Sunday, 26 February 2012

Stick 'Em Up

On a flight from Miami to Nassau I had an aisle seat; the window seat was taken by a fridge freezer.  At least it was were clean, quiet, did not need the arm rests and had not drunk so much as to need trips to the lavatory.

Even better was that a number of other seats were similarly occupied by high priced electrical goods which together with their owners meant the usual scramble for the exit at the end of the flight did not take place. 

The reason for all this was that it paid the owners to fly the goods passenger from Miami, bought tax free, to avoid the local sales taxes in NassauNassau in The Bahamas is a tax haven but this did not mean zero taxes.  It meant very little taxation on income or accrued wealth but it did mean hefty sales taxes. 

This policy not only hit the tourists but all the middling and lower income people who had neither high pay nor wealth.  Yards from many houses of the rich were the shanties and lean-to’s of the poor.

Down the decades I have seen many and various ways and means of avoiding tax or the administrative burden of accounting.  In the 1940’s there was extensive barter, a good deal of pilfering and many ways and means of trying to beat the system. 

One of the more serious side effects in the 1950’s was not only creative accounting in business but providing facilities, expenses and services to employees in lieu of pay.  So a lot of money went into unproductive spending instead of renewal, development or modernising production methods or rewarding employees.

This went on into the 1970’s one way or another.  In the 1960’s and later I was certainly arranging my mortgages to minimise tax and car expenses and other “perks” became a significant part of real income.  The distortions across the economy became worse and worse.

Now one of my family in the USA is about to cross the State line to reduce the tax liabilities.  He is not alone, unseen and unnoticed a lot of others seem to be doing the same one way or another as State taxes bear down harder as the revenues shrink because of the property crisis and its effects on property tax.

So avoiding and evading taxes is not new, it has been going on since time immemorial.  It is possible that one of the many causes of the collapse of the Roman Empire may have been the shrinkage in its tax base arising from the increasing levels of poverty created by wars and Imperial demands and the concentration of the ownership of land.

Now it has all become worse with the almost industrialisation of tax avoidance and evasion.  Given that now finance is almost a primary economic function instead of tertiary because it operates on the economics of extraction together with such tax arrangements it may have gone beyond the point of no return. 

There is little hope for the 160 taxmen of Germany as they try to bring virtue to Greece.  Very likely they would do better to help sort out the developing mess in Germany.  Across the world sovereign states are finding that taxes are harder to get from those with the most incomes and wealth.

One of the interesting quirks in all this is the situation now in the USA.  The State of Delaware for some time has operated a tax policy favourable to the wealthy and corporations but other States are getting into the act. 

One is Wyoming and the capital, Cheyenne, has become a secrecy jurisdiction allegedly worse than that of Somalia.  There was once a TV series called “Cheyenne” in the 1950’s and 1960’s set in the Wild West days not long after the Civil War when these territories operated by survival of the fittest expressed in the law of the gun. 

It was every man for himself.  For a hundred or so years now Wyoming has had the rule of law and what passes for civilisation these days.  But it is all going, the Marshall, the Sheriff and the “goodies” have gone into derivatives trading and the “baddies” into Mergers and Acquisition. 

The earlier peoples, the Mescalero’s on the other hand have become personal financial advisers whilst the Cheyenne are running pension funds.

So make sure your Colt 45 is oiled and your Winchester rifle clean in the barrel.


  1. One innovative way which has now had the loophole closed, is for employers to pay their employees in golden crowns. The face value for tax purposes was £1. Actual value at the time was much much higher.

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