Convenient scapegoats: “Tax Havens”
Adolph Hitler was one of the most infamous examples of a politician skilled at deflecting the blame for a country's woes to others so as to take the people's focus away from fundamental problems on the home front The ploy worked for a while, Hitler rose to power as Fuhrer and the Jews suffered as Nazi scapegoats. In the end, Hitler put a gun to his head as Allied forces marched on Berlin and the Third Reich ended rather ingloriously.
Fast forward to contemporary America and the rhetoric that many Americans seem to be eating up lately, the rancorous rhetoric aimed at "closing down" so-called "Tax Havens". Tax Havens being those jurisdictions that some American politicians conveniently blame for America's economic woes and describe in terms meant to lead voters to believe that these vital offshore financial centres are nefarious cosmic black holes for American dollars. The spirit of Mein Kampf still lives on via the vapid spewing of the U.S. politicians who deflect blame for their mismanagement of their country's economy — and deflect attention from the USD$1,090,000,000,000 federal deficit they helped create and continue to grow — by pointing their slimy fingers at "Tax Havens".
Let's look at the facts: Americans and the poor leaders that they have chosen over the years have fueled the fires of unsustainable spending and have amassed a debt that now hovers at around USD$16,700,000,000,000. Stack this figure against the claim that offshore tax havens are said to cost the US Treasury an estimated $150,000,000,000 per year in lost revenues and an interesting picture begins to emerge. If the claims of revenue losses are true, (and if I did my math right at this late hour) the loss claimed to be caused by "Tax Havens" amount to a paltry sum of less than 1% of US debt. Hitler would be proud of (and maybe even a bit awestruck by) power-hungry American politicians and their beguiling propaganda.
It is important to bear in mind that it is not the "tax havens" that are collecting this USD$150 billion annually; it is US businesses that are benefiting by reducing their tax burden by that amount. The offshore jurisdictions that are being lambasted by American political demagogues receive revenue based on professional financial and business services and that's all.
Lower tax expenditure means that US companies have more money to spend on capital expansion, and on research and development. Economically this should be a good thing. If we assume that the lion's share of stock in US companies is held domestically then an even more interesting picture materialises: less money spent on taxes means more profits and more dollars to distribute as dividends to shareholders. More profits to American shareholders means more money circulating in the country's economy. Is this bad?
American corporations saving on taxes may be a good thing for the US economy, but not so good for leaders of a wasteful government that is unable to control its expenditures and powerless to curb its gnawing appetite for tax dollars to waste. Combine US tax gluttony with the unrealistic and absolutely unsustainable expectations of the American people and their insatiable desire for a comfy share of government services, and you can see why a scapegoat is needed: at the current rate of runaway expenditure the U.S. debt is forecast to mount from its current level of around 70% of GDP to grim predictions of up to 200% of GDP within the next 25 years.
To add to an already dire scenario, America is steadily loosing its global competitive edge. This is partly because of its own esurience, and significantly because China, India and other strongly emerging countries are beginning to adapt rapidly and are quickly becoming able to play the global economic domination game all too keenly. Their cut of the global pie is rapidly expanding. They are beginning to eat America's lunch primarily because the cost of doing business is less in those places, and significantly because the labour and technical talent pool is industrious, ambitious, skilled, vast, and cheap. The economic slide America is experiencing will inexorably continue and will most likely accelerate, whether or not so-called "Tax Havens" are "closed down". But, they gotta blame somebody, right? So why not blame the Cayman Islands and other politically small and oh-so-convenient scapegoats? Sieg heil!
Americans and their leaders need to look in a mirror and do the healthy thing and accept their fair share of the blame for the mess their country is in. Then they need to wake up to the stark and cold reality that the world's old economic and political map is being burned and a new one is being redrawn even as you read this. Like it or not, new global paradigms are evolving. Whenever sweeping global economic shifts take place it results in domestic conditions undergoing massive change, a great many people are deeply discomfited, established powers and entities are turned topsy-turvy and established societies experience almost unbearable turmoil. Rather than embracing political propaganda and trying to hold on to an unsustainable standard of living and an unhealthy dependence on government services, the people of America need to stop looking for external scapegoats, face reality and try to figure out how to best survive the unrelenting changes that are taking place in the world. A new race is being run and those not ready to keep pace in the pack will be left in the dust.
Pointing fingers at scapegoats and embracing political rhetoric ended badly for Hitler and the German people. The bad ending was a foregone conclusion as soon as the masses began to believe in Hitler's enticing rhetoric. Sadly, the poll mentioned in the article on CNS Business entitled "Democrats bring bill to cut tax loopholes" shows that the people of the USA seem to be no less gullible than the masses of pre-war Germany. Unless the people of America face reality and act accordingly, a bad ending for the USA is no less certain.
PS: We see that other countries that have also jumped on the "Let's make Tax Havens the scapegoat" band wagon. To them I say: "Read carefully and apply accordingly!" because most of them are even bigger tax gluttons and tax wasters than the USA.
Category: Viewpoint
1:If tax avoidance is such a negligble issue as a %age of govenment debt then the effect on income flow and employment must be similarly negligble!
2:Governments need tax revenue to live.What's the point in saying that this reduces income flow and employment .They can simply compensate by spending it to a greater or lesser degree ,sometimes even on socially beneficial projects!.
Economics 101
Jack Sloper
Just Commentin' has done a skillful job in deflecting the voter and the people of the Cayman Islands to the real problems here.
Of course anyone with a modicum of intelligence would throw the Hilter analogy in the rubbish where it belongs. The US has every right to protect its income tax system and to draw comparisons with Nazi Germany is ignorant.
The real problem that Just Commentin' uses Hitler's blame game to avoid is the mismanagment of the Cayman Islands government over the years. Bloated and wasteful government spending is the real issue to Cayman's woes, to the point where the UK now must closely monitor financial guidelines. This is a homegrown problem that blaming will not solve.
The entire Hilter analogy trivializes the terror and horror of the Nazi period and I would recommend Just Commentin' read "Night" by Elie Wiesel to clarify reality for himself or herself.
Did you really mean that I have "done a skillful job in deflecting the voter and the people of the Cayman Islands TO the real problems here"" Or, did you actually mean to express that I have "done a skillful job in deflecting the voter and the people of the Cayman Islands FROM the real problems here"? Because if you actually wrote what you meant, then your argument does not follow your moot.
If you meant the former, I owe you a hug because focusing voter attention TO the real problems here is one of my life's sacred missions. However, making allowance for the vernacular error that is all too prevalent among among the unlearned – the semantic confusion of "to" and "from" – I will assume you meant the latter. (Right?)
What you failed to check out before flying off into Fantasyland is that I have written several – no, make that many – comments on CNS that were (deservedly) highly critical of the waste, misdirection, and mismanagement of the successive governments of the Cayman Islands. In other words, where your argument became rancid tripe is by your fabrication of the premise that "The real problem that Just Commentin' uses Hitler's blame game to avoid is the mismanagment (sic) of the Cayman Islands government over the years." I have to laugh. If you were attempting even a marginally intelligent response to my opinion you would have left that one out. To rephrase: one of my life's fondest endeavours is to awaken the voters of the Cayman Islands so they will not become even more like their American counterparts believing in the spewings of power-hungry, slimy-fingered demagogues. I ardently preach the message that we have a flawed process that is producing quite less than optimal outcomes and that is why we are in the mess we are in today. Why even go there anyway? What relevance does this have to the issue? Your statement is a classic example of "deflecting" (in case you need to be tutored in the nuances of the term, which apparently you must.)
Obviously you like to talk and are very focused upon what you say but not so much what other people say. Your Nazi comparisons were ignorant and offensive and the problem is in Cayman not in the United States.
Blaming is a waste of time and hurtful to solving the real problems in Cayman. I suggest you read the book Night and learn about the Nazi years before you make such future comparisons.
Don't let this person near the real world. They would be eaten alive.
To compare the US’s attitude towards offshore finance with the Nazis’ towards the Jews reveals woefully disproportionate priorities and a misunderstanding of both issues. I hope everyone agrees that ANY rhetoric or economic measures against offshore jurisdictions would pale to insignificance alongside the atrocities committed against the European Jews in the 30s and 40s.
Interesting viewpoint but lacking in fundamentals, taxes are one necessary evil,direct or indirect. How would one pay for goods and services? America’s problem is not taxation rather their problems came about with the destruction of the middle class with exporting jobs that the middle class held in manufacturing and customer services to China, India and other low wage jurisdictions, the same is happening in Cayman with the importation of cheap labour. America got smart to an extent and is encouraging many of its companies to return to America with lower tax benefits and other incentives. Cayman on the other hand is doing nothing to keep its middle class alive its only solution is investment from foreign investor, and giving concessions to them, there is no long term planning for the development of the middle class. Cayman’s middle class are the people who now have to shoulder the cost of this country while the rich developer is given millions in tax concessions.
One reason I chose to use the Hitler analogy was that it would get attention. Apparently this was a moderately successful idea because you read my contribution, didn't you? Maybe even more than once, huh?
Another reason is that it is a well-known and extreme example of blame-mongering. I could have used a more obscure blame-monger, perhaps Joseph McCarthy, but as a lede that would not have made nearly as much impact and buzz. Why not go for the biggest "BANG!" and use Hitler to personify the evil of American politics? It got reader attention and fostered some debate, which is what I intended (thank you very much). Heck, I could have done worse in your eyes and used an analogy that leaves Hitler in the dust as a small-time mass murderer by comparison: the Communist Oppression which was responsible, by some estimates, to be responsible for upwards of 60,000,000 murders of those who they pointed their slimy fingers at. Now that would have been "trivialising" even by my standards.
Since I have a "misunderstanding of both issues", can you fill us in on at least one in an informative and insightful manner? I am all ears. (Or eyes…or whatever…)
Great viewpoint. Unfortunately, the Cayman bashers just like to harp on bashing Cayman. United States needs to stop wasting money and blaming other people. Not saying that our dear ex-premier and current premier is any better but at least they wasted the money on trips and not supporting countries that are killing their people. Secondly, for the Cayman bashers, please look at the difference in debt and how quickly it is accruing. Cayman's problems started with the down turn in the economy, USA has been on a downward spiral for years.
What a load of hyped nonsense!
Nazi references are just the start of it. To name just one absurdity, the poster speaks of America's deficit as though it was an example of their inefficiencies, and yes, a large part of it is classic overspend, but the other part is the inability to collect taxes. Thats where the likes of Cayman come in, and frankly it is becoming an unacceptable to pretend you have nothing to do with the initial problem. Yes, they need to keep taxes reasonable, cut spending and so on, but for Cayman to help the citizens of other jurisdictions defraud their governments makes Cayman a part of the fraud, its like the guy that buys the stolen goods!
What really is nonsense is that these slimy-fingered American politicians are finger-pointing and howling because American people and corporations are exploiting U.S. tax loopholes that American politicians enected specifically for the purpose of minimising the tax burden of U.S. Big Business and America's weatlhy.
What is unacceptable and utter hogwash is to criminalise the Cayman Islands and pretend that America is an innocent victim rather than admitting the truth that America was the prime mover of the "initial problem". Your use of the word "defraud" and pointing at the Cayman Islands would be amusing if it were not so slimy-fingered: with all the tax-treaty mandated reporting and due-diligence requirements, the tax benefits that U.S. individuals and corporations derive from the Cayman Islands stems mostly from legal use of loopholes in the American tax system. The "initial problem", as you put it, was spawned by America itself. The so-called "tax havens" merely accomodated American greed. In case you took to slumber in 1980 and just woke up, the days of the "Tax Haven" and wide-spread tax "fraud" is pretty much over, Bobo. (Nice try, though!)
Maybe you don't think so but a deficit to the sum of trillions of dollars is a pretty damn good example of an "inefficiency" to me! But I will cut you some slack: If America's deficit is not "an example of", as you put it, its "inefficiencies" and is not a result of its poor fiscal planning and policy, then who is responsible for Ameica's deficit? The Cayman May-cow? The Tooth Fairy not leaving enough quarters under their pillows? Who?
At least the majority of Caymanians roun' yah will be the first to admit that our politicians and their "inefficiencies" have been the prime cause of our deficit. So what's America's excuse?
Cayman's Offshore sector is woefully lacking in public defenders, besides those who are paid to defend it. So we should all welcome this Viewpoint contribution, anonymous though it is.
My own article "In defence of Offshore tax havens" has regularly attracted visitors to my blogsite (Barlow's Cayman) since it was posted in August last year. It's never been as popular as the items on the prospect of Income Tax in Cayman (in July and August), but popular enough. After all, it's a topic of great interest to people in finance all over the world.
The more local contributors we can muster, the better.
Anything that starts with a Nazi analogy is bound to be pretty weak. And so it proved.
And the weakness is?
Pretty much the whole thing.
Well aside from the inane Nazi rubbish, and the awful lack of judgment the writer had thinking "Yes, a Hitler analogy will help my argument", the real issue is that it seems to adopt a false binary approach between tax haven crackdowns and local onshore fiscal responsibility, when in truth both are necessary as part of a long term G20 plan to stabilise equitable and effective revenue bases.
The bit starting "Adolph" and ending in "USA" was the weakest part.
OK lets just pick a basic economic / accountancy one.
The writer claims that the tax not collected is not material to the issue in the states by comparing the tax foregone to the national debt.
Tax not collected each year is an income line. National debt is a balance sheet item. The valid comparison is to the annual deficit and on that basis the tax foregone accounts for around 10% of the deficit….pretty material.
Doing what the writer has done is a bit like comparing your annual pay rise to the size of your mortgage which is clearly nonsense.
NB I am accepting his / her numbers…if they are wrong then fine but they are what he / she builds an argument on so they are taken as the base case.
Bopttom line then is that even if we ignore the sensationalist comparisons the basic economic measurements are drivel.
Will that do you for weakness????!!!
Contrary to your allegation I never "claimed that the tax not collected is not material to the issue", it is the issue! Actually I was not trying to make a point via economics/accountancy at all; in the comparison I was painting an illustration of the vastness of America's internal problem compared to the tax "loss" – in this case, an illustration of scope.
So…let's go with your 10%. How much of this 10% is actually "lost" through Cayman facilitation? More importantly, how much of this 10% could be collected by merely quietly making equitable changes in American tax codes, rather than sabre-rattling and Hitler-like scapegoating and bashing so-called "tax havens"? Any idea, Mr. Accountant?
Unless and until you can do a better job of proving that the American political scape-goating in question is not pure unabashed and uncalled-for demagoguery, I will stick with my Hitler analogy. It fits. Cayman bashing is the result of evil power-hungry men doing what evil men throughout history have done, consolidate their power over disillusioned souls by placing blame on others.
BTW: In the real world people actually do compare a paltry pay raise to the scope of their mortgage. It may not be correct "accountancy", but it is human nature.
Its true, some Americans just listen to what their leaders say without giving time to think about how valid their statements really are. Not all statistics belted out by a person in power is going to be true – they expect you to believe them and that is how one can be easily manipulated.
Sure we're a tax haven, and you can bag on us, but do clean up your own yard first before pointing fingers at problems less serious than the ones already happening in your country. Likewise with (currently in office) Caymanian politicians, always rectify your own national dilemmas before blaming others blindedly. It truly exposes your character…
what is the point of this viewpoint????…. please forget about tax havens and look somewhere else?????
classic caymankind example of failing to address the real issue and sticking your head in the sand…
The point is that America and other high tax countries are failing to address the real issue, looking for scapegoats in tax havens and sticking their heads in the sand. Got it?
Another point, simply put is all of the countries that are balking about " tax free offshore centres" should realise that they are stifling their own wealth. If their citizens are restricted from investing & operating their offshore accounts they will simply keep their funds in a bank in their homeland and no one benefits. They are not gaining much, if any interest on the funds and the money just sits idle. It would be better to have their offshore tax free company, work their money and circulate it in their own country to help the deficit. Offshore jurisdiction only get the fees they charge for the services- sometimes not even that! An offshore centre is a win win situation for clients.
Theory only. Secrecy jurisdictions like the Caymans and other similar pond life are parasites allowing the rich and the corrupt to steal from the poor with the assistance of corrupt local politcians and fat cat lawyers.
Cayman is not a secrecy jurisdiction. There are a number of pathways to legitimately access information here in respect of crimes including tax evasion.
How do I find out the directors. From a public register? Thought not. How do I find out the shareholders? From a public register? Thought not. Nominee shareholders OK? Thought so. Corporate directors OK? Thought so. Bearer shares? Thought so. Different rules for local businesses and ones that agree to carry on their business in foreign lands? But of course. Yes, sir, you are a classic secrecy jurisdiction.
Again, there are statutory pathways to obtain all that information.
Nonsense. In theory criminal investigations from abroad can access some information, but you put hurdles in the way and the need for a piublic and criminal element means corruption abroad can defeat these rights. Individuals prtecting their civil rights are barred from accessing this type of information. On top of everything else you have a confidentiality statute which means people are criminals for complying with foreign court orders.
Please don't post until you have an actual understanding of the subject. There are a number of exceptions to the Confidentiality Law. That is the point I have been making but you are just too ignorant to understand.
Read the U.S. Government Accountability Office Report. U.S. govt. agencies have praised Cayman's record of cooperation so you are just spouting malicious nonsense.
Ah the typically arrogant assumptions of the little islander. The continued existence of the confidentiality law, brought in as it was to further secrecy interests, is one of the best examples of why the Caymans are a secrecy jurisdiction. The exceptions are limited and unclear, the costs and threats associated with seeking information are a hurdle placed by and maintained by the local government.
Ah the little islander superiority complex had to come out at some point. How predictable. Now we all know the confidentiality law does not work and even when it does it can cost tens of thousands of dollars and a long time to get even a tiny piece of information that usually leads to another brother secrecy jurisdiction or is designed by expensive lawyers to really mean nothing. I know you know the kool-aid-slurpin'-Cayman-Finance-party-line theory, but if you don't know what it is like to deal with this stuff in the real world then you would be either the ignorant one or the one trying to pull wool over everyone's eyes.
Sometimes it is better to leave ignorance alone.
Thanks for the lecture on how to be a successful country. Maybe one day Cayman will be too, a country I mean…
Hey, thanks for taking the time to read what I wrote.
Ok, here is a challenge for you: just so we can understand where you are coming from, please do tell us your definition of "country" in the context of your comment. And give us some meaningful criteria…I mean…that is…if you can.
It is probable that regardless of what you write, you response will most likely show that your comment is rather pointless. But, don't let that stop you.
It gunnah be fun t'see wha yah ansah bees. I tink yah bees in for a long clime up de pole yah, Bobo.
Looks like I hit what I was aiming at.
countries have ambassadors, militaries, memberships in the UN, and such like. you don't have your own police or judges.
Just commentin' oughto to read the comments and man up or woman up and admit that the Nazi analogy was inappropiate and his comments were off the mark. His final surrender was to revert to local patois which was to be expected when facing his own limitations.
Real awareness for Just Commentin' would consider that Caymanians are responsible for the mismanagement of their government and focus on solutions rather than blaming foreigners.