Not only criminals and tax-evaders, but also ordinary people can be against restrictions on cash.

Sir, referring to how the existence of cash creates difficulties for central banks imposing negative interests. you mention “economist Kenneth Rogoff, one of the… restrictions on the use of cash noted proponents, is still receiving death threats for raising the idea. “The growing challenge to central banks’ credibility” September 24.

Frankly, that phrases it as only assassins and bad people would be for blocking the idea of restricting cash. I am sure that non-violent, non-criminal, not-tax evading ordinary people can also find the restriction of cash very problematic.

Just as an example, if governments mistreat cash, with inflation, they mistreat all holders of it equally, but if there was no cash and all monetary assets and their movements were identifiable, they could be very selective in who they want to mistreat or not.

Does this mean in any way or form that I condone the bad uses of cash? Of course not, that would be worse than silly.

PS. Central banks that only want banks to harvest what’s “safe” and not sow what’s “risky”, do not deserve any credibility. 

@PerKurowski ©

What a government spends is a lousy proxy for what the citizens receive; it ignores redistribution costs and profits

Sir, Tim Harford writes that the idea of a universal basic income “appeals to three types of people: those who are comfortable with a dramatic increase in the size of the state, those who are willing to see needy people lose large sums relative to the status quo, and those who can’t add up.” “Could an income for all provide the ultimate safety net?’ April 30.

And while doing so he uses figures for UK’s social security spending of £217bn, and on health and education spending of £240bn. 

Over the last 15 years the poor in Venezuela have most surely received less than 15 percent of what they would have received, had only the oil revenues been shared out equally among all citizens as a universal basic income. In such a case, supporting a net oil revenue funded universal basic income could be done by someone like me, someone who wants the state to become much smaller, who wants poor people to obtain more, and who can add quite well.

The basic mistake the undercover economist makes in this case, is that he equates all social support received by the needed with what is spent on them. That ignores the redistribution cost and profits. A universal basic income, that would put aside in different account much of the redistribution, would help bring more transparency to what the real cost of real government’s functions are. In these Panama Paper days, when so much concern is expressed on the issue of tax evasion and tax avoidance, there is little mentioning of the possibility that pure tax revenue waste could add up to much more.

Many wealthy non-leftists do harbor serious concerns about the growing income inequality, not only because of a sense of justice, but also because they know it could come back to haunt them. And so for them, a universal basic income distribution of a pro-equality tax, and which would not have to cost more than 2 percent in administration fees, might seem as a quite reasonable way to go.

Also many of us concerned with climate change but who also do feel quite uncomfortable with all the climate change profiteers who surround most initiatives, could find a huge gas/carbon tax paid out by means of a universal basic income scheme much better. For a starter it would beautifully align the fights against climate change and inequality.

And please, whenever I mention “redistribution profiteers’, I do not only refer to those who get cold cash and favors, but also to those so much worse, those populist and demagogues who take out their share in political power.

By the way here is a question for the Undercover Economist: Would our economies be better or worse had the QEs been redistributed in equal shares to the citizens?

PS. The problem with governments is not they are monopolies. It is they are operated and exploited by too many monopolists.

@PerKurowski ©

The Undercover Economist surfaces timely to help put some stop on dangerous divisive demagoguery.

Sir, Tim Harford writes: “If the rich and powerful are dodging taxes or committing financial crime, they deserve to be exposed. And if a $160bn merger makes sense only if it qualifies for a juicy tax break, it should not happen. If politicians and voters are finally taking an interest in closing tax loopholes, that is good… Yet there is also something disheartening about the name-and-shame, patch-and-mend turn the conversation has taken.” ‘Naming and shaming is no way to build a tax system” April 9.

What can I say? I guess: “Hear, hear!” applies the best.

And next week I hope the Undercover Economist helps to explain that what is to be found there in the stash-away is not some unused treasures type Ali Baba and the 40 thieves, but papers that evidences how values have already been deployed, like for instance buying shares or government debt.

I ask this because when we read articles that state “The Panama Papers Show That There's Enough Money to Solve the World's Problems - It's Just in the Wrong Hands”, it is clear that truth is bended in order to serve populism, and that redistribution profiteers are smelling great opportunities for their Rightful Hands.

@PerKurowski ©

Do Gillian Tett and other really believe that ever-growing offshore cash piles, is cash stashed away under mattresses?

Sir, Gillian Tett writes: “overseas profit piles have swelled — to more than $2tn”; and from there she jumps to: “in the real world introducing a repatriation deal — even at a mere 10 per cent — would almost certainly be better than the dismal status quo: a world of ever-growing offshore cash piles, transatlantic tax battles and lousy infrastructure does not suit anybody.” “The clampdown on tax inversions is only a start” April 8.

But Vanessa Houlder informs: “Over $1tn of cash has been booked offshore, even if the money is held in US banks or Treasury bonds.” “Tax havens seen as ‘grease on wheels’ of cross-border trade” April 8.

All those “overseas profit piles” have, in some way or another, already been deployed and so, to redeploy these, means having to liquidate their current positions.

What if the “more than $2tn” had all been invested in public debt and you repatriated all of it and the government got a 10 percent cut on it?

Then of course governments would owe ‘more than $200bn’ less, but if they for instance wanted to better any “lousy infrastructure”, then they would have to sell fresh public debt in the market. And, since the stockpile-holders have been diminished, that would most certainly imply having to pay higher interest rates. That is of course, unless governments are not assisted by banks holding it against zero capital requirements, or central banks buying up public debt for the governments own “stockpiles of cash”.

It is amazing the kind of demagoguery that is floating around. It is dangerously divisive. At the end of the day what it really comes down to, is who is going to decide on how any accumulated wealth is to be redeployed, whether the private or some government bureaucrats.

I truly believe that current governments waste, represents much more lost value than what is inappropriately or illegally diverted into these oh-so-horrible “stockpiles of cash”. And so I would like to see the expected repatriation profiteers kept at bay. Perhaps all citizens in some Universal Basic Income/Wealth scheme could share the governments’ cut of any repatriated assets?

And by the way, what are we to do with Putin’s “stockpiles of cash”, those that might be fully invested in the US? Send it back to Russia to Mr Putin?

Do these comments mean that I condone what distorts or what is illegal? Of course not! All tax systems should be improved and all taxes should be paid! There are occasions though in which I find it quite relevant to ask: How much failed nation or tyrannical government is needed for citizens’ capital to be granted immediate asylum?

Sometimes a citizen, within his human rights, has a moral duty of not paying his taxes.

Sir, I agree with your “Taxing problems” on the “war against aggressive tax avoidance”, December 4. That said I think we should also remember, as a “taxing problem”, the case of aggressive tax income squandering. 

Of course I do not want other governments or nations to help fellow citizens to avoid paying the taxes they legally owe, but, if the tax collector in your country has to rely on other countries to collect his taxes, then we tax -paying citizens are being placed on a very slippery slope. 

The first and absolute principle must be that each country is responsible for collecting its own taxes, and that the most fundamental principle on which such collection is based, is that the governments earn the taxes they collect in a way that is acceptable to its citizens. 

If a nation squanders completely away your taxes, not leaving anything, it is a human right and a moral obligation of the citizen not to pay those taxes. 

The real truth is that on a global scale more taxes might be wasted away by inefficient of even corrupt bureaucracies, than all the taxes that are not paid… and, if we citizens do not hold our governments responsible on both fronts we are doomed. 

And so if someone is thinking about setting up a United Nations of tax collectors, with the sole objective of collecting taxes, no matter what, then we will have no other option than to seek shelter in the shadows… Forest of Sherwood, here we come!

By the way, nothing is as powerful against tax-havens as a tax heaven.

What about the “lucky” 47.000?

Sir Joanna Chung reports that most probably UBS will hand over to the US tax authorities a list of about 5.000 tax-dodging clients of theirs, out of 52.000, “150 US clients of UBS investigated”, August 19.

My question is simple how do you pick out the 5.000? Lottery, profiling? Is there any auctioning out of the 47.000 not picked slots? If there is one who does the auctioning and to whom do the proceeds go… or are they split fifty-fifty? I mean, knowing this sort of information would be helpful in order to predict future USB profits or the path of the US fiscal deficit. Are these the innovative exit mechanism some big public spenders have been talking about lately?

No matter how guilty I might have felt were I among the 52.000, which I am not, phew, I am sure I would be extremely upset about finding myself among the 5.000 without understanding the how come.

Now for all the others out there, are these 5 out of 52 the odds they should include in their financial and tax models, or do you believe these odds will vary much depending on who are the negotiators and on whose behalf they are negotiating?

There should also be a list of countries where the tax-payers are allowed to use safe-havens.

Sir you request “Closing the havens” August 17, because citizens should pay their taxes. Quite right! But from a global perspective, the question of whether the non-paid taxes that have escaped to safe havens have been put to better use than the taxes that were paid lingers on.

In some places that is not the case, in some places, sadly, the most patriotic thing to do seems not to pay the taxes; and safeguard the resources so as they can be used in better times, with different governments, and, for those countries, the existence of tax-havens are a blessing and they should be kept open.

So perhaps countries should be indexed on a how good use the government makes of the taxes and other revenues, and any citizen from the 100 worst should have the right to access a safe haven, for at least ten years. Of course, this exclusion privilege should be renounced by anyone in public service.

There are though many criminals using the safe-haven facilities and that should be stopped and so what could be needed is for the banks requiring from the citizen that qualify for entrance to a safe-haven, to evidence that the funds indeed originate from tax evasion.

If the Financial Times wants to live up to its motto of “Without fear and without favour” then it should not forget the citizens so easily and so automatically side with the tax man… (that is, of course, unless it has some own dirty laundry to hide). If there is an argument for tax-evaders losing sleep, the same argument should be used for tax-wasters.

So, Sir, help us put a little pressure on Governments and prepare that list of countries where tax evasion should be permissible… I mean aren’t we all for better accountability? Constitutions are written to guarantee that the citizen is not abused by those in power, and given ever more intense globalization it would seem like we are in need of a global constitution, before those in power team up against us small fry.