A genuine, real ultimate conspiracy by the rich against everyone else. Acting in concert with small armies of accountants and lawyers, they coordinate at an international level to hide their money/profits and avoid paying taxes.
This is a mainstream article with an excellent video outlining how it all works.
The only difference between tax avoidance and tax evasion is if it’s legal or not. And laws vary from place to place.
“Secrecy World” author Jake Bernstein explains how the super-wealthy hide billions using tax havens and shell companies. Following is a transcript of the video.
In 2016, 11.5 million files were leaked from Mossack Fonseca, the world’s fourth largest offshore law firm. These were called the Panama Papers. Hundreds of thousands of offshore entities and shell companies connected to over 200 countries and territories appear in the papers. Prominent world leaders, politicians, business people and the super wealthy were exposed to have been using offshore accounts for tax avoidance and other purposes.
So, why should you care? Every year, about 70 billion dollars that the US could be using for infrastructure, law enforcement, healthcare or education is missing. It’s hidden deep within shell companies and anonymous entities in places like the British Virgin Islands. Now, let’s back up. What exactly is a shell company anyway?
Jake Bernstein: Setting up a shell company is really quite easy. You can go to a place like Panama or the British Virgin Islands or Delaware or Nevada and usually the places where you’re doing it have tough laws where they will not reveal who the beneficial owner is and they just layer on different aspects of anonymity. So for example, you could have fake directors where you pay a little bit extra and someone pretends to be the public face of this company.
Just because you have a shell company does not mean necessarily that you’re doing anything illegal. Say for example, you wanna have some business activities but you don’t want certain business partners to know what you’re doing. The more normal one is some form of legal tax avoidance. I think that a lot of people in the US think that tax evasion and tax avoidance is something that happens in a far off place with palm trees and ocean breezes. And the reality is it’s a big deal here. The US Treasury estimates that something like 300 billion dollars a year is laundered through the United States. Foreigners are coming in and buying up property with anonymous shell companies and some of that is perfectly legitimate but some of it is clearly money laundering and corrupt officials and other people using their cash to park it in property and making it impossible for the people who live there to afford it.
And our government is claiming that it doesn’t have enough money for infrastructure or for healthcare or for police or for education and at the same time, there’s just huge amounts of tax avoidance and tax evasion going on through this secrecy world. Worldwide tax authorities have collected more than a half a billion dollars based on the Panama Papers leak.
Of the 214,000 entities identified in the Panama Papers, about one half of them are located in the British Virgin Islands. How did this tiny area become such a huge tax haven? Mossack Fonseca is a Panama based law firm founded in 1977. After instability in Panama was pushing clients away during the ’80s, the firm discovered the British Virgin Islands were ripe new territory for anonymous shell companies.