Structural studies of the global networks exposed in the Panama papers(doi.org)
doi.org
Structural studies of the global networks exposed in the Panama papers
https://doi.org/10.1007/s41109-020-00313-y
97 comments
It means corruption is a basic human behavior. Its a self generating phenomena, and is „natural“.
So there is no „illuminati“ to go after to solve this. Studies try and see how problems can be solved - if there was a single organizing entity like a mafia boss, it would be simpler to tackle the issue but there isn't, so its Marder than first expected.
As to tax evasion, id posit the question „so why are these people evading? Is it the law itself? Can they be otherwise somehow incentivized to invest in their Communities rather than evade? And how big is the contribution here? Is it worth pursuing?“
So there is no „illuminati“ to go after to solve this. Studies try and see how problems can be solved - if there was a single organizing entity like a mafia boss, it would be simpler to tackle the issue but there isn't, so its Marder than first expected.
As to tax evasion, id posit the question „so why are these people evading? Is it the law itself? Can they be otherwise somehow incentivized to invest in their Communities rather than evade? And how big is the contribution here? Is it worth pursuing?“
> Can they be otherwise somehow incentivized to invest in their Communities rather than evade? And how big is the contribution here? Is it worth pursuing
I like this question. It makes me wonder what society would look like if we had micro community councils that operated this way, where residents “donated” parts of their wealth and those donations gave them some sort of stake, naming right, or voting power in community projects.
I wonder if we’d get the same sort of donations we get by wealthy families to get hospital wards named after them etc.
I suppose it requires a shift in what we value as humans, perhaps we could work toward a society where the amount you’ve given away gives you the most social credit or prestige, rather than how much you’ve amassed. Is it too naive and childish to think this sort of society is possible and could be an improvement over the current one?
I like this question. It makes me wonder what society would look like if we had micro community councils that operated this way, where residents “donated” parts of their wealth and those donations gave them some sort of stake, naming right, or voting power in community projects.
I wonder if we’d get the same sort of donations we get by wealthy families to get hospital wards named after them etc.
I suppose it requires a shift in what we value as humans, perhaps we could work toward a society where the amount you’ve given away gives you the most social credit or prestige, rather than how much you’ve amassed. Is it too naive and childish to think this sort of society is possible and could be an improvement over the current one?
That society already exists in e.g. Nordic countries. If we look at Sweden, Finland etc, total tax revenues as percentage of GDP are 48-54%. In USA, they are 24.3%.
So here's a smaller community where the majority is fine with high taxation in exchange for freely available health care, higher education etc.
Family funds exist here (e.g. Novo Nordisk is 25% owned by a humanitarian fund, Mærsk) but are less important than US.
So here's a smaller community where the majority is fine with high taxation in exchange for freely available health care, higher education etc.
Family funds exist here (e.g. Novo Nordisk is 25% owned by a humanitarian fund, Mærsk) but are less important than US.
> That society already exists in e.g. Nordic countries.
Why IKEA’s profits are mostly tax free https://www.afr.com/policy/tax-and-super/why-ikea-s-profits-...
Legal loopholes make Sweden a tax haven https://www.dn.se/nyheter/sverige/legal-loopholes-make-swede...
Siem Offshore Fined NOK 5 Mln in Tax Evasion Case https://www.offshore-energy.biz/siem-offshore-fined-nok-5-ml...
the issue is less how much tax _individuals_ pay. Tax avoidance on behalf of individuals is tiny and absolute "small-fry". The biggest cheaters that can afford it on a massive scale are companies.
one of the biggest problems is that if you want to compete in a global market space you're kind of forced to use legal (but dirty) tricks (tax optimization such as transfer pricing etc). The strategy is always to squeeze the consumer end (e.g. the retail) and supply side (production/manufacture etc) and this is where you're losses are while you scoop the profits from the middle (a tax haven). It's cool to talk about Cayman and Switzerland in silly Hollywood movies but some of the biggest tax havens are actually the US (Nevada, New Mexico, etc), Luxembourg, Netherlands, UK ... as long as we don't clean up this rigged global financial system we shouldn't even consider discussing about whether the average Joe has been taxed enough.
There is a great book that links the emergence of this offshore industry with the dissolving of the empires (e.g. Gabon is laundering the money for the French elite in the same way as BVI, Caymans have been used by Brits) ...: "Treasure Islands: Tax Havens and the Men who Stole the World (2011) " https://en.wikipedia.org/wiki/Treasure_Islands:_Tax_Havens_a...
Even we clean up all our structures in the West there will be plenty of opportunity to move capital to Bahrain, Dubai or uhm ... Japan https://fsi.taxjustice.net/en/
Why IKEA’s profits are mostly tax free https://www.afr.com/policy/tax-and-super/why-ikea-s-profits-...
Legal loopholes make Sweden a tax haven https://www.dn.se/nyheter/sverige/legal-loopholes-make-swede...
Siem Offshore Fined NOK 5 Mln in Tax Evasion Case https://www.offshore-energy.biz/siem-offshore-fined-nok-5-ml...
the issue is less how much tax _individuals_ pay. Tax avoidance on behalf of individuals is tiny and absolute "small-fry". The biggest cheaters that can afford it on a massive scale are companies.
one of the biggest problems is that if you want to compete in a global market space you're kind of forced to use legal (but dirty) tricks (tax optimization such as transfer pricing etc). The strategy is always to squeeze the consumer end (e.g. the retail) and supply side (production/manufacture etc) and this is where you're losses are while you scoop the profits from the middle (a tax haven). It's cool to talk about Cayman and Switzerland in silly Hollywood movies but some of the biggest tax havens are actually the US (Nevada, New Mexico, etc), Luxembourg, Netherlands, UK ... as long as we don't clean up this rigged global financial system we shouldn't even consider discussing about whether the average Joe has been taxed enough.
There is a great book that links the emergence of this offshore industry with the dissolving of the empires (e.g. Gabon is laundering the money for the French elite in the same way as BVI, Caymans have been used by Brits) ...: "Treasure Islands: Tax Havens and the Men who Stole the World (2011) " https://en.wikipedia.org/wiki/Treasure_Islands:_Tax_Havens_a...
Even we clean up all our structures in the West there will be plenty of opportunity to move capital to Bahrain, Dubai or uhm ... Japan https://fsi.taxjustice.net/en/
> So here's a smaller community where the majority is fine with high taxation
Yes, but it's not the majority that runs offshore companies in Panama, but those rich enough that it makes sense for them to go through the trouble of setting offshore companies up.
And IMHO the problem is in simple psychology of how humans compare between themselves. We don't compare in absolute means, but relative to people around us. If you're a middle class and you pay the same taxes as everyone else around you, you might grumble a bit, but in the end you'll except it as a part of life, because, well, everybody does it. If you make a lot more money than others and thus have to pay a lot more taxes, you'll perceive it as an injustice, being punished by mediocrity for your success. And you'll have a much less of morale dilemma should you try avoid paying it.
Yes, but it's not the majority that runs offshore companies in Panama, but those rich enough that it makes sense for them to go through the trouble of setting offshore companies up.
And IMHO the problem is in simple psychology of how humans compare between themselves. We don't compare in absolute means, but relative to people around us. If you're a middle class and you pay the same taxes as everyone else around you, you might grumble a bit, but in the end you'll except it as a part of life, because, well, everybody does it. If you make a lot more money than others and thus have to pay a lot more taxes, you'll perceive it as an injustice, being punished by mediocrity for your success. And you'll have a much less of morale dilemma should you try avoid paying it.
You're missing out on the significant unemployment in countries like Sweden. There is significantly better free healthcare in Australia - which has an average tax rate of 23.6%.
The correlation of high taxes = better quality of life doesn't hold much strength when you consider that there are plenty of countries doing well without it, and plenty of countries with high taxes that have a poor quality of life.
The correlation of high taxes = better quality of life doesn't hold much strength when you consider that there are plenty of countries doing well without it, and plenty of countries with high taxes that have a poor quality of life.
There is extremely significant unemployment in the US as well. It's just not counted. The number of people in US prisons alone adds about 2% to the total unemployment rate. And abstracting a little from the endless and pointless arguments about whether work should be funded by taxation or by sales - and the correct answer there is it depends - imprisonment not alone removes productive people from society, but also remove other productive people to guard them. But of course, if you have private prisons, then the objective will always be to increase sales. For the same reason, paying surgeons by the operation is also a terrible idea.
I’m Australian and my personal income tax rate is not 24%, but 40%. What tax rate are you referring to —- corporate, gross personal, effective personal?
In terms of model healthcare, Australia is not the system you want. Our health system grossly underfunded and ineffective with lots of waste from years of private sector health insurance.
In terms of model healthcare, Australia is not the system you want. Our health system grossly underfunded and ineffective with lots of waste from years of private sector health insurance.
I specifically said average, because it’s important to note that the Swedish personal income tax rate starts at 32% with a tax free threshold of about AUD$3k.
Re: healthcare, you won’t realise how good you have it until you try to go to a Swedish hospital with a torn ACL only for a nurse to diagnose you with a cramp, direct you to take paracetamol and refuse to let you see a doctor. Or when you try to have a blood test done and realise it’s not a 24 hour turn around, but a 24 day turn around if you’re lucky with 1-2 years minimum to see a specialist.
Re: healthcare, you won’t realise how good you have it until you try to go to a Swedish hospital with a torn ACL only for a nurse to diagnose you with a cramp, direct you to take paracetamol and refuse to let you see a doctor. Or when you try to have a blood test done and realise it’s not a 24 hour turn around, but a 24 day turn around if you’re lucky with 1-2 years minimum to see a specialist.
Yeah but we need more than a few instances to draw general conclusions. Is there like, a study?
That's just a higher level of taxation (i.e. mandatory), not the donations (i.e. voluntary) in exchange for naming rights or direct influence which parent is talking about.
In practice people that object to the taxes just move away.
They have the resources to do so, but How many low tax, high status countries are there to live in? How many people are free from all community, familial relationships that moving abroad had no social costs?
For Scandinavians doing e.g. banking the UK has previously been a good option.
Some do, but changing countries is not that easy.
> So here's a smaller community where the majority is fine with high taxation
The higher taxation not come about because "people were fine with it". It was the consequence of a political and social momentum caused by the cold-war era where workers were able to extract concessions from the haves under the threat of a socialist revolution if they did not agree, in turn the result of historical proximity to the revolutionary movements in Europe in the 19th century as well as the geographical proximity to a powerful socialist state for the most part of the 20th century. This momentum is now slowly being eroded by the whole political spectrum on the right, paradoxically including what is left of the Scandinavian social democracies.
The welfare state will likely be a historical parenthesis between the laissez faire economy of the mid 18 hundreds and the new economy where the billionaires once again dictate the whole playing field. Unless a new situation arises where the haves once again willingly will agree to contribute towards funding a welfare state for some reason. I don't see it happening anytime soon however.
The higher taxation not come about because "people were fine with it". It was the consequence of a political and social momentum caused by the cold-war era where workers were able to extract concessions from the haves under the threat of a socialist revolution if they did not agree, in turn the result of historical proximity to the revolutionary movements in Europe in the 19th century as well as the geographical proximity to a powerful socialist state for the most part of the 20th century. This momentum is now slowly being eroded by the whole political spectrum on the right, paradoxically including what is left of the Scandinavian social democracies.
The welfare state will likely be a historical parenthesis between the laissez faire economy of the mid 18 hundreds and the new economy where the billionaires once again dictate the whole playing field. Unless a new situation arises where the haves once again willingly will agree to contribute towards funding a welfare state for some reason. I don't see it happening anytime soon however.
I think one answer is tax cuts for charity.
If I can give my tax money to someone of my choosing, I think it may incentivise people to feel better about where the money is going.
To be clear, not making your tax payments less, but rather choosing where it goes. Of course, if you have a network of nonprofits, this become a bit grey. In the USA I have gotten the impression that people do try to game the idea of nonprofits.
If I can give my tax money to someone of my choosing, I think it may incentivise people to feel better about where the money is going.
To be clear, not making your tax payments less, but rather choosing where it goes. Of course, if you have a network of nonprofits, this become a bit grey. In the USA I have gotten the impression that people do try to game the idea of nonprofits.
Taxes became a thing precisely because this model failed. The utopia of "common sense and decency" kicking in and ensuring public services are well funded is a false hope and does not work. Simply put, there is always a significant element in the populace that won't pay if they can get away with it, and making taxes optional just gives them an easy way to avoid contributing at all.
>I think one answer is tax cuts for charity.
>To be clear, not making your tax payments less, but rather choosing where it goes.
Giving to charities reduces your tax burden, at least in the US.
In fact, you can generally deduct up to half your income[0] based on charitable contributions.
Does that meet your desire to better direct your tax dollars?
[0] https://www.irs.gov/charities-non-profits/charitable-organiz...
>To be clear, not making your tax payments less, but rather choosing where it goes.
Giving to charities reduces your tax burden, at least in the US.
In fact, you can generally deduct up to half your income[0] based on charitable contributions.
Does that meet your desire to better direct your tax dollars?
[0] https://www.irs.gov/charities-non-profits/charitable-organiz...
This I think is pretty much exactly how I think it should be. Half sounds decent.
But... I don't live in the US. We pay tax and received no services in return.
But... I don't live in the US. We pay tax and received no services in return.
those donations gave them some sort of stake, naming right, or voting power in community projects.
You cannot forsee the possibility that the ability to purchase voting rights might result in another "natural" problem?
You cannot forsee the possibility that the ability to purchase voting rights might result in another "natural" problem?
> or voting power in community projects.
but then they get called lobbyists when this happens.
but then they get called lobbyists when this happens.
the issue with lobbying is that too many and too large benefits is effectively sold for very cheap by the politicians selling stuff which aren't really theirs to start with. For example,a huge development should be permitted not in exchange for small political contribution. Instead the community should get something sizeable in return - new park, road, school, significant number of low income rentals, etc.
> what society would look like if we had micro community councils that operated this way, where residents “donated” parts of their wealth and those donations gave them some sort of stake, naming right, or voting power in community projects.
... I think the challenge is if concrete power such as votes, etc, is given based on financial contribution, then, it's not a democratic process.
... I think the challenge is if concrete power such as votes, etc, is given based on financial contribution, then, it's not a democratic process.
Off shore safe havens exists because some sovereign authority has designated their domain as a "tax haven" and the usually very strict sovereigns of "big powers" are not sending their military to the said "off shore safe havens" to shut them down.
Opaque segments of the global financial networks enable Black Ops. No need to drag in Weishaupt and his worshipful brethren here, correct? So let's just discuss the "secret services" of the "big powers". Are they using the "tax havens"? I think the answer must be "Surely you jest, old boy!"
Opaque segments of the global financial networks enable Black Ops. No need to drag in Weishaupt and his worshipful brethren here, correct? So let's just discuss the "secret services" of the "big powers". Are they using the "tax havens"? I think the answer must be "Surely you jest, old boy!"
I don't know who Weishaupt is but that's a good point; it's probably in the interest of most major powers to have opaque segments of the global economy.
> It means corruption is a basic human behavior.
That is most certainly not what the study means. If you were going to extrapolate, you might be able to get away with corruption is basic rich people behavior, but even that is going way further than what the study is actually saying.
That is most certainly not what the study means. If you were going to extrapolate, you might be able to get away with corruption is basic rich people behavior, but even that is going way further than what the study is actually saying.
>That is most certainly not what the study means. If you were going to extrapolate, you might be able to get away with corruption is basic rich people behavior, but even that is going way further than what the study is actually saying.
Corruption is incredibly widespread globally across all demographics. It tends to show up the least in WEIRD places, and be most obvious in poorer countries, but it's everywhere and every level of society.
Corruption is incredibly widespread globally across all demographics. It tends to show up the least in WEIRD places, and be most obvious in poorer countries, but it's everywhere and every level of society.
> It tends to show up the least in WEIRD places
What do you mean by that?
What do you mean by that?
I'm not the OP, but to me the world "corruption" is a blanket term used to refer to the apparent or actual distortion of a system for personal gain.
Thus corruption can be found on any system, no matter the scale, and regardless of the shape and form of the gain that may be attained.
This definition implies that hypothetical cases such as a college professor using his right to park free of charge on campus to store his car collection, or a secretary using the company's printer to print out fliers, might surprise people who believe that corruption is the fruit of sinister morally and ethically empty sociopaths who are super wealthy and very powerful.
Thus corruption can be found on any system, no matter the scale, and regardless of the shape and form of the gain that may be attained.
This definition implies that hypothetical cases such as a college professor using his right to park free of charge on campus to store his car collection, or a secretary using the company's printer to print out fliers, might surprise people who believe that corruption is the fruit of sinister morally and ethically empty sociopaths who are super wealthy and very powerful.
More like "illuminati" emerge "naturally" from the "Free Market".
They're evading because taxation is based on income.
If it were based on expenditure, there'd be no avoiding.
If it were based on expenditure, there'd be no avoiding.
I don't understand. Mind to elaborate? Eli5?
>I don't understand. Mind to elaborate? Eli5?
Not OP, but I assume he/she means something like a consumption tax[0].
However, given that poorer people tend to spend more of their income than wealthier ones, unless such a tax is appropriately calibrated, it can be quite regressive.
[0] https://en.wikipedia.org/wiki/Consumption_tax
Not OP, but I assume he/she means something like a consumption tax[0].
However, given that poorer people tend to spend more of their income than wealthier ones, unless such a tax is appropriately calibrated, it can be quite regressive.
[0] https://en.wikipedia.org/wiki/Consumption_tax
A consumption tax can also be made progressive.
In a nutshell: Poor people stay poor because they can't save. That is why income tax is repressive - it guarantees economic stagnation, since nobody wants to work for the man.
Spending tax means that, no matter who you are, you will pay your taxes if you want to purchase something, whether its a commodity or product or service.
The rich will still be able to be rich - in fact, there will be more rich people - but they won't be encouraged to spend any of it without sharing it in the form of taxes.
Spending tax means that, no matter who you are, you will pay your taxes if you want to purchase something, whether its a commodity or product or service.
The rich will still be able to be rich - in fact, there will be more rich people - but they won't be encouraged to spend any of it without sharing it in the form of taxes.
That’s cute but the economy is based on spending. Governments want people with some money but not enough where they’ll start to think they can stay at home playing the stock market. If the majority did that, society would collapse.
Also a version of that already exists in most countries, in Europe you pay around 18-25% of VAT in every purchase you make but income taxes tend to apply only if you make X amount of money which effectively means poor people don’t pay income tax.
Also a version of that already exists in most countries, in Europe you pay around 18-25% of VAT in every purchase you make but income taxes tend to apply only if you make X amount of money which effectively means poor people don’t pay income tax.
>Governments want people with some money but not enough where they’ll start to think they can stay at home playing the stock market. If the majority did that, society would collapse.
People still need to eat and live their lives. They'll have more revenue for doing that if they don't automatically have to give half of it to government.
Taxing spending removes a repressive socio-economic influence on people among different classes of economic status.
Poor people stay poor because that way they don't have to give away half their income. This has a much bigger socio-economic impact than most middle-class taxpayers are willing to admit.
People still need to eat and live their lives. They'll have more revenue for doing that if they don't automatically have to give half of it to government.
Taxing spending removes a repressive socio-economic influence on people among different classes of economic status.
Poor people stay poor because that way they don't have to give away half their income. This has a much bigger socio-economic impact than most middle-class taxpayers are willing to admit.
In network science, it’s fairly common to take a graph of something and be able to apply techniques like neighbourhood analysis or clustering which then reveal something about the data. This comes up in all kinds of real world examples from social networks to music preferences etc. What the authors are saying (I think) is that they tried the same tricks on the Panama data and got nothing useful out of it. The standard graph techniques don’t explain anything useful about what’s going on. I would guess (from previous experience working on similar things at opencorporates.com a few years ago) that this is because these networks aren’t constructed according to the real world - instead they’re a response to specific tax rules. For example if you use a specific tax avoidance scheme like the Irish dog leg then the company structure will be defined by the laws of the countries involved. Another reason would be that intermediaries like company formation agents are likely to show connections where they don’t exist in reality. If I use the same company formation agent as say, Donald Trump, it doesn’t follow that we’re related financially. Finally the Panama papers were just about hiding assets in many cases, so you’ll have these chains of ownership going through as many countries as they could be bothered to work with. This is just to give law enforcement etc. a hard time. Again I wouldn’t expect graph analysis to make sense of that on its own. If anyone is interested, banks in the US are required to document their corporate structures so there’s good data available on their structures. It suffers from the same issues though - it’s hard to tell from looking at a graph of companies where the bad stuff is happening.
>What the authors are saying (I think) is that they tried the same tricks on the Panama data and got nothing useful out of it. The standard graph techniques don’t explain anything useful about what’s going on.
The impression I got was not that they found nothing useful, but that they didn't find broadly interconnected networks within the data.
If that's the case, it's likely that the transactions in the data aren't tightly linked.
Which is useful, in that it tells us that those involved in such activities are not a cabal of evil elites, rather they're disparate groups with little in common except their desire to avoid taxes/hide assets.
That conclusion certainly implies that addressing these activities will be more difficult as they are decentralized and widespread, but it's certainly not useless IMHO.
The impression I got was not that they found nothing useful, but that they didn't find broadly interconnected networks within the data.
If that's the case, it's likely that the transactions in the data aren't tightly linked.
Which is useful, in that it tells us that those involved in such activities are not a cabal of evil elites, rather they're disparate groups with little in common except their desire to avoid taxes/hide assets.
That conclusion certainly implies that addressing these activities will be more difficult as they are decentralized and widespread, but it's certainly not useless IMHO.
It just means that they didn’t find useful network structures with the specific network analysis methods they used and the specific networks that they constructed using the data.
It leaves room for tons of other network analysis and data analysis.
It leaves room for tons of other network analysis and data analysis.
> that they didn't find broadly interconnected networks within the data.
That seems to agree with what the parent said. It sounds to me like if a broadly interconnected network was found, that would be a failure on the part of the people trying to facilitate the tax avoidance schemes - the closer to homogenous noise the graph looks, the harder it is to trace. Based on that, I'd say that there's no utility in trying to prove the negative, i.e., that larger networks do not exist.
If the people hiding their assets actually did their job well, they would expect and hope that you (as an outside analyst) would come to exactly the conclusion that you have come to.
That seems to agree with what the parent said. It sounds to me like if a broadly interconnected network was found, that would be a failure on the part of the people trying to facilitate the tax avoidance schemes - the closer to homogenous noise the graph looks, the harder it is to trace. Based on that, I'd say that there's no utility in trying to prove the negative, i.e., that larger networks do not exist.
If the people hiding their assets actually did their job well, they would expect and hope that you (as an outside analyst) would come to exactly the conclusion that you have come to.
It means the corruption is spread far and wide, without a central group of 'authority'.
It means the author has to worry about car bombs from more than a single entity.
There are no lizard people. No New world order and no Illuminati. Disappointing because that makes it all much harder to solve and makes it that much harder to view humanity in a favourable light.
Humans are easy to view in a favorable light. Humanity, less so. Humans take individual actions that help themselves. Humanity forms networks of perverse incentives that harm others. If we build a network of perverse incentives, and catastrophe befalls us, an interesting thing happens: no one wants to lose in the time of loss. This is when you get revolutions, invasions, fascism threatening where the imaginary border lines are drawn. It's all merely loss aversion. Change is necessitated by material reality, in which the average person, fearing for their loss of wealth or for their loss of potential future life, are driven to extreme or violent actions. There needs to be one world currency, and it needs to be subject to entropy without human intervention (and something similar with material buildup and 'property'); we will kill ourselves otherwise as that which nourished us in the past is today's poison. Nothing is forever, why is wealth? Loss over time due to entropy as law needs to be more accounted for in our world economy as a whole. There is a level of individual wealth and capital advantage one may gain that literally destabilizes international peace (I'm looking at you global oil): why do we allow it? It's like nations have become lame date-show suitors to international oligarchs, offering missiles as flowers, and it's pathetic, and it's weak.
It means they ran a bunch of off the shelf graph theory algorithms and the results were confusing.
It means the authors were trained to plot degree distributions of any network they come across, and hey, here's another network, let's plot some degree distributions
Everything I've heard about the panama papers suggests that it's a massive scandal that exposes how the rich and powerful are systematically fucking over society. The sad truth is that even though it's been exposed, the scheme is too complex for most people to grasp. Hell they even made a movie about it and no one paid much attention.
>The sad truth is that even though it's been exposed, the scheme is too complex for most people to grasp.
As the paper's abstract says: "In recent history, the Panama Papers have comprised one of the largest and most influential leaks detailing information on offshore entities, company officers and financial (and legal) intermediaries, and has led to a global exposé of corruption and tax evasion. A systematic analysis of this information can provide valuable insights into the structure and properties of these entities and the relations between them. Network science can be applied as a scientific framework for understanding the structure of such relational, heterogeneous datasets at scale. In this article, we use an existing, relational version of the Panama Papers to selectively construct various networks, and then study the properties of the underlying system using well-defined analytical methods from network science, including degree properties, country assortativity analyses, connectivity and single-point network metrics like transitivity and density."
This is an attempt to make some sense out of this using the tools of Network Science[0].
[0] https://en.wikipedia.org/wiki/Network_science
As the paper's abstract says: "In recent history, the Panama Papers have comprised one of the largest and most influential leaks detailing information on offshore entities, company officers and financial (and legal) intermediaries, and has led to a global exposé of corruption and tax evasion. A systematic analysis of this information can provide valuable insights into the structure and properties of these entities and the relations between them. Network science can be applied as a scientific framework for understanding the structure of such relational, heterogeneous datasets at scale. In this article, we use an existing, relational version of the Panama Papers to selectively construct various networks, and then study the properties of the underlying system using well-defined analytical methods from network science, including degree properties, country assortativity analyses, connectivity and single-point network metrics like transitivity and density."
This is an attempt to make some sense out of this using the tools of Network Science[0].
[0] https://en.wikipedia.org/wiki/Network_science
The actual power of the wealthy is vastly overestimated. What matters is the extent to which that power is exercised. Most of us exert very little effort to nudge society in a direction we want it improve, leaving the few that do vulnerable and exposed. (and we put too little effort into handle the conflict that arises when we do.)
I disagree that people couldn't understand the panama papers, we don't because we don't try. People like J.C. Sharman spell it out for us what's going on.
http://www.internationalaffairs.org.au/australianoutlook/rea...
we just don't read it. I've got his book. I haven't read it. But in the time that I've had it I've watched multiple garbage sci fi series.
I disagree that people couldn't understand the panama papers, we don't because we don't try. People like J.C. Sharman spell it out for us what's going on.
http://www.internationalaffairs.org.au/australianoutlook/rea...
we just don't read it. I've got his book. I haven't read it. But in the time that I've had it I've watched multiple garbage sci fi series.
The movie was simplistic bullshit where every situation was nefarious broken people instead of the everyman that uses and would use these entity structures
Sure, non-wealthy people own stocks. But right now, the richest 10% of American households own 84% of the value of all stocks owned by Americans [1]. It is clear that the wealthy benefit massively from these structures and have much more use and access to them than the "everyman", who in the U.S. probably lives paycheck-to-paycheck. The fantasy that the "everyman" is this cowboy investor and broker is ridiculous and only makes sense if you define "everyman" as an upper middle class American who has a high-paying job and owns significant investments. Compared to the wealthy, most Americans see no benefit from these global networks of moving money around because they aren't rich enough to make the effort and investment worth doing, much less have the connections necessary to even access them.
[1] https://money.com/stock-ownership-10-percent-richest/
[1] https://money.com/stock-ownership-10-percent-richest/
But they absolutely will drive to the next county to get cheaper gas or lower property taxes and it is the same concept.
Eventually you get to level up to the place of tax deferral that is infinite. You can do it onshore you can do if offshore. It is only hubris for some people to think some governments of their own choosing should have a piece of that. We are talking about the distinctly non corrupt activities.
Eventually you get to level up to the place of tax deferral that is infinite. You can do it onshore you can do if offshore. It is only hubris for some people to think some governments of their own choosing should have a piece of that. We are talking about the distinctly non corrupt activities.
I think the actual best course of action in general is to deport the rich that cheat on taxes and let them go enjoy being rich in some other country, or in international waters. The idea that we should tolerate big parasites because they'd take their money elsewhere both undervalues everything else about a region and it's people that might keep them there and overestimates the value of being home to greedy wealth.
It's stupid to play in the race to the bottom of governing power versus concentrated wealth. It's something captured/self-interested regulators do, not honest ones.
It's stupid to play in the race to the bottom of governing power versus concentrated wealth. It's something captured/self-interested regulators do, not honest ones.
An infinite tax deferral would be too compliant to fit in your tax cheat rubric as deportation would have to a consequence of a criminal tax evasion charge and conviction in a court.
Revenue services are not worried with how much you pay them, they are only concerned with compliance.
Revenue services are not worried with how much you pay them, they are only concerned with compliance.
> It is only hubris for some people to think some governments of their own choosing should have a piece of that
It is not hubris. It is pragmatics. Moving to another county does not fully avoid contributing to the community where you live; you aren’t leaving the state, so state taxes still apply. The point is that rich people should pay their fair share of taxes and not be able to just buy their way out of it with fancy lawyers and accountants, thereby depriving governments of billions in taxes. This analogy just isn’t on the same order of magnitude.
However, I think our philosophies are too different for you to accept my argument because it rests on the premise that rich people should pay taxes, which I don’t think you believe. It seems to me that you believe that individuals can and should avoid contributing to their communities through taxation as much as they possibly can. No matter that this money is often used for social services and other non-profitable activities that help people in need.
I think the atomized, “I got mine” attitude meshes deeply with the “temporarily embarrassed millionaire” attitude that tries to justify the Panama Papers stuff as on the same order of magnitude as getting cheap gas in another county. The concept of community doesn’t exist in this mindset; only a group of dragons sitting on their hoards whose sole interactions with each other are business transactions exists. I hope that changes.
It is not hubris. It is pragmatics. Moving to another county does not fully avoid contributing to the community where you live; you aren’t leaving the state, so state taxes still apply. The point is that rich people should pay their fair share of taxes and not be able to just buy their way out of it with fancy lawyers and accountants, thereby depriving governments of billions in taxes. This analogy just isn’t on the same order of magnitude.
However, I think our philosophies are too different for you to accept my argument because it rests on the premise that rich people should pay taxes, which I don’t think you believe. It seems to me that you believe that individuals can and should avoid contributing to their communities through taxation as much as they possibly can. No matter that this money is often used for social services and other non-profitable activities that help people in need.
I think the atomized, “I got mine” attitude meshes deeply with the “temporarily embarrassed millionaire” attitude that tries to justify the Panama Papers stuff as on the same order of magnitude as getting cheap gas in another county. The concept of community doesn’t exist in this mindset; only a group of dragons sitting on their hoards whose sole interactions with each other are business transactions exists. I hope that changes.
As someone that knows exactly what the “fancy lawyers and accountants” do, I think your argument is just far too simplistic and I think you could never get an effective public policy change because you don’t know whats really going on in the implementation, you react to the results.
To me the argument is “I’m mad we arent getting hosed equally” and rationalizing a phantom role of the state as if the state’s revenues would really improve and as if they would fund that infrastructure properly and that the infrastructure really had a meaningful effect on that wealthy person’s ability to do business reliably - or even keep the area safe and productive via improved social services. To which I would say thats all overestimated, and the state’s revenue sources should be reevaluated.
To me the argument is “I’m mad we arent getting hosed equally” and rationalizing a phantom role of the state as if the state’s revenues would really improve and as if they would fund that infrastructure properly and that the infrastructure really had a meaningful effect on that wealthy person’s ability to do business reliably - or even keep the area safe and productive via improved social services. To which I would say thats all overestimated, and the state’s revenue sources should be reevaluated.
What was the movie called? Don't think I saw that.
The Laundromat
Available on Netflix https://www.netflix.com/title/80994011
troughway(1)
Accounting has a rich history going back approximately 7,000 years [0]. This decade will get an entry in that history as "and in the early 21th century, it became a matter of public record how rich people actually managed their money".
It might be easy to underestimate how tectonic papers like this are.
[0] https://en.wikipedia.org/wiki/History_of_accounting
It might be easy to underestimate how tectonic papers like this are.
[0] https://en.wikipedia.org/wiki/History_of_accounting
I haven't been following the fallout of the Panama Papers leak, but has anything concrete (and positive for us vanilla tax payers) actually come out of it? Or did the ultra wealthy simply move their tax evasion schemes to a different set of countries?
Just different agencies at the same countries.
Laws havent been reported to have changed, a few people had legal consequences, a few people had reputational consequences, most didnt because what they did may be misunderstood but not illegal
https://old.reddit.com/r/PanamaPapers/comments/4e7f1n/person... (last updated 2 years ago, so without more recent developments)
It should be mentioned that there are lots of non tax avoidance reasons to go offshore. The biggest ones are asset protection and incontestable estate succession.
IMHO, if your net worth is over about 250k (or lower if you have a high risk profile) your assets should probably be held in an offshore LLC, trust, or foundation. This makes them effectively untouchable by lawsuit, divorce proceedings, seizure, etc.
If you are concerned that your will provisions will be contested or that a lawsuit between siblings is likely when you die, offshore estate management also makes those things impossible.
Since in only costs 1-3 thousand US to set up effective offshore asset management, and maintaining it is 200-1200 a year, it's a small price to pay for peace of mind.
IMHO, if your net worth is over about 250k (or lower if you have a high risk profile) your assets should probably be held in an offshore LLC, trust, or foundation. This makes them effectively untouchable by lawsuit, divorce proceedings, seizure, etc.
If you are concerned that your will provisions will be contested or that a lawsuit between siblings is likely when you die, offshore estate management also makes those things impossible.
Since in only costs 1-3 thousand US to set up effective offshore asset management, and maintaining it is 200-1200 a year, it's a small price to pay for peace of mind.
Noting that transferring assets into Trust will often trigger a capital sales event (and tax), while potentially increasing asset holding costs (your home held by a Cook Islands trust may be subject to non-resident land taxes, for example, than many self-occupiers are exempt from) or life friction (I had a UK client who refused to work with me unless my main company was based in the UK, for example). Of course, these things are hugely jurisdictional - I would set the bar much higher than $250K net worth, but agree with your point.
This. Most people pissed off about various (legal) offshore structures do not even understand their utility. A little financial education goes a long way.
[deleted]
This feels very much like a case of when you have a hammer everything looks like a nail
Hey where can independent researchers obtain the Panama Papers? I don’t think people can be expected to simply “trust us guys.”
>Hey where can independent researchers obtain the Panama Papers? I don’t think people can be expected to simply “trust us guys.”
Footnote 5 of the paper in the submission provides a link to the data used. For your convenience, that link is: https://offshoreleaks.icij.org/pages/database
I look forward to reading your paper when it's complete.
Footnote 5 of the paper in the submission provides a link to the data used. For your convenience, that link is: https://offshoreleaks.icij.org/pages/database
I look forward to reading your paper when it's complete.
No I mean, the entire dataset. It's being jealously guarded by the "free" press.
Is it? Please explain which data is not included in the ICIJ database[0].
[0] https://offshoreleaks.icij.org/pages/database
[0] https://offshoreleaks.icij.org/pages/database
The Panama papers really only make sense in the context of multinationals operating from regimes with some degree of transparency, i.e. the West, Japan, Singapore etc..
'Most' of the problems are in regimes where everything is nicely hidden i.e. Dubai, Moscow, anywhere in China.
Why would anyone do banking in Dubai, where there are absolute Monarchs who can do whatever, whenever, with their money, finances information, when they can go to US/UK/EU and have full legal protections? Because 'no transparency'. And that's it. Billions of USD intended for Afghanistan investment end up in bank accounts there etc..
What we really need are the 'Dubai Papers'.
'Most' of the problems are in regimes where everything is nicely hidden i.e. Dubai, Moscow, anywhere in China.
Why would anyone do banking in Dubai, where there are absolute Monarchs who can do whatever, whenever, with their money, finances information, when they can go to US/UK/EU and have full legal protections? Because 'no transparency'. And that's it. Billions of USD intended for Afghanistan investment end up in bank accounts there etc..
What we really need are the 'Dubai Papers'.
I would expect people in Dubai, Moscow and China put their money in the WEST. How much money go to London every year? How much money go to Sydney? And Vancouver? Money will go to the so-called cities with transparency.
People in Russia and China put their money in the West for it to be safe from their own corrupt regime, otherwise, they don't want transparency.
And Dubai, definitely, is the place to keep dirty money.
If it can be cleaned, and someone has legit cover for their money, they can keep it in the West.
And Dubai, definitely, is the place to keep dirty money.
If it can be cleaned, and someone has legit cover for their money, they can keep it in the West.
I will not be so certain about it. There are a lot (a lot) corrupt money in London, Vancouver and other cities.
Actually I have to state what I believe: the only way to keep your corrupt money safe is to work with international institutes, bankers and layers in so called cities with transparency, such as London, Hong Kong, New York, Switzerland and so on. It is called money laundering. Keeping it in Dubai makes no sense. People may spend money in Dubai, but not keeping their wealth in Dubai.
There will always be offshore entities with strong rule of law (Cayman) because multinational companies need a neutral ground to settle disputes with competent judges without the whims of each company’s home base screwing it up.
That’s the most generous and ethical explanation for the continued support and existence of offshore judication. The unpopular reason is that offshore countries offer lower taxes and favorable regulation. As someone who believes in the smallest possible state and enjoys the benefits of offshore countries (as do Facebook, Google, and Apple which use a combination of the Netherlands, Ireland, Bermuda, and Cayman in complex corporate structures) I am sympathetic to this argument. Although my friends say I am a corporate stooge!
That’s the most generous and ethical explanation for the continued support and existence of offshore judication. The unpopular reason is that offshore countries offer lower taxes and favorable regulation. As someone who believes in the smallest possible state and enjoys the benefits of offshore countries (as do Facebook, Google, and Apple which use a combination of the Netherlands, Ireland, Bermuda, and Cayman in complex corporate structures) I am sympathetic to this argument. Although my friends say I am a corporate stooge!
"multinational companies need a neutral ground to settle disputes with competent judges without the whims of each company’s home base screwing it up."
This is definitely not it. The largest entities with the most IP at stake don't duke it out in the Cayman islands.
Moreover, Cayman - and any other offshore - does not have nearly the sophistication to handle complicated disputes.
'Sound rule of law' is one thing, but when laws are not very clear or complex, without a lot of historical rulings, without a sophisticated judicial + participants ... then it's not going to be part of the value add.
If you're really concerned about 'rule of law' then you want to be in EU/US/UK, possibly Canada, Australia, Switzerland and you don't even want it to touch other jurisdictions.
This is definitely not it. The largest entities with the most IP at stake don't duke it out in the Cayman islands.
Moreover, Cayman - and any other offshore - does not have nearly the sophistication to handle complicated disputes.
'Sound rule of law' is one thing, but when laws are not very clear or complex, without a lot of historical rulings, without a sophisticated judicial + participants ... then it's not going to be part of the value add.
If you're really concerned about 'rule of law' then you want to be in EU/US/UK, possibly Canada, Australia, Switzerland and you don't even want it to touch other jurisdictions.
I don’t think you understand how offshore works. You seem like someone who saw a bunch of YouTube videos. For example all re-insurance companies that back the US insurance markets are Bermuda companies, and this is explicitly OK in the tax code.
I worked at a company that payed out $700M in an IP dispute involving offshore entities (and worked for a while in an offshore entity, Monaco, though it's a different kind of 'offshore').
Edit: FYI your 'Bermuda' argument doesn't help make your point re: 'neutral ground IP law'. The reason companies exist 'offshore' is to avoid taxation and scrutiny, which is why they are there.
Edit: FYI your 'Bermuda' argument doesn't help make your point re: 'neutral ground IP law'. The reason companies exist 'offshore' is to avoid taxation and scrutiny, which is why they are there.
They have it right.
The less power the state asserts, the more is left for the biggest corporations to use, throwing their weight around, dominating everybody smaller.
The less power the state asserts, the more is left for the biggest corporations to use, throwing their weight around, dominating everybody smaller.
OK, I get that. What are the insights?
In the Summary it says:
> We iterate that, while we certainly did not expect small-world phenomena to emerge in all networks, the fact that it did not emerge in even a single network, and also that the distribution of connected components (as a function of size measured in terms of number of nodes) seems to follow a clear and consistent trend throughout, suggest a similar fundamental difference compared to small-world networks.
Um, what does that tell us about corruption and tax evasion? Can somebody please explain in layman's terms?