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Paradise Papers: How offshore tax havens are worse than you think

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Wilbur Ross

There’s a dirty little secret many ultra-rich people would never want revealed: most of them pay lower percentages in actual taxes relative to their overall wealth than average middle class Americans. No, this is not a call for socialism nor is it a rant about how unfair the system is. Frankly, I don’t blame people for wanting to keep more of the money they earn. However, I do take offense at the lack of transparency they embrace as their efforts to save money also shield their dealings and motivations.

When Joe Blow Billionaire uses a tax haven, it’s smart money. That’s not to say it’s right that they can keep large percentages of their money hidden from the government in ways that middle class Americans cannot, but it’s not their fault the system is broken. We shouldn’t expect them to willingly pay more when they’re given legal avenues to avoid it. Those who complain from a socialistic perspective about the use of tax havens are the same people who would use those havens if they had the money. Ultra-liberal semi-socialist Justin Trudeau, Canada’s Prime Minister, would probably side with anyone who complained about how unfair it was unless they were aware that he took advantage of it himself.

The real problem isn’t that money can be protected for the rich. Where we get into real trouble is when politicians do it. Again, they have the right to protect their money, but they should not be allowed to shield their motivations. When a public official has secret investments, it’s impossible to know if their decisions aren’t being influenced by personal gain or loss.

Public disclosure of investments allows us to know if Senator X has ulterior motives for their actions. Let’s say Senator X has investments in an American sugar company. Americans should know this in case he’s voting on a bill to save sugar subsidies. Conflict of interests are easier to see when all of their money is in public view. When they hide their money offshore, their investments (and therefore their interests) are kept from the people they’re supposed to represent.

An example of this may be coming to light with the recent Paradise Papers release. U.S. Department of Commerce Secretary Wilbur Ross was listed in the Paradise Papers as having a stake in a company that does business with a gas producer partly-owned by Vladimir Putin’s son-in-law. As you can see, it’s already a distant but not completely indirect connection, though one can easily argue that it’s not a close enough connection to get Robert Mueller’s interests piqued. Nevertheless, this is an investment that was previously unknown because it was done through secretive offshore accounts.

We must have a reasonable expectation that the people we elect as well as the people who are put into bureaucratic offices are untainted. Ross has direct influence over trade and manufacturing policy. He should be the last person in DC to be heavily invested in foreign interests hidden from the people. Again, let’s not jump to conclusions or call for President Trump to get rid of Ross, but the fact that questions now have to be asked is a black eye for the Trump administration.

Tax havens are unfair, but that’s not as big of a problem as most believe. The real issue is transparency. Anyone in public office who utilizes offshore accounts or investments to hide their money should be put under the microscope. If we don’t know their private motivations, we can’t trust their public actions.

Further Reading

Trump commerce secretary’s business links with Putin family laid out in leaked files

https://www.theguardian.com/news/2017/nov/05/trump-commerce-secretary-wilbur-ross-business-links-putin-family-paradise-papersRoss, a billionaire and close friend of Trump, retained holdings in Navigator after taking office this year. The relationship means he stands to benefit from the operations of a Russian company run by Putin’s family and close allies, some of whom are under US sanctions.

Corporate records show Navigator ramped up its relationship with Sibur from 2014, as the US and EU imposed sanctions on Russians. The measures followed Putin’s aggression in eastern Ukraine and annexation of Crimea. Navigator has collected $68m in revenue from its Sibur partnership since 2014.

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  1. Douglas Olson

    November 6, 2017 at 11:22 am

    I will even go one further. If a politician is to have any say on tax policy, particularly income taxes, they need to be transparent on how much an on what income they pay taxes on. For example, if a politician wants to increase the payroll tax but all of their income is from dividends, then the warning bells should be ringing. Right Trump?

    Maybe it is time we stop taxing income at different rates. If we do, and those living off dividend income have to pay the same rate as those paying in payroll taxes, then I would bet that all those rich folks will start complaining about taxes. Right Buffet?

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Economy

Fed survey cites rising concerns about trade tariffs

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Fed survey cites rising concerns about trade tariffs

WASHINGTON (AP) — The Federal Reserve said Wednesday that the U.S. economy was growing in the fall, but there were concerns about higher tariffs from a widening trade war, rising interest rates and tight labor markets.

In its latest report on economic conditions around the country, the Fed said that most of its 12 regions saw moderate growth through late November. Dallas and Philadelphia said growth had slowed, while St. Louis and Kansas City depicted growth as slight.

The report, known as the beige book, found that optimism about the future had waned somewhat, with business contacts citing “increased uncertainty.”

The survey will used at the Fed’s next meeting on Dec. 18-19. The central bank is widely expected to boost its benchmark rate for a fourth time this year at that meeting.

The beige book report noted problems the higher tariffs from Trump’s get-tough approach to trade were causing: rising costs for manufacturers, weaker sales at companies and farmers hurt by retaliatory tariffs imposed by China and other nations.

Even with the tariff concerns, the beige book said most districts continued to report moderate growth in manufacturing.

The impact of rising interest rates affected interest-rate sensitive sectors such as housing, with the beige book noting that new home construction and sales of existing homes were either holding steady or experiencing slight declines.

The Fed survey said that labor markets had tightened further across a broad range of occupations.

“Over half of the districts cited firms for which employment, production and sometimes capacity expansion had been constrained by an inability to attract and retain qualified workers,” the report said.

Unemployment fell in October to a 49-year low of 3.7 percent with economists forecasting further declines in the coming months. A key reason the Fed has been raising interest rates is to slow the economy to ensure that tight labor markets don’t unleash unwanted inflation pressures.

With labor markets already so tight, the Fed said that many districts were seeing examples of firms enhancing their nonwage benefits, including health benefits, profit-sharing, bonuses and paid vacation days.

Despite the wage pressures, the report said that prices continued to increase at a modest pace in most districts although reports of tariff-inducted cost increases have spread more broadly in such areas as manufacturing, retailing and restaurants.

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Economy

White House intensifies confusion and fear on US-China deal

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White House intensifies confusion and fear on US-China deal

WASHINGTON (AP) — The Trump administration raised doubts Tuesday about the substance of a U.S.-China trade cease-fire, contributing to a broad stock market plunge and intensifying fears of a global economic slowdown.

Investors had initially welcomed the truce that the administration said was reached over the weekend in Argentina between Presidents Donald Trump and Xi Jinping — and sent stocks up Monday. But on Tuesday, after a series of confusing and conflicting words from Trump and some senior officials, stocks tumbled, with the Dow Jones shedding about 800 points, or 3.1 percent.

White House aides have struggled to explain the details of what the two countries actually agreed on. And China has not confirmed that it made most of the concessions that the Trump administration has claimed.

“The sense is that there’s less and less agreement between the two sides about what actually took place,” said Willie Delwiche, an investment strategist at Baird. “There was a rally in the expectation that something had happened. The problem is that something turned out to be nothing.”

Other concerns contributed to the stock sell-off, including falling long-term bond yields. Those lower rates suggested that investors expect the U.S. economy to slow, along with global growth, and possibly fall into recession in the coming year or two.

John Williams, president of the Federal Reserve Bank of New York, also unnerved investors by telling reporters Tuesday that he supports further Fed rate hikes. His remarks renewed fears that the Fed may miscalculate and raise rates so high or so fast as to depress growth.

The disarray surrounding the China deal coincides with a global economy that faces other challenges: Britain is struggling to negotiate its exit from the European Union. Italy’s government is seeking to spend and borrow more, which could elevate interest rates and stifle growth.

And in the United States, home sales have fallen sharply in the past year as mortgage rates have jumped.

Trump and White House aides have promoted the apparent U.S.-China agreement in Buenos Aires as a historic breakthrough that would ease trade tensions and potentially reduce tariffs. They announced that China had agreed to buy many more American products and to negotiate over the administration’s assertions that Beijing steals American technology. But by Tuesday morning, Trump was renewing his tariff threats in a series of tweets.

“President Xi and I want this deal to happen, and it probably will,” Trump tweeted. “But if not remember, I am a Tariff Man. When people or countries come in to raid the great wealth of our Nation, I want them to pay for the privilege of doing so.”

Trump added that a 90-day timetable for negotiators to reach a deeper agreement had begun and that his aides would see “whether or not a REAL deal with China is actually possible.”

He revisited the issue later Tuesday with a tweet that said: “We are either going to have a REAL DEAL with China, or no deal at all – at which point we will be charging major Tariffs against Chinese product being shipped into the United States. Ultimately, I believe, we will be making a deal – either now or into the future. China does not want Tariffs!”

The president’s words had the effect of making the weekend agreement, already a vague and uncertain one, seem even less likely to produce a long-lasting trade accord.

“We expect the relationship between the world’s two largest economies to remain contentious,” Moody’s Investors Service said in a report. “Narrow agreements and modest concessions in their ongoing trade dispute will not bridge the wide gulf in their respective economic, political and strategic interests.”

Among the conflicting assertions that White House officials made was over whether China had actually agreed to drop its 40 percent tariffs on U.S. autos.

In addition, Treasury Secretary Steven Mnuchin said Tuesday on the Fox Business Network that China agreed to buy $1.2 trillion of U.S. products. But Mnuchin added, “If that’s real” — thereby raising some doubt — it would close the U.S. trade deficit with China, and “We have to have a negotiated agreement and have this on paper.”

Many economists have expressed skepticism that very much could be achieved to bridge the vast disagreements between the two countries in just 90 days.

“The actual amount of concrete progress made at this meeting appears to have been quite limited,” Alec Phillips and other economists at Goldman Sachs wrote in a research note.

During the talks in Buenos Aires, Trump agreed to delay a scheduled escalation in U.S. tariffs on many Chinese goods, from 10 percent to 25 percent, that had been set to take effect Jan. 1. Instead, the two sides are to negotiate over U.S. complaints about China’s trade practices, notably that it has used predatory tactics to try to achieve supremacy in technology. These practices, according to the administration and outside analysts, include stealing intellectual property and forcing companies to turn over technology to gain access to China’s market.

In return for the postponement in the higher U.S. tariffs, the White House said China had agreed to step up its purchases of U.S. farm, energy and industrial goods. Most economists noted that the two countries remain far apart on the sharpest areas of disagreement, which include Beijing’s subsidies for strategic Chinese industries, in addition to forced technology transfers and intellectual property theft.

Chief economic adviser Larry Kudlow acknowledged those challenges in remarks Tuesday morning.

“China’s discussed these things with the U.S. many times down through the years and the results have not been very good,” he said. “So this time around, as I said, I’m hopeful, we’re covering more ground than ever … So we’ll see.”

Complicating the challenge, Trump’s complaints strike at the heart of the Communist Party’s state-led economic model and its plans to elevate China to political and cultural leadership by creating global champions in robotics and other fields.

“It’s impossible for China to cancel its industry policies or major industry and technology development plans,” said economist Cui Fan of the University of International Business and Economics in Beijing.

Trump had tweeted Sunday that China agreed to “reduce and remove” its 40 percent tariff on cars imported from the U.S. Mnuchin said Monday that there was a “specific agreement” on the auto tariffs.

Yet Kudlow said later that there was no “specific agreement” regarding auto trade, though he added, “We expect those tariffs to go to zero.”

___

Associated Press writer Joe McDonald in Beijing contributed to this report.

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Economy

Medicare-for-All would cost more than every penny we’ve spent on defense in the country’s history

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Medicare-for-All would cost more than every penny weve spent on defense in the countrys history

Math is hard for many Americans. It isn’t just the sad state of our public school system that keeps the people down. It’s politicians like Bernie Sanders and Alexandria Ocasio-Cortez who push lies and pipe dreams that keep many Americans thinking the government has unlimited money and there’s no real difference between millions, billions, and trillions.

There’s a big difference, of course, but leftists will never let the number of zeroes get in the way of promoting their ideological goals. As I posted earlier, even left-leaning news outlets like the Washington Post are calling out Ocasio-Cortez for her false statements about Medicare-for-All.

Alexandria Ocasio-Cortez earns 4 Pinocchios over bungled defense budget interpretation

http://noqreport.com/2018/12/04/alexandria-ocasio-cortez-earns-4-pinocchios-bungled-defense-budget-interpretation/Ocasio-Cortez must have realized when she Tweeted the article that there’s no way “66% of Medicare for All could have been funded already by the Pentagon.” She was certainly playing down to her base in hopes they’d ignore reality and embrace her false notions just because she said it. The Tweet was either a bald-faced lie or she’s an absolute moron. Or both.

Washington Post, which normally supports socialist initiatives recommended by their Democratic puppetmasters, had to call this particular claim out. They gave the claim “4 Pinocchios,” a designation they save for some of the most egregious lies in politics.

It isn’t just about being completely wrong on the Pentagon’s accounting errors. This goes deeper. While fact-checking her claims, PolitiFact decided to do some math of their own. They gathered defense spending data as far back as they could – 1940 – and tallied the totals. Those who understand the difference between millions, billions, and trillions probably won’t be surprised to learn the total spent in that time is under $18 trillion, well short of the $21 trillion Ocasio-Cortez claimed she could have used to pay 2/3 of Medicare-for-All.

The also stipulated that since defense spending was much lower in the past, it’s very likely the total spent since the nation’s inception still couldn’t hit Ocasio-Cortez’ number.

Alexandria Ocasio-Cortez wrong on scale of Pentagon accounting errors

https://www.politifact.com/truth-o-meter/statements/2018/dec/03/alexandria-ocasio-cortez/alexandria-ocasio-cortez-wrong-scale-pentagon-acco/One tip-off is the amount of Ocasio-Cortez’s “accounting errors” is far bigger than the actual Pentagon spending from 1998 to 2015, which was $8.5 trillion. In fact, it’s also far bigger than the amount the government has spent on national security since 1940 and, in all likelihood, in the nation’s history.

Here’s a chart we assembled showing national-security spending by the federal government from 1940 to today. Ocasio-Cortez’s $21 trillion estimate exceeds the entirety of national-security spending since 1940, which checks in around $17.8 trillion. And while full data back to 1776 doesn’t exist, prorating backwards for another 164 years would almost certainly not add enough to make the total $21 trillion.

Medicare-for-All is projected to cost $32 trillion over its first 10 years alone.

Bernie Sanders, Alexandria Ocasio-Cortez, and all their mathematically challenged supporters need to hear this information now. If you could somehow take back every dollar spent on defense from the time the nation was formed until today, it still wouldn’t be enough to pay for Medicare-for-All. This isn’t a right-wing conspiracy. This is left-leaning Politifact crunching the numbers.

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