29 November 2011

Obama: “biggest tax scam on record”

05 Jan 2008
"You've got a building in the Cayman Islands that supposedly houses 12,000 corporations. That's either the biggest building or the biggest tax scam on record."

US Uncut, Yes Men to Bust Corporate Tax Dodgers in Cayman Islands, June 18
10 Jun 2011

The activism groups behind a widely circulated (and false) AP report stating GE would return its entire 2010 tax refund of $3.2 billion to the US Treasury appear to be getting the band back together. US Uncut and The Yes Men are planning another event to draw attention to the massive problem of corporate tax dodging, but this time they’re taking their activism directly to the source of America’s lost revenue: the Cayman Islands.

One of Obama’s stock applause lines was a true-life story he would tell about a single building in the Cayman Islands which houses 12,000 corporations. "That's either the biggest building,” then-Senator Obama would say, “or the biggest tax scam on record.” Cue wild applause. The building Obama was referring to is called the Ugland House in George Town, and it actually houses about 19,000 registered companies. Since being elected, however, President Obama has done little to stem the problem of corporate tax havens. Legislative paralysis is precisely why US Uncut and The Yes Men are planning this action to draw the American people’s attention back to the problem of tax dodging.

Ugland House

28 November 2011

Tax Havens Shift Tax Burdens

Treasure Islands by Nicholas Shaxson, 2011, Excerpts
In the large economies, tax burdens are being shifted away from mobile capital and corporations onto the shoulders of ordinary folks. The rich have been paying less, and everyone else has been forced to take up the slack. Tax havens overturn the healthy dynamics by providing escape routes for their elites. The secrecy jurisdictions are the biggest culprits.

27 November 2011

Tax Haven Investments

Treasure Islands by Nicholas Shaxson, 2011, Excerpts
The two biggest sources of foreign investment into China in 2007 were not Japan or the United States or South Korea but Hong Kong and the British Virgin Islands. Similarly, as of 2009 the biggest source of foreign investment into India, at over 43 percent of the total, is the treaty haven of Mauritius, a rising star in the offshore system. It also specialized in channeling Chinese investments into Africa’s mineral sectors. Mauritius illustrates how the British spiderweb is no imperial relic but a modern and self-renewing system. Although French-speaking, the country has a long history of British colonial involvement. Mauritius set up its offshore center in 1989 under the tutelage of experts mostly from the City of London, Jersey, and the Isle of Man. The Netherlands is another major European tax haven. In 2006, while the Irish musician Bono browbeat Western taxpayers to boost aid to Africa, his band, U2, shifted its financial empire to the Netherlands to cut its own tax bill.

Chinese officials stole $120 billion, fled mainly to US
2011 Jun 17
Thousands of corrupt Chinese government officials have stolen more than $120bn (£74bn) and fled overseas, mainly to the US, according to a report released by China's central bank. The officials used offshore bank accounts to smuggle the funds, according to the study posted on the People's Bank of China website this week but which has since been removed. It said the officials smuggled about 800 billion yuan into the US, Australia, Canada and Holland through offshore bank accounts or investments, like property or collectables.  The stolen funds were covered up by disguising them as business transactions by establishing private companies to receive the money transfers.

26 November 2011

Tax Haven Secrecy

Treasure Islands by Nicholas Shaxson, 2011, Excerpts
Tax havens don’t just offer an escape from tax. They also provide wealthy and powerful elites with secrecy and all manner of ways to shrug off the laws and duties that come along with living in and obtaining benefits from society – taxes, prudent financial regulation, criminal laws, inheritance rules, and many others. Offering these escape routes is the tax havens’ core line of business. It is what they do.

Offshore secrecy shifts control over information and the power that flows from it toward the insiders, helping then take the cream and use the system to shift the costs and risks onto the rest of society.

These zones of ultra-freedom for financial interests are so often repressive places, viciously intolerant of criticism. The offshore world is steeped in a pervasive inverted morality: Turning a blind eye to crime and corruption has become good business practice: a way of attracting money; while alerting forces of law and order to wrong doing has become the punishable offense. Here in the tax havens, rugged individualism has morphed into disregard, even a contempt, for democracy and for societies at large.

25 November 2011

United States’ Tax Haven Structure

Treasure Islands by Nicholas Shaxson, 2011, Excerpts
Along with Britain and Europe, the United States anchors the third big offshore pole. At the federal level, on the top tier, the United States dangles a range of special tax exemptions, secrecy provisions, and laws designed to attract foreign money in true offshore style. U.S. banks may, for instance, legally accept proceeds from a range of crime - such as handling stolen property – as long as the crimes are committed overseas. Special arrangements are made with banks to make sure they do not reveal the identities of foreigners parking their money in the United States.

The next tier involves individual U.S. states. Florida’s banks have a long history of harboring mob money, often in complex partnerships with the nearby British Caribbean havens. Other U.S. states like Wyoming, Delaware, and Nevada have specialists in offering low-cost and very strong forms of almost unregulated corporate secrecy, which has attracted illicit money, and even terrorist money, from around the globe.

The third U.S. offshore rung is the U.S. Virgin Islands, a minor haven used by Bank of America, Boeing, FedEx, and Wachovia, among others. The Marshall Islands provides the anything goes, unregulated flag, among many others, the Deepwater Horizon, the BP-operated rig that caused environmental chaos off the U.S Gulf Coast in 2010.

The biggest tax haven in the U.S. zone of influence is Panama. The country is filled with dishonest lawyers, dishonest bankers, dishonest company formation agents and dishonest companies. The Free Trade Zone is the black hole through which Panama has become one of the filthiest money laundering sinks in the world.

The U.S. government and many others have allowed tax havens to proliferate because the elites who use them are the world’s most powerful lobbyists. Nearly every multinational corporation uses tax havens, and their largest users – by far – are on Wall Street.

24 November 2011

City of London – Tax Haven Mothership

Treasure Islands by Nicholas Shaxson, 2011, Excerpts
This network of offshore satellites does several things for the City of London. First, it gives it a global reach. These jurisdictions funnel money through to London. Second, the spiderweb lets the City get involved in business that might be forbidden in Britain, giving the financiers in London sufficient distance from wrongdoing to allow plausible deniability.  By the time the money gets to London, it has been washed clean.

Offshore Magic Circle: Its members are made up of highly profitable multijurisdictional law firms mostly originating in Britain or its Overseas Territories and Crown Dependencies: a smartly dressed regiment of accountants, lawyers, and bankers forming a private global infrastructure that, in league with captured legislatures in the secrecy jurisdictions, makes the whole system work.

City ‘to be offshore currency market for China’
11 Jan 2012
Talking to bankers and lawyers, there is growing optimism that the City of London will join Hong Kong as an offshore center where the Chinese currency, the Renminbi, can be traded - and that an announcement on all this may not be far off. The RMB would be on its way to becoming a proper globally traded currency, commensurate with China's status as the world's second biggest economy.

22 November 2011

Tax Haven Structure

Treasure Islands by Nicholas Shaxson, 2011, Excerpts
The world tax havens can be divided roughly into four groups: a set of continental European havens, a British zone of influence centered in the City of London and parts of Britain’s former empire, a zone of influence focused on the United States, and a fourth category holding unclassified oddities like Somalia and Uruguay.

Each jurisdiction offers one or more offshore specialties. Each attracts particular kinds of financial capital, and each develops a particular infrastructure of skilled lawyers, accountants, bankers, and corporate officers to cater to their specific needs.

The drug smugglers, terrorists, and other criminals use exactly the same offshore mechanisms and subterfuges – shell banks, trusts, dummy corporations, and so on – that corporations use. Offshore connects the criminal underworld with financial elites and binds them together with multinational corporations and the diplomatic and intelligence establishments. Offshore drives conflict, shapes our perceptions, creates financial instability, and delivers staggering rewards to les grands, the people who matter. Offshore is how the world of power now works.

18 November 2011

Expropriating Wealth

Citigroup Plutonomy Report, 2005, Excerpts
Organized societies have three ways of expropriating wealth - through the revocation of property rights, through the tax system, or to slow down the rate of wealth creation. The three levers governments and societies could pull on to end plutonomy are benign. Property rights are still intact and taxation policies are neutral to favorable.

There seems little threat from the first of these challenges: blatant expropriation of property by governments. There are few examples of governments changing the rules in the plutonomies and engaging in widespread nationalization, or asset re-distribution. Governments have learnt the lessons of regulatory certainty and the sanctity of property rights.

The more likely means of expropriation is through the tax system. Corporate tax rates could rise and personal taxation rates could rise. Dividend, capital-gains, and inheritance tax rises would hurt the plutonomy. In the U.S., the current administration’s attempts to change the estate tax code and make permanent dividend tax cuts plays directly into the hands of the plutonomy.

So long as economies continue to grow, there is little threat to Plutonomy.

17 November 2011

Plutonomy Limits

Citigroup Plutonomy Report, 2005, Excerpts
Concentration of wealth and spending in the hands of a few has its limits. There are signs around the world that society is unhappy with plutonomy. If voters feel they cannot participate, they are more likely to divide up the wealth pie, rather than aspire to being truly rich. The population at large might still endorse the concept of plutonomy, but feel they have lost out to unfair rules. This is a threat more clearly felt during periods of falling wealth. A collapse in wealth in the plutonomies, felt by the masses, could easily raise the prospects of anti-plutonomy policy.

The “global imbalances” is not as dangerous and hostile as one might think. A more balanced view acknowledges these nasty imbalances, but predicts a gentle, gradual dollar decline, a yuan revaluation, and the hope that Asians and European consumers will embark on a spending journey, righting the world.

16 November 2011

Plutonomy Drivers

Citigroup Plutonomy Report, 2005, Excerpts
What are the common drivers of Plutonomy? Disruptive technology-driven productivity gains, creative financial innovation, capitalist-friendly cooperative governments, an international dimension of immigrants and overseas conquests invigorating wealth creation, the rule of law, and patenting inventions. Often these wealth waves involve great complexity, exploited best by the rich and educated of the time.

15 November 2011

Managerial Aristocracy

Citigroup Plutonomy Report, 2005, Excerpts
Plutonomies have occurred before in sixteenth century Spain, in seventeenth century Holland, the Gilded Age and the Roaring Twenties. In the early 20th century, capital income was the big chunk for the top 0.1% of households, since the mid-eighties, mainly from oversized salaries. The rich in the U.S. went from coupon-clipping, dividend-receiving rentiers to a Managerial Aristocracy indulged by their shareholders.

The Managerial Aristocracy commandeers a vast chunk of that rising profit share. We think the trend of cost-cutting-balance-sheet-improving CEOs might just give way to risk-seeking CEOs, re-leveraging, going for growth and expecting disproportionate compensation for it. The earth is being held up by the muscular arms of its entrepreneur-plutocrats, like it, or not.

Globalization is keeping the supply of labor in surplus. On-going globalization is making it easier for companies to either outsource manufacturing from cheap emerging markets like China and India, or “offshore” manufacturing, move production to lower cost countries. Those being undercut are losers in the short term. This tends to lead to calls for protectionism and anti-immigration policies.

Louis XIV

12 November 2011

Plutonomies and the Rest

Citigroup Plutonomy Report, 2005, Excerpts
The World is dividing into two blocs - the plutonomies, where economic growth is powered by and largely consumed by the wealthy few, and the rest. In a plutonomy, there are rich consumers, few in number, but disproportionate in the gigantic slice of income and consumption they take. There are the rest, the “non-rich”, the multitudinous many, but only accounting for surprisingly small bites of the national pie. At the heart of plutonomy is income inequality. Societies that are willing to tolerate/endorse income inequality are willing to tolerate/endorse plutonomy. Society and governments need to be amenable to disproportionately.

The U.S., UK, and Canada are world leaders in plutonomy. Eastern Europe is embracing many of these attributes, as are China, India, and Russia. Countries and regions that are not plutonomies: Scandinavia, France, Germany, other continental Europe [except Italy], and Japan.

There are 1,011 billionaires in the world this year. These titans control entire swaths of the global economy, from energy and steel to fashion and telecom.

Photograph: Jimmy Sime, 1937, Toffs and Toughs

10 November 2011

Ownership Skewed by Legal Definitions

OWN: to have or hold as property : POSSESS
POSSESS: to have and hold as property : OWN

OWN: to have legal title or right to something. Mere possession is not ownership.

Note how the legal definition explicitly states that possession in not ownership.
Common Axiom: Possession is 9/10ths Law.

to divide and distribute

1) a portion of a benefit from a trust, estate, claim or business usually in equal division (or a specifically stated fraction) with others ("to my three daughters, in equal shares").
2) a portion of ownership interest in a corporation, represented by a stock certificate stating the number of shares of an issue of the corporation's stock.

assured reliance on the character, ability, strength, or truth of someone or something

an entity created to hold assets for the benefit of certain persons or entities, with a trustee managing the trust (and often holding title on behalf of the trust). Most trusts are founded by the persons (called trustors, settlors and/or donors) who execute a written declaration of trust which establishes the trust and spells out the terms and conditions upon which it will be conducted. The declaration also names the original trustee or trustees, successor trustees or means to choose future trustees. The assets of the trust are usually given to the trust by the creators, although assets may be added by others. During the life of the trust, profits and, sometimes, a portion of the principal (called "corpus") may be distributed to the beneficiaries, and at some time in the future (such as the death of the last trustor or settlor) the remaining assets will be distributed to beneficiaries. A trust may take the place of a will and avoid probate (management of an estate with court supervision) by providing for distribution of all assets originally owned by the trustors or settlors upon their death. There are numerous types of trusts, including "revocable trusts" created to handle the trustors' assets (with the trustor acting as initial trustee), often called a "living trust" or "inter vivos trust" which only becomes irrevocable on the death of the first trustor; "irrevocable trust," which cannot be changed at any time; "charitable remainder unitrust," which provides for eventual guaranteed distribution of the corpus (assets) to charity, thus gaining a substantial tax benefit. There are also court-decreed "constructive" and "resulting" trusts over property held by someone for its owner. A "testamentary trust" can be created by a will to manage assets given to beneficiaries.

a person who owns real property and rents or leases it to another, called a "tenant."

07 November 2011

Joan of Arc Startles Mark Twain

Joan of Arc

New York Times, 31 Dec 1905

Left to Right: Andrew Carnegie, Mark Twain, Dan Beard, Sir C. Purdon Clarke, Rollo Ogden, Miss Angersten

Mark Twain was the guest of honor at a dinner given last night at the Aldine Association by the Society of Illustrators. All the well-known magazine and newspaper artists were present, while other distinguished guests included Andrew Carnegie, Sir. C. Purdon Clarke, Caspar Whitney, Robert Collier, Jr., Norman Hapgood, Alphonse Mucha, Arthur Scribner, and Thomas A. Janvier, Frederick Remington, Henry S. Fleming, and Daniel Beard were on the Reception Committee.

It had been arranged that when the humorist arose to speak Miss Angersten, a well-known model, was to appear in the garb and with the simple dignity of Jean d'Arc, his favorite character in all history. He was on his feet as Jean d'Arc entered the room. She wore the armor of the French heroine and her hair and face made a strangely appealing picture.

The face of the humorist, which had been wearing its "company" smile all night, suddenly changed. He had every appearance of a man who had seen a ghost. His eyes fairly started out of his head, and his hand gripped the edge of the table.

Jean d'Arc presented him with a wreath of bay. He merely bowed, with his eyes fixed on the girl's face. They followed her as in reverent silence she passed out, followed by a little boy in suitable costume, bearing a banner over her head. Then Mark Twain spoke. His voice was broken, and his word came slowly.

There's an illustration, gentlemen - a real illustration," he said. "I studied that girl, Joan of Arc, for twelve years, and it never seemed to me that the artists and the writers gave us a true picture of her. They drew a picture of a peasant. Her dress was that of a peasant. But they always missed the face - the divine soul, the pure character, the supreme woman, the wonderful girl. She was only 18 years old, but put into a breast like hers a heart like hers and I think, gentlemen, you would have a girl - like that."

The humorist looked toward the door, and there was absolute silence - puzzled silence - for many did not know whether it was time to laugh, disrespectful to giggle, or discourteous to keep solemn. The humorist realized the situation. Turning to his audience he came out of the clouds and said solemnly:

"But the artists always paint her with a face - like a ham."

06 November 2011

Inez Milholland - Martyr of the Women's Suffrage Movement

Inez Milholland [1886-1916]: Born and raised in Brooklyn, New York, she grew up in a wealthy family. She attended Vassar College, where she was once suspended for organizing a women's rights meeting. The president of Vassar had forbidden suffrage meetings, but Milholland and others held regular "classes" on the issue, along with large protests and petitions.

She led the Suffrage Parade in Washington, DC, the day before Woodrow Wilson's inauguration, March 3, 1913, looking like Joan of Arc, draped in white robes and riding a huge white horse.

In 1916, she went on a tour in the West, speaking for women's rights. During a speech in Los Angeles that September she suddenly collapsed. Ten weeks later, on November 25, 1916, she died at the age of 30. She died from conditions arising from Pernicious Anaemia. Her last public words were, "Mr. President, how long must women wait for liberty?" She was known as the martyr of the Women's Suffrage movement.

King Henry by Douglas Galbraith:
Fictionalized role she played aboard Henry Ford’s pre-WWI Peace Ship.

Iron Jawed Angels, 2004:
From 1912 to 1920, a group of fiery young suffragettes led by Alice Paul [Hilary Swank] and Lucy Burns [Frances O-Connor] band together to wheedle the United States into adapting a Constitutional amendment guaranteeing women the right to vote. Along the way, they incur the wrath of President Woodrow Wilson [Bob Gunton] and anger other suffragette leaders [Anjelica Huston and Lois Smith]. Directed by Katja von Garnier.

05 November 2011

Emily Davison - Suffragette

Europe by Geert Mak, 2007, Excerpts

A brief section of newsreel has been preserved of the Derby [London] held in June 1913. We see the horses hurtling around the bend at high speed, neck and neck. In the background we catch a glimpse of the crowd, men in straw hats, here and there a woman. Then something happens, so quickly as to be almost imperceptible: a woman runs onto the track, there is whirl of bodies, then the horses are past and spectators rush towards a pile of clothing. That is how she entered history. Waving two flags, Emily Davison threw herself in front of the king’s horse for the cause of female suffrage. She died four days later.

Shortly before Emily was born, John Stuart Mill published The Subjection of Women in 1869. A man held absolute sway over his wife’s person and her possessions. University degrees were off-limits to women. Many professions barred women from their ranks. Many poor girls turned to whoring to survive. After 1870, women began making themselves heard on subjects such as education, charity work, health care, mandatory vaccination and prostitution. Starting in 1880, the major political parties established women’s organizations, and demonstrations for female suffrage began in 1900.

She was drawn into a current of political action, demonstration of solidarity and intense friendships. She was deeply convinced that ‘she had been called by God not only to work, but also to fight for the cause she had embraced, like Joan of Arc leading the French Army. Her prayers were always long, and the Bible always lay beside her bed.’ Emily united in herself the contradiction of her day; a hotchpotch of modern militancy and religious romanticism.

Within this field of contradictions, and driven by her own religious fervor, Emily Davison went further and further adrift. She became on the first to wield the new weapon of the powerless: the hunger strike. After she was arrested, she was force-fed through a tube and attempted to throw herself down the prison stairwell.

Slowly but surely, she began considering herself a martyr, a sacrificial lamb. On Tuesday 3 June, 1913 she walked at the ‘All in a Garden’ fair organized by the women’s movement, and paused for a long time before the statue of Joan of Arc. She told her friends cheerfully that she would come back here every day, ‘except for tomorrow. Tomorrow I’m going to the Derby.” She refused to elaborate. ‘Read the papers, you’ll see.” The next morning she rushed into the main office. ‘I need to borrow two flags.’ In everything now, she was Joan of Arc.

But dying was not a part of her plan. When she committed her ultimate act, the train ticket home, third class, was still in her pocket.