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Strategies & Market Trends : Anthony @ Equity Investigations, Dear Anthony, -- Ignore unavailable to you. Want to Upgrade?

To: anniebonny who wrote (105799)	1/16/2009 7:45:14 PM
From: scion	Read Replies (1) \| Respond to of 122087

Big U.S. Firms Use Tax Havens JANUARY 16, 2009, 7:36 P.M. ET By JESSE DRUCKER online.wsj.com Eighty-three of the 100 biggest U.S. public companies have subsidiaries in tax havens or financial-privacy jurisdictions, government investigators found. A report released Friday by the Government Accountability Office, the watchdog arm of Congress, looked at securities filings by large public companies to arrive at its findings. The investigators also looked at a list of federal contractors and found 63 of them had subsidiaries in tax havens. Others on the list are recipients of federal bailout money, including Citigroup Inc., which the GAO found had 427 subsidiaries in such jurisdictions, including 90 in the Cayman Islands. The list of jurisdictions included some locations that may have legitimate nontax purposes, such as Hong Kong and Switzerland. A Citigroup spokeswoman declined to comment on the report, beyond saying that the company has more than 4,000 subsidiaries around the globe. The GAO did the report at the request of Democratic Sens. Byron Dorgan of North Dakota and Carl Levin of Michigan. Mr. Levin is chairman of the Senate's Permanent Subcommittee on Investigations, which has held numerous hearings on tax avoidance. The study didn't quantify what impact, if any, the use of subsidiaries in tax havens had on any of the companies' overall tax payments in the U.S. The findings come as President-elect Barack Obama is set to inherit a record budget deficit of more than $1 trillion. Many tax experts say that the U.S. will eventually have to find new revenue sources, likely through a combination of tax increases and greater enforcement. The report stated there is no universally agreed upon definition of a "tax haven," although some of the characteristics include "no or nominal taxes; a lack of effective exchange of information with foreign tax authorities; and a lack of transparency in legislative, legal, or administrative provisions." The lack of a formal definition has sometimes made it difficult for the U.S. to effectively crack down on strategies used by U.S. companies to avoid paying taxes. Switzerland, for example, has a corporate income tax but does not levy it on profits earned by subsidiaries overseas, even when the profits are sent to the Swiss parent. That effectively makes the country a corporate tax haven, many tax experts argue. But it has a tax treaty with the U.S., which helps companies use that locale to avoid anti-tax haven rules in the U.S. that are targeted at jurisdictions with no general tax treaty, such as Bermuda. Write to Jesse Drucker at jesse.drucker@wsj.com online.wsj.com

To: anniebonny who wrote (105799)	1/17/2009 5:02:30 AM
From: Jeffrey S. Mitchell	Read Replies (1) \| Respond to of 122087

It absolutely would work. I said "mockingly" because even though the idea is technically brilliant (as long as you do not get caught) I didn't want to sound like I was endorsing what he did. There's an old Steve Martin joke: "How to make a million dollars: First, get a million dollars..." the point being that, yes, it is somewhat absurd to think many people have the ability to copy the guy even if they wanted to. But, assuming you did... and assuming you didn't get caught... you could probably carry the scam on until you die. After that, who cares? :) Basically the key is to maintain a strict accounting on your outflows. The best "investors" would be the younger ones saving for their retirement where you knew they'd be adding to their account over time not depleting it. Second would be charities since they typically operate off the interest while replenishing it each year. Your profit would be whatever money you could comfortably raise above and beyond your outflow. By "comfortable" I mean that each year you'd have to calculate ahead of time your likely outflow based on taking on more money (since you are paying people based on their cumulative paper gain) because the big killer would be growing too fast. Hence, you'd need to close the fund now and again. Now if I just had $10M, you wouldn't tell, right? :) - Jeff