General / Off-Topic privacy vs tax dodging

[beelbeebub]

With the massive leak of the "panama papers" shining a light on the tax dodging, sanction busting and all around shadyness that tax havens and in particular anonymous offshore shell companies. One question popped into my mind.
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Lots of people, myself included, think privacy is a pretty good thing. The reaction to Edward Snowdon's revelations showed that many people are not comfortable with the government having the ability or right to snoop on our affairs. Similarly, Apple's recent stand against assisting the decryption of a phone (which lets face it, in all respects was the poster child for the argument the gov should be able to decrypt stuff) shows there is still an appetite for the concept of "privacy trumps security".
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A logical conclusion of that concept is that there is nothing wrong with the "offshore finance" industry. In fact we all ought to be doing it to avoid government snooping into our business whether it be our private lives or our financial lives.
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The second conclusion should be that an industry that allows corrupt leaders to steal billions, sanctions to be avoided and the proceeds of crime to be laundered should be given the same "protection" as strong encryption. After all both are methods of obscuring our actions from others (I.e. Privacy).
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So how do we square the two things? One is on the face of it a good thing (right to privacy) the other is clearly a bad thing (dictators stashing cash, rich dodging taxes). Yet they both essentially spring from the same thing.
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How can we argue against the activities detailed in the panama papers and support Apple and Snowdon?

 

[Surfinjo]

Good points.

If I may suggest an alternative approach on this issue.

Stand back and laugh.

I understand part of Apple's argument was that the FBI had the ability and technology to decrypt the phone itself but the FBI wanted Apple to do it. The FBI eventually did it anyway.

Snowden is not much short of hilarious. Sensitive information as filming of gunning down a load of completely innocent young men in Iraq from a helicopter, is treated so casually, they allow one man to smuggle all that info out! And then to travel to Russia! Then spend the next X years and millions hounding the journalist to dared to publish. While the rest of the press community stands by, not daring to say anything incase they are next.

None of us know the details of this latest gaff but much like all those politicians and senior military who were all so clearly innocent when accused by the compo brigade, while lesser mortals continue to languish in jail for the remainder of their lives, I'm sure the outcome here will be equally amusing.

 

[Surfinjo]

Just realised what's going on.

Look out for elections.

There's one in Scotland, but it seems a rather big bait.

The US elections are coming up. How about opening a poll on the likely names of those due to be suddenly accused on 1 November next.

 

[Mephane]

I understand part of Apple's argument was that the FBI had the ability and technology to decrypt the phone itself but the FBI wanted Apple to do it. The FBI eventually did it anyway.

Well, any hardware and software developer (individual or company) who genuinely cares about security would damn well not want to put any backdoors = planned security breaches into their products.

As of the OP, I think there is a huge difference between privacy in general (for example your private data) what happens with your money. Since state collect taxes, obviously they need to be able to know who (people as well as companies etc) receives how much total money from wages, sales etc.

But the huge underlying problem is that there is the idea among some people - particularly of the richer and more powerful type, that paying your taxes is either a "generous gift" on your behalf, or the state "stealing your money". A lot of those people who engage in these tax evasion schemes have no ill consciousness because they believe themselves in some form of righteous position. And it is therefore that no state can ever count on people just being honest with their taxes as long as this sort of thinking exists.

 

[Crash Landing]

The day Apple and Snowden are kneeling in an orange jump suite with a guy in a bin liner behind them wielding a knife lets see how keen they are on government snooping. If you don't want the internet to get hold of pictures of your tadger don't post em on snapchat.Given the choice of being a pink mist waiting for a train or plain or worrying about GCHQ i'd say the pink mist wins every time.

 

[Iskariot]

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A logical conclusion of that concept is that there is nothing wrong with the "offshore finance" industry. In fact we all ought to be doing it to avoid government snooping into our business whether it be our private lives or our financial lives.

Let's not kid ourselves, constructions like that only serve the rich elites to get richer.
The gap between the underprivileged and the filthy rich has become an abyss now and still gets deeper every year.

How can we argue against the activities detailed in the panama papers and support Apple and Snowdon

You create a false dichotomy I feel. There has always been a limit to privacy.
I understand where Apple's coming from and I agree. I also support Snowdon.
I do not support quasi legal tactics to evade tax and I do not feel that the issue of privacy should be abused as an excuse to keep this going.

 

[Yaffle]

On Hobbes' Freedom v Security this - http://www.bbc.co.uk/programmes/p02b922h is excellent.

From my point of view it seems that the fundamental issue is that laws around these things are only a problem to the law abiding. For example, our neighbour flies model aircraft. Big models, like 10 feet long. He has to fly in particular areas and the club he belongs to is very careful about disturbing people, no fly zones, flight ceilings and all that. A new law on where remote aircraft can be flown (to target drones flown dangerously) would affect him, and probably force his club to close. John Doe with his drone will just continue to fly it dangerously, he knows the law is not practicably enforceable against him. Back to freedoms. By making everything available to a government it will be an issue for the law abiding, not the law breakers. Law breakers would devise their own cryptography or use some way of avoiding the system. That's the problem with law breakers, they break the law. Meanwhile law abiders surrender everything to the state. Which means you could get a visit for voting against the government. Or government minion spots a cute guy/girl on the bus and can easily access everything about them for no reason other than stalking them. There has to be a balance, but quite where that is needs a bigger brain than mine.

The offshore thing is interesting. As you may note from my sig I'm an accountant. While I am now in sort-of retirement and teaching I used to be a forensic accountant looking at fraud, money laundering, compliance etc. To do that I had to live in some of these places, and visited most of them. Panama had a bad rep for a long time, and bearer shares have always been looked at as extremely dodgy. I've not had chance to properly read these revelations yet, and I am sure there are more interesting stories buried in there than the headlines about political figures. By the sounds of the reports (which may be inaccurate) money laundering has been facilitated here, that's a serious thing. Tax evasion is also serious, but we can't just forbid countries from having banks or lawyers as the law abiding are now hurt, the law avoiders just do something else (hawala banking would spring to mind).

ETA further reading on offshoring can be had here - http://www.amazon.co.uk/dp/B005LYOYNY/ref=dp-kindle-redirect?_encoding=UTF8&btkr=1 it's old, but still most of it is relevant.

 

[FuzzySpider]

Good points.

If I may suggest an alternative approach on this issue.

Stand back and laugh.

These revelations have provoked a snap election in Iceland.

http://www.theguardian.com/news/2016/apr/03/iceland-pm-calls-snap-election-offshore-revelations

The problem is that we do sit and laugh. We do nothing. We don't just accept things when it turns out our politicians are corrupt, we actually expect it.

Little by little we've been led to a place where we just allow this to go on. No privacy for our citizens, no accountability for our leaders, absolute power for those who have money.

 

[beelbeebub]

@Surfinjo, I think you're getting confused between Chelsea (then Bradley) Manning's leak of DoD info which revealed what appear to be war crimes committed by various US forces in Iraq and Edward Snowden's leak that revealed the NSA, GCHQ and other intelligence agencies engaged in massive "dragnet" surveillance of the population. Chelsea Manning is currently in jail, whilst Edward Snowden is at large in Russia (of all places). Julian Assange is currently holed up in the Ecuadorian embassy trying to avoid charges of sexual assault (of which he may or may not be guilty) and breaking his bail conditions (of which he clearly is guilty). I have no idea what you are talking about with elections.

@Mephane, Agreed, deliberate backdoors have a habit of becoming security vulnerabilities.

My point was that if you argue for "strong" privacy", i.e. that the government should not have the ability to view the data of citizens under any circumstances (e.g. the person is a proven terrorist and the information in their phone may help prevent further loss of life) you must also allow that it is not morally wrong to use "offshore" techniques to prevent the government examining someone's finances.

Therefore you cannot call for "off shoring" to be regulated or made illegal somehow (as I'm sure some will) whilst also maintaining that the government should not have the ability to view the data of citizens under any circumstances.

@Iskariot, Don't misunderstand me, I'm in no way supporting the rich and corrupt getting richer using these techniques and I'm not trying to abuse the issue of privacy. I'm simply pointing out that the two issues are logically and irrefutably linked and that it is not possible to say "Citizens should have strong privacy" (not just encryption but freedom from mass surveillance, meta data dragnets, long lived DNA databases etc) and to also say "We should ban these offshore techniques"

Let us suppose that a criminal used bitcoins and an encrypted iPhone to launder their money. They are caught and arrested, but all the evidence is locked inside the iPhone's encrypted data. If the authorities could break the encryption and read the data they would have the criminal "red handed" and also be able to work out which judges, politicians, policemen had been paid off etc. Would you support the FBI/Met/law when they requested that Apple assist them in unlocking the phone (assume for a moment that only Apple could do it) or would you support Apple in resisting them? I assume if you support Apple in the San Bernardino case (where the stakes were higher) you would support them in the example case.

Now swap "Apple" and "encrypted iPhone" for "Panamanian law firm" and "fancy network of shell companies".

The big economic blocs, the US the EU etc could shut down tax havens and these shell companies if they really wanted to. They could simply say "Until Panama/Bermuda/Jersey complies with our transparency codes and responds to our warrants we will simply ignore any company registered there". As the primary aim of a shell company is to control an asset in a useful end country (e.g. the US, the EU etc) the authorities could simply cut the line of control between the foreign shell company and the entity in their jurisdiction. Essentially you would draft a law that said that entities from country X are not recognised and the state will insert itself into any control or ownership position that the entity from country X previously occupied. Sort of "if you don't play by our rules you can't play on our turf". Of course Panama/Bermuda/Jersey etc. might protest but ultimately they are small fry and can't really do anything against the big power blocs.

@Yaffle, Interesting (and nicely explained) video. As an accountant with experience in this sphere, would you say my analogy between encryption for privacy and "off shore" techniques for financial privacy is reasonable? After all the objective of both encryption and these offshore techniques is to prevent the government from seeing what is going on (who is talking to who or who owns what).

 

[Yaffle]

@Yaffle, Interesting (and nicely explained) video. As an accountant with experience in this sphere, would you say my analogy between encryption for privacy and "off shore" techniques for financial privacy is reasonable? After all the objective of both encryption and these offshore techniques is to prevent the government from seeing what is going on (who is talking to who or who owns what).

It is an interesting comparison certainly. I think the issue is that neither is a binary choice. Is tax avoidance good? Well, not if you are the country losing the revenue, but yes if you are the country gaining the revenue. Is encryption good; yes if you need to keep things secret, no if you need to see those secrets.

The two are certainly aimed at a similar goal. I think the difference is that one is nefarious, it is an act of commission to design and implement a complex web of entities to obfuscate and hide earnings. The other is an act of omission, 'we didn't put a backdoor in because what's the point of security if there's a backdoor'. Apple's refusal was part marketing, part truthful and part corporate muscle flexing. Under most circumstances a Government with a need to spy on a person has to go via some form of check and balance, typically a judge (who should be independent of the executive), before a phone tap, or bank data or whatever could be grabbed. In this case the Court Order wouldn't help, as Apple lacked the ability to break the phone's cryptography. It then expanded into a human rights debate, which became futile once the FBI had worked out how to defeat the security.

Now I am rambling. I think there are parallels between the two, but the heart of the intent is very much different. If that makes sense.

 

[Surfinjo]

Well, any hardware and software developer (individual or company) who genuinely cares about security would damn well not want to put any backdoors = planned security breaches into their products.

Ahh, that's so sweet.

http://www.apple.com/customer-letter/

https://www.washingtonpost.com/worl...93a0e2-f52b-11e5-9804-537defcc3cf6_story.html

Seriously, if these organisations cared a jot about security we would never have heard of hackers, viruses and such. [haha]

These revelations have provoked a snap election in Iceland.

http://www.theguardian.com/news/2016/apr/03/iceland-pm-calls-snap-election-offshore-revelations

The problem is that we do sit and laugh. We do nothing. We don't just accept things when it turns out our politicians are corrupt, we actually expect it.

Little by little we've been led to a place where we just allow this to go on. No privacy for our citizens, no accountability for our leaders, absolute power for those who have money.

No, the problem is we have one of two choices. We can pull our hair out and rant about dirty government as we have been doing since the late 40s, (forgetting the usurping of the democratically elected PM Ramsay MacDonald), which achieves nothing or we can laugh.

We're dealing with a powerful, imperialist organisation here. (Just saying that, leaves me open to all sorts of associative dismissals). But we, as a population, generally swallow every piece of nonsense dished out.

 

[X-Terminator]

Privacy on data is not really needed as Terrorists still use written paper lists as found in Brussels!
They don't trust data but paper is ok for them. The Hacking group Anonymous is therefore just nerds who have found themselves with a potential government job or use as our own Propaganda to make us feel we have a voice. It seriously does not affect Terrorists meeting to plan and make paper lists!

 

[FuzzySpider]

No, the problem is we have one of two choices. We can pull our hair out and rant about dirty government as we have been doing since the late 40s, (forgetting the usurping of the democratically elected PM Ramsay MacDonald), which achieves nothing or we can laugh.

We're dealing with a powerful, imperialist organisation here. (Just saying that, leaves me open to all sorts of associative dismissals). But we, as a population, generally swallow every piece of nonsense dished out.

We have a third choice - fight back. The problem is that we are led to believe that is not a choice.

Back in the summer of 2000 a bunch of farmers parked their tractors outside fuel depots. The country was brought to a standstill for days, traffic stopped, factories were shut down, only emergency workers were allowed to purchase fuel.

Back in 2011 a young man was shot dead by police. What followed was days of looting and rioting by basically a handful of kids, but they did it with such enthusiasm that their mayhem made international headlines (Anarchy in the UK was my favorite).

The system is remarkably fragile. We're simply led to believe that it isn't.

 

[Patrick_68000]

These revelations have provoked a snap election in Iceland.

http://www.theguardian.com/news/2016/apr/03/iceland-pm-calls-snap-election-offshore-revelations

The problem is that we do sit and laugh. We do nothing. We don't just accept things when it turns out our politicians are corrupt, we actually expect it.

Little by little we've been led to a place where we just allow this to go on. No privacy for our citizens, no accountability for our leaders, absolute power for those who have money.

Yes. Half of the world financial flows pass in transit by tax havens. The problem is that a large part of these flows is potentially of illicit origin. Corruption and international traffics in arms, drugs, migrants, fraud and tax evasion ... there are 90 countries on the lists of tax havens ...

 

[Surfinjo]

We have a third choice - fight back. The problem is that we are led to believe that is not a choice.

Back in the summer of 2000 a bunch of farmers parked their tractors outside fuel depots. The country was brought to a standstill for days, traffic stopped, factories were shut down, only emergency workers were allowed to purchase fuel.

Back in 2011 a young man was shot dead by police. What followed was days of looting and rioting by basically a handful of kids, but they did it with such enthusiasm that their mayhem made international headlines (Anarchy in the UK was my favorite).

The system is remarkably fragile. We're simply led to believe that it isn't.

No we don't.

2000 workers were laid off, the country was brought to a standstill. Result, utter failure. The farmers were offered a 1 p reduction which they said was completely inadequate. (They were looking for 50%)

The riots were stupid and achieved nothing.

We can't fight against the British Empire. (The UK). The UK is run by people who see themselves as running the world, which they effectively do.

Only by getting rid of the UK and having a civilian government, concerned with only this country can we hope to achieve any real change.

Iceland's prime minister has resigned - the first major casualty of the leaked Panama Papers that have shone a spotlight on offshore finance.
The leaks, from Panama-based law firm Mossack Fonseca, showed Sigmundur Gunnlaugsson owned an offshore company with his wife but had not declared it when he entered parliament

http://www.bbc.co.uk/news/world-europe-35966412

 

[beelbeebub]

Privacy on data is not really needed as Terrorists still use written paper lists as found in Brussels!
They don't trust data but paper is ok for them. The Hacking group Anonymous is therefore just nerds who have found themselves with a potential government job or use as our own Propaganda to make us feel we have a voice. It seriously does not affect Terrorists meeting to plan and make paper lists!

True, old fashioned paper and face to face meetings are difficult to hack, but easier to find or follow. Bin Laden used no electronic communications when he was holed up in Abbotabad. A courier would visit and hand carry letters and video tapes to and fro. Eventually his courier was tracked.

The current ISIS terrorist threat relies on electronic coms to recruit people "in place". Once recruited they then can run "dark" but the need to remotely radicalise people requires communications. Take the recent case of the guy from Luton who was going o behead a us airman. he was being encouraged and advised by a chap from Birmingham who was in Syria chatting via various chat and video call apps.

It is an interesting comparison certainly. I think the issue is that neither is a binary choice. Is tax avoidance good? Well, not if you are the country losing the revenue, but yes if you are the country gaining the revenue. Is encryption good; yes if you need to keep things secret, no if you need to see those secrets.

The two are certainly aimed at a similar goal. I think the difference is that one is nefarious, it is an act of commission to design and implement a complex web of entities to obfuscate and hide earnings. The other is an act of omission, 'we didn't put a backdoor in because what's the point of security if there's a backdoor'. Apple's refusal was part marketing, part truthful and part corporate muscle flexing. Under most circumstances a Government with a need to spy on a person has to go via some form of check and balance, typically a judge (who should be independent of the executive), before a phone tap, or bank data or whatever could be grabbed. In this case the Court Order wouldn't help, as Apple lacked the ability to break the phone's cryptography. It then expanded into a human rights debate, which became futile once the FBI had worked out how to defeat the security.

Now I am rambling. I think there are parallels between the two, but the heart of the intent is very much different. If that makes sense.

the use of "unbreakable" encryption on a phone and of holding companies (my understanding is that a shell company is essentially a holding company that achieves nothing other than obscuring the ownership whereas a holding company may achieve other goals, as an accountant you may be able to correct me) both have legitimate uses. for example, strong phone encryption protects my data and hence access to my bank accounts, medical records, itinerary, personal pictures etc. Similarly a holding company may be a convenient way to control many separate businesses or to hide the owner, say in the case of a secret project or a bid for ownership. Ironically Apple are know to use shell companies to hide future products, like the mooted apple car.
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As a point of fact, Apple admitted they had the ability to help the FBI, but argued that the "all writs act" that the FBI were using didn't apply because assisting the FBI in this case would place an undue burden on Apple which the act allows as a valid reason Fr non-compliance. The un d burden would have been the effect on apple's business of essentially creating "back door", in this case a legal back door rather than a code back door, in the security. There were other arguments such as the FBI didn't need apple as it could have done it itself (the act only requires compliance with things the authorities can't do themselves) an a first amendment issue as well.
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I get you point about intent. Obviously using encryption to hide child abuse is different from using it to expose a corrupt regime.
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The argument against strong privacy has always been crime. "if you allow strong privacy, you make catching murders/abusers/terrorists harder". The work the NSA did, that Snowden exposed was certainly directed against terrorism. but potentially it could have be used to target legitimate anti government groups etc. The argument of the strong privacy camp was the additional security gained was not worth the loss of liberty.
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X allows citizens to hide their activities from view.
X could also allow criminals to hide their activities from the law
Circumventing X to allow the authorities to catch criminals would reduce the ability of citizens to hide their activities from view.
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for X read strong privacy protections and many people would agree.
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But X could be "offshore stuff".

Would people still agree?

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No we don't.

2000 workers were laid off, the country was brought to a standstill. Result, utter failure. The farmers were offered a 1 p reduction which they said was completely inadequate. (They were looking for 50%)

The riots were stupid and achieved nothing.

We can't fight against the British Empire. (The UK). The UK is run by people who see themselves as running the world, which they effectively do.

Only by getting rid of the UK and having a civilian government, concerned with only this country can we hope to achieve any real change.



http://www.bbc.co.uk/news/world-europe-35966412

come on Surfinjo, stay on topic and off the "the united kingdom is the root of all evil" soap box
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The subject is "does supporting string privacy logically mean you shouldn't mind about anonymous offshore companies'". Note not tax evasion or money laundering, we should be able to agree they are bad, just the existence of anonymous off shore companies

 

[Surfinjo]

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come on Surfinjo, stay on topic and off the "the united kingdom is the root of all evil" soap box
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The subject is "does supporting string privacy logically mean you shouldn't mind about anonymous offshore companies'". Note not tax evasion or money laundering, we should be able to agree they are bad, just the existence of anonymous off shore companies

I made the point that whatever the revelations are, they won't have any significant effect upon the UK.

FuzzySpider claimed that we can fight back.

I contend we can't because our government is more concerned with running the world than our country. Compare with Iceland where they do have a civilian government.

But you are right, it is drifting away.

I am soweey. [heart]

 

[xondk]

Its a tricky question, because you can't really have both sides at the same time.

Though personally I think the richer and more powerful a person is the more scrutiny they should be under, some would of course cry out and say then people won't be motivated to become rich and powerful? but really do anyone really believe that?
Then there's the whole "but that isn't fair!" it isn't? is it fair they can through these things hide who knows how many money and avoid tax that the average joe is forced to pay?
If rich and powerful people were held to higher standards, and expected more off, I believe it could solve a lot of issues and it wouldn't really punish anyone, because, who gets punished most? the little guy that is paying taxes, or the guy with millions that is paying taxes?
Now yes, I know many will say "the rich guy" but that is because people see it in pure cash amount, and not in what people actually need the cash for.

Poor family that needs the job to have food on the table, tax and other stuff reduce how much food is on the table.

Rich family? it might prevent them from a certain object or living with a specific standard? say instead of the 70 year wine at dinner they have a 40 year wine. You know, stuff like that, sure they may not be able to get that super insane expensive yacht that they want, and that might be annoying, but you know what? the only reason those things are super expensive, is because they 'can' cost that, I seriously doubt any super rich luxury items now a days has a poor return on what actual value is put into the product.
Then there's the whole image thing? really? does anyone for one moment really believe that their image would 'take damage' from not being able to buy that insanely overpriced yacht? they are part of the 1% (or 0.5% as some say now a days), yes I understand that image is important as status symbol, but frankly, I think it has gone to insane proportions of late, way way out of proportions.

So yeah, especially when its ministers you know, that run a country, such action as hiding money from tax is ....yeah I don't know a word for how low a person you have to be to do that, lowest of low. When this was revealed, with all the world trying to save money on government stuff and such left right and center, I have to wonder how much money they are not getting from tax dodgers.

Now yes, I will agree there are situations where people don't agree with what governments use the money on, or that they themselves don't use them wisely, and that's part of the whole problem, but tax dodging is not part of the solution..

 

[Patrick_68000]

The France put again the Panama on the blacklist of tax havens

 

[Soliluna]

The subject is "does supporting string privacy logically mean you shouldn't mind about anonymous offshore companies'". Note not tax evasion or money laundering, we should be able to agree they are bad, just the existence of anonymous off shore companies

Logically? No.
Morally? No.

Privacy is being able to eat, sleep and.. eat without being snooped on, it's not about setting up shell companies in BVI to buy properties in Barbados or having offshore funds and investments to avoid tax.