Don’t let redistribution profiteers raise your expectations. In offshore centers there are no shining treasures, only documents.

With relation to Panama, the Mossack Fonseca affair and offshore centers in general how many articles do not begin with something like “The wealthy conceal their cash”?

That gives the impression of an Ali Baba cave where fabulous unused treasuries are stored and that if only these could be recovered from the 41 thieves everyone would live happily ever after.

What devious bullshit! What exists in those offshore caves is a load of documents that gives the holders of these the ownership of a lot of assets, almost all of these to be found onshore... for instance stocks, property in London or municipal infrastructure bonds.

Granted, the ownership of some of those assets is incorrect, since in not so few cases they should belong to the governments… but that is another issue that has little to do with the assets as such.

And many of those assets are the result of loopholes… but who can throw the first stone holding that using loopholes is an odious behavior.

If you hate loopholes, I do, fight for their removal, by for instance making tax laws simpler, better and fairer.

But in the same vein we have corporations who, egged on by smart tax-lawyers, intensely exploit the opportunities loopholes provide, let us not forget that on the opposite side, we most often find redistribution profiteers waiting to lay their hands on new business opportunities.

For instance if we want to redistribute wealth and income, the most efficient way would be through a Universal Basic Income scheme, at a cost of 2 percent tops, but that leaves many of the redistributes asking "what’s in it for me?"... and so they oppose it.

If for instance we imposed a big carbon tax and distributed its revenues equally to all as a part of Universal Basic Income then we would align beautifully the fight against inequality and climate change, but a lot of the mercenary soldiers in the wars against climate change and inequality, would also ask… what’s in it for us?

Profiteers surround all wars, no matter the cause. It is impossible to avoid them, but let us at least try to point out their theoretical existence.

And please when I refer to “profiteers” I do not only speak of those who collect their profits in cash. Much much worse are those demagogues and populists who collect their profits in political power… like the late Hugo Chavez did.

PS. An interesting question is what represents more money deposited in offshore centers: that from tax fraud and evasion or that from stealing tax revenues?

My tax paradise (Nothing as powerful against tax havens as tax heavens)

My tax paradise is not, as some could think, a country where there are no taxes paid, but a country with a just, transparent and efficient tax system which, without weakening the citizen, allows for the fiscal revenue necessary for the government to undertake what the citizen considers it should undertake on their behalf… and nothing more. 

Currently such a fiscal paradise does not exist anywhere. In fact what dominates in the world is the existence of real Kafkaesque tax infernos. Countries capable of transforming themselves into tax paradises have all to gain. 

My tax paradise would be governed by the following two principles: 

1. Every person has the inalienable right to contribute to his country by the payment of taxes, no matter how poor he is. It is also unacceptable that citizens can be odiously divided by interested politicians and bureaucrats, in those paying and those not paying taxes.

2. The state must not receive any income other than those taxes paid directly by the citizens in their own name. It should be an inalienable right of citizens to have their governments work exclusively for them, without patrons or other interested parties, introducing confusion into such relation.

In this respect, in my tax paradise, any person who receives a single dollar in income, for any reason or from any source, pays taxes. The tax rate, progressive of course, could for example be between 10 and 49 percent. Never should the government be able to get hold of the largest portion of the income of any citizen, no matter how wealthy that citizen might be.

Companies would not be taxed at all, because their function is to create jobs and increase the taxable income of the citizens, something they can do much better without any distortions. Of course, companies would have to withhold and pay taxes on dividends paid to those who are not fiscally domiciled in the country.

All other revenue that may enter the state, such as the net oil revenues (Venezuela) and net import duties, should be distributed directly to citizens, in the extent that macroeconomic realities so permit, and will become part of their taxable income.

The tax revenues collected by the central state should be automatically distributed on a highly decentralized basis, which in our case (Venezuela) I visualize to be about 10 percent for the governorates and 40 percent to municipalities, 90 percent of these to be distributed based on population and 10 percent based on the territory. Municipalities may also collect their residential property taxes.

In cases of national emergency, and with the favorable vote of 80 percent of the Assembly, the National Assembly may also enact a tax on the value of financial assets up to a maximum of 1 percent per year, up to a maximum period of 3 years.

¿Could public services be privatized? Absolutely, but always allocated on the basis of minimizing user fees and not, as is usual, maximizing state revenues.

¿What about public debt? Not a penny more that 30 percent of GDP, and only long term debt.

I appreciate any suggestions you may have to help make even more paradisaical my tax paradise. 

Translated from Op-ed in El Universal

PS. Phrased in other words: Corporate taxes only dilute citizen's tax representation or... clearer yet... the corporations have hijacked the citizen's tax representation... to the delight of politicians.

PS. In order for the government to timely collect taxes on what derives from corporate profits, these profits, as shown on financial statements, should yearly be passed through to the shareholders, and the corporations, in order to assist the shareholders in the payment of those taxes, decree and pay some dividends.

PS. And of course, VAT and similar, beside being regressive do not give real representation, as there is not an identified citizen behind its payment.

PS. April 2016 "Panama Papers" Don't let redistribution agitation profiteers raise your expectations.

PS. Public borrowing capacity (or money printing seigniorage) is a valuable strategic asset that should not lightly be consumed or squandered.

Flashback: April 3, 1998 The taxes we have to pay! Daily Journal Please read it.

PS. Oh, how I dislike redistribution profiteers... let's diminish their franchise value with a Universal Basic Income