Today we are going to examine a curious phenomenon. Over the last 10 or so years we have seen a systematic highlighting and denigration (some would go as far as to call it persecution) of nations to determine their own taxation policies. Furthermore, in this area we have seen overwhelming pressure (some refer to it as blackmail) to destroy the sovereign decisions of countries.
One by one the dominos have fallen. It’s been a two prong attack all the way:
- Universal taxation
- Elimination of bank secrecy
This is a little known process that has been relentless and constant since the end of WWII. At that time, taxes were quite low and were only levied in certain countries for certain gains that were obtained inside of said country. Everything else was tax-exempt.
Today most countries tax almost everything multiple times and no, this is not a figment of our imagination; familiarize yourself with the taxes you are paying in your country (please do not take our word for it).
How did this happen? Researching history in this topic, we tend to find the spearhead of this initiative in the Organization for Economic Cooperation and Development ( OECD ).
Elimination of bank secrecy
This is a topic that is quite recent and most people are familiar with it, albeit they sit on the wrong side of the fence. As we explained in our article This Is The End, bank secrecy is effectively dead anywhere in the world. And again, if we study the history of this process, we will notice that the spearhead of this initiative is the OECD.
If we study the timelines of these two processes it becomes clear that a significant acceleration occurred in the late 70’s / early 80’s, reaching its apex in 2014. And the question is why? Why the sudden pressure to rob anybody no matter where in the world this person may live? Answer: bankrupt governments.
It so happens that the commencement of this sudden pressure coincides with the onset of frequent world-wide economic debacles that have become endemic by now. And if we dig some more, we will notice that before the 60’s this was a non-event. And so, what did happen in the 60’s that matured in the early 80’s that affected world-wide economy to this extreme? Answer: socialist policies. The “spend because we deserve it and be damned our income” moronic motto. The 60’s were the boom eras for socialist policies at the worldwide level. Many so-called western countries (as opposed to eastern ones as in communist ones) went as far as to actually have governments that called and labelled themselves openly and purposely as socialists. Take for example Canada and the government of Jean Pierre Trudeau (twice prime minister). There is a direct correlation between the economic debacle that socialist policies created and the insatiable thirst of governments for your money. Coincidence? Sure… if you say so…
As we mentioned before, if we inquire as to who (or which organization) spearheaded this effort to “standardize” taxes and eliminate bank secrecy, we find the OECD. Don’t you thing this deserves more scrutiny? We do.
The OECD is the direct descendant of the Organisation for European Economic Cooperation (OEEC) which was created to administer the Plan Marshall for the reconstruction of Europe after WWII. Then, we should ask who created the OEEC? Answer: the USA.
And who has controlled the OECD ever since?
Answer: the USA.
And what is OECD’s role? As per their website it is “to promote policies that will improve the economic and social well-being of people around the world.”
It is of course trivial to argue that taxing more instantaneously decreases productivity. Even the most traditional and conservative economists will acknowledge that much. And if taxing more decreases the economic well-being of people isn’t it obvious that it will also decrease its social wellbeing? Where would you rather be? In a rich country without social policies or in a poor country with social policies? This is, of course, a no brainer; a rhetoric question since without wealth to be distributed, any distribution of wealth is not possible (although this did not stop the communists from trying and we all know how well that experiment went).
And so the following key question arises: why would the USA pervert and twist the goal of an ejem… “international” organization to decrease world wealth levels through increased taxation?
To answer this question we need to take a look at what has been happening over the last 10 or so years. Who or what is the proverbial canary in the economic coal mine that are government finances? Answer: companies.
Pretty much every company on earth that failed to lobby their respective governments to obtain tax “relief” voted with their corporate feet if they could. They realized that they were being squeezed by greedy politicians. Hence, they simply packed and went to a different country with little or no corporate taxation. Of course, the USA could not allow this to happen. Such a source of revenue could not be replaced and the USA was desperate. How desperate? The USA is the fourth most indebted nation on earth, preceded only by Antigua and Barbuda, Singapore and Cabo Verde (see our Default Index ). USA is the only country in the world that has maxed-out all taxation subjects; they have nobody else to tax for any reason -see the table below- (Eritrea at least differentiates resident from non-resident income) Hence, the US pressured influenced the OECD to demonize and accuse countries of “tax competition” (i.e. freedom from taxation). Through these types of negative propaganda they ensured that “international pressure” would force such countries to raise taxes which they did. Of course, this was also a windfall for local politicians who suddenly found themselves flush with cash. Perfect! Win-win. This is, USA politicians win and local politicians win. Who loses? Well you and us, but who cares right? We don’t matter. At all.
The sad current state of affairs
Take a look at the table below (it was taken from Wikipedia “International Taxation” page). You will notice that there are very few countries left on earth with little or no taxes. Of those few, most are stamp-sized island or territories or they are artificially rich (such as oil producers). No “normal” country offers tax relief (or to be precise, not to be robbed by politicians). Companies have no place to run but they could still hide.
Hide and seek
Which is exactly what many companies did. The hid their profits from insatiable governments in the secure knowledge that their secrets would be protected by the secrecy laws of powerful countries such as Switzerland. This was not acceptable to the USA and so they proceeded to release their puppet a second time, this time persecuting and demonizing so-called “Tax Heavens” or as we call them “Freedom Fighters”. The end result was the document we talked about in the article This Is The End. Companies can no longer run and can no longer hide either. Check mate.
The usual suspects
And so we come to the end of this article pointing out that yet again a gang of a few thousand politicians in USA (i.e. the usual suspects) have managed to make life miserable and decrease the standards of living of about 6.7 Billion people (the world population minus the USA population). It is interesting to point out that the history of USA over the last 200 or so years has been characterized by a continuous escalation of aggression levels towards any and all countries. Is then a surprise that when things go wrong we raise and point fingers at the usual suspects? Is it then a surprise that almost any country in the world has massive amounts of population that outright hate the USA? Is it then a surprise that almost all countries in the world despise USA citizens unless they spend money and in so doing repair a microscopic portion of all the damage the USA has done in its history? Of course not.
But before we go, let’s be clear. It is not our intention to demonize the USA, only to put it in its rightful place: the accused in the tribunal of history. Lastly, we are not blind to several other countries that also deserve this appellation or are currently working hard to achieve it. Such is the nature of political evolution. However, at this junction, there is primarily one set of usual suspects and a widespread amount of misery. You do the math and assign blame as you see fit, we already did.
Note: please see the Glossary if you are unfamiliar with certain words.