The Pandora Papers: It will be a bad week for international tax cheats

jollystomper said:
Isn't South Dakota also one of the easiest states to establish legal residency in, and (in theory) avoid taxes in the state one actually lives in? Hmmmm...
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That reminds me. Isn't South Dakota the state RV'rs like to register residency to avoid sales tax on the purchase of $$$ RV's? Trickle down tax avoidance?
 
HawkeyeNFO said:
Meh...Anyone remember the Panama papers back in '16? Nothing happened after that. My guess is because the major media have CEOs and others that are part of the group.
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Yep, that's my fear. Big story when it comes out, the rich make sure nothing happens. New laws and regs *might* happen, tax lawyers and greedy locales figure out how to avoid them.

See: https://www.theatlantic.com/ideas/archive/2021/10/how-south-dakota-became-haven-dirty-money/620298/

Agree that the growing wealth inequality has a real chance of causing a lot of bad things to happen.
 
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Scrapr said:
That reminds me. Isn't South Dakota the state RV'rs like to register residency to avoid sales tax on the purchase of $$$ RV's? Trickle down tax avoidance?
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Yes, for full timers for sure.
 
Markola said:
Yes, I’m sure most DO use legal tools to help the uber-rich have lower tax rates than you and I pay, and perhaps in the shadows they can avoid paying taxes altogether. That’s precisely the problem for civil society that tax havens foster.

Maybe others here either don’t yet grasp the growing risks to our political economy associated with ever-ballooning wealth inequality. As a history major, I do, because it nearly always leads to very sharp “corrections”, of the kind that none of us on this board of millionaires and multimillionaires would enjoy living through very much.
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Much of what 'the rest of us' complain about is legal even if not within the spirit of the laws. Tax loopholes are not happy accidents. If one of us were suddenly among the .01% we wouldn't pay more than our legally required taxes. Until you curb or eliminate campaign contributions (democracies at least), good luck...
 
GTFan said:
New laws and regs *might* happen, tax lawyers and greedy locales figure out how to avoid them.
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Midpack said:
Tax loopholes are not happy accidents. .
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Sometimes such heralded 'expose's' like Pandora end up merely identifying the weaknesses in a strategy. The journalists are simply doing the hard work for them! A stress-test of sorts.

They can then 'adjust' the laws and loopholes such that even bigger dodges are clearly and perfectly legal with no grey area...and much harder to find.

That's why tax accountants and lobbyists live in nice big houses!
 
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Midpack said:
Much of what 'the rest of us' complain about is legal even if not within the spirit of the laws. Tax loopholes are not happy accidents. If one of us were suddenly among the .01% we wouldn't pay more than our legally required taxes. Until you curb or eliminate campaign contributions (democracies at least), good luck...
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Agree.
 
CardsFan said:
I think it is funny how the public abhors having their personal data stolen, but revels in seeing the data of others stolen and published.
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That said, one of our major political parties (which I won't name) subscribe to the philosophy that the ends justify the means.
 
South Dakota may save on vehicle sales tax and state income tax…but Federal is still the biggest bite. Gotta believe there are foreign residency would be less expensive.
 
teejayevans said:
South Dakota may save on vehicle sales tax and state income tax…but Federal is still the biggest bite. Gotta believe there are foreign residency would be less expensive.
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Foreign residency does not eliminate your Federal income taxes unless you also renounce your citizenship.
 
audreyh1 said:
Foreign residency does not eliminate your Federal income taxes unless you also renounce your citizenship.
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For high income and/or high net worth US citizens the expatriation tax is also applied on renunciation.

https://www.expatnetwork.com/how-to-renounce-us-citizenship-the-costs-and-implications/

An Expatriation tax is payable if you are a ‘covered expatriate’ which will apply if:

Your average net income tax for the five years ending before the date of expatriation is more than a specified figure that is adjusted for inflation ($160,000 for 2018.
Your net worth is $2 million or more on the date of your expatriation.
You cannot certify tax compliance.
If you qualify as a covered expat you will be treated as having disposed of your assets the day before your expatriation and will be subject to capital gains tax. The first $699,000 of any assessed gains are exempt and any gains beyond this will be taxed as a short term or long term gain.

The Expatriation Tax is generally only an issue for very high net worth individuals, but the inability to certify tax compliance draws many people, including accidental Americans, into the tax. The exemption of $699,000 will take many out of having to pay any tax, but property or other gains can have an impact. It is essential to take advice before you renounce your citizenship to see if you can structure things to avoid being a covered expat and, if this is not possible, to structure your affairs to eliminate or minimise any taxable gains.
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jollystomper said:
Isn't South Dakota also one of the easiest states to establish legal residency in, and (in theory) avoid taxes in the state one actually lives in? Hmmmm...
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I know this is where you get license plates if you don't live in the US - RVs in Mexico.
 
Here’s a good, brief summary of the Pandora Papers in the context of all of the other leaks. With over 11 million files to wade through, it will take years to open this Pandora’s box, prosecute any wrongdoers, embarrass people who maneuver in the shadows to pay fewer taxes than you and I do, and try to reform laws and rules.

Is it wrong to leak people’s private records? Normally, yes, but these people are not subject to audits, like you and I are. So, these leaks are not going to stop, because leaks are the only way to clarify how elites are depriving their societies of revenues that the rest of us are required to pay. In that sense, the rest of us subsidize these “tax optimizers” and, in some cases, “cheats” to the tune of trillions of lost tax revenues to run our countries and pay our debts and deficits.

https://www.euronews.com/next/2021/...about-the-latest-bombshell-icij-investigation
 
Most "explosive" (term used in the link above) or "bombshell" reports these days are forgotten with few if any consequences eventually. With faux "bombshells" every day now, we all forget sooner than ever before. Loopholes have existed forever, and could be fixed pretty easily, but they were all bought and paid for - again, none of them are happy accidents...

And there have been articles about companies and very wealthy individuals paying little or reduced taxes throughout my adult life. I don't recall any of them being "embarrassed" for more than a few weeks if that - unless they've actually broken a law, and that's not the case more often than not.
 
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My problem with most of these exposés is that they fuzzy the line between tax avoidance and tax cheats.

You may want to change what constitutes tax avoidance, that’s all well and good, but tax avoiders are still operating within the law and don’t deserve to have their private matters exposed in the newspaper.

Actual criminal tax cheats don’t deserve any such protection.
 
mpeirce said:
My problem with most of these exposés is that they fuzzy the line between tax avoidance and tax cheats.

You may want to change what constitutes tax avoidance, that’s all well and good, but tax avoiders are still operating within the law and don’t deserve to have their private matters exposed in the newspaper.

Actual criminal tax cheats don’t deserve any such protection.
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+1. We've all seen good people following what the law allows being brandished as criminals and reputations ruined for all sorts of reasons.
 
mpeirce said:
My problem with most of these exposés is that they fuzzy the line between tax avoidance and tax cheats.

You may want to change what constitutes tax avoidance, that’s all well and good, but tax avoiders are still operating within the law and don’t deserve to have their private matters exposed in the newspaper.

Actual criminal tax cheats don’t deserve any such protection.
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Yea, but I think it is a public service to remind John Q. Public what outrageous tax avoidance maneuvers are perfectly legal. And, that Congress has essentially de-funded the IRS so they don't have the resources to dig through layers of shell corporations and complex transactions. Instead they go after easy, low dollar stuff.
 
teejayevans said:
South Dakota may save on vehicle sales tax and state income tax…but Federal is still the biggest bite. Gotta believe there are foreign residency would be less expensive.
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IIRC, SD is one of the states that has eliminated the ban on perpetuities, so a trust setup there has an unlimited lifespan if the grantor wishes.

It may also be one of the few states that now allow irrevocable trusts where the grantor is also allowed to function as a trustee.

So once transferred their assets are untouchable, but unlike with a 'normal' irrevocable trust the grantor as trustee can continue to control distributions of both income & assets instead of having to appoint/employ an independent trustee who would otherwise be constrained by the written provisions in the trust.

Note the above type of irrevocable trusts are not cheap to either setup or maintain.
 
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ncbill said:
IIRC, SD is one of the states that has eliminated the ban on perpetuities, so a trust setup there has an unlimited lifespan if the grantor wishes.

It may also be one of the few states that now allow irrevocable trusts where the grantor is also allowed to function as a trustee.

So once transferred their assets are untouchable, but unlike with a 'normal' irrevocable trust the grantor as trustee can continue to control distributions of both income & assets instead of having to appoint/employ an independent trustee who would otherwise be constrained by the written provisions in the trust.

Note the above type of irrevocable trusts are not cheap to either setup or maintain.
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Our very own Cayman Islands! Iike it!
 
I investigated a few of these a few years ago and they are REALLY for are for the exceptionally rich. The costs of setting up and maintaining these legal structures is tough when compared to the "reasonable" tax rates we pay as retirees.

We have decided to continue to pay our annual tithes for being citizens. Our one dodge is to live in Mexico for 6 months and avoid the expensive food and state taxes on consumption. Mexico has IVA but the net costs are still lower by 20% per year.
 
^^^^^ Canada appreciates your patriotic act of paying your taxes to benefit the society that helped you accumulate your wealth, rather than dodging your taxes through sleazy multiple shell companies and audit-proof secret trusts.
 
dmpi said:
That said, one of our major political parties (which I won't name) subscribe to the philosophy that the ends justify the means.
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The sad reality is that both US major political parties believe that the end justifies the means and they act accordingly.
 
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