax schemes that allow the wealthy to pay the least amount of taxes.
Hell us rubes even suffer through coach so that the ultra wealthy's luxury jets are subsidized.
There's too much money at play for there to not be a conspiracy - of some sort. I think it's pretty hard to argue that our economy is not highly skewed towards protecting the wealth of the very rich.
Reminds me of something someone said a while back:
> hey remember when the panama papers came out and revealed that all the rich people in the world are part of enormous criminal conspiracy to dodge taxes and hoard stolen wealth in offshore accounts and literally nothing happened
Sure there is - it's the ordinary people who make their money through trading their labor and invest it through a retail brokerage. In other words, most likely...you, the reader.
Hear that a company is going to beat estimates from your friend the accountant at a party and act on it, and you'll get busted for insider trading. Develop a complex algorithm to identify all the other people who are trading on inside information and do what they do, and chances are nobody will figure out what you're doing.
Cheat on your taxes, and you'll get busted for tax fraud. Move earnings through a complex web of offshore subsidiaries in Ireland, Dubai, and the Cayman Islands, and you're technically following the laws of all of those individual countries, but still end up paying less taxes.
Start a pyramid scheme through an e-mail chain letter, and you'll get busted. Start a pyramid scheme by creating a ride-hailing app and bringing on progressively wealthier and more powerful investors, and soon you'll own transportation.
Borrow lots of money on your credit card, and you'll be dealing with aggressive debt collectors for the rest of your life. Borrow lots of money from banks for a series of increasingly more speculative real estate & casino deals, go bankrupt 4 times, start a reality TV show, run for President, and soon you'll own the world.
Completely agree. While I'm very interested in the data and I'm sure there is a significant amount of implied evil deeds going on, I think notion that there is a conspiracy to protect the 1% is sophomoric enthusiasm at best (and idiocy at worst).
People move money around for a variety of reasons. Tax fraud, sure. Capital flight for protection of assets from instability or fears of nationalization (Cyprus, for example) is another completely valid reason and I don't see anything wrong with that. At different scales of wealth, a shell company isn't that different from hiding cash in the mattress.
Now, if you're talking about dictators in resource rich banana republics siphoning off riches of their country, then by all means, let those be prosecuted... But how likely is that?
Really rich people do this with a complex network of shell organisations that's as opaque as possible.
It's not just that a corporation owns their house, it's that another corporation owns that corporation, and a holding company in the Cayman Islands with a nominee director who lives in a postbox owns everything, except the IP rights which are in Panama - this year. And personal spending goes through a credit card set up by their own personal offshore bank, which effectively makes it loan. Etc.
If there are enough shell companies you can decide your own tax payments, because you can hide everything you choose to hide. It's not that these networks can't be disassembled, it's that they can't be disassembled efficiently. It can literally take months or years of full-time auditing effort to trace all the relationships.
Maybe you're right that it would be impossible to hide this in America.
I don't like to get all conspiratorial, but have you read 'Confessions of an Economic Hit Man'? If half of what Perkins writes is true, then maybe it wouldn't be so hard. He says that there is a parallel economic system in operation that most of us don't know about. If you were part of that world, you probably could flaunt your wealth... you just have to be sure it's hidden from the population at large.
Exactly this. The financial system is designed to extract wealth globally and funnel it to well connected elites and the organizations they control. It’s not even a secret or a conspiracy, since all of the information is in the public domain. Rather the strategy is to maintain social stability, since for most people as long as their standard of living is stable or slightly improving, they won’t bother to take actions to defect from this system (such as buying assets that are not primarily in USD)
The primary reason for people like Larry to exist at this scale is the tax loopholes that the ultrarich use to hide wealth. This includes international money-laundering and cartels.
yeah, doesn't take a conspiracy, the idea of any transparency of ownership in some assets is extremely recent, its not a complete idea as it doesn't cover much, and its even more recent that ways of circumventing those disclosures were less numerous. the basis for all “net worth” listicles come from extrapolating mandated disclosures, and are rarely the complete picture for anyone
and trusts can own anything with no record of the trust’s existence, and no disclosure of who manages or is a beneficiary of the trust
and even when that exists from one point in time, a trustee or beneficiary can be hotswapped in the blink of an eye
they may have no tax footprint to cause reporting, and their mere existence isn’t enough for a subpoena to go through to service providers like banks, accountants, lawyers
so yeah the government knows nothing, the service providers don't know the full picture, lawyers and trust companies may only have an incomplete picture and even the beneficiaries likely have no idea, all the while their net worth is miscalculated by every pocket watcher in existence
additionally, people in most developed nations don’t have to go international for this or an equivalent concept. the “stigma” towards international/offshore ownership can also be viewed as the high tax nation being protectionist of its domestic less accountable industry
and finally, liquidity liquidity liquidity. what America has scaled up is a market environment where the most kinds of things can be turned into cash and other assets faster than anywhere and anytime in the history of markets. and this concept isnt done yet. many of these secret high net worth holders cant sell their properties to cash if they wanted to, but can in the future.
lets not be naive. A head of state can't have $2 billion in offshore saving without illegally sourcing some of that money. So for corporations, even though they are too evading tax, their sources of income is known. For many powerful individuals sources of income ins't known (and probably illegal)
What shocks me way more than the rich individuals and family offices having setups allowing them to, legally, pay less taxes is the sheer amount of politicians caught with hidden assets. Assets that were very likely misappropriation of taxpayers money and proceeds from other criminal activities. That and assets from families linked to drug dealing and whatnots.
For example one of the most prominent leftist french politicians, ex- director of the IMF I think, was caught the hand in the cookie jar with tens of millions stashed away, while years ago he was publicly saying that tax evasion should be fought.
We're talking hundreds of politicians.
It's estimated 3% to 5% of the world's GDP is linked to criminal activites: maybe we should the priorities right, and focus on politicians-thieves and drug dealers before hating on those among the rich who legally put their money where they think it's safer? (many in these leaks have done absolutely nothing wrong and it would be nice if everything was not conflated)
Money laundering is illegal. Stealing tax payers money and hiding it is illegal. Selling drugs is illegal. Legally evading taxes is, in many cases, fully legal (tax evasion / tax avoidance: whatever you call it, nothing forces you to pay the most: if you find a legal way to pay less, more power to you as long as you're not a criminal).
Given they need to hire agents to "decipher" their returns it probably means they're using legal loopholes and hiding the money outside of the US with complicated structures.
Sure, they could start saying those loopholes are not good enough but then the political system would have a 600bn pressure to implement different loopholes or risk losing all of the tax revenue with people moving somewhere else.
These days the USA main advantage is offering highly paid jobs and venture capital - and the ultra rich definitely don't need that.
If they're still in the States and pay little tax, they most likely own the system.
> The ultra-rich are largely law-abiding and have the paperwork to prove it.
Oh really?
"Credit Suisse, the collapsed Swiss bank taken over by UBS Group in a hastily arranged bailout earlier this month, may bring with it a fresh set of regulatory and legal problems for its new owner.
For years, the bank has provided a safe haven for wealthy American clients to hide assets from the IRS — even after it was caught and prosecuted for doing the same thing more than a decade ago"
Many will take whatever opportunity they can get. Whether its complex offshore structures or moving it to banks that will greet you with a wink and a nod. As long as it doesn't go to the IRS.
I'm not saying all wealthy individuals do this, or even most. But the amount of money that is intentionally hidden from the IRS is incredibly substantial. They have done the studies.
"But Oliver Bullough says it doesn't make sense to look at the world that way. He's a British journalist and he has written a new book: Moneyland. That's what he calls a hidden economy where shell companies and offshore accounts shelter wealth from taxation and scrutiny."
I live in a country with a thoroughly dysfunctional banking system which, by most accounts, fall right in the middle of the global income bracket.
Yet I know a ton of people in the upper-middle and lower-upper class and they all have the following characteristics of their wealth, which _do not_ appear in most wealth statistics:
* One or multiple bank accounts in offshore tax havens, with the US being the most important
* Multiple properties, whose real ownership is hidden by being assigned to family members, friends, and relatives
* A lot of overseas trips to buy things that are normally horribly expensive due to to import restrictions.
* A deep, thorough understanding not only of tax law, but also personal connections with people who work in tax agencies to understand when to avoid (legally), when to evade (knowing the tax agency won't pursue evasions under a certain currency amount) and when to get into convenient tax amnesty regimes.
Again, these aren't phenomenally rich people and they're easily hiding away 50-85% of their net wealth. By most metrics these people's income would, in theory, put them in median American lifestyle. Yet it's obvious that their standard of living _easily_ puts them in the top 2-5% of a developed country, with the addition that labor costs are so cheap that they can afford services even pretty wealthy people in other places cannot.
This is a classic in Latin America, and I have no reasons to believe it's any different elsewhere; the instruments are just different.
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