4 ms·

After expressing “deep shame and sorrow,” she admitted to years of underreporting her earnings, through the practice of “yin and yang” contracts, in which a sma

by nkurz 8y ago

After expressing “deep shame and sorrow,” she admitted to years of underreporting her earnings, through the practice of “yin and yang” contracts, in which a smaller contract is disclosed but a larger one is paid to the star. She was ordered to pay a hundred and thirty million dollars in back taxes and penalties. Her actions amounted not only to a personal misstep, she wrote, but to a betrayal of China. I find myself agreeing with the confession: if you illegally evade $100 million of taxes by lying about the amount you are paid, you are betraying your country. While the Chinese approach to prosecution seems open to abuse, the outcome here seems actually seems reasonable: the actress pays substantial penalties but goes on being an actress, tax evasion is not condoned, and rule of law is upheld. By contrast, the outcomes of the US system often seem perverse: https://www.nytimes.com/interactive/2018/10/02/us/politics/donald-trump-tax-schemes-fred-trump.html https://www.nytimes.com/interactive/2018/10/02/us/politics/d.... This is an in-depth NYT article showing how the current president seems to have used similar illegal maneuvers to avoid paying many millions of inheritance taxes. The outcome seems to be that if you have enough money, you win, and the ordinary taxpayer loses.

chmln 8y ago
> seems to have used similar illegal If it really was illegal, the IRS would prosecute him, but they didn't. Why not? And if loopholes are so bad, why were they not closed and persisted through both GOP and Democrat leadership? It is the system that made tax evasion possible that's at fault, not the people that are able to and do take advantage of loopholes.
- danharaj 8y ago
  Are you saying that everything illegal is immediately prosecuted upon discovery? That's a little unrealistic, don't you think?
  - chmln 8y ago
    No. The alleged tax fraud occurred in 1990s and to quote the article, "these maneuvers met with little resistance from the Internal Revenue Service." So they didn't find anything illegal neither at the time, nor at any time since then. I highly doubt this investigation will change anything.
- philipodonnell 8y ago
  This is a horrible outlook to have. Dont blame the criminal blame the cops for not catching them. Sheesh.
forapurpose 8y ago
The issue behind this event is not tax evasion, which would not make headlines or HN, and we have no way of knowing if she indeed evaded taxes. All we know is that the Chinese government has the power to kidnap people and coerce them into saying whatever the government wants.
- nkurz 8y ago
  we have no way of knowing if she indeed evaded taxes Are there sources claiming that this was a false confession, and that she did not actually falsify her tax returns? I agree that in principle this is a possibility, but I haven't seen such claims. The New Yorker article seems typical in assuming her guilt: "In a nation of runaway economic growth, where tax evasion is rampant among the wealthy, what struck many people was not Fan’s alleged misdeed—that was predictable enough to be banal—but the startling way in which her case was handled." Similarly, for discussion of the NYT article, I think it's generally assumed that the blatant manipulations of the appraised values happened, the only question is whether it was illegal, and if so, whether it's prosecutable. While you are right that the headlines are primarily because of the "disappearance" of a celebrity, some people (like me) are equally interested in the larger question of whether tax laws can be reasonably enforced without resorting to such measures.
  - forapurpose 8y ago
    There is no evidence that she evaded taxes presented by the state, and she has not been given the opportunity to challenge the evidence or present any defense. A confession coerced by an oppressive state is not evidence; it would not be accepted by evidence by any legitimate court. That's why legitimate governments have rule of law, courts, trials, juries, and due process. Furthermore, persecution for alleged financial corruption is a standard modus operendi for oppressive states. As examples, Xi has been doing it to his political opposition, Putin does it, and the current Saudi Arabian dictator is another example.
    - nkurz 8y ago
      There is no evidence that she evaded taxes presented by the state, and she has not been given the opportunity to challenge the evidence or present any defense. As I said, this is theoretically possible, but I haven't seen sources claiming that the charges are a complete sham. Can you find some? That's why legitimate governments have rule of law, courts, trials, juries, and due process. It's interesting that you emphasize "juries" as the key element of a legitimate government. Did you know that Germany doesn't use them? https://www.howtogermany.com/pages/legal.html https://www.howtogermany.com/pages/legal.html Some even argue that using a panel of trained judges provides better justice than using a group of untrained citizens: https://www.theatlantic.com/national/archive/2012/06/what-america-can-learn-from-germanys-justice-system/258208/ https://www.theatlantic.com/national/archive/2012/06/what-am... Is it a better approach? I don't know, but I don't think trial by jury should be considered a required characteristic for a legitimate government.
ixtli 8y ago
Yeah honestly I wish there were any working mechanisms to hold people like this accountable for non-participation in society (or doing things that are outright deleterious, like hiding money when you’re absurdly rich) in the west.
- forapurpose 8y ago
  There are working mechanisms: The rule of law, tax agencies, and courts. Plenty of people in Western countries go to jail or suffer significant financial penalties for tax evasion. In the U.S., I've even seen ads: 'In trouble with the IRS?'. You can find plenty of stories of famous people with tax problems. I would guess that compliance with tax law is higher in advanced, free societies than anywhere else.
  - ixtli 8y ago
    Yes but with few exceptions the severity of the repercussions is inversely proportional to how much private capital you have. My previous comment was a bit ranty but this mostly what I'm lamenting.
    - forapurpose 8y ago
      > with few exceptions the severity of the repercussions is inversely proportional to how much private capital you have Is that true? People with more money have much more to lose, are more likely to be audited, and the audits and lawsuits are far more time-consuming and expensive. Also, I expect that the legal penalties are proportional to the amount of taxes illegally withheld.
  - deleted 8y ago
    [deleted]
- fjsolwmv 8y ago
  The "Eastern" (and often "Western") method of summarily imprisoning and often executing millions of people for "non participation" is not an ideal to strive for.
thrower123 8y ago
America is a country founded by tax evaders, smugglers, and traffickers, so it's practically one's patriotic duty to avoid paying a penny more in taxes than you can get away with. Particularly when those tax dollars are wasted so egregiously.
skrebbel 8y ago
> the outcome here seems actually seems reasonable But wait, wasn't disappearance the outcome?
- nkurz 8y ago
  No, as far as I can tell the outcome is that she is back in public and will continue making many millions of dollars a year as an actress. But I'd guess that she (and all other high flying Chinese actors/actresses) are going to be particularly scrupulous about their upcoming tax returns, and are much less likely to flagrantly misreport their earnings than they did in the past. I realize that it's close to praising the fascists for making the trains run on time, but I do find this to be a good outcome, even if the process is scary and subject to future misuse. It's hard for me to read the linked article about American tax evasion/avoidance and feel that our system is truly better. But perhaps there's somewhere else that does it even better than both?
  - DeonPenny 8y ago
    No but she still got snatched by the Chinese government. You don't see a problem with that?
    - gdhbcc 8y ago
      You mean people getting arrested for committing crimes?
      - DeonPenny 8y ago
        She wasnt arrested. She disappears with no due process.
    - Para2016 8y ago
      He doesn't care. In his words she "betrayed" China although he is only using a coerced statement as proof. Basically, he's a fucking moron.
fjsolwmv 8y ago
Do you believe that friends of the Chinese government in power are all being property held accountable for taxes? Chinese government inner party has over 100 billionaires, by some coincidence. https://www.nytimes.com/2018/03/01/business/china-parliament-billionaires.html https://www.nytimes.com/2018/03/01/business/china-parliament...

by nkurz 8y ago

chmln 8y ago

> seems to have used similar illegal If it really was illegal, the IRS would prosecute him, but they didn't. Why not? And if loopholes are so bad, why were they not closed and persisted through both GOP and Democrat leadership? It is the system that made tax evasion possible that's at fault, not the people that are able to and do take advantage of loopholes.

danharaj 8y ago
Are you saying that everything illegal is immediately prosecuted upon discovery? That's a little unrealistic, don't you think?
- chmln 8y ago
  No. The alleged tax fraud occurred in 1990s and to quote the article, "these maneuvers met with little resistance from the Internal Revenue Service." So they didn't find anything illegal neither at the time, nor at any time since then. I highly doubt this investigation will change anything.
philipodonnell 8y ago
This is a horrible outlook to have. Dont blame the criminal blame the cops for not catching them. Sheesh.

forapurpose 8y ago

The issue behind this event is not tax evasion, which would not make headlines or HN, and we have no way of knowing if she indeed evaded taxes. All we know is that the Chinese government has the power to kidnap people and coerce them into saying whatever the government wants.

nkurz 8y ago
we have no way of knowing if she indeed evaded taxes Are there sources claiming that this was a false confession, and that she did not actually falsify her tax returns? I agree that in principle this is a possibility, but I haven't seen such claims. The New Yorker article seems typical in assuming her guilt: "In a nation of runaway economic growth, where tax evasion is rampant among the wealthy, what struck many people was not Fan’s alleged misdeed—that was predictable enough to be banal—but the startling way in which her case was handled." Similarly, for discussion of the NYT article, I think it's generally assumed that the blatant manipulations of the appraised values happened, the only question is whether it was illegal, and if so, whether it's prosecutable. While you are right that the headlines are primarily because of the "disappearance" of a celebrity, some people (like me) are equally interested in the larger question of whether tax laws can be reasonably enforced without resorting to such measures.
- forapurpose 8y ago
  There is no evidence that she evaded taxes presented by the state, and she has not been given the opportunity to challenge the evidence or present any defense. A confession coerced by an oppressive state is not evidence; it would not be accepted by evidence by any legitimate court. That's why legitimate governments have rule of law, courts, trials, juries, and due process. Furthermore, persecution for alleged financial corruption is a standard modus operendi for oppressive states. As examples, Xi has been doing it to his political opposition, Putin does it, and the current Saudi Arabian dictator is another example.
  - nkurz 8y ago
    There is no evidence that she evaded taxes presented by the state, and she has not been given the opportunity to challenge the evidence or present any defense. As I said, this is theoretically possible, but I haven't seen sources claiming that the charges are a complete sham. Can you find some? That's why legitimate governments have rule of law, courts, trials, juries, and due process. It's interesting that you emphasize "juries" as the key element of a legitimate government. Did you know that Germany doesn't use them? https://www.howtogermany.com/pages/legal.html https://www.howtogermany.com/pages/legal.html Some even argue that using a panel of trained judges provides better justice than using a group of untrained citizens: https://www.theatlantic.com/national/archive/2012/06/what-america-can-learn-from-germanys-justice-system/258208/ https://www.theatlantic.com/national/archive/2012/06/what-am... Is it a better approach? I don't know, but I don't think trial by jury should be considered a required characteristic for a legitimate government.

ixtli 8y ago

Yeah honestly I wish there were any working mechanisms to hold people like this accountable for non-participation in society (or doing things that are outright deleterious, like hiding money when you’re absurdly rich) in the west.

forapurpose 8y ago
There are working mechanisms: The rule of law, tax agencies, and courts. Plenty of people in Western countries go to jail or suffer significant financial penalties for tax evasion. In the U.S., I've even seen ads: 'In trouble with the IRS?'. You can find plenty of stories of famous people with tax problems. I would guess that compliance with tax law is higher in advanced, free societies than anywhere else.
- ixtli 8y ago
  Yes but with few exceptions the severity of the repercussions is inversely proportional to how much private capital you have. My previous comment was a bit ranty but this mostly what I'm lamenting.
  - forapurpose 8y ago
    > with few exceptions the severity of the repercussions is inversely proportional to how much private capital you have Is that true? People with more money have much more to lose, are more likely to be audited, and the audits and lawsuits are far more time-consuming and expensive. Also, I expect that the legal penalties are proportional to the amount of taxes illegally withheld.
- deleted 8y ago
  [deleted]
fjsolwmv 8y ago
The "Eastern" (and often "Western") method of summarily imprisoning and often executing millions of people for "non participation" is not an ideal to strive for.

thrower123 8y ago

America is a country founded by tax evaders, smugglers, and traffickers, so it's practically one's patriotic duty to avoid paying a penny more in taxes than you can get away with. Particularly when those tax dollars are wasted so egregiously.

skrebbel 8y ago

> the outcome here seems actually seems reasonable But wait, wasn't disappearance the outcome?

nkurz 8y ago
No, as far as I can tell the outcome is that she is back in public and will continue making many millions of dollars a year as an actress. But I'd guess that she (and all other high flying Chinese actors/actresses) are going to be particularly scrupulous about their upcoming tax returns, and are much less likely to flagrantly misreport their earnings than they did in the past. I realize that it's close to praising the fascists for making the trains run on time, but I do find this to be a good outcome, even if the process is scary and subject to future misuse. It's hard for me to read the linked article about American tax evasion/avoidance and feel that our system is truly better. But perhaps there's somewhere else that does it even better than both?
- DeonPenny 8y ago
  No but she still got snatched by the Chinese government. You don't see a problem with that?
  - gdhbcc 8y ago
    You mean people getting arrested for committing crimes?
    - DeonPenny 8y ago
      She wasnt arrested. She disappears with no due process.
  - Para2016 8y ago
    He doesn't care. In his words she "betrayed" China although he is only using a coerced statement as proof. Basically, he's a fucking moron.

fjsolwmv 8y ago

Do you believe that friends of the Chinese government in power are all being property held accountable for taxes? Chinese government inner party has over 100 billionaires, by some coincidence. https://www.nytimes.com/2018/03/01/business/china-parliament-billionaires.html https://www.nytimes.com/2018/03/01/business/china-parliament...