The Global Elite Are Hiding 18 Trillion Dollars In Offshore Banks

In recent days, the fact that Mitt Romney has millions of dollars parked down in the Cayman Islands has made headlines all over the world.  But when it comes to offshore banking, what Mitt Romney is doing is small potatoes.  The truth is that the global elite are hiding an almost unbelievable amount of money in offshore banks.  According to shocking research done by the IMF, the global elite are holding a total of 18 trillion dollars in offshore banks.  And that figure does not even count any money being held in Switzerland.  That is a staggering amount of money.  Keep in mind that U.S. GDP in 2010 was only 14.58 trillion dollars.  So why do the global elite go to such trouble to hide their money in offshore banks?  Well, there are two main reasons.  One is privacy and the other is low taxation.  Privacy is a big issue for those that are involved in illegal enterprises such as drug running, but the biggest reason why people move money into offshore banks is in order to avoid taxes.  Some set up bank accounts in foreign nations because they want to legally minimize their taxes and others set up bank accounts in foreign nations because they want to illegally avoid taxes.  You would be absolutely amazed at what some large corporations and wealthy individuals do to get out of paying taxes.  Unfortunately, the vast majority of the rest of us don’t have the resources or the knowledge to play these games, so we get taxed into oblivion.

So why do they call it “offshore banking”?

Well, the term originally developed because the banks on the Channel Islands were “offshore” from the United Kingdom.  Most “offshore banks” are still located on islands today.  The Cayman Islands, Bermuda, the Bahamas, and the Isle of Man are examples of this.  Other “offshore banking centers” such as Monaco are actually not “offshore” at all, but the term applies to them anyway.

Traditionally, these offshore banking centers have been very attractive to both criminals and to the global elite because they would not tell anyone (including governments) about the money that anyone had parked there.

These days some governments (particularly the U.S. government) are trying to change this, but we certainly will not see the end of offshore banking any time soon.

The amount of money that goes through these offshore banks is absolutely astounding.

It has been estimated that 80 percent of all international banking transactions take place through these offshore banks.  $1.4 trillion is being held in offshore banks in the Cayman Islands alone.

One article in the Guardian estimated that a third of all the wealth on the entire globe is being held in offshore banks, and others believe that as much as half of all the capital in the world flows through offshore banks at some point.

Obviously, all of this tax avoidance means that governments around the world are missing out on a whole lot of money.

It has been estimated that the U.S. government is missing out on $100 billion a year because of these offshore banks.  Others would put that figure significantly higher.

Avoiding taxes is a game that the global elite have mastered.  They are playing a whole different ballgame than you and I are.  They don’t just sit there like idiots and get blasted with taxes.  Instead, they hire the best experts and they employ every trick in the book to hold on to as much money as they possibly can.

These days, taking advantage of offshore tax havens is not that complicated to do.  The following is from a recent Politico article….

A plausible scenario plays out like this: I hire an accountant. Doing her job, my accountant tells me that if I sign a few legal documents and route my money through a small Caribbean island, I could keep more of my paycheck and pay a lower tax rate. I may have earned my money in the United States, but legally I can claim that it was, in fact, earned in a tax haven.

If it is legal, perhaps more of us should look into this.

After all, if playing these kinds of games is good enough for Mitt Romney, then why isn’t it good enough for all the rest of us?

During a campaign stop recently, Romney said the following….

“I can tell you we follow the tax laws”

I certainly believe him when he says that.  But it is what he said next that is troubling….

“And if there’s an opportunity to save taxes, we like anybody else in this country will follow that opportunity.”

I certainly believe him when he says that too.

ABC News recently revealed that Bain Capital has established an astounding 138 different offshore funds in the Cayman Islands.

Something has got to work pretty well to want to do it 138 times.

But Bain Capital was also very busy over in other offshore banking centers as well.

One of the largest shell companies that Bain set up down in the Caribbean was called Sankaty High Yield Asset Investors Ltd.  It did not have an office in Bermuda and it had no staff in Bermuda.  But it helped clients of Bain Capital avoid a whole lot of taxes.

The following comes from a 2007 Los Angeles Times article….

In Bermuda, Romney served as president and sole shareholder for four years of Sankaty High Yield Asset Investors Ltd. It funneled money into Bain Capital’s Sankaty family of hedge funds, which invest in bonds and other debt issued by corporations, as well as bank loans.

Like thousands of similar financial entities, Sankaty maintains no office or staff in Bermuda. Its only presence consists of a nameplate at a lawyer’s office in downtown Hamilton, capital of the British island territory.

“It’s just a mail drop, essentially,” said Marc B. Wolpow, who worked with Romney for nine years at Bain Capital and who set up Sankaty Ltd. in October 1997 without ever visiting Bermuda. “There’s no one doing any work down there other than lawyers.”

The amount of money being funneled through Sankaty today is absolutely stunning….

Today, Bain Capital manages $60 billion in assets, according to a spokesman. The total includes $23 billion in Sankaty debt and credit funds. Half a dozen Sankaty affiliates now are active in Bermuda, corporate registry records show.

The Sankaty debt hedge funds are organized as partnerships in Delaware that produce taxable business income by investing in fixed-income bonds and other debt instruments. Under tax law, even tax-exempt U.S. institutions may face a 35% tax if they invest directly in such hedge funds. By investing instead through a Bermuda corporation, the taxes are legally blocked, experts say.

Of course all of this is perfectly legal.

So nobody gets into trouble for any of this.

By keeping money offshore, even those managing these kinds of funds can avoid being taxed.

Victor Fleischer, a tax professor at the University of Colorado Law School, recently explained how this works….

“The idea behind some of the Cayman Island strategies was that the income that the fund managers receive for managing the money would be kept offshore in the Cayman Island — and the chief benefit is that you can defer when you recognize that income until a later date and you can reinvest the money from the Cayman islands and none of those reinvested funds get taxed until you bring them back either”

So was Romney doing this?

We may never know unless he shows us his tax returns.

What we do know is that Romney has millions of dollars of his own personal wealth invested in offshore tax havens.

The following comes from ABC News….

In addition to paying the lower tax rate on his investment income, Romney has as much as $8 million invested in at least 12 funds listed on a Cayman Islands registry. Another investment, which Romney reports as being worth between $5 million and $25 million, shows up on securities records as having been domiciled in the Caymans.

But Romney does not just have money invested down in the Cayman Islands.  Apparently his money is invested in a whole host of offshore tax havens.

The following quote comes from a Reuters article….

Bain funds in which Romney is invested are scattered from Delaware to the Cayman Islands and Bermuda, Ireland and Hong Kong, according to a Reuters analysis of securities filings.

So is there anything wrong with this?

Well, it depends on how you define “wrong”.

What Romney is doing is perfectly legal.

But it also stinks.  Washington lawyer Jack Blum recently told ABC News the following about Romney’s finances….

“His personal finances are a poster child of what’s wrong with the American tax system”

So now we may have a few hints as to why Romney may not want to release his old tax returns.

But as noted above, what Romney is doing is just small potatoes compared to what the ultra-wealthy do.

The U.S. Congress has been trying to clamp down on offshore banking, but the ultra-wealthy are always two or three steps ahead of them.

The ultra-wealthy will go to just about any extreme in order to avoid paying taxes.

In fact, the Washington Post has reported that an increasing number of wealthy individuals are actually deciding to renounce their citizenship rather than face the wrath of the IRS.

The ultra-wealthy aren’t really concerned that much with national citizenship anyway.  If they want to influence an election, they can have far more influence by donating a few million bucks to a “Super PAC” than they can by casting the few votes that they have.

In a previous article, I described how the ultra-wealthy use offshore banks as a “shadow banking system” that plays by rules that most people don’t even know exist….

It is a shadow banking system that most Americans don’t know anything about. Most Americans don’t have the resources to be able to set up shell companies in half a dozen different countries so that they can “filter” their profits.  Most Americans don’t know a thing about complicated tax avoidance plans that tax lawyers use such as the “Double Irish” and the “Dutch Sandwich”.  Most Americans would have no idea how to eventually have most of the money that they make end up in Bermuda so that it can avoid taxes.

Most among the global elite simply do not care that U.S. debt is climbing into the stratosphere.  All they care about is keeping as much of their own money in their pockets as they possibly can.

Of course there are always exceptions to this rule.  Warren Buffett recently wrote a check to the U.S. Treasury for a little more than $49,000 to help pay off the national debt.

But considering the fact that the U.S. national debt is increasing by more than 100 million dollars an hour, that didn’t exactly do much to help.

Our system is deeply broken and the global elite are getting away with bloody murder.  Over the decades, they have carefully crafted the rules so that as much wealth as possible is funneled into their pockets, and they have carefully crafted the rules so that as much wealth as possible stays in their pockets.

Of course if we got rid of the personal income tax and the corporate income tax entirely and replaced them with a completely new system we could get rid of all of this game playing once and for all.

But what do you think the odds are of that happening?

Taxed Into Oblivion

In the United States today, we are being taxed into oblivion, yet it is being done so stealthily that most Americans don’t even realize what is happening.  Most people are fixated on federal income tax rates, but the federal income tax is only one of the dozens of different taxes that each of us pay each year.  The politicians have learned that people get really upset when income tax rates are raised, so they have found hundreds of other ways to raise taxes on us.  What most taxpayers in the United States today are facing is “death by a thousand cuts”.  When you add up all forms of taxation from all levels of government, approximately 40 percent of all the income in the country is taken in as taxes by government.  Large numbers of Americans end up paying well over 50 percent of their income in taxes, and many of them don’t even realize that it is happening.  We truly are being taxed into oblivion, and yet the politicians just keep coming back for more.

On all levels, government just keeps growing, and all of this government has got to be paid for somehow.  Politicians have become masters at finding ways to tax us so that we won’t even feel it.  They have an endless hunger to spend more money, and they depend on us to feed that addiction.  Today, the combination of federal government spending, state government spending and local government spending now accounts for a larger share of U.S. GDP than at any other time in our history.

Yes, federal income tax rates were significantly higher 30 or 40 years ago.  But virtually every other tax you can think of has gone way up since then or did not exist back then.

Federal income taxes definitely still hurt, but the reality is that where we really get hit is in all of the other taxes that we pay.  American families pay Social Security taxes, Medicare taxes, state income taxes, sales taxes, property taxes, death taxes, various excise taxes, gasoline taxes, tire taxes, utility taxes, liquor taxes, telephone taxes and cigarette taxes just to name a few.  The truth is that there are dozens and dozens of different taxes that most Americans pay each year, and there are a whole bunch of others that get passed on to us through businesses that we deal with.

Speaking of cigarette taxes, there is legislation in Congress right now that would send taxes on tobacco products absolutely skyrocketing yet again.

I don’t smoke and I never will smoke, but I find the attack on smokers by our politicians to be seriously offensive.  If smoking is legal, then leave them alone.  Don’t tax them into oblivion just because you don’t like what they are doing.

An excerpt from S. 1403 (The IDEA Full Funding Act) is posted below.  You will notice that a portion of this legislation even refers to itself as the “Saving Lives by Lowering Tobacco Use Act”.  They are openly admitting that they want to make tobacco so expensive that people cannot afford to use it….

SEC. 3. TOBACCO TAX INCREASE AND PARITY.

(a) Short Title- This section may be cited as the ‘Saving Lives by Lowering Tobacco Use Act’.

(b) Increase in Excise Tax on Small Cigars and Cigarettes-

(1) SMALL CIGARS- Section 5701(a)(1) of the Internal Revenue Code of 1986 is amended by striking ‘$50.33’ and inserting ‘$100.50’.

(2) CIGARETTES- Section 5701(b) of such Code is amended–

(A) by striking ‘$50.33’ in paragraph (1) and inserting ‘$100.50’, and

(B) by striking ‘$105.69’ in paragraph (2) and inserting ‘$211.04’.

(c) Tax Parity for Pipe Tobacco and Roll-Your-Own Tobacco-

(1) PIPE TOBACCO- Section 5701(f) of the Internal Revenue Code of 1986 is amended by striking ‘$2.8311 cents’ and inserting ‘$49.55’.

(2) ROLL-YOUR-OWN TOBACCO- Section 5701(g) of such Code is amended by striking ‘$24.78’ and inserting ‘$49.55’.

(d) Clarification of Definition of Small Cigars- Paragraphs (1) and (2) of section 5701(a) of the Internal Revenue Code of 1986 are each amended by striking ‘three pounds per thousand’ and inserting ‘four and one-half pounds per thousand’.

(e) Clarification of Definition of Cigarette- Paragraph (2) of section 5702(b) of the Internal Revenue Code of 1986 is amended by inserting before the final period the following: ‘, which includes any roll for smoking containing tobacco that weighs no more than four and a half pounds per thousand, unless it is wrapped in whole tobacco leaf and does not have a cellulose acetate or other cigarette-style filter’.

(f) Tax Parity for Smokeless Tobacco-

(1) IN GENERAL- Section 5701(e) of the Internal Revenue Code of 1986 is amended–

(A) in paragraph (1), by striking ‘$1.51’ and inserting ‘$26.79’;

(B) in paragraph (2), by striking ‘50.33 cents’ and inserting ‘$10.72’; and

(C) by adding at the end the following:

‘(3) SMOKELESS TOBACCO SOLD IN DISCRETE SINGLE-USE UNITS- On discrete single-use units, $100.50 per each 1,000 single-use units.’.

You can view the full text of this legislation right here.  Please notice that some of the tax increases are absolutely mind blowing.  For example, the tax rate on pipe tobacco is going from 2.8311 cents to $49.55.

Now that is a tax increase you can really sink your teeth into.

We are seeing “quiet” tax increases like this happen on every level of government all over the United States.

Of course I haven’t even mentioned all of the fines and fees and “registration” charges that state and local governments are hitting us with.

Have you gone to renew your car registration lately?  In some states (such as California) the fees have gotten absolutely ridiculous.

Speaking of California, it looks like they are getting ready to target cellphone users once again.

According to USA Today, California is getting ready to seriously jack up the fines for talking on a cellphone while driving….

The state Senate has sent a bill to Gov. Edmund G. Brown Jr. raising the basic fine for a first automotive offense from $20 to $50, the Sacramento Bee reports. For subsequent offenses, the fine would rise from $50 to $100. That’s not the worst of it: by the time state and local assessments are added on, the total for a first offense rises to between $208 to $328. For additional tickets, make that $328 to $528.

Yes, talking on a cellphone while driving is dangerous.  But hitting people with tickets of $300, $400 or even $500 is not about safety.  It is all about revenue generation.

Right now we are seeing an epidemic of speed traps all over the country.  State and local governments are desperate for money, and they see speeders as an easy source of revenue. You can read more about this phenomenon right here.

Speaking of “revenue”, that seems to have become Barack Obama’s new favorite word lately.  He seems absolutely obsessed with raising more money for the federal government.  The Obamacare law was absolutely packed to the gills with new taxes, but now he wants even more.

Yes, it is true that the wealthy are getting away with murder under our current tax system.  I find it highly offensive that many people that make millions of dollars each year are able to find ways to pay much, much smaller percentages of their incomes in taxes than I do.

But raising tax rates isn’t going to solve the problem.  Those that are masters at avoiding taxes are going to continue to do so.  Meanwhile, middle class Americans and small businesses will continue to get bled to death.

Our current tax system is fundamentally broken and needs to be completely thrown out and replaced.

However, no system is going to work until the federal government gets a handle on its spending addiction.

In the past couple of years, spending by the federal government as a share of GDP has been the highest that it has been since World War II.

You would think that there should be plenty of fat to trim, but as the recent debt ceiling deal clearly demonstrated, our politicians do not intend to significantly reduce government spending.

They are just going to keep borrowing, spending and finding more ways to tax us.

All of this nonsense in Washington D.C. is part of the reason why Americans are so displeased with Congress at this point.  According to Gallup, 84 percent of Americans now disapprove of the way Congress is doing its job, which is a brand new all-time high.

The truth is that sending more money to Washington D.C. is not going to “fix” things.

The federal government has multiplied in size over the past several decades, and yet the number of poor people just continues to increase.

Giving the poor more handouts may ease their suffering for a little while, but it is not the solution to their problems.  What they really need are good jobs, but our politicians have very busy setting up unfair trade agreements that allow millions of our jobs to be shipped overseas, and they continue to suffocate businesses in this country with mountains of ridiculous regulations.

No, the people that truly benefit when more money flows to the federal government are the fatcats that live and work around Washington D.C.

The past few decades have been a bonanza for government contractors, lobbyists and lawyers in the D.C. area.

According to the Washington Post, those living in the Washington D.C. metropolitan area now have a higher median household income than anyone else in the country….

Washingtonians now enjoy the highest median household income of any metropolitan area in the country, and five of the top 10 jurisdictions in America — Loudoun, Howard and Fairfax counties, and Falls Church and Fairfax City — are here, census data shows.

The signs of that wealth are on display all over, from the string of luxury boutiques such as Gucci and Tory Burch opening at Tysons Galleria to the $15 cocktails served over artisanal ice at the W Hotel in the District to the ever-larger houses rising off River Road in Potomac.

There is a ton of money in the D.C. area.  I know.  I used to work there.  Approximately one third of the GDP of the region comes from spending by the federal government.  Even during this recent economic downturn, the Washington D.C. region continues to do really, really well.

So, no, raising taxes is not going to fix what ails us.  It would just feed the monster that we have created in Washington.

We are already being taxed into oblivion.  Middle class America can’t take much more of this.

We need to change our entire approach to taxation in this country, because right now our tax system is fundamentally unfair and it is not working.

So what do all of you think about our tax system?  Please feel free to post a comment with your opinion below….

 

The Economic Collapse