Wednesday, April 6, 2016 3:55 PM

Subject: Another Excuse for Uncle Sam to Kill Privacy

Strategic Investment

A few years ago, multibillionaire Warren Buffett said that his secretary — who earns far less — was in a higher income-tax bracket than he was.

It’s been known for years that our tax system rewards those with the means, at the expense of everyone else. Of course, this isn’t how it’s supposed to be. If you ask the IRS, they would tell you that we have a so-called “progressive” tax system. In other words, you end up in a higher tax bracket as your income climbs.

In practice, though, that’s not how it works.

For example, California is known for its high tax rate. But what most people don’t know is that many highly-paid actors are paid out directly to their own company. This allows an accountant to go in and change the nature of the income the actor is making … so as to avoid the really high income-tax rate. For example, some actors may choose to receive income in a way that isn’t subject to payroll tax (since self-employed people have to pay twice as much in this tax).

This is something that the IRS certainly knows. In a report issued last year, the IRS found that once you pass the top 1%, you begin paying lower taxes. Here is a chart showing this very thing:

The globe’s richest people have trillions of dollars sheltered in offshore accounts that their governments know nothing about. These tax shelters are used in a variety of ways, but with one main goal: to help someone avoid paying higher taxes than they otherwise would.

Now, before I go on, realize that I believe people should not pay one penny more in taxes than they need to. But when the tactics being employed are illegal, that’s where I draw the line.

So I don’t necessarily feel bad for anyone who was implicated in the biggest information leak we have ever seen. It’s known as the Panama Papers, and it details some of the most highly-valued offshore holdings in the world … some of which are certainly used illegally.

This leak holds information on 214,000 offshore companies and implicates some very powerful people around the world: people like Vladimir Putin, the king of Saudi Arabia and many more.

Over the last two days, governments have carried out raids to get even more information. Swiss police just raided the offices of the European soccer body UEFA today. And RBC Bank has started what will surely be a long investigation to determine what ties it has to these offshore accounts.

Even the prime minister of Iceland was forced to step down after he was accused of concealing millions in family assets.

To be sure, this is all just getting started. There are over 11.5 million records to go through. And as news organizations examine everything more closely, expect more and more names to be implicated.

We could easily see CEOs step down, and we’re even more likely to see Congress try to “fix” the situation by making it harder to hide money.

This, of course, affects us all.

Pretty soon, the government will want to know where every single dollar we spend goes. And while Uncle Sam may say, “Hey, we’re trying to avoid these tax loopholes!” … we know the reality: It’s just another way to get power over us all.

We’ve already seen oversight increase in the name of “terrorism.” What comes next could get downright draconian.

kommonsentsjane