[Plura-list] How to cheat on your taxes
doctorow at craphound.com
Sun Jun 20 12:50:42 EDT 2021
* How to cheat on your taxes: The rich are different from you and me.
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👨🏻🔧 How to cheat on your taxes
Some things are hard to understand because they're complicated, but when
it comes to finance - and finance crimes - we enter the real of things
that are complicated so they'll be hard to understand.
The Propublica Secret IRS Files leaks reveal the wealthy pay
infinitesimal amounts of tax and the ultra-rich often pay no tax at all.
Propublica is careful to note that all of this is legal - that it's how
the system is supposed to work.
But that's not the whole story. A string of leaks from high-powered
tax-evasion specialists have revealed that the richest people of every
nation, up to prime ministers and "national treasures" avail themselves
of fraudulent accounting to duck tax.
From the Paradise Papers to the Panama Papers to Luxleaks to Swissleaks
and beyond, we have a wealth of evidence that many of the "legal"
deductions the super-rich deploy are actually grounded in accounting frauds.
Even when there's no fraud, some tactics are in such bad faith, reliant
on such absurd readings of the law that they're outlawed once they're
discoveredThis comes in up Disney heiress Abigail Disney's frank account
of the workings of dynastic wealth.
"My grandfather Roy O. Disney...was so determined to prevent the
government from taking any of the money he wanted to leave to his family
that...what he did back then was so effective that most of it is illegal
In the fall of 2020, a consortium of journalists reported out the Jersey
Offshore leaks, a collection of 350,000 docs from an especially dirty
trust company called La Hougue, on the British Channel Isle of Jersey, a
The Jersey Offshore leaks had the misfortune to be published amid a
pandemic, a once-in-a-generation antiracist uprising, a string of armed
far-right assaults on US state-houses and a critical election, so the
reporting barely registered, despite its significance.
But it's worth revisiting those leaks, especially in light of the debate
that the Secret IRS Files has provoked about the morality and legality
of dynastic wealth preservation and the bizarre, complicated and
hard-to-understand tactics deployed by tax evasion experts.
Last January, Mother Jones published an analysis of a key memo from La
Hougue, in which Calyn Shaw and Sam Eifling worked with tax experts to
analyze 11 tactics La Hougue advised their clients to employ.
These "11 ways" are definitely in the "complicated so they'll be hard to
understand" category, but at root, they all have a simple, common
mechanism: La Hougue opens a secret account in a tax-haven for you and
funnels money into it.
But like the conjuror who has 11 tricks that all rely on the same
sleight, La Hogue has 11 different pretenses that are used to obscure
the fraud and slide it under the noses of underfunded, overworked tax
I. Consultancy: secretly incorporate a fake offshore "consultancy." Bill
your onshore business for "consulting" and write it off as a "business
expense." The money goes into your consultancy's offshore, tax-free bank
account, which you secretly control.
II. Expenses: Secretly create an offshore account. Pay money into it
that you record as a "travel expense" or "gift" or "misc expense." Keep
the payments under the $10,000 threshold for formal reporting.
III. Metrocab: Buy stock options in a money-losing British taxi company
called Metrocab that La Hougue secretly controls. La Hougue secretly
funnels the money into your secret offshore account.
IV. Los Cabos: Fake an investment in a 65-acre property in Baja
California that La Hougue secretly owns. They send you fake docs
claiming you lost all your money. The money you send them actually goes
into your secret offshore account.
V. Danehill Currency Fund: Borrow money from a company that La Hougue
secretly owns and invest it in a "currency fund" La Hougue secretly
runs. They fix it so your "investment" loses money (on paper) but
actually all the money goes into your secret offshore account.
VI. Bad loans: Make "loans" to businesses secretly controlled by La
Hougue. These loans are not repaid so you can write them off, but
actually La Hougue just shovels the money into your offshore account.
VII. Mortgage default: Remortgage a property you own to a lender
secretly controlled by La Hougue, then default and let La Hougue
foreclose. La Hougue secretly transfers title to your offshore company.
VIII. Offshore property: Sell a property at a discount to an offshore
buyer (really your offshore company). The discount is due to a contract
that requires you be allowed to occupy the property for a month/year.
You pay lower tax on the sale and the title is moved offshore.
IX. Redirecting money: If someone owes you money, get them to send it to
your offshore company and just don't declare the income.
X. Made-up penalty: When you sell a property, La Hougue forges a
contract with your offshore company giving it the right to buy the
property, with a penalty if you don't sell it to them. You send some of
the sale money to your company as a penalty and don't pay taxes on it.
XI. Fake offshore investment: Sell 49% of your onshore business to an
offshore company you secretly own or control. You don't pay taxes on 49%
of your onshore earnings or the eventual sale of the business.
Those are the 11 ways, and as you can see, once you cut through all the
performative complexity, they're all just obvious frauds. In fact, it
seems the La Hougue partner who came up with these got bored and started
Parts of this read like a lazy D&D module, where you enter a series of
nearly identical rooms and fight nearly identical monsters for nearly
identical rewards - it's a kind of soporific wickedness, what Dana
Claire calls the "shield of boringness."
La Hougue was never prosecuted for any of this and never will be. They
shut down in 2007.
But that doesn't mean that these scams were consigned to the dustbin of
fraud history - far from it! La Hougue's principles decamped to Panama
and formed a new "consultancy" there.
The tissue-thin lies of the tax fraud and money-laundering industries
are themselves very dull, but what is incredibly interesting is how hard
it seems to be for the world's tax authorities to pierce them.
The amount of political pressure not to look to hard at this stuff must
be prodigious indeed.
👨🏻🔧 This day in history
#15yrsago Life among the homeless bloggers
#5yrsago Judenstaat: an alternate history in which a Jewish state is
created in east Germany in 1948
#5yrsago Gun control is a great idea, terrorist watchlists are bullshit
#5yrsago Russian bill mandates backdoors in all communications apps
#5yrsago Cleveland: “First Amendment zones” will fence protesters far
away from RNC
#1yrago Yahoo is a deadbeat billionaire zombie
#1yrago The politicization of K-pop stans
Today's top sources: Sam Eifling (https://twitter.com/SamEifling).
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Beacon Press 2022
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