Maxiavelli: Demagogy Tax Evasion and Tax Avoidance

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Politicians have run out of imagination. They have practically given birth to the ongoing economic crisis and now, since they don't know how to get us all out of it, they are desperately on a rich hunt. 

Last week, the European Union announced that "tax evasion" is costing the union €1 trillion (then it added the demagogic detail: more than it spent on health care in 2008). The MEPs immediately called for tax havens to be blacklisted - although they refuse to blacklist Hezbollah as a terror group. Ireland was called a tax haven. Bank secrecy is in peril. This populist anti-evasion measure was prompted by the news that some "Greek and French politicians hold secret Swiss bank accounts". 

We would like to refrain from mentioning the obvious fact that Mr Durão Barroso is already preparing his political future. We would also like to refrain ourselves from accusing MEPs of throwing sand at our eyes. And we would most certainly like to avoid accusing PM Cameron of demagogy...

A tax haven (a legacy from Ancient Greece) is a low tax jurisdiction created by politicians. Clients that have money in offshore accounts, do so because they wish to enjoy certain advantages (both financial and legal): privacy; low taxation (which differs from "no taxation"); easy access to deposits; protection against political and financial instability. Tax havens are perfectly legal. 

Tax evasion is escaping one's duty, or responsibility, to pay taxes; and it falls into the category of money laundry.
Tax avoidance is dodging taxation (in one's native country), through legal dispositions; meaning that an individual/entity will pay less taxes than a common citizen, but will pay them nevertheless. 
This being said, when politicians mix an illegal concept with an legal one; and play with such words (knowing well that most of the electorate can't tell the difference between tax evasion and avoidance) they simply pretend to be doing something, while certainly avoiding more pressing issues - e.g. ravaging unemployment rates; Islamic terrorist activity (ranging from funding, recruiting, to terror acts) in European territory; the rise of the far right; reform of the Welfare State; passing gay marriage laws without direct popular vote, etc. 

Mr Barroso and his fellow Euro-politicians claim they want to tackle tax evasion: are they actually confessing that prostitution, drug and arms dealing, and alike will finally be taxed? Are they confessing that they actually know who and where these people are and, that there is political will to go after them at last? 
If the EU is not speaking of these tax evaders; then it must be speaking of those lawmakers whose wealth is deposited in tax havens and, contrary to what the law says, forgot to declare those "secret" accounts when they began serving in the public sector. But going after companies that make a proper use of the law (a law made by politicians) and abide by it; going after countries that earn their income, and develop themselves, by being fiscally attractive is simply nonsensical. 

If politicians want to address the tax issue they will need to sift evasion from avoidance. 
If they wish to attack evaders then they will have to start by demanding total fiscal transparency from all politicians and public servants first, as a sign of good will. Then move on to the rest of the lot (panderers and drug dealers included)...are they politically prepared for it? 

Comments

  1. Rich hunt? Politicians do not hunt the rich enough! They have to pay their fair share of the bill cause they are not more then the rest of us! Tax havens may be legal but they are immoral, Max you have to agree with us!

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    1. Hi Celia :D!

      Would you care to elaborate on why should the rich be hunted? I don't think that the rich, in general, see themselves as being more than "the rest of us" and they DO pay their share of the bill as per the law.

      No, darling, I do not have to agree with you that tax havens are immoral; because they are not - especially when we are dealing with the private sector.
      Now, public servants should be totally transparent and declare their wealth deposited in safe havens - wouldn't you agree?

      Celia, thank you so much for your comment :D. Always a pleasure.

      Cheers

      Delete
  2. If they were imaginative, they would not be politicians. Only wheeler dealers can be politicians.

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    1. Hi Rummy :D!

      LOL LOL LOL *nodding*...

      Rummy, thank you for the good laugh :D.

      Cheers

      Delete
  3. I guess my feelers are a bit mixed on this. People generally are happy to live under the Monster State and enjoy the benefits, but want someone else to pay. Which tax moralizer would not choose to move his assets to a safe haven if it increased his net annual income by 40%? In our country, the poor are among the tax cheats, preferring to work for cash only and report no income, even though a payroll tax and social security contributions are due. They also tend to collect welfare benefits on the side. But I suppose we can argue that only the rich cheaters should be publicly flogged?

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    1. Hi Looney :D!

      You make an excellent point! That is exactly it. They are hunting the rich because it is politically becoming to do so at this point; while the real tax evaders not only get away with it but also suck the government dry...in the name of equality; HA!

      I always say that the poor should pay taxes (even if they would contribute with one euro per month only): not making them contribute sends the wrong message and teaches them how to be beggars. It's unethical.

      Looney, thank you ever so much for your brilliant input :D.

      Cheers

      Delete
  4. Olá Max!

    I read Durão Barroso's speech: what does he mean by "illegal evasion" and "unacceptable fraud"? Did he even bother to review his speech? I don't think he did...
    In that same speech he suggests shaking down the richer in order to pay the EU's energetic plan (costing exactly €1Tn)! This is ludicrous: the same people who probably sponsor his (and their) political career!

    Max, these politicians don't even listen to themselves anymore: é vergonhoso!!

    Great job, girl!

    Tchau

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    1. Girlfriend, Lenny Hannah had already addressed this last week at Etnias and we all laughed at it! Apparently, the EU Commission seems to believe that there is legal evasion and acceptable fraud; the question is of which kind and done by whom?

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    2. Olá Celeste :D!

      Right? I asked myself and others the same question. What is more shocking is that most journalists didn't even bother to ask what he meant by these terms *nodding*. Did they even bother to read the whole speech?

      You are right, he IS proposing a shake down - how scandalous is that?

      Thanks, darling *bowing*.

      Celeste, thank you so much for your fab input :D.

      Cheers

      Delete
  5. "If politicians want to address the tax issue they will need to sift evasion from avoidance.
    If they wish to attack evaders then they will have to start by demanding total fiscal transparency from all politicians and public servants first, as a sign of good will. Then move on to the rest of the lot (panderers and drug dealers included)...are they politically prepared for it?"

    They will never be prepared for it cause the avoiders and evaders pay for their campaigns, Max!! Plus, they use the services provided by the panderers, know what I'm sayin'? ;-)

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    1. Hi Adam :D!

      lol Yes, I know what you are saying *nodding*...

      Thank you so much for your fab input :D.

      Cheers

      Delete
  6. AHAHAHAHAHAHA...how low can you go? Politicians make me sick! They want us to believe that they are going after themselves? Yes, cause they are the biggest tax evaders on earth! Celeste spoke of Mayor Isaltino, last week if I am not mistaken, who knew that politicians had to report their wealth in both national and international bank accounts yet he didn't: of course, now he is in jail; but how much money did he make in interests and savings (by not paying taxes in Portugal) since the 90's? Yeah...
    Shabbat Shalom, Max!

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    1. Hi Ana :D!

      Again, good questions, love. Thank you so much for your comment :D.

      Cheers

      Delete
  7. I so agree with your thoughts. To me tax is one subject which is beyond me as I find that every individual pays tax so many times in different names out of the same income whether its the income tax itself and then the wealth tax, service tax, taxes on items purchased, municipal tax. And that is why I believe nobody is completely avoiding tax. I believe there is no fundamental basis of it. Some may say it helps in nation building but I would love to look the other way.

    From an Indian perspective I would like to give is there is no consistency in the mechanism as such, say, 10 years back the tax rate was 30 percent and now it has come down to 10 percent and in certain cases completely nil, then where is the basis of the nation building idea.

    Yes and you are very right that for those people who are so concerned about tax havens, I believe, as you rightly said is check their own deposits first before hounding other fellow citizens. It would be mostly politicians and men of supreme influence who has more easier access to tax havens than the common man per se.

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    1. Hi Kalyan :D!

      *High five*!

      Very good point, K: every individual pays multiple taxes (under different names) from the same income. The web of taxes is so tight that it is nearly impossible to practise tax evasion or even avoidance.

      I agree with you: the foundation of the nation building concept through taxes is ambiguous, at best.

      "It would be mostly politicians and men of supreme influence who has more easier access to tax havens than the common man per se."

      True although we need to be careful when we define "common man" (I say this because many falling in this category have access to tax havens - especially when they manage to "save" at least $10,000).

      Kalyan, thank you ever so much for your outstanding comment :D. Very good points indeed.

      Cheers

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  8. This is really a helpful article regarding Tax Evasion. Thanks.

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    1. Hello TLC :D!

      This is a post about Tax evasion and avoidance (two different things). You're most welcome.
      And thanks for having left a comment :D.

      Cheers

      Delete

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