Re: New Panama Papers leak exposes relatives of President Xi, Jackie Chan, Putin aide
And whilst the big boys evade taxes big time, you and me still have to pay taxes like shmucks. Here's one newspaper's take on tax evasion:-
http://www.cbc.ca/news/business/inversions-panama-revenue-quandary-1.3521358
Analysis
Inversions, Panama schemes mean the ordinary wage-earner gets stuck paying the taxes: Don Pittis
Even the leanest governments need to get revenue somewhere, so they choose the soft targets
By Don Pittis, CBC News Posted: Apr 06, 2016 5:00 AM ET Last Updated: Apr 06, 2016 11:24 AM ET
After the Panama Papers were released I spotted this tweet: "Wife calling .... wants to know why we are the only morons apparently still paying taxes."
It's not just a joke.
• Panama Papers: Iceland's PM resigns amid protests over offshore tax haven revelations
• Pfizer-Allergan merger in doubt as new U.S. tax inversion rules proposed
Paying your taxes used to be a moral duty, but primed by growing anti-tax rhetoric, the moral rules have changed. As tax avoidance becomes more respectable and its legal methods more labyrinthine, governments are going after the soft option, ignoring the hard nuts to focus on taxing the average shmo.
Inversion crackdown
The threat yesterday by U.S. Treasury Secretary Jack Lew to crack down on tax inversions came as a shot across the bow of a deal by drug giant Pfizer. It wants to merge with another company as a scheme to slash its tax bill by pretending it is actually Irish for tax purposes.
Pfizer, makers of Advil, wanted to wear a touch of the green and benefit from Ireland's low tax rate by merging with Allergan. (Reuters)
Irish business taxes are 12.5 per cent. In the U.S. they are 35 per cent.
A day later, the Pfizer-Allergan deal is dead because the Treasury Department's new rules would make trying to exploit that tax loophole not worth the effort. And that's a good thing, the White House says.
Stuck with the tab
"It sticks the rest of us with the tab," said President Barack Obama at a news conference calling on Congress to push through the tax inversion changes.
Despite presidential attention over inversions, plus this week's ruckus over the Panama Papers — which have already claimed at least one high-profile victim — the world's governments have been paralyzed in their attempts to capture escaping tax revenue.
U.S. President Barack Obama scowls during a briefing in which he called on Congress to pass new rules blocking tax avoidance, but critics hold out little hope for legislative change. (Reuters)
"While lawmakers have introduced anti-inversion bills, none have been passed," said one U.S. news report in a line buried at the bottom of a story trumpeting the crackdown, "and the chance that Congress will embark on business tax reform this year is very slim."
The fact is, governments are in an unequal battle. In an earlier era, even the biggest corporate giants were under the power of the one or sometimes two countries where they did most of their business.
Huge and unattached
In the years since, corporations have become huger and less nationally attached. They manufacture or buy parts in many places around the world while being able to run much of their day-to-day operations — telemarketing, billing, IT, administration — anywhere there are computers. National residency becomes a mere formality.
Meanwhile, governments have been intentionally weakening themselves, whether under the starve-the-beast principle or simply to try to get their budgets under control in an era of shrinking revenue.
While business growth stagnates, finding legal ways to pay lower taxes has been a bumper source of revenue for corporations and rich people. Money in offshore tax havens is estimated in the trillions of dollars.
The staggering power of that kind of money to buy accounting expertise, to lobby governments at home and abroad, to get the best legal help or even to hire the best crooked help, may be literally overwhelming. Governments find themselves unable to pass laws fast enough to close the freshly devised loopholes.
Revenue agency cuts
Tax authorities earning government-level wages are up against the world's priciest talent. In Canada the revenue agency actually faced staff cuts.