The poor are on the inside rolls, the rich are leaking taxes

The wealth owned by the 26 richest people in the world is the sum of the property owned by the bottom 3.8 billion people.

The poor are on the inside rolls, the rich are leaking taxes

In order to hide their money, a great drama of tax avoidance by the super rich is staged around the world.

01 “Only the Little People Pay Taxes”

On October 2, 2018, the New York Times launched a heavy investigative front-page story of 15,000 words.

The report pointed directly at the back of then President Donald Trump – as one of the richest families in the country – the Trump family had massive tax fraud, as well as the transfer of assets through various means such as internal transactions and the establishment of shell companies, evading billions of dollars in taxes and other acts, while Trump himself had a record of not paying any income tax for 10 years.

This piece of work, which took three journalists a year and a half to create, going through tens of thousands of pages of tax documents and confidential information, was eventually suppressed and did not make any waves, despite the heated debate among the public.

Trump responded with four words, “extremely boring”, and refused to release his tax returns. New York State tax officials claimed to have been investigating Trump’s tax situation, but after several months there was no new information, and finally nothing was done.

It was no surprise that a media outlet took on a president, but it at least gave the public another glimpse into the other side of the super-rich’s vast wealth.

The poor are on the inside rolls, the rich are leaking taxes

The New York Times’ coverage of the Trump family’s tax evasion Source: NYT official website

In recent days, the American mega-rich have once again been vaulted into the limelight over tax issues.

On June 8, news agency ProPublica broke a record of the American super-rich paying taxes, and the names of Amazon founder Bezos, Tesla founder Musk and financial magnate Soros were listed. The records show that in some years, the super-rich, who hold 80% of the nation’s wealth, paid zero federal personal income tax.

For example, Bezos did not pay any federal personal income tax in 2007 and 2011, Musk did not pay any federal personal income tax in 2018, and financial giant Soros paid zero personal income tax for three consecutive years.

What’s more, the 25 richest Americans increased their wealth by $401 billion between 2014 and 2018, but paid a total of $13.6 billion in taxes, with an average “personal income tax rate” of only 3.4%, with Buffett as low as 0.1% and Bezos even less than 1%, while a The income tax rate is as high as 14% for an average middle-class American with an annual income of $70,000.

Their hard work for a year is not as much as the capitalists earn a second, but to bear more than ten times the tax rate than the rich, who is not balanced in the heart.

For the media, the attitude of the tycoons is also very strange, Bezos remained silent not to respond, Musk back a “? .

Legally speaking, this record does not cause much damage to these super-rich people. Most of their wealth comes from company stock and dividends, which are not taxable income as long as they don’t sell stock or receive dividends.

In other words, other than hearing a few words of moral criticism from the public, the rich don’t have to bear any significant costs.

On the contrary, the general public, who live on wages from selling their labor, pay high personal income taxes

“Only the little people pay taxes”, the words of New York real estate tycoon Helmsley in the 1980s, full of superiority, still reveal the naked reality 40 years later. The great melon that is the United States has made us see the never-ending gap between capitalists and ordinary people.

Few people are willing to give their lifelong wealth to the state for nothing. The richer the person, the higher the desire and ability to avoid taxes.

In order to protect their wealth, the rich people have turned into “iron roosters”, and a big drama of tax avoidance has been staged all over the world.

02 “Hidden” trillions of dollars

In the Cayman Islands, located in the northwest of the Caribbean Sea, there is a small 5-story building, in this very ordinary-looking building, there are more than 18,000 companies hidden.

Cayman Islands picturesque, the 16th century Columbus sailing discovery of this “New World” after, here was once a pirate’s paradise.

Today, “Captain Jack” has given way to capital, the island is everywhere in hardcover lawyers, accountants, bankers, as well as from around the world, living in luxury hotels and their invisible bigwigs and their cars and beautiful women, they are doing the same thing here – “hiding their wealth”.

The poor are on the inside rolls, the rich are leaking taxes

The Cayman Islands on the Caribbean Coast

In 1978, the British-ruled Cayman Islands enacted a law stating that no business or individual is required to pay a single cent of tax on any economic activity in the Cayman Islands. Moreover, there is a strict policy of secrecy regarding the protection of private property.

With the ability to avoid taxes and provide a shortcut for companies to list overseas, the Cayman Islands has become a haven for the world’s wealthy.

Today, this small island with only 70,000 inhabitants houses more than 300 bank branches and 100,000 registered companies around the world, among which are the Fortune 500 companies such as Apple, Google, Coca-Cola and Procter & Gamble from the United States.

Similar to the Cayman Islands, Swiss bankers have been recruiting customers around the world since the 1920s under the slogan “Swiss banks, helping you hide your money seamlessly”.

In 1934, Switzerland enacted the Banking Secrecy Act, which allowed any depositor to open an account with a Swiss bank in any way he or she liked. You could register your banking information under an alias, with a code name, or even with a string of numbers, and no one could know your identity. During World War II, these anonymous accounts protected the property of many Jews. Even if a gun was held to the heads of Swiss bank staff, they would keep their mouths shut about their users’ information.

By 2014, Swiss banks were managing $2.2 trillion in offshore assets.

The poor are on the inside rolls, the rich are leaking taxes

UBS

Good systems make bad people good and bad systems make good people bad.

For many small business owners, it’s not necessary to travel that far across the ocean. They are also very good at hiding their property and avoiding taxes wisely.

They take their daily expenses to the company for reimbursement, register their cars and houses as company property, and then give themselves a token low salary. Not only do they pay less personal income tax, but they also raise the operating costs of the business and pay less corporate income tax, killing two birds with one stone.

This is probably the inspiration for the scene in the TV drama where the rich young man is saved by Cinderella after all the cars and houses registered in his company’s name are taken away by the court due to his father’s bankruptcy.

In addition to personal and corporate income taxes, the inheritance tax in Europe, the United States, Japan, Korea and Taiwan is also a huge sum of money that the rich and powerful have to pay afterwards.

Shrewd as they are, they navigate various gray areas and transfer all their assets legally before their death.

In a 2018 New York Times disclosure, Trump’s dad, Trump Sr. started thinking about how to keep the family fortune from suffering from estate taxes when his sons were still toddlers. He had the Trump brothers hang out at his own company with high salaries before setting up a purse company to be the family business provider, transferring the wealth to the children’s names, and then later allowing the assets to shrink by dialing down the valuation and diluting the equity, saving $500 million in estate taxes through these maneuvers.

Trusts are also a commonly used method. The wealthy can set up their assets as a family trust to be managed by professionals, and the fund income will be enjoyed by the beneficiaries, because the ownership and income rights are separated, which can circumvent the tax in a roundabout way.

For example, Apple founder Steve Jobs’ wealth was managed using a family trust. He entrusted a total of $4.6 billion in Disney stock to the Jobs Trust and three properties to two different trusts, with his wife and children as beneficiaries, so that he could pay less estate tax.

Setting up charitable foundations is also a common method of tax avoidance for foreign tycoons. This type of foundation is more like the result of the good offices of the U.S. government and the rich, the money is not given to the government, then you must donate 5% to do public welfare, we all abide by the rules.

For the rich, this can at least bypass the government, according to their own will to spend money, wealth can also continue for a longer period of time.

In 2012, the then French President Francois Hollande imposed a 75% “tax on the rich” on wealthy people with an annual salary of more than 1 million euros, the policy was introduced in the year, there were 587 levied on the object of immigration The year the policy was introduced, 587 subjects emigrated to other countries.

03 A world torn apart

The world is deeply torn by the gap between the rich and the poor.

UN Secretary-General Anton Guterres has said that nearly half of the world’s wealth is monopolized by the richest 26 people, who together own more than $1.4 trillion in assets, equivalent to the combined assets of the world’s poorest 3.8 billion people, while 70% of the world’s population has to accept unfair incomes and wages.

In the United States, nearly 20 percent of the nation’s wealth is owned by the top 0.1 percent of the population, whose net worth is equal to the combined assets of the bottom 90 percent of the population. Over the past 40 years, CEO pay in the U.S. has increased by 937%, while working-class wages have increased by only 10%.

While the rich and powerful are finding ways to avoid taxes when they earn large amounts of wealth, the average person simply has no choice.

The majority of the working class live on a fixed salary, the money has not yet arrived, the tax has been deducted, they are “social animals” self-deprecating, to “lie flat” as the goal, but also have to continue to “inside the volume for a living “The irony is that most of the wealthy people are not only rich, they are also rich.

The irony is that most wealthy people’s wealth growth more from stocks, property and other assets rise, these assets do not need to pay taxes before the sale of real estate, they do not even have the need to avoid taxes.

“People who make $20,000 a year pay higher taxes, and those rich people who enjoy about $50 billion a year in tax breaks are engaging in charitable fundraising.” lamented Gili Daladas, author of The Elite Scam That Changed the World.

The essence behind the tax reforms being carried out in many countries is a tug-of-war between the interests of different social classes.

“If you call taxes on the rich class warfare, let them say so. But ask a billionaire to pay the same tax rate as his secretary, and most Americans would say that’s basic common sense.” In 2012, President Barack Obama, who comes from a civilian family, took a shot at the rich.

His tax reform bill proposed that the government make the tax rate for the wealthy class, who earn more than $1 million a year, no less than 30 percent. In contrast, the tax rate for those earning less than $250,000 a year, who make up 98 percent of the population, should not be raised. He also established the Trade Investigation and Financial Crimes Unit to investigate capital manipulation on Wall Street and other practices.

However, the bill is very difficult to promote because of the many issues involved. After the “rich two” President Trump took office, Obama tax reform did not end, Trump instead began to promote tax cuts, to further “reduce the burden” for the rich.

Now, Biden, who defeated Trump, has included taxes on the rich in his agenda. He proposed to raise the capital gains tax from 20% to 39.6% for Americans earning more than $1 million a year, plus the existing surtax of 3.8% on investment income, the overall capital gains tax rate could be as high as 43.4%; the top marginal tax rate for personal income tax was also raised from 37% to 39.6%.

At the same time, the process of international tax transparency is opening up further.

In May 2014, the Swiss government announced that the Swiss financial system would support a declaration signed with the Organization for Economic Cooperation and Development on the implementation of a standard for the automatic exchange of information between banks (AEOI).The specific requirements of the AEOI are that information collected by countries on foreigners’ bank accounts, beneficial ownership of companies, etc., will be automatically shared with the country of the foreigner’s nationality whenever tax is involved.

Those who signed the declaration with Switzerland also include offshore tax havens such as the Cayman Islands and Bermuda.

In other words, the information of those account holders has been transparent since then, which shows Switzerland’s determination to combat tax evasion. The signing of the declaration brings an end to more than 300 years of secrecy in Swiss banks.

In 2019, the Cayman Islands also formally implemented the Economic Substance Ordinance to clean up shell companies registered in the jurisdiction that do not carry out core business and avoid them becoming a gateway for cross-border tax avoidance.

The doors of the old “tax havens” have since been closed, and the Swiss banks and Cayman Islands, which were hiding dirt, are now history.

Light gradually shines through the darkness.

In the movie “The Shawshank Redemption”, Andy was forced to use his professional financial knowledge to help the prison warden evade taxes and launder money, and when he was finally freed, he also sent the real devil to hell with a thick book of money laundering evidence.

In real life, the truth about this “fugitive wealth” has just been uncovered the tip of the iceberg.

References.

[1] “Swiss banking: the end of tax havens for the rich” Tencent Finance

[2] “Cayman Islands: The Past Life and Future of Tax Havens” China News Weekly

[3] “U.S. media digging deep into the Trump family “tax evasion door”: 550 million estate tax paid less than 10%” Surf News

[4] “Super rich people’s tax records exposed! Some people have not paid a single cent for years ……” China Economic Network

[5]”The tax rate of America’s top tycoons is only 3.4%, far lower than that of ordinary office workers” Interface News

[6] “Under the epidemic, the gap between rich and poor in the United States seems to go back to 100 years ago” Xinhua News Agency

[7] “Inheritance Tax, the Absolute Tax on the Rich” Global Magazine

[8] “Inheritance Tax Avoidance and the Insurance Planning Therein” Modern Business Magazine

[9] “30 million inheritance tax 10.34 million, controversial inheritance tax 800,000 starting point” 21st Century Business Herald

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