An opinion – War and Tax
Without tax you can not have war. War is expensive. War is a rich country’s game.
As long as we deny developing nations the means to retain their own money by ignoring the systematic theft of their resources by corrupt leaders who misappropriate nation’s money to themselves and conceal their theft in offshore accounts, we also deny them the means to defend themselves and improve their lot. In the meantime, we, in developed countries, hear the urgent pleas for help from developing countries and answer them as soon as we want to (if indeed we want to help at all).
Of course, that is all rubbish right? Developing countries have proved their ability to fight amongst themselves just as much as have developed countries. But that is no problem because we in developed counties facilitate capital flight away from developing countries, thus keeping them poor and hence ensuring they can’t spread their trivial wars to developed countries. (For the avoidance of doubt I am being factious.)
The point that developing countries can spread war to (or make smart phone components more expensive for) developed countries is the point when developed countries begin to care.
Maybe we can spend their money intervening under the façade of charity, perhaps we can even assume the moral high ground or something. Of course the flow to the developing countries would still be less than was taken from them. But let us not let the facts get in the way of a good story. (Also, we could perhaps enforce a debt at a usurious rate of interest.)
Of course not all taxation in developed countries is spent on war. But without surplus taxation revenues developed countries have to be judicious in selecting causes for war. (And who wants to live in a world where developed countries have to exercise the judicious use of force?)
War was the genesis for income tax in more than one nation.
Perhaps enabling capital flight from developing countries is an extension of foreign policy; after all without the means to defend themselves developing countries will always play second fiddle to developed countries.
Anyway, war is for the rich countries and who wants to bother with poor countries unless they have oil? (Yes, of course I am being factious.)
Also by keeping developing countries poor we are also spared the intellectual rigour that goes with entertaining their ideas of right and wrong that perhaps are not synchronous with our Western ideas. This leaves our minds uncluttered so that we can focus on who should win X-Factor.
That said, even poor countries can make us care about ideologies that are not mainstream in developed countries. Such ideologies (right or wrong) can be promulgated through terrorism.
Once we have to prove our computers are not bombs so that we can travel internationally we may perhaps care about things other than whether the iPhone 6 will offer a 4.7 inch screen. (Aren’t inches an imperial measure?)
Recently we have discovered that keeping nations poor isn’t enough to effortlessly secure our campaign for world domination. Worse, poor nations have become a fertile ground for ideologies that challenge the divine right of developed countries to do as they wish.
Keeping developing nations poor is no longer enough. Terrorism is the new threat. Introduce weapon number two: KYC/AML. By such means banks control who can transfer money to whom. Even terrorism costs money and if you can control the flow of money to terrorists then you disarm them (or at least prevent further armament).
To reiterate, you can’t have war or terrorism without the means to finance them.
Stem the money flow and you stem the ammunition on which war and terrorism depend. The most deadly weapons are prohibitively expensive and preventing money flowing to people who would procure them is certainly one means of preventing them from doing so. (That said, this would not prevent arms from being ‘donated’.)
In the old days the victors wrote history; the new victors control the money flow and are happy to go unnoticed.
The flow of money and taxation are the new weapons. Worse the use of these weapons often goes unnoticed. Worse still, when the use of these weapons gets noticed we are sometimes distracted by decoys (by which I mean we hyper focus on a small injustice without noticing a larger injustice).
Cryptocurrencies and data privacy are a threat to controlling money flow.
It is for this reason that data privacy will not be allowed (or more accurately it will be redefined to such an extent as to be unrecognisable). But don’t worry about that because the next series of smart phones and wearable technology will be great and we can watch the demise of developing countries in glorious 4K and listen in 24 bit lossless audio.
As for Cryptocurrencies. These are not new ideas. John Maynard Keynes, for one, considered such concepts and even considered calling such a currency a “Bit” (though he preferred “Orb”). These ideas were discussed during the Summit in the 1940s that resulted in the IMF, the World Bank and the emergence of the US dollar as the World’s reserve currency. Keynes was outsmarted (or more accurately diverted by other matters and ill health) during this Summit by an American who turned out to be spying for the Soviets – it could so easily have been different.
Bitcoin and its cousins are not as radical as we are led to believe. The threat of Crypocurrencies will be mitigated with robust KYC/AML and controlled in the same ways as fiat currencies.
When that happens the Crypocurrencies will become mainstream. All that is uncertain is which of these currencies will emerge as the lead Crypocurrency.
But isn’t all this a distraction? We are still allowing capital flight from developing countries. Aren’t we better than this?
We still allow corporates to shift profits to low tax jurisdictions. Aren’t we better than this?
We still allow beneficial ownership of companies to be concealed behind veils of incorporation.
At what point do we recognise that the flow of money and taxation are being used against the poor and defenceless and do something about it?
Well perhaps we have started to address it through FATCA. But it is a dismal start. FATCA has been botched to such an extent that it captures the accidental American while the tax evader remains spoilt for choice in terms of finding ways to go undetected. For the true tax evader FATCA is as threatening as a cage consisting of sugar glass windows.
FATCA and its spin offs are a shambles because they won’t catch true tax evaders.
While we argue the merits of FATCA the tax evaders have gotten away and the innocent have been distracted by administrative minutiae.
The real problem was and remains the corporates i.e. tax base erosion and profit shifting and the concealment of beneficial ownership.
The true tax evader must be laughing into their champagne as we argue about FATCA. What a fantastic farce FATCA has been. All hail the FATCA decoy.
Terrorism is wrong. Generally speaking KYC/AML are forces for good when applied judiciously. Ignoring tax base erosion, profit shifting and the concealment of beneficial ownership – well you don’t need me to tell you, you already know.
So who appointed me judge of all this? No one, but I post regularly on the subject of FATCA and some have mistaken my not stating my opinion on FATCA for being a fan of FATCA.
I’m not a fan of FATCA. FATCA is a start, not a good start, but I believe that the original intentions may have been good. But what FATCA was set out to accomplish it does not accomplish but instead captures the vast majority of innocent bystanders in colossal administration while the tax evaders get away.
Worse still it diverts us from helping developing countries who would benefit the most from tackling tax havens. The AEOI actually works against developing countries because it excludes them. The G20 is controlling the agenda.
I am neither for, nor against FATCA. In my opinion the world will be a fairer and ultimately a safer place if we start to address the needs of developing countries – AEOI (informally GATCA) in its present format fails to do that.
We can’t just ignore developing countries. Surely we should help developing countries to develop and once developed to be just.