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I think what’s most surprising about both the Panama papers and the Pandora papers, is the total lack of Americans in both. If you were to believe popular medi

I think what’s most surprising about both the Panama papers and the Pandora papers, is the total lack of Americans in both. If you were to believe popular media narratives, rich Americans would be the number 1 clients of most of these firms. But they aren’t, and if you adjust by percentage of rich people, the US is dramatically underrepresented. I think there’s two contributing factors to this: 1) The US has relatively low capital gains and inheritance taxes as compared to most countries in Europe and elsewhere, and since most rich people only care about capital gains and inheritance, it makes tax evasion less profitable when done successfully 2) The power of the US treasury to enforce draconian global reporting laws like FATCA and FBAR and global tax. This cannot be overstated. The US can cut off your banks ability to trade in dollars—-which is effectively a death sentence for a bank. Therefore pretty much every bank on earth is willing to comply. In the US, the problem isn’t offshore tax evasion, it’s the actual domestic tax code itself which allows for all the loopholes! Meanwhile, if you’re an average joe American expat living abroad, your financial life will be a nightmare since the US automatically assumes you’re some rich tax evader. Good luck opening even a basic bank account while abroad. It’s easier for a non-American to create an anonymous shell company inside the US than it is for an American exchange student to open a bank account while abroad.

villasv 5y ago
> If you were to believe popular media narratives, rich Americans would be the number 1 client of most of these firms. Not my expectation exactly because > The US has relatively low capital gains taxes This is very euphemistic. The US is a maze of tax havens and loopholes. Some states make it easier to launder art, some make it easier to zero-out income taxes and so on. Plus endless tax benefits “for the sake of the economy”. So congratz to the US on allowing such nasty behavior inside instead of adding a few more contrived hoops to those who wish to evade taxes…
shapefrog 5y ago
Global taxation. US citizens pay tax on global earnings. Almost every other country in the world you do not. Your tax rate for say a UK citizen if you shift from onshore to offshore goes from 40% to 0%. For a US, no change. If you are spending 10k/100k per year to maintain the strucures the motivation is not there for the US. Philosophically this is interesting as they are taxing residents as well as citizenship, which has a right to residency at any time.
- neilwilson 5y ago
  That's not correct for UK citizens. We pay tax on an arising basis on global earnings too. "When you’re UK resident you’re normally taxed on the arising basis of taxation. This means that all your worldwide income and gains will be taxable in the UK. Therefore, even if your foreign income and gains have already been taxed in another country they will still be taxable in the UK and you must declare all of your foreign income and gains on your tax return." https://www.gov.uk/government/publications/residence-domicile-and-remittance-basis-rules-uk-tax-liability/guidance-note-for-residence-domicile-and-the-remittance-basis-rdr1 https://www.gov.uk/government/publications/residence-domicil... The difference is that a UK citizen can become 'non-resident' by moving permanently abroad and there is a 'non-domiciled' option that is wildly complex legally but allows taxation on a remittance basis. The US tax code applies to its citizens wherever they choose to live in the world with IIRC no exceptions short of renouncing citizenship.
  - shapefrog 5y ago
    Or you do the "not normal" thing - which by weight of £'s is the normal thing to do by orders of magnitude - and pay tax on a remittance basis only. The choice is yours, pay tax or keep it offshore and dont pay tax. You can also become non-resident by moving abroad for a short period of time, no need to do so permanently.
    - neilwilson 5y ago
      The introduction of the statutory Residence test changed that. If you spend over half the year in the UK, don't have a permanent home overseas as well as in the UK, or work here full time you are resident - and you have to declare all earnings. Playing domicile and residence games isn't as easy as it used to be.
nobody9999 5y ago
>Meanwhile, if you’re an average joe American expat living abroad, your financial life will be a nightmare since the US automatically assumes you’re some rich tax evader. Good luck opening even a basic bank account while abroad. That's not even close to being true. As long as you're paying taxes where you're living (and most foreign jurisdictions are quite prickly about such things), if the taxes you pay to the foreign government exceed what you'd owe the US government, you generally don't have to pay any US income tax[0]. [0] https://www.americansabroad.org/us-taxes-abroad-for-dummies-update/ https://www.americansabroad.org/us-taxes-abroad-for-dummies-... Edit: Apparently, while the income tax situation isn't too bad for expats, the US has reporting requirements for foreign banks that are rather onerous. As such, many American expats have a hard time getting bank/investment accounts abroad, which is what OP was talking about.
- anotherhue 5y ago
  That is correct, but you are still not. Many financial institutions will block US taxable people due to the complications supporting them. Especially if you're a peasant whose support costs will exceed your value to the institution. Additionally, you must still file taxes every year, and declare all bank accounts on which you are a signatory (under threat of seizure), or for which your spouse is a signatory.
  - nobody9999 5y ago
    >Many financial institutions will block US taxable people due to the complications supporting time My apologies. I don't understand the second half of that sentence. Would you please explain?
    - shapefrog 5y ago
      As a financial institution outside the US, if you have a US taxable customer, you effectively come under the jurisdiction of the US governement, along with all their forms.
    - anotherhue 5y ago
earthbee 5y ago
Assuming, puts conspiracy hat on, that the US intelligence agencies aren't the ones behind this leak in an attempt to put pressure on influential people the US has problems with, sprinkled with a bunch of random other people from other countries to make it less obvious what is going. Since the US intelligence agency is forbidden by law from spying within the US, there's no Americans on the list.
- deleted 5y ago
  [deleted]
- Chris2048 5y ago
  > Since the US intelligence agency is forbidden by law from spying within the US Sure. Are they also forbidden to lie to congress? Or interfering with their own oversight committees? I have little faith that the law is adequately applied to these orgs.
throwaway4good 5y ago
In many signup flows for non-US financial services (bank, exchanges, crypto) one of the first questions is “do you have an US citizenship?” If you have, you cannot become a customer.
markdown 5y ago
The US is a tax-haven, with many states competing to be the most attractive haven. My country, which isn't a tax haven, get's branded as one (with significant penalties) by the EU, while actual tax havens like those in the Pandora Papers, and USA, are given a free pass. https://www.theguardian.com/news/2021/oct/05/eu-action-against-tax-havens-is-inadequate-say-meps https://www.theguardian.com/news/2021/oct/05/eu-action-again...
noja 5y ago
Why would a US citizen put their money in an offshore tax haven, when there are plenty of on-shore tax havens/"privacy jurisdictions".
xorfish 5y ago
I wonder how the tax treatment for investments is in Panama. How much of the 30% US withholding taxes on Dividends from US-equities can be claimed back? If you can't claim back anything, then it is probably not worth it just because of that.
- pembrook 5y ago
  The US taxes the global income of its citizens, and has punitive taxation for "foreign controlled" investments. You'd never want to open an investment account in Panama due to these rules (and you'd have a hard time opening an account there in the first place). You could invest in Panama through US domiciled funds (or a US company), but then of course you're still paying US taxes on everything. The US is the only country on earth with the power to actually enforce a draconian global tax scheme on its citizens, due to the US dollar being the global currency. If you don't comply, the US treasury shuts off your access to the US dollar. Eritrea (small African nation) is the only other country with global taxation, but they have absolutely zero power to enforce it.

villasv 5y ago

> If you were to believe popular media narratives, rich Americans would be the number 1 client of most of these firms. Not my expectation exactly because > The US has relatively low capital gains taxes This is very euphemistic. The US is a maze of tax havens and loopholes. Some states make it easier to launder art, some make it easier to zero-out income taxes and so on. Plus endless tax benefits “for the sake of the economy”. So congratz to the US on allowing such nasty behavior inside instead of adding a few more contrived hoops to those who wish to evade taxes…

shapefrog 5y ago

Global taxation. US citizens pay tax on global earnings. Almost every other country in the world you do not. Your tax rate for say a UK citizen if you shift from onshore to offshore goes from 40% to 0%. For a US, no change. If you are spending 10k/100k per year to maintain the strucures the motivation is not there for the US. Philosophically this is interesting as they are taxing residents as well as citizenship, which has a right to residency at any time.

neilwilson 5y ago
That's not correct for UK citizens. We pay tax on an arising basis on global earnings too. "When you’re UK resident you’re normally taxed on the arising basis of taxation. This means that all your worldwide income and gains will be taxable in the UK. Therefore, even if your foreign income and gains have already been taxed in another country they will still be taxable in the UK and you must declare all of your foreign income and gains on your tax return." https://www.gov.uk/government/publications/residence-domicile-and-remittance-basis-rules-uk-tax-liability/guidance-note-for-residence-domicile-and-the-remittance-basis-rdr1 https://www.gov.uk/government/publications/residence-domicil... The difference is that a UK citizen can become 'non-resident' by moving permanently abroad and there is a 'non-domiciled' option that is wildly complex legally but allows taxation on a remittance basis. The US tax code applies to its citizens wherever they choose to live in the world with IIRC no exceptions short of renouncing citizenship.
- shapefrog 5y ago
  Or you do the "not normal" thing - which by weight of £'s is the normal thing to do by orders of magnitude - and pay tax on a remittance basis only. The choice is yours, pay tax or keep it offshore and dont pay tax. You can also become non-resident by moving abroad for a short period of time, no need to do so permanently.
  - neilwilson 5y ago
    The introduction of the statutory Residence test changed that. If you spend over half the year in the UK, don't have a permanent home overseas as well as in the UK, or work here full time you are resident - and you have to declare all earnings. Playing domicile and residence games isn't as easy as it used to be.

nobody9999 5y ago

>Meanwhile, if you’re an average joe American expat living abroad, your financial life will be a nightmare since the US automatically assumes you’re some rich tax evader. Good luck opening even a basic bank account while abroad. That's not even close to being true. As long as you're paying taxes where you're living (and most foreign jurisdictions are quite prickly about such things), if the taxes you pay to the foreign government exceed what you'd owe the US government, you generally don't have to pay any US income tax[0]. [0] https://www.americansabroad.org/us-taxes-abroad-for-dummies-update/ https://www.americansabroad.org/us-taxes-abroad-for-dummies-... Edit: Apparently, while the income tax situation isn't too bad for expats, the US has reporting requirements for foreign banks that are rather onerous. As such, many American expats have a hard time getting bank/investment accounts abroad, which is what OP was talking about.

anotherhue 5y ago
That is correct, but you are still not. Many financial institutions will block US taxable people due to the complications supporting them. Especially if you're a peasant whose support costs will exceed your value to the institution. Additionally, you must still file taxes every year, and declare all bank accounts on which you are a signatory (under threat of seizure), or for which your spouse is a signatory.
- nobody9999 5y ago
  >Many financial institutions will block US taxable people due to the complications supporting time My apologies. I don't understand the second half of that sentence. Would you please explain?
  - shapefrog 5y ago
    As a financial institution outside the US, if you have a US taxable customer, you effectively come under the jurisdiction of the US governement, along with all their forms.
  - anotherhue 5y ago

earthbee 5y ago

Assuming, puts conspiracy hat on, that the US intelligence agencies aren't the ones behind this leak in an attempt to put pressure on influential people the US has problems with, sprinkled with a bunch of random other people from other countries to make it less obvious what is going. Since the US intelligence agency is forbidden by law from spying within the US, there's no Americans on the list.

deleted 5y ago
[deleted]
Chris2048 5y ago
> Since the US intelligence agency is forbidden by law from spying within the US Sure. Are they also forbidden to lie to congress? Or interfering with their own oversight committees? I have little faith that the law is adequately applied to these orgs.

throwaway4good 5y ago

In many signup flows for non-US financial services (bank, exchanges, crypto) one of the first questions is “do you have an US citizenship?” If you have, you cannot become a customer.

markdown 5y ago

The US is a tax-haven, with many states competing to be the most attractive haven. My country, which isn't a tax haven, get's branded as one (with significant penalties) by the EU, while actual tax havens like those in the Pandora Papers, and USA, are given a free pass. https://www.theguardian.com/news/2021/oct/05/eu-action-against-tax-havens-is-inadequate-say-meps https://www.theguardian.com/news/2021/oct/05/eu-action-again...

noja 5y ago

Why would a US citizen put their money in an offshore tax haven, when there are plenty of on-shore tax havens/"privacy jurisdictions".

xorfish 5y ago

I wonder how the tax treatment for investments is in Panama. How much of the 30% US withholding taxes on Dividends from US-equities can be claimed back? If you can't claim back anything, then it is probably not worth it just because of that.

pembrook 5y ago
The US taxes the global income of its citizens, and has punitive taxation for "foreign controlled" investments. You'd never want to open an investment account in Panama due to these rules (and you'd have a hard time opening an account there in the first place). You could invest in Panama through US domiciled funds (or a US company), but then of course you're still paying US taxes on everything. The US is the only country on earth with the power to actually enforce a draconian global tax scheme on its citizens, due to the US dollar being the global currency. If you don't comply, the US treasury shuts off your access to the US dollar. Eritrea (small African nation) is the only other country with global taxation, but they have absolutely zero power to enforce it.