ICIJ: stop being the gatekeepers.

Some of the people who defend the ultra-rich are also the ones who claim to be in favour of free markets. A small bit of economic orthodoxy is that for free markets to work, parties need to be informed (and externalities priced in, but that's another story). This is not just in terms of "this is the price of bananas" but also in terms of knowing eg what various salaries are, which businesses are profitable, etc.

How can we have free markets when we don't even know who owns what?

As for taxation, there needs to be an overhaul. Things need to be simpler, and I say this as someone who has used international tax advisors. There's no reason the tax guy's diagram of your business should be more complicated than your own diagram. Moving profits to other countries shouldn't be possible, or rather, it should be more fixed by the nature of the business than by the desires of the CFO. We simply hear too much about "selling IP rights" to subsidiaries and similar schemes that are clearly meant to lower tax rather than increase revenue. Granted some things will be legitimate, but it's important that some vague concept of fairness is adhered to. This again goes back to transparency. We invented corporations to help improve society, so we ought to know what kinds of things people are doing with them.

Edit:

Perhaps the way to see it is, if you say "we make money by selling coffees in the UK" you would expect that entity to report a tax structure that contains a bunch of coffee and UK related entries. Reporting to investors ought to mirror reporting to the taxman.

Corruption means a politician becoming wealthy in an inappropriate way from their position of power. Even if they were to pay taxes this is still a huge negative for society. Wherhers it's the president of Azerbaijan or Nancy Pelosi, it's should rise to the level of criminal enrichment if properly investigated.

On the flip side are people who made their money legitimately and employ legal strategies available to them to minimize their tax bill. I have a hard time moralizing this because we all do it. Be it writing off donations, using tax loss harvesting, holding on to investments just long enough to not trigger capital gains taxes, etc - we all use strategies available to us to pay no more tax that we have to. I would expect nothing else from a more wealthy person. I would be totally fine if society made moves to close loopholes but I can't blame people for leveraging loopholes that exist because we should all do that.

https://www.bbc.com/news/world-58780465

https://www.theguardian.com/news/2021/oct/03/pandora-papers-...

https://www.washingtonpost.com/business/2021/10/03/takeaways...

1. Establish profitable company in your home country.

2. Establish 2nd company in a tax haven country.

3. Give 2nd company some kind of ownership, and then pay rental fees, licensing fees, or simply set up a high interest loan that the 2nd company loaned the first.

4. Once you set up a way to make it look like you owe the 2nd company tons of money, now your 1st company no longer is "profitable" and actually in debt losing money, which means it doesn't need to pay taxes on the massive profit it's making.

While I believe it's legal it hinges on bad ethical practice. But many large companies do this, such as cruise ships and I think Apple.

It is kind of insane that this is even allowed. How do you plan to tackle money laundering, corruption, and transparency when you cannot even figure out who owns the property in the first place?

You can wait around for four years til a new set of old rich people get voted into power (maybe they'll be blue/red this time!!!!) and hope they get rid of the loopholes they all use. Maybe a couple more """revolutionary""" politicians will be elected who VERBALLY DISMANTLE AND DESTROY a couple billionaires in a senate hearing (OMG SO AWESOME!!!). Decide for yourself if you think anything will change.

There does exist a great equalizer, but I won't mention it. I like staying unb&.

[0] https://www.theguardian.com/world/2017/oct/16/malta-car-bomb...

Everyone knew before and after the rich don’t pay taxes. We don’t need more evidence, we need action.

In history books, you get a sense sometimes that there were eras in which stuff like this sent people into the streets in rages. In which governments were voted out or overthrown, in which meaningful legislative responses were made. Or, you know, riots.

But I look around after reading those books and wonder what makes us so different. It's weird to live in this era. I read a Guardian article like this and look at the staggering sums, this entire "shadow financial system" devoted solely to one notion: I'm going to take as much as I can, in whatever way that I can, regardless of legality, and I'm going to give nothing back because I sincerely don't believe I owe anything back -- oh, and I'm going to keep it all a secret.

And I look around and not only don't see any riots; I sometimes get the feeling that people are actually envious, sometimes even respectful of the ingenuity it takes to manufacture these schemes. It's tough.

The only silver lining I can think of is what all the secrecy says: we're not just doing this in the open because we're still afraid we'll end up like the Romanovs if too many of you get angry. I think that while they're still afraid, there's still some hope.

EDIT: Reading some replies. It's weird to have to say this to such a smart crowd, but I'm not advocating riots as such; I'm advocating a substantive response. Of course riots are "bad" in some sense, but my observation is really about the odd contrast between the huge size of the "stimulus" (theft of wealth, much of it yours, on a staggering scale) and the tiny size of the "response" (newspaper articles and web forum discussions), especially when contrasted with other historical periods. So while I wouldn't "want a riot", seeing one would make me go "well, that makes sense".

If I had such level of riches I'd invest in stocks, companies, research, properties etc.. I'm certain it would open more job opportunities.

When you get barely rich, like single digit millions, the banks will start to offer you "family office" services. They basically just take care of everything for you. You send them all your money and all your debts (even your phone bills and stuff), and they promise to make sure there is more at the end of the year than the start. They invest for you, they do accounting and file taxes for you. You give them limited power of attorney so you don't even see the tax forms.

If you ask how it all works, they tell you it's really complicated and you should just focus on doing whatever it is that made you rich and let them worry about managing the money for you. Sometimes they do ethical stuff, sometimes not, depending on which bank and which consultant you hire.

I'm not excusing the people who are here, just explaining how some people who you thought were good people end up in these leaks.

I see a lot of positives,

Panama and paradise leaks were from one firm, this is from 14 different ones and by far the largest one in terms of number of documents, that's progress.

More transparency is always good , as an immediate impact asset owners like the British crown are now going to be lot more careful who they are buying from, the optics of enabling laundring is quite important for such buyers.

Removing such buyers from the market for dictators will limit who they can deal with making it more difficult and likely less lucrative for them in dealing with property

Heh this is totally affordable for regular jack offs like me. Perhaps someone will create a public benefit corporation (benefit for the irony), democratize access to these schemes for everyone, draw the ire of government when tax revenue plummets and lead to new laws enacted.

https://www.icij.org/investigations/pandora-papers/power-pla...

* their abysmal greed and asocial psyche: When you already have billions, what does it matter if you pay any percentage in taxes? How does it have any material or imaterial impact on your quality of life if you contribute back to society a fraction of what it gifted you with?

* their deep fear of the societies they plunder: most people do accept some spread in wealth distribution if it is somehow "legitimate" and "kosher". Hidding their tracks and actions in complex constructions is how to engineer top-heavy, artificial, pyramids of wealth and power that exceed what would be acceptable under the cleansing light of transparency

I think it's easy to say this, but I'm not sure the history of corporations bears this out. Technically, the first corporations were colonial expeditionary forces (like the Dutch VOC) that were sent to Africa and the Caribbean to control various types of precious resources and we all know what happened there.

I guess it all depends on who "society" is in your statement, because someone has always has to lose in a corporate structure.

We let this happen. We don't have to.

The first step in the right direction, then, is for people to become aware of these highly unsavory (but legal) practices. It's not going to be an easy fight. The kind of people that setup multiple shell companies to obfuscate the ownership of their assets have worked deliberately to extract wealth and game the system to a level that is unimaginable (at least for me before I heard about the related Panama Papers story that broke a couple years ago).

Ultimately, as we approach a global society with insane levels of wealth inequality and where public infrastructure and social safety nets have started to come apart at the seams, it's imperative that these "loopholes" get closed. Otherwise, we're going to be revisiting Feudalism in 21st century western democracies. Sadly some people seem to want that. They see it as a kind of gilded age lords and their servants.

Taxation is really hard to enforce in the modern World. The biggest problem is that small, local companies cannot compete with big ones because they don't have resources to overcome taxation.

For me it make sense more sense to abandon corporate tax at all and make sure that all the resources, public services that company uses in a given country are paid by the company. If company uses trucks, it should pay for roads, etc.

I don't think that Facebook that operates from US and uses US resources and services should pay CIT tax in, say, France. If it uses internet infrastructure, just make Facebook to pay for it fair amount and that's all.

Are these exclusive?

https://www2.gov.bc.ca/gov/content/housing-tenancy/real-esta...

At the same time, markets do "work". That is, the results of market interactions are what you might expect from market interactions: Accumulation of capital in fewer hands, economic cycles of various kinds, some motivation for innovation and lots of innovation for exploitation, war, scams and such...

I think you're kind of gesturing at the concept of "perfect competition", which is rigorously defined and does have technical requirements [0], one of which is perfect information. But it actually doesn't really apply to the tax situation of the owner.

In other words, for political and ethical reasons, there's a lot of reform that can and should be done, but I wouldn't dress up the argument in the form of "economic orthodoxy", unless you're talking about actual economic orthodoxies like lowering corporate income tax and preferring VAT to personal income tax.

edit: I should soften my confidence here, it's been a while since I did economics. At least, I've never heard of transparency extending beyond the good or service being a requirement for perfect competition... do you have a source for that, or can you clarify how it would affect things?

[0] https://en.m.wikipedia.org/wiki/Perfect_competition#Idealizi...

It’s called “transfer pricing” and it’s been going on for decades: https://en.wikipedia.org/wiki/Transfer_pricing

Short of a revenue (as opposed to income) corporate tax or VAT, it’s a very tricky problem to address. Maybe an excise tax on foreign remittances to match the highest corporate bracket.

Or you just scrap corporate tax entirely because it’s a terrible idea anyway.

Huh. Made me wonder if advocates of IP reform could claim improved tax sanity as a benefit.

Happily, not an original thought.

Here's the first hit via ddg:

Intellectual Property Law Solutions to Tax Avoidance [2015]

https://www.uclalawreview.org/pdf/62-1-1.pdf

"Multinational corporations use intellectual property (IP) to avoid taxes on a massive scale, by transferring their IP to tax havens for artificially low prices. Economists estimate that this abuse costs the U.S. Treasury as much as $90 billion each year. Yet tax policymakers and scholars have been unable to devise feasible tax-law solutions to this problem. This Article introduces an entirely new solution: change IP law rather than tax law. Multinationals’ tax-avoidance strategies rely on undervaluing their IP. This Article proposes extending existing IP law so that these low valuations make it harder for multinationals to subsequently litigate or to license their IP. For example, transferring a patent for a low price to a tax-haven subsidiary should make it harder for the multinational to demonstrate the patent’s validity, a competitor’s infringement, or entitlement to any injunctions. The low transfer price should also weigh toward lower patent damages and potentially even a finding of patent misuse. Extending IP law in such ways would thus deter multinationals from using IP to avoid taxes. Both case law and IP’s policy justifications support this approach."

Also...

> How can we have free markets when we don't even know who owns what?

Yup. Open markets require symmetrical information.

This is the true power of the media. It isn't whatever lies or truths they may tell, though those are impactful in their own way... it is the way they decide what we think about at all. The true power of the media is to inflate some tiny incident that happened to one person to a national-scale, multi-week crisis... and to be able to take national-scale, multi-decade crises and bury them to the point that it's right down there with "conspiracy theories" to think about them.

If you pay attention, you can see this sometimes in action. They'll push a story expecting a certain reaction, but if they don't get the reaction they expect, poof, it's gone. There's always a huge pool of stories to draw from, far larger than they need to send any message they want without having to necessarily lie at any point. They just have to control the spotlight of attention to get the results they want.

Sometimes HN denizens talk about breaking out of the filter bubble. This might be a better way of thinking about it... instead think of it as breaking away from the attention spotlight being pushed on you by the media. Almost the entire world is taking place outside that spotlight.

Apple's easy to pick on, they're one of the richest companies in the world and should pay more taxes. But for companies that are less successful, it's entirely possible that the second company is actually losing money. Without an appropriately sized army to track through the 200th company (tracking transactions between two companies is simplified to make the tax evasion easy to understand. Real world tax evasion is dramatically more complicated.)

Yes but many of the tax loopholes are just the result of the corruption of power (legal or not). It's only obvious to the people who benefit from it, so no one bats an eye.

There were no earth shattering mass arrests and government topplings, but it's unrealistic to expect such a thing.

E.g. In Denmark, the country’s tax minister cited the Panama Papers to justify hiring hundreds of new employees to bolster the fight against tax fraud.

It was high news and had consequences. There is much work to be done, but 'nothing changing' is not the case.

You do not like that they move money offshore, and that is for a good reason, the super rich have so much resources that they can unilaterally distort the economy. The more concentrated the wealth the more fragile is the economy and the more is dependent on the mood of a few lucky people.

They mention King Abdullah II of Jordan, but how likely do you think it is that there could or would be any consequences for him? It seems highly unlikely.

Also, they mention that Putin is not named directly in these papers, but we can be pretty certain that he's been involved in all sorts of financial skullduggery. Yes, they say that some of his close associates are mentioned, but even if it can be tied directly to Putin with 100% certainty it would have little to no effect in removing him from power as his power over Russia at this point is too strong for such allegations to have any effect.

And Who benefits from making Zelinskiy look bad?

EDIT: Maybe we're not more shocked because we suspect that if we knew the whole story it would actually be much worse than this?

Since birth they are made to believe that the miraculous democratic republic they live in gives them agency, and that the reason they actually don't have agency is because their fellow citizens are stupid and can't vote for the right things.

The result is a feeling of justified helplessness. There's no feeling of outrage at the greedy tyrannical ruling class, because after all either you or your neighors "chose" them.

And if taxation laws are unjust, it's your neighbors' fault. They voted for red while blue would obviously have your best interests in mind. Nevermind the fact that both red and blue are part of the same wealth and social class, who benefit from the same laws.

I used to think this. But now I think: maybe the ‘dent’ I’ve been looking for is essentially just excitement and hype, which isn’t change. The narrative that change happens through the mass public getting angry, forcing politicians to respond, is overblown at best. I think the boring truth is that nearly all progress in this area (and there is progress) happens through countless bureaucrats diligently working for years on court cases and regulation changes to make it harder for people to get away with this stuff. For such bureaucrats, a leak like this is going to be relevant and valuable for years, long after the media has moved on. The people implicated in the leak didn’t want the leak to happen, and there’s a reason. Sure, most are probably too powerful to get prosecuted and put in jail, but it does curb their options for future shenanigans, and they will probably lose some money. Sanctions do work. I think it’s probably always been this way too – the exciting, romantic parts of history (marches, revolutions) are the exception, we just pay more attention to them.