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Inside the Secretive World of Tax-Avoidance Experts (2015)

82 points by ValentineC 8y ago

Bucephalus355 8y ago
Also known as “Deloitte”.
- Paraesthetic 8y ago
  Thats a fairly big call, but highly likely to be accurate
  - lordnacho 8y ago
    Not a big call, it's what they do. They have huge departments for (legally) optimizing your tax. Source: I used them to do this for a firm I was working for.
- IkmoIkmo 8y ago
  Not sure why this is downvoted. All the big four and smaller firms have tax advisory departments which advice on how to avoid (not evade) taxes. They sometimes set up the structure as well but usually that's done by a third party, following the tax advice memos from firms like Deloitte. It's hardly secretive, many (academic) books have been written about it. You can find a million fiscal books and papers on fiscal literature and many top firms offer tax avoidance advisory services. Tax evasion is different, it's entirely baded on being secretive due to its illegal nature. But that's not what the article is about.
anon7429 8y ago
Secretive? Hardly. Any deca-/centimillionaire can point you toward good tax accountants whose job it is to minimize their client's tax burden within a certain gray zone. For more wholesale tax avoidance, putting it in non-self-destructing art would be far better than hiding it in gems or unstable cryptocurrencies.
- Paraesthetic 8y ago
  I would suggest that their world is more secretive than their practices, They like to stay unknown.
- PaulAJ 8y ago
  A centimillionaire is someone with assets of $10k. Perhaps you meant a hectamillionaire ($100M).
  - asaph 8y ago
    Someone with assets of $10k would be a decathousandaire.
  - SmellyGeekBoy 8y ago
    Thanks for this, I'm very much going to enjoy going around telling people that I'm a multi-centi-millionaire.
  - jasode 8y ago
    Depending on the word, The centi- prefix can mean multiply by 100 instead of divide by 100. The popularity of "centimillionaire" to mean $100 million is reflected in Google's top results.[1] Merriam-Webster dictionary, Wikipedia, and Forbes all mention centimillionaire as $100 million. Likewise, "centipede" means a creature with ~100 feet (even though no species actually has exactly 100 feet). Language usage is ultimately dictated by popularity instead of "correct" scientific prefix rules and it looks like "hectamillionaire" is not the widespread choice to label 10^8 dollars.[2] [1] 18000 results for "centimillionaire": https://www.google.com/search?q=centimillionaire https://www.google.com/search?q=centimillionaire [2] only 1880 results for "hectamillionaire": "https://www.google.com/search?q=hectamillionaire https://www.google.com/search?q=hectamillionaire
lordnacho 8y ago
It's not actually all that secretive. There's two related levels though: personal and corporate. As soon as you're making more than a few hundred grand, or you become a junior on a ladder that looks like you'll get there, people will get a hold of you on the personal side. On the corporate side, as soon as you touch offshore, one of the big 4 that you already work with will suggest some tax optimization as a matter of course. It's always weird, requiring whole pages of A4 diagrams, and you'll never really understand why these constructions work. Some of the ones I've been offered have been downright ridiculous. One involved setting myself up as an advisor on rap lyrics. Another required me to publish my own poetry. IMO the weird ones are the most aggressive, and it's always sold as a tax reduction, so I've never gone ahead with them. It just seems too good to be true, and someone's gotta pay for social expenses. On the corporate side, it's a bit less clear cut. You have a duty to shareholders to more or less do what everyone else does. There's also the fact that some governments actively court firms to set up shop with a discount, which is a sort of mutually beneficial bargain.
- chii 8y ago
  > someone's gotta pay for social expenses. while it's honorable to do so, one single person/entity isn't gonna change the tide. It's political will and changes to tax code that will make the difference - stop tax loop holes, and stop off-shore accounts that are untracable, etc.
- deleted 8y ago
  [deleted]
- gaius 8y ago
  A previous employer had an extremely weird WAN topology, until you realised that all this data was circumnavigating the world as part of a grand tax reduction strategy. All fully legal of course. In the end they simplified by simply cutting a deal with the Irish government. Of course they also went on enjoying all the facilities and infra provided by those who did pay their fair share of UK taxes. If any of the directors or their children had been taken ill or been in an accident, they surely would have expected the NHS to take care of them... At the time, this was many years ago, I just saw all this as a fascinating technical challenge in database replication and distributed transactions; I’m obviously alot more woke now and wouldn’t get involved with it now.
Simulacra 8y ago
Tax evasion is illegal; tax avoidance is not.
- SmellyGeekBoy 8y ago
  Arguably they are both immoral, however.
  - roel_v 8y ago
    When you got your last mortgage, didn't your advisor tell you the 'best' option, taking into account tax breaks and whether you are single- or dual income family? Sure, it's less money we're talking about, but it's 'tax planning' or 'tax avoidance' all the same. I find it weird that people complain about 'them' not paying their full share, yet use their retirement tax incentives to the max every December.
    - EADGBE 8y ago
      It's terrible when everyone else can use it to get ahead. It's smart when I use it to save a few bucks and get ahead.
    - null000 8y ago
      Some schemes stretch credulity and fly in the face of the intent of the law. If I choose to pay 22% down instead of 20% so I can qualify to write off my interest payments, that's one thing. The schemes revolving around putting out shitty books of poetry or what not mentioned above are an entirely different beast. My own way of looking at it is that it becomes more immoral the further out of your way you go and the further you stray from the original intent of the law
  - ada1981 8y ago
    Can you explain the morality of taxation in your perspective? An entity with a gun says give me some of your money / labor or I will use violence or threat of violence to take it. Individuals at the other end of the gun do what they can to reduce what they turn over to the entity with the gun.
PaulAJ 8y ago
See also "Moneyland": https://www.theguardian.com/books/2018/sep/07/moneyland-oliver-bullough-review https://www.theguardian.com/books/2018/sep/07/moneyland-oliv...
throw2016 8y ago
The problem is lobbying and laws being written with the help of banks and financial firms like Deloitte with intentional loopholes, who have large wealth advisory services and then go on to market and sell their services to wealthy clients. This is brazen corruption and everyone knows it. There has been focus on offshore havens for decades now with no resolution suggesting a lack of interest in fixing the loopholes. It's like saying every employee can sell their services to a marketing firm which can then lease it out to employers. And the marketing firms can exist in low tax regions. If the law allows this it is not 'tax evasion', merely 'tax optimization'. The end result is is lower tax revenue but of course employees as a group do not have this kind of clout so won't happen. But let us not pretend we do not understand what is happening and muddy the waters in the face of brazen opportunism and corruption.
- provolone 8y ago
  Maybe the taxes are the problem. Laws are written by politicians and bureaucrats. Naturally as officers of the government, they rationalize an ever expanding government. Speaking of a conflict of interest...
Novashi 8y ago
Has anyone moved from a pure software/hardware technical career to wealth management? Do you find your skills useful there?
- EADGBE 8y ago
  In my experience, wealth management is mostly about having great people skills and being able to have a conversations with anyone. Not saying everyone here is bad at it; but it's an extremely social industry.
seltzered_ 8y ago
Theres a decent interview of Brooke Harrington (article author) here: https://overcast.fm/+BvAG1UMFw https://overcast.fm/+BvAG1UMFw http://whomakescents.libsyn.com/brooke-harrington-on-wealth-managers-and-the-one-percent http://whomakescents.libsyn.com/brooke-harrington-on-wealth-...
sevensor 8y ago
So in this vein, what ever came of the Panama Papers / Paradise Papers? I admit to not keeping careful track, but I don't recall any reforms resulting in the U.S.

82 points by ValentineC 8y ago

Bucephalus355 8y ago

Also known as “Deloitte”.

Paraesthetic 8y ago
Thats a fairly big call, but highly likely to be accurate
- lordnacho 8y ago
  Not a big call, it's what they do. They have huge departments for (legally) optimizing your tax. Source: I used them to do this for a firm I was working for.
IkmoIkmo 8y ago
Not sure why this is downvoted. All the big four and smaller firms have tax advisory departments which advice on how to avoid (not evade) taxes. They sometimes set up the structure as well but usually that's done by a third party, following the tax advice memos from firms like Deloitte. It's hardly secretive, many (academic) books have been written about it. You can find a million fiscal books and papers on fiscal literature and many top firms offer tax avoidance advisory services. Tax evasion is different, it's entirely baded on being secretive due to its illegal nature. But that's not what the article is about.

anon7429 8y ago

Secretive? Hardly. Any deca-/centimillionaire can point you toward good tax accountants whose job it is to minimize their client's tax burden within a certain gray zone. For more wholesale tax avoidance, putting it in non-self-destructing art would be far better than hiding it in gems or unstable cryptocurrencies.

Paraesthetic 8y ago
I would suggest that their world is more secretive than their practices, They like to stay unknown.
PaulAJ 8y ago
A centimillionaire is someone with assets of $10k. Perhaps you meant a hectamillionaire ($100M).
- asaph 8y ago
  Someone with assets of $10k would be a decathousandaire.
- SmellyGeekBoy 8y ago
  Thanks for this, I'm very much going to enjoy going around telling people that I'm a multi-centi-millionaire.
- jasode 8y ago
  Depending on the word, The centi- prefix can mean multiply by 100 instead of divide by 100. The popularity of "centimillionaire" to mean $100 million is reflected in Google's top results.[1] Merriam-Webster dictionary, Wikipedia, and Forbes all mention centimillionaire as $100 million. Likewise, "centipede" means a creature with ~100 feet (even though no species actually has exactly 100 feet). Language usage is ultimately dictated by popularity instead of "correct" scientific prefix rules and it looks like "hectamillionaire" is not the widespread choice to label 10^8 dollars.[2] [1] 18000 results for "centimillionaire": https://www.google.com/search?q=centimillionaire https://www.google.com/search?q=centimillionaire [2] only 1880 results for "hectamillionaire": "https://www.google.com/search?q=hectamillionaire https://www.google.com/search?q=hectamillionaire

lordnacho 8y ago

It's not actually all that secretive. There's two related levels though: personal and corporate. As soon as you're making more than a few hundred grand, or you become a junior on a ladder that looks like you'll get there, people will get a hold of you on the personal side. On the corporate side, as soon as you touch offshore, one of the big 4 that you already work with will suggest some tax optimization as a matter of course. It's always weird, requiring whole pages of A4 diagrams, and you'll never really understand why these constructions work. Some of the ones I've been offered have been downright ridiculous. One involved setting myself up as an advisor on rap lyrics. Another required me to publish my own poetry. IMO the weird ones are the most aggressive, and it's always sold as a tax reduction, so I've never gone ahead with them. It just seems too good to be true, and someone's gotta pay for social expenses. On the corporate side, it's a bit less clear cut. You have a duty to shareholders to more or less do what everyone else does. There's also the fact that some governments actively court firms to set up shop with a discount, which is a sort of mutually beneficial bargain.

chii 8y ago
> someone's gotta pay for social expenses. while it's honorable to do so, one single person/entity isn't gonna change the tide. It's political will and changes to tax code that will make the difference - stop tax loop holes, and stop off-shore accounts that are untracable, etc.
deleted 8y ago
[deleted]
gaius 8y ago
A previous employer had an extremely weird WAN topology, until you realised that all this data was circumnavigating the world as part of a grand tax reduction strategy. All fully legal of course. In the end they simplified by simply cutting a deal with the Irish government. Of course they also went on enjoying all the facilities and infra provided by those who did pay their fair share of UK taxes. If any of the directors or their children had been taken ill or been in an accident, they surely would have expected the NHS to take care of them... At the time, this was many years ago, I just saw all this as a fascinating technical challenge in database replication and distributed transactions; I’m obviously alot more woke now and wouldn’t get involved with it now.

Simulacra 8y ago

Tax evasion is illegal; tax avoidance is not.

SmellyGeekBoy 8y ago
Arguably they are both immoral, however.
- roel_v 8y ago
  When you got your last mortgage, didn't your advisor tell you the 'best' option, taking into account tax breaks and whether you are single- or dual income family? Sure, it's less money we're talking about, but it's 'tax planning' or 'tax avoidance' all the same. I find it weird that people complain about 'them' not paying their full share, yet use their retirement tax incentives to the max every December.
  - EADGBE 8y ago
    It's terrible when everyone else can use it to get ahead. It's smart when I use it to save a few bucks and get ahead.
  - null000 8y ago
    Some schemes stretch credulity and fly in the face of the intent of the law. If I choose to pay 22% down instead of 20% so I can qualify to write off my interest payments, that's one thing. The schemes revolving around putting out shitty books of poetry or what not mentioned above are an entirely different beast. My own way of looking at it is that it becomes more immoral the further out of your way you go and the further you stray from the original intent of the law
- ada1981 8y ago
  Can you explain the morality of taxation in your perspective? An entity with a gun says give me some of your money / labor or I will use violence or threat of violence to take it. Individuals at the other end of the gun do what they can to reduce what they turn over to the entity with the gun.

PaulAJ 8y ago

See also "Moneyland": https://www.theguardian.com/books/2018/sep/07/moneyland-oliver-bullough-review https://www.theguardian.com/books/2018/sep/07/moneyland-oliv...

throw2016 8y ago

The problem is lobbying and laws being written with the help of banks and financial firms like Deloitte with intentional loopholes, who have large wealth advisory services and then go on to market and sell their services to wealthy clients. This is brazen corruption and everyone knows it. There has been focus on offshore havens for decades now with no resolution suggesting a lack of interest in fixing the loopholes. It's like saying every employee can sell their services to a marketing firm which can then lease it out to employers. And the marketing firms can exist in low tax regions. If the law allows this it is not 'tax evasion', merely 'tax optimization'. The end result is is lower tax revenue but of course employees as a group do not have this kind of clout so won't happen. But let us not pretend we do not understand what is happening and muddy the waters in the face of brazen opportunism and corruption.

provolone 8y ago
Maybe the taxes are the problem. Laws are written by politicians and bureaucrats. Naturally as officers of the government, they rationalize an ever expanding government. Speaking of a conflict of interest...

Novashi 8y ago

Has anyone moved from a pure software/hardware technical career to wealth management? Do you find your skills useful there?

EADGBE 8y ago
In my experience, wealth management is mostly about having great people skills and being able to have a conversations with anyone. Not saying everyone here is bad at it; but it's an extremely social industry.

seltzered_ 8y ago

Theres a decent interview of Brooke Harrington (article author) here: https://overcast.fm/+BvAG1UMFw https://overcast.fm/+BvAG1UMFw http://whomakescents.libsyn.com/brooke-harrington-on-wealth-managers-and-the-one-percent http://whomakescents.libsyn.com/brooke-harrington-on-wealth-...

sevensor 8y ago

So in this vein, what ever came of the Panama Papers / Paradise Papers? I admit to not keeping careful track, but I don't recall any reforms resulting in the U.S.