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I love how the article spins it such that offshoring is only for sinister, evil people. The reality is that most people use offshoring as a hedge against insolv

I love how the article spins it such that offshoring is only for sinister, evil people. The reality is that most people use offshoring as a hedge against insolvent governments, and depending on their industry, the very real threat of criminal prosecution for benign activity.[0] The moral question isn't 'how can this be prevented?', but 'how can it be made more accessible for the average person?'. I see huge startup opportunities right now around helping people cheaply and easily diversify internationally. [0] http://maxkeiser.com/2013/01/17/a-broken-justice-system-most-americans-commit-about-three-felonies-a-day/ http://maxkeiser.com/2013/01/17/a-broken-justice-system-most...

pekk 14y ago
Most people don't use offshoring at all, and for those who do, it is not extremely likely that it is a hedge against the insolvency of (say) the US government, or fear of being busted for marijuana (for example, large companies like Google move money around mostly just to save on taxes). Your linked article draws the comparison between regulating unpasteurized milk and Nazi Germany, which seems not completely even-handed.
arethuza 14y ago
So how would offshoring help someone in the US sell marijuana or raw milk?
- ajays 14y ago
  For marijuana: you deliver the physical product here, and have the money deposited in your offshore account.
riffraff 14y ago
> The reality is that most people use offshoring as a hedge against insolvent governments [citation needed] And what does this actually mean? How do you define insolvent governments? If you are thinking of one-off cuts when the state is actually going bankrupt (latest cyprus thingie, italy's cut in '92 etc) these don't seem to offer a different security from keeping money in a foreign non-offshore bank. And these events don't seem so common to me. Or are you considering governments insolvent in the sense that they just waste money and taxing is stealing etc ? I am unsure how the situation is in these specific cases, but way way way often offshore accounts get found out in my country (italy) related to _massively illegal_ activities. This is not a case of avoiding messing up a tax form, it's accounts used to pay bribes for falsified trial witnesses with money laundered from drug smuggling.
- bd_at_rivenhill 14y ago
  I expect that "insolvent governments" refers to the likelihood that a government in financial difficulties will eventually resort to confiscating the assets which its citizens hold in foreign accounts in addition to the confiscation of of domestic accounts, which has already occurred in Argentina in 2001 and in other places. In terms of the rate at which these events happen, I would consider 'once in a lifetime' to be a very high rate given that they can significantly reduce the wealth that you have managed to accumulate from a lifetime of hard work. People living in countries with poorly managed economies, such as Italy and Spain, should be in the habit of keeping significant portions of their savings in foreign accounts; once the corralito hits, you're already done for.
  - frankydp 14y ago
    You could also group volatile taxation policy into the insolvent government bracket. It could be difficult to justify not diversifying if taxation on savings change by large amounts every time the political landscape changes.
reeses 14y ago
Foreign depositary receipts are a good way of accessing global markets via domestic exchanges. You can invest in, say, a Dutch company, getting the advantages of a different tax jurisdiction as well as a different numéraire.
pelle 14y ago
I agree. Most of the people who use offshore banks are not even Americans or Western Europeans. They are people who run businesses in the developing world or are trying to get around stupid rules. I lived in the BVI in the mid 90s and most of the companies registered there at that time were Taiwanese companies investing in mainland China. A stupid law wouldn't allow them to invest directly. Thanks to BVI the Taiwanese tech industry were able to start the Chinese tech manufacturing boom. Much of the world in the past 100 years has had bank runs, currency devaluations, genocides and all sorts of other idiocy primarily caused by bad governments. Offshore banks and companies provide ways for people in those countries to maintain some level of security. Yes in between those million offshore accounts there may be the accounts of a Papa Doc or an Idi Amin. But witch hunting people using offshore only does more damage to people who are already victims of those said bad governments. The drug connection is also over hyped. Real money launders only use banks for connections between their "legal" businesses. The money laundering doesn't happen in the banks but in the fake "legal" businesses they set up. For the past 100 or so years the offshore industry, be it in Switzerland, Miami, London or Cayman Islands have been important parts of making the world financial systems less fragile.
liber8 14y ago
Speaking strictly for Americans, this simply isn't true. There are very, very, very few benefits to keeping your money offshore. Tax fraud is benefit #1. "Asset protection" (which generally means you're hiding money from your spouse or business partners) is benefit #2. Unless you actually own property in the country where you keep your money, or do real business there, those are basically the only benefits. There are also massive costs: (1) the literal costs that the foreign nation (and bank) will charge you to hold your money; (2) the risk that the money will actually be available when you want to access it; (3) the risk that the foreign government and bank will cooperate with the U.S. government when it comes knocking (this risk has greatly increased since the passage of MLAT and other recent treaties). I could definitely see how citizens of other countries could legitimately use such accounts to get around immoral laws in their home countries. Whether this makes up "most people" who use offshore accounts, as you claim, is beyond my knowledge. I would bet that a great percentage of the volume of money moving through these offshore havens are indeed a hedge against insolvent governments: the governors' own. There's a reason these island nations are where despots like Gaddafi, Mugabe, Marcos, Bashir, Afwerki, Mbasogo, Mubarak, Kagame, and others, and their extended families, park their money.
- nateabele 14y ago
  > Speaking strictly for Americans, this simply isn't true. You are mistaken. Allow me to enlighten you: - http://en.wikipedia.org/wiki/Executive_Order_6102 http://en.wikipedia.org/wiki/Executive_Order_6102 - http://www.progress.org/fold13.htm http://www.progress.org/fold13.htm - http://www.youtube.com/watch?v=ZsIGtSRDy54 http://www.youtube.com/watch?v=ZsIGtSRDy54 Not to mention the rhetoric inherent in statements like "it's patriotic to pay taxes", or the implicit assumption in policies like tax withholding, that government owns the product of your labor, and 'grants' you a portion of it. No, history shows us that broke governments are dangerous governments, and if you don't believe that the US is going broke, you are blind and helpless.
  - jgalt212 14y ago
    Yowsa. You need go hole up in the mountains with your survival gear, guns, gold bullion and collection of Glenn Beck books.
coldtea 14y ago
>I love how the article spins it such that offshoring is only for sinister, evil people. The reality is that most people use offshoring as a hedge against insolvent governments, and depending on their industry, the very real threat of criminal prosecution for benign activity. In the Western world, most people use off shores to avoid paying taxes that regular citizens pay and that they, themselves would have to pay if not for hiding their money through various channels. We might not like high taxation, in Europe, but we do believe in fair taxes and in our state having money for education, health, military, etc. And we consider those people using tax havens and offshoring to be the scum of the earth, at least in popular, average person, opinion. See the popular reaction to Gerard Depardieu seeking tax shelter outside France for an example.

pekk 14y ago

Most people don't use offshoring at all, and for those who do, it is not extremely likely that it is a hedge against the insolvency of (say) the US government, or fear of being busted for marijuana (for example, large companies like Google move money around mostly just to save on taxes). Your linked article draws the comparison between regulating unpasteurized milk and Nazi Germany, which seems not completely even-handed.

arethuza 14y ago

So how would offshoring help someone in the US sell marijuana or raw milk?

ajays 14y ago
For marijuana: you deliver the physical product here, and have the money deposited in your offshore account.

riffraff 14y ago

> The reality is that most people use offshoring as a hedge against insolvent governments [citation needed] And what does this actually mean? How do you define insolvent governments? If you are thinking of one-off cuts when the state is actually going bankrupt (latest cyprus thingie, italy's cut in '92 etc) these don't seem to offer a different security from keeping money in a foreign non-offshore bank. And these events don't seem so common to me. Or are you considering governments insolvent in the sense that they just waste money and taxing is stealing etc ? I am unsure how the situation is in these specific cases, but way way way often offshore accounts get found out in my country (italy) related to _massively illegal_ activities. This is not a case of avoiding messing up a tax form, it's accounts used to pay bribes for falsified trial witnesses with money laundered from drug smuggling.

bd_at_rivenhill 14y ago
I expect that "insolvent governments" refers to the likelihood that a government in financial difficulties will eventually resort to confiscating the assets which its citizens hold in foreign accounts in addition to the confiscation of of domestic accounts, which has already occurred in Argentina in 2001 and in other places. In terms of the rate at which these events happen, I would consider 'once in a lifetime' to be a very high rate given that they can significantly reduce the wealth that you have managed to accumulate from a lifetime of hard work. People living in countries with poorly managed economies, such as Italy and Spain, should be in the habit of keeping significant portions of their savings in foreign accounts; once the corralito hits, you're already done for.
- frankydp 14y ago
  You could also group volatile taxation policy into the insolvent government bracket. It could be difficult to justify not diversifying if taxation on savings change by large amounts every time the political landscape changes.

reeses 14y ago

Foreign depositary receipts are a good way of accessing global markets via domestic exchanges. You can invest in, say, a Dutch company, getting the advantages of a different tax jurisdiction as well as a different numéraire.

pelle 14y ago

I agree. Most of the people who use offshore banks are not even Americans or Western Europeans. They are people who run businesses in the developing world or are trying to get around stupid rules. I lived in the BVI in the mid 90s and most of the companies registered there at that time were Taiwanese companies investing in mainland China. A stupid law wouldn't allow them to invest directly. Thanks to BVI the Taiwanese tech industry were able to start the Chinese tech manufacturing boom. Much of the world in the past 100 years has had bank runs, currency devaluations, genocides and all sorts of other idiocy primarily caused by bad governments. Offshore banks and companies provide ways for people in those countries to maintain some level of security. Yes in between those million offshore accounts there may be the accounts of a Papa Doc or an Idi Amin. But witch hunting people using offshore only does more damage to people who are already victims of those said bad governments. The drug connection is also over hyped. Real money launders only use banks for connections between their "legal" businesses. The money laundering doesn't happen in the banks but in the fake "legal" businesses they set up. For the past 100 or so years the offshore industry, be it in Switzerland, Miami, London or Cayman Islands have been important parts of making the world financial systems less fragile.

liber8 14y ago

Speaking strictly for Americans, this simply isn't true. There are very, very, very few benefits to keeping your money offshore. Tax fraud is benefit #1. "Asset protection" (which generally means you're hiding money from your spouse or business partners) is benefit #2. Unless you actually own property in the country where you keep your money, or do real business there, those are basically the only benefits. There are also massive costs: (1) the literal costs that the foreign nation (and bank) will charge you to hold your money; (2) the risk that the money will actually be available when you want to access it; (3) the risk that the foreign government and bank will cooperate with the U.S. government when it comes knocking (this risk has greatly increased since the passage of MLAT and other recent treaties). I could definitely see how citizens of other countries could legitimately use such accounts to get around immoral laws in their home countries. Whether this makes up "most people" who use offshore accounts, as you claim, is beyond my knowledge. I would bet that a great percentage of the volume of money moving through these offshore havens are indeed a hedge against insolvent governments: the governors' own. There's a reason these island nations are where despots like Gaddafi, Mugabe, Marcos, Bashir, Afwerki, Mbasogo, Mubarak, Kagame, and others, and their extended families, park their money.

nateabele 14y ago
> Speaking strictly for Americans, this simply isn't true. You are mistaken. Allow me to enlighten you: - http://en.wikipedia.org/wiki/Executive_Order_6102 http://en.wikipedia.org/wiki/Executive_Order_6102 - http://www.progress.org/fold13.htm http://www.progress.org/fold13.htm - http://www.youtube.com/watch?v=ZsIGtSRDy54 http://www.youtube.com/watch?v=ZsIGtSRDy54 Not to mention the rhetoric inherent in statements like "it's patriotic to pay taxes", or the implicit assumption in policies like tax withholding, that government owns the product of your labor, and 'grants' you a portion of it. No, history shows us that broke governments are dangerous governments, and if you don't believe that the US is going broke, you are blind and helpless.
- jgalt212 14y ago
  Yowsa. You need go hole up in the mountains with your survival gear, guns, gold bullion and collection of Glenn Beck books.

coldtea 14y ago

>I love how the article spins it such that offshoring is only for sinister, evil people. The reality is that most people use offshoring as a hedge against insolvent governments, and depending on their industry, the very real threat of criminal prosecution for benign activity. In the Western world, most people use off shores to avoid paying taxes that regular citizens pay and that they, themselves would have to pay if not for hiding their money through various channels. We might not like high taxation, in Europe, but we do believe in fair taxes and in our state having money for education, health, military, etc. And we consider those people using tax havens and offshoring to be the scum of the earth, at least in popular, average person, opinion. See the popular reaction to Gerard Depardieu seeking tax shelter outside France for an example.