Wealthy Americans Targeted by U.S. in Panama Tax-Fraud Probe

"Tax = bad" thinking is basically a core pillar of the American way of thinking, unfortunately.

Switzerland is a tax-heaven for the ultra wealthy. These individuals buy passports from countries with territorial or no tax at all. This way they can open bank accounts claiming to be tax residents in such countries, and avoid tax reporting to their true tax resident country. When the OECD designed the information exchange protocol they did learn about this phenomenon. It turns out that the implementation of CRS (common reporting standards) was actually different from country to country. The OECD negotiated each deal individually with all the different countries in the world. One of the very few features of AEOI (automatic exchange of information) in the CRS that Switzerland did not sign fully with the OECD, was the "enhanced" validation of the account holder citizenship. It was marked "optional" for Swiss banks to validate. [1] Switzerland has been a tax haven for so many years now (they invented the business, we could argue), that they don't care about the small fish anymore. They are all about the UHNW (ultra high net worth) individuals and families. Now, there is some interesting things to be noted for such individuals. Many centamillionaires and billionaires are tax residents in many countries. They own properties and businesses all across the world, which often needs you to have tax IDs in those countries, either as a natural person, as a corporation or both. It doesn't matter if the corporation, in such case, is a complicated and obfuscated entity because the bank reports the tax id of the significant owners, not regarding how many layers of corporate structures there are (except for exotic "non-incorporated" entities such as trusts, which also serve the purpose of reducing tax burdens or hiding away assets). Most tax systems across the world were designed for normal people who don't own stuff all around the world and are based upon the principle of worldwide taxation based on your "true" residence. Truth is many of these billionaires are not true only-residents of any country. They might be traveling around the world for many months each year, having multiple homes across the world. So, which should be their "true" tax resident country? Apart from the USA, which taxes Americans regardless of where they reside, most of the remaining countries of the world are pretty ambiguous about this dilemma and most importantly, they are unable to enforce taxation of the worldwide income, and in the end, in practice, people with multiple citizenships and permanent residencies just choose whichever is more convenient when making their invoices or opening their bank accounts. That's why Switzerland may score so high on the list. Almost all UHNW individuals have bank accounts in Switzerland because they open them with their most convenient passports and/or permanent residence cards, and they prefer to bank in Switzerland because they have better perks, better mobile apps, better account managers, they can get an AMEX black card guaranteed by their private banking account balance, and much more.

1: https://www.oecd.org/tax/automatic-exchange/crs-implementati...

Very interesting, thanks for the insight.

In BC we have numbered corporations, it's quite cheap to incorporate and very little info is made public.

To look up corporate records, you need to apply and get approval, pay $100 and some additional amount per record. Then it is an ancient batch CGI web app that gets you results some days later.

I've been meaning to build a corporate transparency site/non-profit. Some low price per record, but then the results are public on the site for anybody else that is interested.

Firstly inequality growth is mainly an American phenomenon, it's not really a factor in the developed world generally.

The problem is the Pickety/Zucman analysis didn't fully take into account taxes and transfers, so it overestimated 1%-er incomes and underestimated low wage earner benefits. Within the US, CHIP and Medicaid expansion have made a huge difference. After all it's hard to argue Medicaid expansion has no effect on inequality.

Another major area of anomaly is that the P/Z analysis assumed income from pass-through businesses was capital gains. It turns out, this includes a lot of doctors, lawyers, etc whose income comes form these kinds of business structures. That made it look like their income was capital gains from investments in businesses, where in fact it's really labour income. This is not a small discrepancy, there are a lot of these sorts of people and they earn a lot. Correct for these sorts of things and the inequality largely evaporates.

Anyway, it's a messy problem with a million details and there are still distortions in the economy that disproportionately benefit the wealthy and always have done.

I disagree tax evasion is such a big factor, it's a problem but a relatively constant one. I think the main problems are mostly structural distortions in the tax system that encourage passive incomes. Income from rents and inheritance are significant issues. The drastic rise in property prices across the developed world is a huge problem that disproportionately hurts low income groups.