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Epic Battle of the Tax HavensNowadays there is a slurry of websites (many with dubious origins and many others government-paid) that claim for so-called "tax justice" and for people to pay "their fair share" and for new "though" prosecutorial policies for these criminal tax evaders. This mess of websites is also accompanied by the usual do-good understand-nothing pseudo-socialistic useful idiots that always pop-up like mushrooms after the rain. They all demand that taxpayers pay to "end world hunger" or "provide vaccinations" for the world or this or that ultra-noble gesture.

On top of that, we have all those fearless idiots (most of the time also paid by governments) who have nothing better to do than to waste their time estimating quantities of money in Tax Havens while being paid from your pocket (this is, through taxes you pay).

Lastly, we have organizations of so-called journalists who spend their time chasing names and their respective quantities of money deposited in Tax Havens.

It all seems gruesome and … well… un-patriotic.

Rubbish!

All of this information is propaganda, with the exception of the fact that Tax Havens do indeed exist and that people do indeed use them to prevent their hard earned money from being stolen by the government. The rest? The rest is propaganda (as we said before); no, it's not marketing or public relations (these have positive connotations). This is propaganda plain and simple; like the USSR used to have or even when Hitler took over Germany and appointed his very own Minister of Propaganda. It is nothing but brainwashing disinformation specifically designed to accomplish two things:

Rob as much money from everybody

To do so while appearing to be on the voter's side

Misdirect public attention from the insane amounts of money that governments are borrowing and printing.

THE NUMBERS

Let's begin by placing some numbers into context, so that you may have a better idea of what it is that we are talking about. There are no reliable figures as to how much money is deposited into Tax Havens, but a credible number is about 8 Trillion USD. The current World Debt is about 100 Trillion USD. The formal US debt is about 17 Trillion USD, if we add its "off-balance-sheet" liabilities (i.e. stuff that politicians promised and people are owned) we have about 70 Trillion USD and if we add all the debts from any source and for any reason that the US government owns; its Consolidated Debt we reach the staggering number of about 186 Trillion USD. From this point, we can only guess what may the entire World-Wide Consolidated Debt may be, but we estimate its order of magnitude to be around 500 Trillion USD. And so that our detractors won't call us names, we haven't included in these numbers all the bank assets that have pseudo-government guarantees, which mean that as soon as the next economic debacle hits, they will be added to the public debt (these numbers are not chicken feed since they oscillate between 200% to 1200% of GDP!!!).

The following graph will provide a better perspective.

Tax Havens Comparative Data

We are throwing numbers left, right and center in here but they mean nothing to you. That's correct. Allow us to give provide some extra perspectives.

On trillion USD would pay for twice the amount of the Canadian total government debt and four times the Argentinian one. You only need about 50 Billion USD to end world hunger, so with 1 Trillion, you could end it 20 times over! Or the salary of all the teachers in the world for about one year. Or the price to vaccinate every person on the planet for all common vaccinable diseases 10 times over. Or the amount of money necessary to provide drinking water and basic sanitation for the entire world, 4 times over.

THE IMPLICATIONS

Assuming that the total world-wide consolidated debt is indeed in the order of 500 Trillion USD, this would mean the government imposed a debt of about 69,500 USD for every person (male, female, child, adult) on the planet. Every single one of those 7.2 billion people in the planet owes 64,500 USD.

A reasonable question would then be, how much does people owe because of the money in Tax Havens? Let's see, zero USD divided by 7.2 billion people is: ZERO!

Now compare these two numbers: 69,500 versus ZERO USD.

Which one would you prefer to have as debt?

That's right. The fact that there are 8 Trillion USD deposited in Tax Havens imposes exactly ZERO debt burden to you.

THE GROWTH

Nobody really knows how fast the formal world debt is growing, but reasonable assumptions indicate that it is about 2.5% per year (the 10 year bond yield). This means that as a minimum government debt increases by 2.5% per year; this is without counting new debt issues, printing and inflation. So, 2.5% of 500 Trillion is about 1750 USD of new debt added every year to every person in the planet (all 7.2 billion of us).

How much does the money in Tax Havens grow per year? Let's also assume 2.5 %. And so 2.5% of 8 Trillion is about 2.7 USD of profit that are not added as new debt for every person on the planet every year. This is, ZERO debt.

Again, let's compare these numbers: 1750 USD versus ZERO USD.

Which one would you prefer to have as debt growth?

THE TAXATION RATIONALE

Of course, the problem (according to those useful idiots that we mentioned at the beginning of the article) is that those 8 Trillion USD in Tax Havens are not paying taxes. Fair enough, let's do the calculation; 8 Trillion USD at 2.5 % ROI is about 60 billion. Now, let's compare this with total tax revenue worldwide which is about 17% of GDP or 10 Trillion USD (using a very conservative estimate). And so, we have 60 billion and 10 trillion; this is, tax lost to Tax Havens is about 0.6% of all tax revenue or 8.33 USD for every person on the planet.

Now let's compare this number 8.33 USD with 1759 USD. Notice the difference?

The revenue lost to people for lack of taxation is about 8.3 USD per year. The debt added to every person on the planet due to government indebtment is 1759 USD per year. Let's see this again:

Money lost to you: 8.3 USD

Money added to your debt: 1759 USD

Notice the difference? Yes; it is "only" about 212 times bigger.

And so, those people that cynically claim that not being able to tax money in Tax Havens is "unfair", conveniently forget that every year, governments add 1759 USD of debt to us whether we like it or not!

But no! claim these people. That's not fair. Everybody has to pay taxes except those who place their money in Tax Havens. Well, that's right; the problem is that nobody should be taxed to begin with, not that some are not. The unfairness is backwards. What's unfair is that almost all people are forced to pay taxes whether they like it or not; whether we have valid social contracts or not, which we don't have (see Social Contracts Are A Scam).

The problem is that while governments are using Tax Havens issues as disinformation and propaganda on one hand, they are robbing you blind with the other.

THE DAMAGE

Well… think of the poor exclaim the defenders. Think of all the good that we could do with all those extra 60 billion. Think of all the lives we could save.

And sure enough, theoretically speaking, it is true. However, before we make a decision, we would like to look at the big picture.

First at all, we absolutely, positively, without a shadow of a doubt know that even if governments get their greedy hands on those extra 60 billion they won't solve any of the world problems. How do we know this? Because so far they have failed to do so over the last 50 or so years. They failed miserably when they were flush with money and now, that they are in debt up to our eyebrows, what makes you believe that they will use this money to serve the people?

No, those extra taxes will simply disappear into government coffers never to be seen again.

And so the real choice is as follow: we either get those extra billions the governments who will spend them in boondoggles or, we leave them where they are with the reasonable expectation that eventually they will become capital to be used in productive processes which benefit everybody. Hummmm…. We don't think that's an ethical or moral dilemma. Actually, it's more of a no-brainer.

Note: please see the Glossary if you are unfamiliar with certain words.

Continue to Tax Havens: Liberty's Last Bastion - Part 2

 

 

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