Worldwide Tax Evasion Plunders Democracy Everywhere.

Posted March 12, 2014

by Jerry Alatalo

“Hell is empty, and all the devils are here.”

– William Shakespeare

368-1Considering one’s perceptions about tax evasion will increase readers’ sense of contrast when hearing what Finance and Accounting Professor Prem Sikka has to say. Professor Sikka, with over 45 years of lecturing, study and research on accounting, has the knowledge and shares it here in a powerful, focused, and direct way.

In effect, Mr. Sikka’s lecture is an advanced accounting explanation of how the worldwide tax evasion industry really operates. His description of the so-called Big Four accounting firms as the “pinstripe mafia” hits the proverbial “nail on the head”; he goes on to thoroughly explain a “very lucrative global industry” that is not as many perceive – an anomalous few island paradises having little consequence on the world’s economy and overall conditions – but an extremely consequential industry having locations in major first-world capitals including New York, London, Geneva, Frankfurt and Singapore.

Surrounded by complete secrecy.

The tax evasion industry is subverting democracy. Men and women run for political office, speaking about the need for better health care, education, security, and so on, people vote them into office, then the world’s largest transnational corporations, because of their tax evasion schemes, blow the promise of the elected politicians and citizen’s hopes for “real change this time” completely out of the water.

Professor Sikka points out that there are 2.5 million professionally qualified accountants in the world, of which 330 thousand reside in the United Kingdom; the UK is a nation of accountants. “Financial engineering” is not taught at universities anywhere, but is the first item on the agenda for newly hired, freshly pressed accounting graduates at the Big Four – Ernst and Young, KPMG, Deloitte, and Price Waterhouse Cooper. Financial engineering is the focus of new hires’ initial training workshops, and is all about creating, selling, and implementing off-the-shelf tax avoidance evasion schemes for, and to, high net worth clients.

It is important to note that there is absolutely no difference between tax “avoidance” and tax “evasion”. Perhaps the accounting, legal, and banking firms that facilitate non-payment of taxes have the idea that using the term “avoidance” instead of “evasion” will prevent ordinary citizens’ associating today’s tax cheats with Al Capone, the infamous mob boss who was nearly impossible to put behind bars until his conviction on tax “evasion”.

The Big Four accounting firms

Price Waterhouse Cooper: $31.5 billion income/sales, 169,000 employees, operations in 150 nations, 766 offices

Deloitte: $31.3 billion income/sales, 170,000 employees, operations in 150 nations, 670 offices

Ernst and Young: $24.4 billion income/sales, 152,000 employees, operations in 140 nations, 700 offices

KPMG: $22.7 billion income/sales, 138,000 employees, operations in 150 nations, 770 offices

In addition to tax evasion the Big Four accounting firms – colluding with the largest legal and banking corporations – enable bribery, corruption, drug cartels, and money laundering.

The Big Four has come to control a vast amount of political power and resources. They have a principal role in suggesting and approving international accounting standards of organizations such as the International Accounting Standards Board, as well as other accounting rules groups. Big Four accounting firms send former employees to run national taxing authorities like the Internal Revenue Service in America.

Very little is known about the Big Four as the same tax evasion schemes they sell to customers come to be implemented in their own corporate accounting frameworks. How much do they earn through tax avoidance evasion services? Nobody knows. How much do they earn from sales of tax avoidance evasion schemes? Nobody knows.

“Cost minimization”

Professor Sikka holds the idea that taxes, from the vantage point of everyone paying their fair share, are not a “cost” like raw materials used in the manufacturing process, wages paid to employees, office supplies, etc. He points out that “bending the rules at any cost to increase profits is now seen as an entrepreneurial skill”. He shares some statements by one of the Big Four, “our profitability rests on the ability of our employees to serve clients well”. There is no mention at all about the public interest. The professor recounts a debate he had with a manager from Price Waterhouse Cooper where his debate opponent finally says, “..we create tremendous revenues for the state, and we have very many satisfied clients. Professor, what is your problem?”

The professor responded with, “..that is the language of drug pushers and pimps.”

The United Kingdom could be losing 30-150 billion, the European Union one trillion, and the U.S. Treasury 345-500 billion, maybe more. Developing countries’ revenue losses from tax evasion could be in the range of 500 billion per year – while total foreign aid is around 120 billion dollars.

Some tools to reduce tax havens and tax evasion have been proposed. Among those are legal agreements/treaties with the world’s over 70 tax haven jurisdictions to allow automatic sharing of tax crime related client/account information, in essence ending secrecy and bringing forth total transparency. Tax haven jurisdictions have thus far stalled and dragged their heels by asserting they will not sign any such agreement(s) until all of their competitor tax havens sign on.

Some have suggested sanctions against those tax haven jurisdictions who do not want to play ball.

Other proposals include laws which prevent any entity which has sold tax evasion schemes from entering into public contracts, establishing licensing requirements for tax advisers/consultants (and license revocation if found implementing or selling tax evasion schemes), elimination of limited liability partnerships because partners are damaging society, and disclosure of income made from sales of tax schemes with file availability (as opposed to years and years of litigation).

Individuals and corporations convicted of tax evasion have thus far “evaded” any penalties for the public’s (taxpayers) very real (and very large) litigations costs. Convicted tax cheats should become required to pay full restitution for taxpayers’ legal costs to the last penny, as well as more in punitive fines.

As Professor Sikka points out, tax cheats’ accounting firms have gone so far as to create “cost-benefit analyses” comparing the amounts of tax “savings” to potential fines from getting caught.

Another proposal is for banking regulatory agencies to conduct audits in tax evasion cases instead of the same accounting firms which have “engineered” the tax evasion schemes in the first place. Professor Sikka considers auditing by the Big Four in tax crime cases, instead of by an independent public regulatory body, as one of the biggest frauds of all time.

If you are interested and upset by a still operational, hugely undemocratic, extremely consequential financial industry focused entirely on tax evasion, Professor Sikka delivers all you need to know to begin taking action. Mr. Sikka has over 45 years experience, study, and research in the field of finance/accounting. If you are not interested – even though every year trillions of dollars in revenues are criminally taken from nations and their citizens the world over – please take a few moments to think about family, friends, acquaintances, journalists, local, state, or national representatives, etc. who may want awareness of the explosive information in this lecture.

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(Thank you to Publish What You Pay Norway PWYP Norway @ YouTube)

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World’s First Internet Tax Haven Database Now Open For Business.

Posted March 5, 2014

by Jerry Alatalo

“Taxation without representation is tyranny.”

– James Otis (1725-1783) 

Earth 444Looking to find out if a particular world politician or transnational corporation, a particular business tycoon or Hollywood icon, or your local drug smuggler is using a tax haven? Perhaps you just have a hunch about a person, or persons, or company – that they are probably using a secretive tax scheme to hide money from their government to avoid paying their share of taxes.

Now you have an internet website with a tax haven database to search/check for yourself.

The International Consortium of Investigative Journalists (icij.org) has established a place for any man or woman in the world to go for information on tax havens, where users are able to search by nation, corporation, or individual. This is an historic accomplishment that holds out great promise for the people of the world. Why? Because, as ICIJ’s Gerald Rye points out in the following film by his ICIJ organization, 1/3 of the wealth in the entire world is parked in tax havens. Because, as Mr. Rye also points out, 1/2 of the entire world’s trade flows through tax havens.

The ICIJ tax haven database website (offshoreleaks.icij.org) gives men and woman from every nation on Earth the ability to report what they know about people, corporations, and other tax haven users to ICIJ, in effect the ability to report tips on illegal tax avoidance activities. If people are concerned about the hundreds of billions, trillions, of dollars of uncollected tax revenues because of the existence of tax havens – and have the desire to expose tax cheats – there is now a place to get involved and make a real difference.

Not only is it important that this database website is available for computer owners around the Earth because it offers real potential to end tax evasion, it also allows people around the Earth to investigate a massive, secretive industry that has been operating for decades, known only to those who have reached a certain level of wealth accumulation. Frankly, the scene in the film with Britain’s David Cameron and America’s Barack Obama – because both Cameron and Obama are well aware that tax havens are a huge, multi-decade industry enabled by the largest accounting, banking, and legal firms in the world – where Mr. Cameron speaks about his “great concern” regarding tax havens, is almost laughable.

The rich and powerful on Earth have been using tax evasion schemes for decades, and this includes terrorist organizations, drug cartel operators, arms smugglers, sanctions breakers, and the whole vast array of criminal actors with wealth. ICIJ’s exposure of this, what may be the greatest scandal in the history of this world, will blow the lid off decades-old secretive actions that have been immense in their consequences for humanity.

For those men and women who have asked themselves how 85 people could have accumulated personal wealth that is equal to the combined wealth of 3.5 billions human beings, ICIJ’s database points them to the most logical source for the real answers.

After reconsideration of the absolutely immense implications surrounding this multi-trillion dollar, decades-long, immeasurably large hoodwink, perhaps one has the responsibility to reconsider the extent and all-encompassing scandalous nature of this historic activity that has directly affected the lives of every man, woman, and child on this Earth. With an amount of focus, thought, and reflection, it is safe to say with all certainty:

Tax havens are the greatest scandal in the history of this world.

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In the year 2014, it is essential that every man and woman becomes aware of the greatest scandal in the history of this world. Please pass this most important information on to your family, friends, news organizations, political representatives, and religious organizations. The sooner everyone knows what has been occurring, the sooner steps will be taken to correct a monumental series of historic and criminal human events.

Please visit: The International Consortium of Investigative Journalists, icij.org 

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(Thank you to TheICIJ @ YouTube)

The Magical Tax Free Tour.

Posted February 27, 2014

by Jerry Alatalo

“Our Constitution is in actual operation; everything appears to promise it will last; but nothing in this world is certain but death and taxes.”

– Benjamin Franklin (1706-1790)

oneness1-1Have you ever heard of the phrase “neutral taxation”? How about “tax optimization”?  Well, these are terms used by the largest accounting firms in the world to describe, frankly: “tax evasion“. And just who are these large accounting firms – these companies that most people believe are the ones making sure every document adds up to the last penny; that the tax filings of their customers are 100% accurate? And why is it that most people are unaware that the massive tax haven/evasion industry has operated for decades, and that real estate multi-millionairess Leona Helmsley’s viral pre-internet remark made over 20 years ago – “Only the little people pay taxes” – remains true in the year 2014?

The “Big Four” accounting firms responsible for the global tax haven industry:

Price Waterhouse Cooper

KPMG

Ernst & Young

Deloitte

Most people are unaware of the fact that a massive tax avoidance industry has operated with impunity for decades around the world because no government officials have had the courage to expose the industry or take any action whatsoever to shut it down. Because no media corporations, owned by tax haven users and receiving multi-billions of dollars from corporations using tax havens, have had the incentive to tell the truth.

Because virtually any corporations with the resources to advertise on mainstream media outlets are using the “Big Four” accounting firms to escape payment of taxes, owners of those media corporations would, if their news divisions reported what was truly occurring regarding massive tax evasion by transnational corporations, lose almost all of their best, highest paying advertisers.

Because virtually every member of the United States Congress and Senate depends on campaign contributions from the major facilitators of tax schemes – the finance sector/banking corporations, as well as corporations/wealthy individuals who employ tax schemes – and many politicians use tax avoidance schemes themselves, no laws have been passed to close down tax evasion estimated in the hundreds of billions and trillions of dollars through recent decades.

If not for an explosive expose and release of banking records from the British Virgin Islands (BVI) a few years ago by the International Consortium of Investigative Journalists (ICIJ – icij.org), comparable to recent leaks of “inconvenient” information from Chelsea Manning, Edward Snowden and others, the tax haven industry would have kept humming along as it has for decades. Seeing that ICIJ released their explosive, avalanche of records around three years ago, and that tax havens continue to operate in dozens of locations around the world, it would seem that the industry is for the most part still humming along.

It is of no small interest to note that the government in the BVI has considered creating laws which result in prison sentences up to 20 years for persons leaking financial records after ICIJ’s massive release of records.

“Tax Free Tour” is a film which delves directly into the secretive world of tax havens and tax avoidance schemes facilitated by the previously mentioned “Big Four” global accounting corporations, the largest banks operating on every continent in the world, the highest priced law firms, and, frankly, elected political officials from low, medium, high, and highest levels of power.

These political “leaders”, when pressed to comment on the huge amounts of revenues being squirreled away and out of the public’s notice (remember, this industry has hummed along for decades), respond with empty words while feigning outrage. Statements to the effect of “this is intolerable…” and “we will put a stop to this…” and “steps must be taken..” etc., have not been met with the actions required to match the empty words. The hypocrisy displayed by politicians on this enormously important matter, the lying expressed by “I am just learning about this secretive practice” – while every politician has been fully aware of tax havens all along – is profoundly stunning.

Like all true criminals, corporations and ultra-wealthy individuals utilize deception, trickery, and disguise to carry out their crimes of tax evasion. One of the most damaging results of this worldwide practice is the aiding and abetting being done by the elected representatives of many nations around the Earth. The worst consequences have been felt by what has become known as the “99%” of the human race, now enduring depression-like conditions in nations around the Earth.

Most men and women remember the enormous media reporting that occurred surrounding the Bill Clinton impeachment proceedings. The issue was whether or not the President of the United States had, or did not have, “sex with that woman”. Across America (and around the world) citizens endured bombardment with news reports about Clinton’s impeachment day after day after day, night after night after night, week after week after week, and month after month after month.

And how many reports on tax havens – a worldwide trillion-dollar tax evasion scheme that has been secretly running entire nations and populations into the economic ground for decades? That has resulted in the greatest level of wealth inequality in the history of mankind here in the year 2014?

How many reports?…

ZERO.

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(Thank you to VPROinternational at YouTube)

Tax Haven Expert James S. Henry On “The Pinstripe Mafia”

Panama Banks
Panama Banks (Photo credit: thinkpanama)

Posted August 24, 2013

by Jerry Alatalo

James S. Henry speaks at a TED talk about the massive industry which has been active, thriving, and unknown to the majority of humanity for decades. This is the industry of tax avoidance (zero taxes) and tax havens up and running in locations around the world.

The International Consortium Of Investigative Journalists (icij.org) broke the silence on this industry after receiving over 130,000 documents related to tax avoidance from the British Virgin Islands, which started a world-wide discussion. As of August 2013 there are reports that the G8 and G20 groups will be meeting to discuss this major issue.

The question that has to be asked is: Where have all of these world leaders been for the last twenty years while this industry has been going gangbusters?

If the International Consortium Of Investigative Journalists had not received those thousands and thousands of documents, would world leaders have still expressed any “concern” about tax havens? If those documents hadn’t been transferred to ICIJ and the story was never told, would these leaders have remained in “business as usual” mode, and remained silent?

Tax havens are no longer secret.

(The following is from an article posted on May 27, 2013. At the end you will hear from expert James S. Henry at his TED talk.)

The Cayman Islands, Cyprus, the Netherlands, Belize, Panama, Hong Kong… Offshore tax havens have operated all around the world for a long time. Fortunately the people have become aware of the size of the operations, to evade paying taxes, run by corporations and wealthy people.

Bankers, lawyers and accountants have been busy aiding firms and the wealthy avoid taxes with offshore smoke and mirrors for long enough now. Complex corporate structures, mysterious chains of ownership, confusing and irrational levels of ownership, along with hide and seek cutout owners are some of the tools of the tax haven industry. Understand that the tax haven industry is a huge industry.

For corporations and rich people the options are there to take advantage of low to non-existent tax rates and secrecy laws in other countries. The offshore tax haven industry is a very controversial subject. The bankers, lawyers and accountants involved in this multi-trillion dollar industry are known as “the pinstripe mafia.” The big four accounting firms of Price Waterhouse Coopers, Deloitte, Ernst and Young and KPMG, along with the too big to fail banks and the largest legal firms in the world are the facilitators of offshore tax havens.

Every day accountants, bankers and lawyers are working to find their clients “neutral taxation” (0%) or “tax optimization” (0%). As long as the actions taken are “legitimate and proper” (getting around the law) it is full steam ahead. They first find the free zones where money is transported by corporations, billionaires and millionaires in secrecy where nothing is visible. Here is where you can erase your clients’ steps so as not to worry about being found out by the taxman or the media.

The interests of those who would seek help to avoid taxes through the use of offshore havens are at odds with the rest of the people. The system is rigged to the tune of many trillions of dollars. This is the way it is on Earth. Perhaps the tide has turned here as exposure and awareness of this greed industry continues to grow.

The writer will admit that, if he had many millions of dollars, he is not at this time able to say with certainty that he would not be tempted to use an offshore tax haven. If such a situation came about he would hope not to go there. We are simply being fully candid with the reader.

It is of note that those with less financial resources have to pick up the tabs for those who use offshore havens. The conditions of societies suffer where companies and individuals evade paying their fair share of tax. Plainly and simply tax havens are not fair.

The accountants, lawyers and bankers involved have to keep this large industry secret or will risk losing their jobs, never working again in the business. Whistleblowers have to think long and hard before they make any decision to let these secrets out to the public and the media.

A wealthy woman Leona Helmsley said years ago, “We don’t pay taxes. Only the little people pay taxes.” The big four accounting firms are in charge of all the accounting rules and are not governed by any type of oversight. They are not accountable to anybody so there were no penalties suffered for their signing off on the health of the large too big to fail banks that recently crashed.

Cruelly, tax havens are funding deficits as governments are borrowing offshore funds. Democracy is diminished as corporations threaten to move offshore if tax rates go up on them and the wealthy people who own them.

There are estimates that anywhere in the range of 40-100 billion dollars per year is lost due to these tax avoidance and evasion schemes. When you add up all the banks in Switzerland, Antigua, Singapore, the British Virgin Islands and the many others you find a huge, legal, bordering on the immoral, unethical practice. Offshore jurisdictions offer lucrative advantages to clients who live outside of that region or country.

Offshore transactions happen outside of the client’s country of residence and financial secrecy is the key to the entire offshore tax haven industry. Clients are assured of confidentiality through laws and other means. Civil law, criminal law, bank policies and industry practices all combine to offer clients complete secrecy to the point where in many of these havens it is against the law for bank employees to show anyone information about client accounts.

Havens offer little or no tax liability on business operations outside of the haven, favorable laws for foundations, trusts and corporations, while working closely with the client’s financial and professional advisors. Shams and schemes are actively promoted, arrangements are made for secret control of accounts, false statements and documents are created.

Financial advisors and facilitators are found in New York, Los Angeles, Chicago, London, Singapore, Geneva and elsewhere to help clients hide assets and avoid taxes. Accounting schemes are engineered to blur or blind the vision of any person attempting to discover fraud and corrupt accounting.

The British Virgin Islands have a land mass the size of Washington, D.C. There are around 20,000 people who live there. In the British Virgin Islands there are more than 1,000,000 registered corporations.

Layers of secrecy have been created where multiple haven locations around the world connect in increasingly complex and secret ways. Fake securities transactions, phone transactions and phony accounting are a few of the tools used to avoid taxes.

Tax avoidance is a worldwide industry that has gone on for decades. It is not operated by tiny, crooked banks on tiny islands all over the world. It is a money-making industry run by the largest banks in the world along with the largest accounting firms and the largest law firms.

These firms are found in every large city on the planet. While clients enjoy the services and benefits of their home countries, they pay no taxes on their hidden wealth. The letter of the law has been met but the spirit of the law has been thoroughly trashed for decades. Any person or entity of any significant wealth will end up consulting a tax haven financial engineer.

These same facilitators of tax evasion end up in positions of power and control in government tax and treasury departments. The large accounting, law and banking firms have come to have no concern for societies and the well-being of ordinary citizens. It is all about profits, period. They use the language of drug pushers and talk about “satisfied clients.”

Enormous public expenditures are made to investigate and prosecute tax schemes. The taxpayer bears the cost while new and more complex schemes are in development now, in real-time, to wipe out client profits with smoke and mirror accounting. These schemes are marketed and sold to clients every business day. “You can increase your income by millions per year”, “profits are larger than the fines you will pay if caught”… Tax scheme products are many and are on the shelf for purchase by clients, just as the average person buys items off the shelves of the supermarket.

There is a lack of deterrence as firms that get caught end up paying fines that are smaller than the amounts realized from their illegal activities.

There are estimates that 500 billion dollars of tax revenues are lost per year to developing countries. The amount lost for developed countries is much higher, perhaps one trillion per year. It is interesting that this writer became aware of this world tax haven reality after seeing investigative reports at an obscure website. The main stream media has not done a major report on this important issue, ever. No politicians have made this information available to the people.

We have to ask why this tax haven secrecy has existed for decades. As this explosive issue is not being reported by the mainstream media, and governments have not dealt with it, the people will have to take the lead and start powerful actions.

Transparency of not just international financial transactions but of everything that is occurring on Earth is healing and healthy for all people. With total transparency comes total democracy.

It is convenient to direct the blame toward those on the lower end of the economic and wealth scale for problems with economies. It is very important to note that the attention has shifted correctly to those who hold the reins of power and are responsible for the realities affecting the human race on Earth.

It is understandable that those in the top-tier of wealth and privilege have no strong want to make any changes to things as they are. Here we find hope in the recent actions taken by the many men and women who are bringing the true reality of what is occurring on Earth to the people of the world.

Transparency will bring to light those problems which can then be dealt with through reforms which end the root causes, instead of treating the symptoms of human problems. Conventional economic wisdom does not pay close enough attention to power arrangements in societies and institutions.

The lack of total transparency, fraud regulations, monitoring and control has led to the current economic free fall. Inequality is the core problem which both caused the crisis and is a result of the crisis. Increasing inequality of human beings has concentrated wealth into the hands of an increasingly smaller group of people, who have captured political institutions and seized power at the expense of the average person.

There is a false belief that governments and markets are separate when in fact vested private interests, not the public interest, are served. Are we to see a race to the bottom or a race to the top? Models of development must be developed which are based on equality, not inequality, that keeps concentration of power in check for the people. Common goals need consideration as opposed to the goals of concentrated power, wealth and resources.

A super class of 6,000 individuals controls the world.

There is a lack of governance in the world of finance where citizens subsidize corporations and the wealthy, where social inequality is actually far worse than perceived. Diversions of wealth have especially hurt the developing countries where many billions of dollars have been transferred to developed countries’ citizens. The unfortunate economic conditions in societies of people have been given very shallow coverage by major media, as the root causes are never identified and reported.

There are hopeful signs of new beginnings as many thousands of the world’s wealthiest corporations and people have become exposed for tax evasion with accounts in offshore tax havens. These people are many times the most politically powerful in their home countries. These are the folks who make calls for austerity and higher taxes on regular citizens while hiding their stashes.

Corporations claim profits in those tax haven jurisdictions where taxes are the lowest. These activities are widespread, criminal and effectively poison the world’s economy. The recent expose of 130,000 client bank accounts from the British Virgin Islands has made many people aware of what is going on, while yet millions of corporate and individual accounts are still secret in the rest of the world.

Britain plays a big role in the control of islands around the world which have become tax havens. Huge profits are reaped in Switzerland, New York, Singapore and dozens of other cities and countries where the tax haven industry operates.

Estimates are that 100 billion dollars per year is lost to America as a result of individuals’ tax avoidance. The amount of corporate tax avoidance losses is much larger.

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