The Paradise Papers

[Legacy]

Offshore Trove Exposes Trump-Russia Links And Piggy Banks Of The Wealthiest 1 Percent (International Consortium of Investigative Journalists)

A trove of 13.4 million records exposes ties between Russia and U.S. President Donald Trump’s billionaire commerce secretary, the secret dealings of the chief fundraiser for Canadian Prime Minister Justin Trudeau and the offshore interests of the queen of England and more than 120 politicians around the world.

The leaked documents, dubbed the Paradise Papers, show how deeply the offshore financial system is entangled with the overlapping worlds of political players, private wealth and corporate giants, including Apple, Nike, Uber and other global companies that avoid taxes through increasingly imaginative bookkeeping maneuvers.

One offshore web leads to Trump’s commerce secretary, private equity tycoon Wilbur Ross, who has a stake in a shipping company that has received more than $68 million in revenue since 2014 from a Russian energy company co-owned by the son-in-law of Russian President Vladimir Putin.

In all, the offshore ties of more than a dozen Trump advisers, Cabinet members and major donors appear in the leaked data.

The new files come from two offshore services firms as well as from 19 corporate registries maintained by governments in jurisdictions that serve as waystations in the global shadow economy. The leaks were obtained by German newspaper Süddeutsche Zeitung and shared with the International Consortium of Investigative Journalists and a network of more than 380 journalists in 67 countries....

AN ICIJ INVESTIGATION PARADISE PAPERS: SECRETS OF THE GLOBAL ELITE (ICIJ)

The Paradise Papers (The Guardian)

The Paradise Papers is a special investigation by the Guardian and 95 media partners worldwide into a leak of 13.4m files from two offshore service providers and 19 tax havens' company registries

 

[phork]

So the elite are hiding their money offshore and are in total collusion with each other? Next thing you are going to do is tell me that water is wet.

 

[Legacy]

So the elite are hiding their money offshore and are in total collusion with each other? Next thing you are going to do is tell me that water is wet.

So we can put an end to this nationalist BS, "drain the swamp" crap, and this populism is merely a disguise to effect a tax reform for the elite and to maintain a globe economy with untaxable offshore profits that contribute to the federal debt.

 

[SonofOahu]

So we can put an end to this nationalist BS, "drain the swamp" crap, and this populism is merely a disguise to effect a tax reform for the elite and to maintain a globe economy with untaxable offshore profits that contribute to the federal debt.

This. Too bad The Deplorables are too stupid to understand the context of this discussion.

 

[MJ12666]

This. Too bad The Deplorables are too stupid to understand the context of this discussion.

So, in other words, it is okay for you to take a position on policy based on that policy's potential economic impact on you personally but it is not right for someone else to take action that is in their economic interest if that action does not conform to your your political ideology.

 

[Legacy]

Endowments Boom as Colleges Bury Earnings Overseas (NY Times)

American universities are using offshore strategies to swell their coffers, skirt taxes and obscure investments that could spark campus protests.

In 2006, the endowments of Indiana University and Texas Christian University invested millions of dollars in a partnership, hoping to mint riches from oil, gas and coal.

The partnership was formed by the Houston-based Quintana Capital Group, whose principals include Donald L. Evans, an influential Texan and longtime supporter of former President George W. Bush. Little more than a year earlier, Mr. Evans had left his cabinet position as commerce secretary.

Though the group had an impressive Texas pedigree, presidential cachet and ambitions for operations in the United States, the new partnership was established in the Cayman Islands. The founders promised their university and nonprofit investors that the partnership would try to avoid federal taxes by exploiting a loophole called “blocker corporations,” which are typically established in tax havens around the world.

A trove of millions of leaked documents from a Bermuda-based law firm, Appleby, reflects some of the tax wizardry used by American colleges and universities. Schools have increasingly turned to secretive offshore investments, the files show, which let them swell their endowments with blocker corporations, and avoid scrutiny of ventures involving fossil fuels or other issues that could set off campus controversy.

Buoyed by lucrative tax breaks, college endowments have amassed more than $500 billion nationwide. The wealth is concentrated in a small group of schools, tilting toward private institutions like those in the Ivy League and other highly selective colleges. About 11 percent of higher-education institutions in the United States hold 74 percent of themoney, according to an analysis in 2015 by the Congressional Research Service.
“It’s overwhelmingly weighted towards the 1 percent,” said Dean Zerbe, former tax counsel to the Senate Finance Committee. “Most of the schools are the most elites in the country.”

The House Republican tax plan includes a 1.4 percent tax on the investment income of private colleges and universities with endowment assets of $250,000 or more per student. It would not apply to public schools. If passed, the new tax would affect about 70 elite private colleges, though it would not touch the type of offshore benefits the Texan partnership pursued.

On Monday, 45 education groups declared their opposition to the bill in a letter to Kevin Brady, the Texas Republican who chairs the House Ways and Means Committee...

Not Notre Dame, please.

Top US universities use offshore funds to grow their huge endowments (Guardian)

Paradise Papers show 12 major universities and colleges invest in Cayman Islands hedge fund pumping cash into fossil fuels

More than 100 US universities and colleges have interests offshore where they pay little or no tax and seek to grow their already phenomenal riches away from public scrutiny, the Paradise Papers reveal.

With combined endowments of more than $500bn (£378bn), the leaked documents show universities have become big players in offshore games. In contrast to the stated mission of open discourse espoused by many prestigious seats of higher education, investments are frequently held in secret entities that help them minimize their contribution to the public purse.

Most contentiously, some of the offshore funds are invested in carbon-polluting industries, despite leading US universities playing a key role in the fight against climate change.

In total, 104 US universities and colleges are named in data from the law firm Appleby. They include Ivy League institutions such as Princeton, as well as some of America’s best-known state schools such as Rutgers in New Jersey and Ohio State.

Four of the top 10 schools by endowment are in the files: Columbia, Princeton, Stanford and the University of Pennsylvania. Between them, they have reserves of $73.7bn...

Paradise Papers: Oxford and Cambridge invested tens of millions offshore . (Guardian)

 

[MJ12666]

Endowments Boom as Colleges Bury Earnings Overseas (NY Times)





Not Notre Dame, please.

Top US universities use offshore funds to grow their huge endowments (Guardian)

Paradise Papers: Oxford and Cambridge invested tens of millions offshore . (Guardian)

University endowments discussed in this article are non-profit entities and therefore are not subject to federal income tax. Therefore they are not making these investments in order to avoid taxes. The article was written by someone who has no clue what they are talking about (not surprising considering the source). The primary reason for these investments is PR (and of course the opportunity to get a good return on their investment). They basically want to make certain investments but want to avoid the lefty protests. This makes perfect sense. Now if you believe that these endowments should be treated as "hedge funds" then that is a different story. Personally I think these endowments are hedge funds by another name and therefore should be subject to federal income taxes.

 

[MJ12666]

One other comment on this tread. Making an investment or keeping money in an "off-shore" account IS NOT ILLEGAL and there are legitimate reasons for doing so. As an individual the only requirement is that you disclose the holding to the IRS and pay taxes on any income.

 

[Black Irish]

One other comment on this tread. Making an investment or keeping money in an "off-shore" account IS NOT ILLEGAL and there are legitimate reasons for doing so. As an individual the only requirement is that you disclose the holding to the IRS and pay taxes on any income.

Stop bringing silly facts into it. It FEELS wrong and feels are the best thing to base an economic & tax policy discussion around. Now excuse me while I go to my safe space to pet puppies and discuss non-binary gender theory in relation to 1960s car commercials.

 

[Legacy]

One other comment on this tread. Making an investment or keeping money in an "off-shore" account IS NOT ILLEGAL and there are legitimate reasons for doing so. As an individual the only requirement is that you disclose the holding to the IRS and pay taxes on any income.

I agree that such tax evasion by any variety of schemes is not necessarily illegal, though it can be so in money-laundering schemes for instance too. A whole industry has been created to disguise the sources of these capital investments to the extent that those investors may not even know what they are investing in, which may be contrary to their values. This system is facilitated by electronic transfers in varying amounts through various multiple banks to the point that those businesses or non-profits like universities escape taxes that legitimately should benefit communities from which those profits arise. This has been termed base erosion and profit shifting.

The Organisation for Economic Co-operation and Development (OECD) comprised of the vast majority of nations of the world has fought to obtain transparency for these offshore tax avoidance schemes to the point that many multinational corporations (MNCs) decide to move money out of countries like Ireland to avoid this transparency and to fight in courts attempts to recover in the case of Apple $13 billion in taxes. MNCs are more suited to this tax evasion than a company or corporation whose sole income is national only.

As the U.S. tax base subsequently erodes due to these schemes, our debt increases with corresponding pressure to increase your taxes. Congress has been very concerned about this and has held hearings.

The OECD:

Fighting tax evasion

Tax avoidance and tax evasion threaten government revenues. The US Senate estimates revenue losses from tax evasion by U.S.-based firms and individuals at around 100 billion dollars a year. In many other countries, the sums run into billions of euros. This means fewer resources for infrastructure and services such as education and health, lowering standards of living in both developed and developing economies.

The EU estimates their countries lost between $54.5 billion and $76.4 billion a year. In short, the Paradise Papers reveal how one company managed their clients' investments. Of course, it is very difficult to trace where those investments end up in legitimate or illegitimate entities.

7 Corporate Giants Accused of Evading Billions in Taxes (Fortune) - focusing on the EU's efforts

After a Tax Crackdown, Apple Found a New Shelter for Its Profits (NYT)

Five months after Mr. Cook’s testimony, Irish officials began to crack down on the tax structure Apple had exploited. So the iPhone maker went hunting for another place to park its profits, newly leaked records show. With help from law firms that specialize in offshore tax shelters, the company canvassed multiple jurisdictions before settling on the small island of Jersey, which typically does not tax corporate income.

Apple has accumulated more than $128 billion in profits offshore, and probably much more, that is untaxed by the United States and hardly touched by any other country. Nearly all of that was made over the past decade.

The previously undisclosed story of Apple’s search for a new tax haven and its use of Jersey is among the findings emerging from a cache of secret corporate records from Appleby, a Bermuda-based law firm that caters to businesses and the wealthy elite.

Yet, to be clear, much of the Paradise Papers from that one investment firm reveals individual investments.

 

[MJ12666]

I agree that such tax evasion by any variety of schemes is not necessarily illegal, though it can be so in money-laundering schemes for instance too. A whole industry has been created to disguise the sources of these capital investments to the extent that those investors may not even know what they are investing in, which may be contrary to their values. This system is facilitated by electronic transfers in varying amounts through various multiple banks to the point that those businesses or non-profits like universities escape taxes that legitimately should benefit communities from which those profits arise. This has been termed base erosion and profit shifting.

The Organisation for Economic Co-operation and Development (OECD) comprised of the vast majority of nations of the world has fought to obtain transparency for these offshore tax avoidance schemes to the point that many multinational corporations (MNCs) decide to move money out of countries like Ireland to avoid this transparency and to fight in courts attempts to recover in the case of Apple $13 billion in taxes. MNCs are more suited to this tax evasion than a company or corporation whose sole income is national only.

As the U.S. tax base subsequently erodes due to these schemes, our debt increases with corresponding pressure to increase your taxes. Congress has been very concerned about this and has held hearings.

The OECD:



The EU estimates their countries lost between $54.5 billion and $76.4 billion a year. In short, the Paradise Papers reveal how one company managed their clients' investments. Of course, it is very difficult to trace where those investments end up in legitimate or illegitimate entities.

7 Corporate Giants Accused of Evading Billions in Taxes (Fortune) - focusing on the EU's efforts

After a Tax Crackdown, Apple Found a New Shelter for Its Profits (NYT)



Yet, to be clear, much of the Paradise Papers from that one investment firm reveals individual investments.

Again, what you are stating is FACTUALLY inaccurate. An individual investing overseas is REQUIRED to report and pay tax on the income from these investments. This is not a hard concept, nor is it TAX EVASION as again, the tax needs to be paid in the year the investment income is earned.

 

[Legacy]

Again, what you are stating is FACTUALLY inaccurate. An individual investing overseas is REQUIRED to report and pay tax on the income from these investments. This is not a hard concept, nor is it TAX EVASION as again, the tax needs to be paid in the year the investment income is earned.

Take some time to read a bit about how this works.

For instance, here's another link for you related to the article I posted about universities' use of blocker corporations set up offshore to pay taxes in low taxation countries.

The Use of Foreign Blocker Corporations by U.S. Nonprofits: Should Blockers Be Blocked?

There's so much more in the links I provided. You could even search for the Congressional hearings on this topic.

 

[Black Irish]

If these companies & individuals are doing something illegal, then they should be punished. But I have a problem with the conflation of "tax evasion," which is illegal and "tax avoidance" which is not. Too many people think that the idea that people and corporations seek to reduce their tax rate through legal means is wrong. The idea is that someone the government has a right to take a piece out of every penny of profit imaginable.

It's like the old mob bosses. "It youse run a card game, a whore house, or deal drugs in this town, youse better kick up to the boss or else youse get dealt with."

 

[MJ12666]

Take some time to read a bit about how this works.

For instance, here's another link for you related to the article I posted about universities' use of blocker corporations set up offshore to pay taxes in low taxation countries.

The Use of Foreign Blocker Corporations by U.S. Nonprofits: Should Blockers Be Blocked?

There's so much more in the links I provided. You could even search for the Congressional hearings on this topic.

This is not exactly why non-profits use blocker corporations when investing in private equity (hedge) funds. Basically hedge funds are generally set-up as LLP's so that the hedge fund does not owe corporate income tax, but rather the income of the LLP is paid by the investors (limited partners) on their own personal income or corporate tax returns based on their partnership interest in the hedge fund. Now a non-profit does not owe Unrelated Business Income Tax (UBIT) on dividend, royalties or interest income. However, if the non-profit would invest in a LLP as a limited partner, they may be subject to UBIT based on the nature of the partnership income. To avoid this they would invest in a (blocker) corporation which would then own a partnership interest in the hedge fund. The income that the blocker corporation earns from the LLP would be subject to income tax but any dividends received by the non-profit from the the blocker corporation are exempt from UBIT. I don't see this as a problem.

 

[Legacy]

As noted in the original Guardian article on the Paradise Papers, none of this is necessarily illegal. As Tim Cook argued before Congress, Apple "complies fully with both the laws and spirit of the laws". Still their overall effective tax rate, while stating they have pay the full 35% corporate tax rate in the U.S., is 25-26%, according to Apple. Their ETR on foreign earnings is 21%. Of Apple's net sales globally 37% of those sales are in the U.S. Apple also says it pays billions of dollars in taxes to the United States at the statutory 35 percent rate on investment income from its overseas cash - 94% of which ($252 billion) is stashed overseas. How they avoid taxes by schemes that end up not classifying cash reserves as not investment income effectively lowering their tax rates further is difficult to calculate. But the Paradise Papers provided some fresh insight into how Appleby assisted. Again, none of this is necessarily illegal. Too long to address how the Rep tax plan lowering corporate tax to 20%, pass through tax breaks, and repatriation holidays of 12% will assist in collecting federal revenue, but feel free to enlarge.

Paradise Papers spotlight Apple tax strategies amid GOP push to cut corporate rates (LA Times)

Paradise Papers suggest Apple shifted holding firm to Jersey to protect $252B from taxation; Apple refutes claim (Apple Insider)

Pass-Through Tax Break Would Benefit the Wealthiest and Encourage Tax Avoidance (CBPP)

 

[MJ12666]

As noted in the original Guardian article on the Paradise Papers, none of this is necessarily illegal. As Tim Cook argued before Congress, Apple "complies fully with both the laws and spirit of the laws". Still their overall effective tax rate, while stating they have pay the full 35% corporate tax rate in the U.S., is 25-26%, according to Apple. Their ETR on foreign earnings is 21%. Of Apple's net sales globally 37% of those sales are in the U.S. Apple also says it pays billions of dollars in taxes to the United States at the statutory 35 percent rate on investment income from its overseas cash - 94% of which ($252 billion) is stashed overseas. How they avoid taxes by schemes that end up not classifying cash reserves as not investment income effectively lowering their tax rates further is difficult to calculate. But the Paradise Papers provided some fresh insight into how Appleby assisted. Again, none of this is necessarily illegal. Too long to address how the Rep tax plan lowering corporate tax to 20%, pass through tax breaks, and repatriation holidays of 12% will assist in collecting federal revenue, but feel free to enlarge.

Paradise Papers spotlight Apple tax strategies amid GOP push to cut corporate rates (LA Times)

Paradise Papers suggest Apple shifted holding firm to Jersey to protect $252B from taxation; Apple refutes claim (Apple Insider)

Pass-Through Tax Break Would Benefit the Wealthiest and Encourage Tax Avoidance (CBPP)

Actually it is quite simple. Basically when they develop intellectual property (for which a patent is issued) Apple either sells or develops the property in a subsidiary that is headquartered in a low tax country. Then when they sell the finished product that includes the patented item in the US they end up paying a royalty to the subsidiary that owns the patent. The US company that books the sale to customers, and pays the royalty to the foreign sub, gets to deduct the royalty as an expense for US tax purposes and the sub books the royalty as income in the country which it resides. Now Apple needs to justify the amount of the royalty with IRS and it cannot repatriate the cash from the foreign sub to the US without paying US taxes on the repatriated cash, but that is basically how they lower there overall effective tax rate.

I am sure you understand this, but the above strategy has absolutely nothing to do with non-profit organizations using blocker companies as a conduit to invest in LLP's to avoid paying UBIT.

 

[Legacy]

Paradise Papers: Your Retirement Cash May Be In The Caymans. Can You Get It Back? - International Business Times

 

[Legacy]

Paradise Papers: Apple's secret tax bolthole revealed (BBC, Nov 2017)

Up until 2014, the tech company had been exploiting a loophole in tax laws in the US and the Republic of Ireland known as the "double Irish".

This allowed Apple to funnel all its sales outside of the Americas - currently about 55% of its revenue - through Irish subsidiaries that were effectively stateless for taxation purposes, and so incurred hardly any tax.
Instead of paying Irish corporation tax of 12.5%, or the US rate of 35%, Apple's avoidance structure helped it reduce its tax rate on profits outside of the US to the extent that its foreign tax payments rarely amounted to more than 5% of its foreign profits, and in some years dipped below 2%.

The European Commission calculated the rate of tax for one of Apple's Irish companies for one year had been just 0.005%.

Apple's 2017 accounts showed they made $44.7bn outside the US and paid just $1.65bn in taxes to foreign governments, a rate of around 3.7%. That is less than a sixth of the average rate of corporation tax in the world.

Apple, Returning Overseas Cash, to Pay $38 Billion Tax Bill (Bloomberg, Jan 2018)

In its December approval of the most extensive tax-code revisions since 1986, Congress scrapped the previous international tax system for corporations -- an unusual arrangement that allowed companies to defer U.S. income taxes on foreign earnings until they returned the income to the U.S. That “deferral” provision led companies to stockpile an estimated $3.1 trillion offshore and many were criticized for the moves, including Apple.

By switching to a new system that’s designed to focus on domestic economic activity, congressional tax writers also imposed a two-tiered levy on that accumulated foreign income: Cash will be taxed at 15.5 percent, less liquid assets at 8 percent. Companies can pay over eight years.

The European Commission’s tax ruling in August 2016 in relation to Apple, said the Irish Revenue should bill two of the tech giant’s Irish entities €13 billion in back taxes. Pascal Saint-Amans, director of the OECD’s Center for Tax Policy and Administration, said that since most of the company's research and development (intangible assets) took place in the U.S., it was clear that the profits Apple placed in the Irish subsidiaries should fall in the U.S. jurisdiction. “There is no ambiguity here: the bulk of it belongs to the United States."