This is what you get when the majority of tax revenue comes from a small tax base. For example, according to Pew Research (<a href="http://www.pewresearch.org/fact-tank/2016/04/13/high-income-americans-pay-most-income-taxes-but-enough-to-be-fair/" rel="nofollow">http://www.pewresearch.org/fact-tank/2016/04/13/high-income-...</a>):<p>> In 2014, people with adjusted gross income, or AGI, above $250,000 paid just over half (51.6%) of all individual income taxes, though they accounted for only 2.7% of all returns filed, according to our analysis of preliminary IRS data. Their average tax rate (total taxes paid divided by cumulative AGI) was 25.7%. By contrast, people with incomes of less than $50,000 accounted for 62.3% of all individual returns filed, but they paid just 5.7% of total taxes. Their average tax rate was 4.3%.<p>In the state of California, "New figures from the Franchise Tax Board show that the wealthiest 1% of Californians paid 50.6% of the state income tax in 2012 — up from 41.1% in 2011. It means that of nearly 15 million tax returns, about 150,000 generated more than half the revenue." (<a href="http://www.latimes.com/local/la-me-cap-taxes-20140505-column.html" rel="nofollow">http://www.latimes.com/local/la-me-cap-taxes-20140505-column...</a>)<p>It's not very healthy to collect taxes this way. As the LA Times article indicated, California's tax revenue fluctuates based on the incomes of a pretty small number of people.<p>When a small number of people provide most of the tax revenue, yet the political discourse constantly accuses them of not paying a fair share, it's not hard to see why they feel persecuted and try to hide their money.<p>It's also hard to say that they aren't paying their "fair share" when they provide more than half of the government's tax revenue. Anyone who wants them to pay more ought to provide some kind of objective way to calculate what someone's "fair share" of tax is, and that's probably impossible.
There is a few GOOD aspects of offshore zones and financial secrecy laws which almost nobody takes into account.<p>In authoritarian countries like Russia, corporate raids made by those who are close to law endorsement structures are pretty common thing. In order to do that, they often put high pressure to a company's owners.<p>For them it's usually harder to put pressure on a company when it's not clear who are the owners.<p>Another reason is that often authoritarian countries have ridiculous regulations regarding cross-border trading. So offshore company often is used as a shell company to facilitate easier cross-border trading.<p>Sure, there is a big abuse of offshores but let's not forget that governments across the globe are not ultimate source of truth and goodness.<p>If you turn down offshore zones, you will turn down many economies across the globe (especially economies of authoritarian countries which are at the bottom economic freedom rating).<p>P.S. I lived 22 years in UZ, then 9 years in RU, now in NL.
Obama recently bemoaned the 8 trillion or so in wealth that is not circulating with much, if any, frequency in the US economy. As he and others have observed, it's sequestered overseas and at home, waiting for a time when confidence is higher and taxes lower. Unless a mechanism exists to prevent smart money from finding safe havens from taxes, instability and currency flux (Even China is currently failing at this task) redistribution and populist ideals are always due to fail. This is the message the "trickle down" and free market cheerleaders try to communicate, poorly.
Let us not forget countries have a need to compete just like companies.<p>If a foreign country taxes more than others you must expect some companies/individuals to move their assets to a country that taxes at a lower rate. To expect otherwise would be unreasonable. This is not tax evasion, but people making rational decisions given their options.
It seems there is too much focus on what is "fair". If one looks at all the opinions it's very hard to come up with unified way to define what is "fair". Going by comments one of the unifying themes is "fair"being defined as "me" paying less and someone else paying more. I think many people feel if 1% payed more in taxes and the rest payed less it would lead to more disposable income in reality it would very likely lead to asset inflation just for a different class of assets.
Maybe Obama should consider a tax amnesty? Get money in from outside the US at a low tax rate (something is better than nothing right) and get it circulating in the US creating jobs and funding startups/ideas<p>Just today we had news about one in Indonesia
<a href="http://www.reuters.com/article/us-indonesia-tax-idUSKCN1200R7?il=0" rel="nofollow">http://www.reuters.com/article/us-indonesia-tax-idUSKCN1200R...</a>
A lot of misinformation in the comments on this feed. I can't persuade their authors that their opinions are on the wrong side of history, but I can say that as I've become wealthier I've felt the desire to tip at least 20% and secretly donate to worthy causes. I’ve also felt troubled by this because it is charity. I'm voting with my dollars for the people and businesses that I believe contribute to my community. Take that to its logical conclusion and it means that the more money I have, the more influence I have in society.<p>This is antithetical to my dream of a future where people are freed from fruitless labor and authoritarian control. We all live two lives - the one of our dreams and the one that happens while we’re making other plans. Right now the vast majority of us have been forced into a default life of making rent and reactionary decision making. Some of us have been lucky enough to find respite in yolo or living for others through our children. But fundamentally we’re still trapped in the rat race.<p>I’ve come to the conclusion that money represents time that someone has sacrificed for someone else. So the quarter of my income I saved in my bank account last year represents one year of my life, and you can tell by that ratio roughly how much I make per year. Go down a few tens of thousands of dollars and the ratio falls to zero, or even negative. Go up a little the other direction and the ratio approaches 100% and then celebrity. About half of Americans have no savings, which means they aren’t being compensated for their lives, not really. So I’ve already stolen from them, by the fact that I have disposable income and they don’t. A handful of Americans make more money from their wealth than they would working, if they ever started (optional work is called a hobby). So they’ve already stolen from me, because I have to work and they don’t. Yet people make the argument time and again that people with the least amount of money (who have stolen the least) should pay higher taxes and the people who have “acquired” the most money should pay lower taxes as some kind of post-incentive. Riiight.<p>So this old notion that taxation is theft doesn’t make sense because money itself is theft. Hoarding vast amounts of it from others so they have to work harder just leads to the vicious cycle of inequality we’re stuck in. No, the best way forward that I can see is to opt out of a high income and instead work every day towards a vision of the future where money isn’t needed anymore. Where people make bigger contributions doing what they want to do with their lives than they ever could by laboring under someone else’s thumb. This is going back to Jeffersonian ideas of trusting society as a whole to make governing decisions rather than leaving elites to pick winners and losers. I would rather take a median income to provide everyone else at least a basic income and watch our culture flourish than subscribe to a meritocratic ideal that crowns the fastest rat.
he says. “Previously, we thought that the offshore world was a shadowy, but minor, part of our economic system. What we learned from the Panama Papers is that it is the economic system.”
I'm doing a self funded start-up and I moved to Panama from SF to save on taxes. I was paying over 50% tax and now I pay 0% tax. By moving here my start-up went from unviable to very competitive. I am now able to undercut my only competitor and will likely drive them out of business sometime next year. Once that happens I'll raise my prices and make even more money.<p>This is business; if I didn't do this someone else would do it to me. Same thing happened to me with a previous company and a Chinese competitor. Lost ten years of savings and 4 years of my life on that one.<p>I much prefer living in the US but it was just impossible to make the numbers work. I could have survived with a 10-20% tax but there is no way that is happening in the near future in the US.<p>The point I want to get across is; irrespective on what you think is fair the US tax rate is uncompetitive and driving small business out of the country. Big companies get to stay because they can afford the more expensive tax avoidance schemes. Little guys like myself are either driven out of business or out of the country.