Panama Papers prove Tax Avoidance is the American Way

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Apr 9, 2016 No Comments ›› admin

By Lynn Woolley

I save receipts, log mileage, keep all my bills and invoices – and look for any legal way to avoid paying higher taxes. So do many of the world’s leaders.

They’ve been exposed by the so-called Panama Papers—a leak of millions of records from a law firm in Panama that helped them set up offshore accounts and shell companies.

 Panama City, home to the law firm Mossack Fonseca, from which the confidential documents known as the Panama Papers were taken. (Photo: Joe Raedle/Getty Images)

Panama City, home to the law firm Mossack Fonseca, from which the confidential documents known as the Panama Papers were taken. (Photo: Joe Raedle/Getty Images)

The difference is that I had nothing to do with setting tax rates that are perceived by many as too high. So there’s some hypocrisy here and that’s what makes it a scandal.

Billions of dollars are spent each year around the world in an effort to avoid taxes. It’s the American Way, the European Way, and probably, it’s that way in many countries. This is money that could – and ought to be saved. But the higher taxes are – and the more complex the Tax Code is – the more people are willing to spend to stop paying them.

This is the end result of Big Government.

Government is too big. Taxes are too high. A leaner, trimmer, more efficient government would not require so much revenue to operate. But Europe is an entitlement state, and the U.S. is on its way. Just this month, governors in both California and New York signed bills raising the minimum wage. Both of them are aware that this is not good fiscal policy – but it made them feel good.

It’s also a limit to freedom. I’m not a libertarian, but still, it seems to me that companies should be free to offer the salaries they see fit in order to attract the talent they need. But government always steps in – taking the place of market forces.

Look at what Obama has done. His Obamacare bill set all kinds of rules and regulations including one that established a 30-hour workweek. And, as a direct consequence, lots of companies cut back on hours to avoid that designation and to save money. Businesses are not in business to lose money. That’s why they avoid taxes when they can.

But Big Government requires Big Bucks.

If you’re going to have an entitlement state, you have to be able to fund it. That’s why personal taxes are so high in many parts of the world where corporate taxes are lower. In the United States, personal taxes are somewhat lower while the corporate tax is a whopping 35 percent. There are ways to get around it.

That’s why big corporations go offshore, or Ford decides to open a new plant in Mexico – or shell companies are set up to provide a corporate address in Ireland or somewhere. Note that corporations also provide jobs. If they can’t make a reasonable profit, there will be fewer jobs. So look for ways to stretch dollars. Some hire illegal immigrants or bring in high tech workers from Asia. Some have layoffs from time to time. Some cut benefits. Virtually all look for ways to legally avoid taxes.

President Obama believes that it is immoral for corporations to avoid taxes.

This peachiest of all presidents lectured us again this week about corporate “inversions” and how they are akin to the Panama Papers. He told corporations to stop “gaming the system.” Besides, he’s got to have a way to fund Obamacare since it isn’t working so well. Every dime that a corporation saves by gaming the system is a dime sucked out of Obama’s grasp.

Daniel Henninger writes in the Wall Street Journal that most Europeans spend a significant amount of time on tax avoidance — using cash-only transactions; bartering; making off-the-books deals involving family real estate; inflated art prices; and anything else they can think of to hide from the “Taxman” that Beatle George Harrison so deplored.

Video: George Harrison and Eric Clapton perform “Taxman”

Meanwhile, President Obama has lived on government money all his life.

He’s done nothing but work in academia, as a community organizer, and as an elected official. Government has treated him well. The concept of small government and lower taxes is anathema to him. (And to Hillary and Bernie and the rest of the left-wing crowd that is seemingly multiplying like rabbits.)

The fact is that the political class is generally protected from their own actions. The Panama Papers show that sometimes, they have to expend a bit more energy to make darn sure they are protected. Most of us, though, do not have the resources to set up shell companies or put our money overseas. We pay the taxes they use to do the things they do. And it’s never enough.

We can do better and fairly easily.

Mike Huckabee was the only presidential candidate that wanted to institute the Fair Tax. Whatever you think of him, he was right about that issue. The Fair Tax would collect tax money like a sale tax does. Everybody – even illegal immigrants – would participate. The poor would get a prebate. On payday, you would get your entire check without any withholding. Prices would go up to cover the tax, but we’d know exactly what our taxes are and we’d get used to it. Remember, we’d start out with a lot more money.

And think of the billions we’d save in tax preparation and avoidance.

Of course, we’re going to have to reform our entitlements and develop a high-tech, smart, and powerful military designed for modern warfare. We have to understand that free trade works to our benefit – something Trump and Sanders just don’t get. We have to realize that we’re probably not going to make TV sets in America – but that we can make other things (like airplanes) and that we can be the world leader in categories like technology.

The problem is that our “leaders” are not working on these issues.

Heck no. They’re concerned about global warming and other such nonsense. This is America. We could solve our real problems if we would just do it. But we don’t because the current system (Status Quo) works great for politicians here and abroad. So “leaders” will continue to tax the heck out of us, feed the government monster, and maintain their bird nests.

We will continue to pay CPA’s and tax attorneys big bucks to help us avoid taxes. Our leaders will still set up offshore ways to avoid their taxes. Trust me; the Panama Papers are embarrassing, but not to people that have no shame.

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