1 00:00:00,040 --> 00:00:02,480 Speaker 1: Guess what will What's that man go? So I'm not 2 00:00:02,640 --> 00:00:06,200 Speaker 1: super into James Bond. I mean, I love spy movies, 3 00:00:06,360 --> 00:00:08,480 Speaker 1: but to me, James Bond never did it. And I 4 00:00:08,640 --> 00:00:11,480 Speaker 1: get why they're popular, like the movies are filled with 5 00:00:11,520 --> 00:00:16,439 Speaker 1: beautiful people and foreign accents and awesome cars. But to me, 6 00:00:16,600 --> 00:00:19,120 Speaker 1: the only thing I ever really liked about James Bond movies, 7 00:00:19,480 --> 00:00:22,560 Speaker 1: and this is so weird to admit, but I like 8 00:00:22,640 --> 00:00:26,400 Speaker 1: the settings. Like the settings, yeah, think about it. It's 9 00:00:26,400 --> 00:00:30,840 Speaker 1: always these exotic, gorgeous locations. And so my memories of 10 00:00:30,840 --> 00:00:33,600 Speaker 1: watching Sean Connery aren't really of him fighting or doing 11 00:00:33,640 --> 00:00:37,320 Speaker 1: interesting things so much as him running around Montenegro and 12 00:00:37,440 --> 00:00:40,920 Speaker 1: Geneva and the Bahamas, and even today they take place 13 00:00:40,920 --> 00:00:44,240 Speaker 1: in Panama City and Hong Kong and all these cities 14 00:00:44,280 --> 00:00:48,400 Speaker 1: that just grip with color. But here's what's interesting. I 15 00:00:48,479 --> 00:00:51,320 Speaker 1: never realized there was a thread linking all of those places. 16 00:00:51,680 --> 00:00:55,160 Speaker 1: I've been reading this incredible journalist Nicholas Shackson, and he 17 00:00:55,200 --> 00:00:57,800 Speaker 1: points out that almost every Bond movie takes place in 18 00:00:57,880 --> 00:01:00,959 Speaker 1: attacks Haven, which blew my mind, like, of course they're 19 00:01:01,000 --> 00:01:03,560 Speaker 1: sending James Bond on assignment there, and it's not for 20 00:01:03,600 --> 00:01:06,640 Speaker 1: the pretty women. It's because in real life there's all 21 00:01:06,640 --> 00:01:10,120 Speaker 1: this mysterious money flowing through there, which means, you know, 22 00:01:10,200 --> 00:01:14,360 Speaker 1: international intrigue and high powered criminals and crooked deals. All 23 00:01:14,400 --> 00:01:18,160 Speaker 1: of that's real and it's all made possible by really 24 00:01:18,319 --> 00:01:21,800 Speaker 1: loose tax laws. Like this is so nerdy, but after 25 00:01:21,880 --> 00:01:24,720 Speaker 1: realizing that, it actually made me interested in watching Double 26 00:01:24,720 --> 00:01:27,279 Speaker 1: O seven again. Okay, so you want to watch James 27 00:01:27,319 --> 00:01:30,120 Speaker 1: Bond for the tax laws. It's got to be the 28 00:01:30,160 --> 00:01:32,280 Speaker 1: worst reason for watching an action movie, but it is 29 00:01:32,319 --> 00:01:34,920 Speaker 1: a pretty good segue into our thrilling look at tax shelters. 30 00:01:34,959 --> 00:01:52,560 Speaker 1: So let's get started, yea he their podcast listeners, Welcome 31 00:01:52,600 --> 00:01:55,080 Speaker 1: to Part Time Genius. I'm Will Pearson and as always 32 00:01:55,080 --> 00:01:57,560 Speaker 1: I'm joined by my good friend Man Guesh Ticketer, and 33 00:01:57,560 --> 00:01:59,560 Speaker 1: in today's episode, we're going to help all of our 34 00:01:59,640 --> 00:02:01,800 Speaker 1: billion our listeners learn more about how to put their 35 00:02:01,840 --> 00:02:04,520 Speaker 1: money in tax havens around the world. Are you ready 36 00:02:04,520 --> 00:02:06,480 Speaker 1: to learn where you can put your billions? Mango? I 37 00:02:06,480 --> 00:02:09,400 Speaker 1: mean I've been hiding all my money under mattresses. Fears. 38 00:02:09,480 --> 00:02:11,280 Speaker 1: That's got to be a lot of mattresses. There's too 39 00:02:11,280 --> 00:02:14,640 Speaker 1: many mattresses right now, So we're looking for sunny places 40 00:02:14,680 --> 00:02:17,080 Speaker 1: to avoid our taxes, because I don't just want a 41 00:02:17,080 --> 00:02:19,400 Speaker 1: place to keep my stacks of money. I want to 42 00:02:19,400 --> 00:02:22,280 Speaker 1: look tan and relaxed while I do it. Or maybe 43 00:02:22,280 --> 00:02:24,840 Speaker 1: we're just curious to learn more about these places, so 44 00:02:24,919 --> 00:02:27,400 Speaker 1: we want to know where are the biggest tax havens? 45 00:02:27,440 --> 00:02:29,840 Speaker 1: Are they all on sunny islands? How hard is it 46 00:02:29,880 --> 00:02:32,959 Speaker 1: to get our offshore operations set up? Wire Swiss bank 47 00:02:32,960 --> 00:02:36,080 Speaker 1: accounts so popular? So we'll discuss all this and and 48 00:02:36,120 --> 00:02:38,200 Speaker 1: plenty more along the way. We'll talk about some of 49 00:02:38,200 --> 00:02:40,760 Speaker 1: the more bizarre taxes in history, and in a bit 50 00:02:40,800 --> 00:02:43,120 Speaker 1: we'll be joined by Holly Fry, the host of stuff 51 00:02:43,120 --> 00:02:45,080 Speaker 1: You've missed in history class, and play one of our 52 00:02:45,120 --> 00:02:47,400 Speaker 1: super important games that we have a pretty terrible game 53 00:02:47,440 --> 00:02:50,720 Speaker 1: lined up for is you definitely awesome? And of course 54 00:02:50,720 --> 00:02:53,120 Speaker 1: we'll be playing our part time genius quiz Who's playing 55 00:02:53,120 --> 00:02:55,959 Speaker 1: with us today? Today we wanted to talk to taxpayers, 56 00:02:56,000 --> 00:02:58,560 Speaker 1: so we did this sweeping call for listeners who pay 57 00:02:58,600 --> 00:03:02,080 Speaker 1: their taxes and we found too we did after the 58 00:03:02,160 --> 00:03:04,480 Speaker 1: long search. That's awesome. Can't wait to talk to them. 59 00:03:04,480 --> 00:03:06,680 Speaker 1: And for those of you listening, remember we're always looking 60 00:03:06,720 --> 00:03:09,359 Speaker 1: for fun pairs, so follow us on Facebook or Twitter 61 00:03:09,440 --> 00:03:11,880 Speaker 1: to see what we're looking for. In future episodes, it 62 00:03:11,960 --> 00:03:14,640 Speaker 1: might be Carpenter's name, Nigel, people who are afraid of 63 00:03:14,639 --> 00:03:17,680 Speaker 1: food with tiny holes in it, politicians in towns with 64 00:03:17,720 --> 00:03:20,079 Speaker 1: fewer than ten thousand people. You never know what we're 65 00:03:20,080 --> 00:03:22,720 Speaker 1: going to be looking for, so be ready. All right, 66 00:03:23,000 --> 00:03:26,360 Speaker 1: back to today's big question, where are the sunniest places 67 00:03:26,360 --> 00:03:28,280 Speaker 1: to park our money? And what do you know about 68 00:03:28,360 --> 00:03:31,600 Speaker 1: tax havens? Mango? So it's no surprise the super rich 69 00:03:31,639 --> 00:03:35,200 Speaker 1: have been hiding money from governments for centuries now, and 70 00:03:35,400 --> 00:03:37,400 Speaker 1: one of the biggest questions is how much do were 71 00:03:37,440 --> 00:03:40,840 Speaker 1: we talking about? And so the chief economist at McKenzie 72 00:03:41,000 --> 00:03:45,320 Speaker 1: estimates there's somewhere between twenty one and thirty two trillion 73 00:03:45,360 --> 00:03:48,120 Speaker 1: dollars stashed in tax havens. I know that's trillion with 74 00:03:48,160 --> 00:03:50,320 Speaker 1: the T trillion with the tea as opposed to trillion 75 00:03:50,360 --> 00:03:56,640 Speaker 1: with the got it um, which is insane. But last 76 00:03:56,720 --> 00:03:59,160 Speaker 1: year we got the first big limps at how pervasive 77 00:03:59,240 --> 00:04:02,480 Speaker 1: this industry is with the Panama papers. Right, So those 78 00:04:02,480 --> 00:04:04,680 Speaker 1: were the documents that got leaked from the Panama law 79 00:04:04,720 --> 00:04:08,200 Speaker 1: firm Mos sac Fonseca, which was huge news. Of course, Yeah, 80 00:04:08,240 --> 00:04:10,440 Speaker 1: I didn't realize the volume of the hack, but there 81 00:04:10,480 --> 00:04:14,880 Speaker 1: were eleven point five million documents released. Yeah, so journalists 82 00:04:14,920 --> 00:04:17,120 Speaker 1: from all over the world hopped on it and they 83 00:04:17,200 --> 00:04:20,559 Speaker 1: uncovered how Panama has been helping wealthy people hide their money. 84 00:04:20,800 --> 00:04:22,520 Speaker 1: And of course Panama is just one of the many 85 00:04:22,560 --> 00:04:25,159 Speaker 1: countries out there doing this. But before we dig into 86 00:04:25,200 --> 00:04:27,400 Speaker 1: the specifics, can we talk about who's on the list, 87 00:04:27,600 --> 00:04:30,000 Speaker 1: of course, So let me read you some names of 88 00:04:30,040 --> 00:04:32,760 Speaker 1: the clients who are operating shell companies and Panama, because 89 00:04:32,880 --> 00:04:36,520 Speaker 1: it's astounding, Like, let's start with the heads of state, 90 00:04:37,080 --> 00:04:41,600 Speaker 1: the President of Argentina, the President of Ukraine, the King 91 00:04:41,640 --> 00:04:46,039 Speaker 1: of Saudi Arabia, Italy's former prime minister is on there, 92 00:04:46,080 --> 00:04:49,880 Speaker 1: the Prime minister of Iceland, even the Prime Minister of Australia. Like, 93 00:04:49,960 --> 00:04:52,000 Speaker 1: that's just a fraction of the world leaders. And many 94 00:04:52,040 --> 00:04:54,320 Speaker 1: of them have their relatives who have shell accounts too. 95 00:04:54,440 --> 00:04:59,160 Speaker 1: But these aren't obscure dictatorships. We're talking about Iceland and Australia. 96 00:04:59,400 --> 00:05:02,240 Speaker 1: And the list is filled with celebrities to like Stanley 97 00:05:02,400 --> 00:05:07,160 Speaker 1: Kubrick was on there, Leonel Messi, Jackie Chan not Jackie Chance, 98 00:05:07,200 --> 00:05:10,080 Speaker 1: I know, and I get it. I mean people hate taxes, right, 99 00:05:10,120 --> 00:05:13,040 Speaker 1: people have always hated paying taxes. The whole idea of 100 00:05:13,120 --> 00:05:15,240 Speaker 1: America is based on that, Like, we didn't want to 101 00:05:15,240 --> 00:05:17,679 Speaker 1: pay a t tax or a stamp tax or whatever. 102 00:05:18,000 --> 00:05:20,480 Speaker 1: But seeing the size of this list and who's on it, 103 00:05:20,520 --> 00:05:24,160 Speaker 1: doesn't it feel outrageous, like World Leader shouldn't be playing 104 00:05:24,200 --> 00:05:26,880 Speaker 1: this game. No, it's definitely crazy. After seeing how many 105 00:05:26,880 --> 00:05:30,000 Speaker 1: contemporary people were avoiding paying their taxes, I decided to 106 00:05:30,000 --> 00:05:33,039 Speaker 1: start looking into historical figures who had avoided Texas and 107 00:05:33,120 --> 00:05:36,640 Speaker 1: you know who. I lost a little respect to William Shakespeare. 108 00:05:37,600 --> 00:05:40,279 Speaker 1: I know Shakespeare was a tax to Hodger and School. 109 00:05:40,279 --> 00:05:42,599 Speaker 1: He's looked at as this man of the people. He's 110 00:05:42,600 --> 00:05:45,240 Speaker 1: a glover son from the countryside and made good by 111 00:05:45,320 --> 00:05:48,960 Speaker 1: telling stories everyone could appreciate, and he's a moral force 112 00:05:49,080 --> 00:05:51,359 Speaker 1: like this is the same guy who has Lady Macbeth 113 00:05:51,480 --> 00:05:54,880 Speaker 1: washing and re washing her hands because of a guilty conscience. 114 00:05:55,320 --> 00:05:58,920 Speaker 1: But recently, this professor from Wales, Jane Archer, located all 115 00:05:58,960 --> 00:06:01,719 Speaker 1: these court documents to show him being charged with tax 116 00:06:01,760 --> 00:06:05,160 Speaker 1: evasion and because he's Shakespeare, instead of jail time, he 117 00:06:05,240 --> 00:06:07,720 Speaker 1: got slapped on the risk, given a few minor fines 118 00:06:07,960 --> 00:06:11,279 Speaker 1: over and over. Meanwhile, not only was he hoarding money 119 00:06:11,279 --> 00:06:15,120 Speaker 1: from the government, but he was hoarding grain, which doesn't 120 00:06:15,160 --> 00:06:17,000 Speaker 1: sound like a big deal, but he did it during 121 00:06:17,040 --> 00:06:19,520 Speaker 1: a famine. This is how bad it was, which is 122 00:06:19,560 --> 00:06:22,440 Speaker 1: doubly problematic because not only was it illegal, but he 123 00:06:22,480 --> 00:06:25,280 Speaker 1: was profiting off spiking food prices and selling it to 124 00:06:25,440 --> 00:06:30,320 Speaker 1: hungry commoners. So first Jackie Chen, now Bill Shakespeare, like 125 00:06:30,360 --> 00:06:32,800 Speaker 1: all my heroes, I know, it's almost too much to handle. 126 00:06:32,839 --> 00:06:35,560 Speaker 1: But you know, obviously people want to accumulate wealth and 127 00:06:35,640 --> 00:06:37,800 Speaker 1: keep as much of their money as they can. And 128 00:06:37,839 --> 00:06:40,640 Speaker 1: in some ways you can't blame him because historically taxes 129 00:06:40,720 --> 00:06:43,440 Speaker 1: used to be outrageous. So like in the Depression era, 130 00:06:43,600 --> 00:06:46,760 Speaker 1: Roosevelt thought no citizens should make more than twenty five 131 00:06:46,760 --> 00:06:50,120 Speaker 1: thousand dollars, which is essentially three hundred thousand dollars a 132 00:06:50,200 --> 00:06:53,240 Speaker 1: year today. So during World War Two, the tax on 133 00:06:53,279 --> 00:06:58,080 Speaker 1: the absolute richest Americans rose to an astounding percent, and 134 00:06:58,120 --> 00:07:01,680 Speaker 1: I knew they were hive. I mean, today people gripe 135 00:07:01,680 --> 00:07:04,520 Speaker 1: about a thirty three percent tax, right, But let's get 136 00:07:04,520 --> 00:07:07,160 Speaker 1: back to where all this untaxed hidden money is going. 137 00:07:07,600 --> 00:07:09,920 Speaker 1: Tax havens. You want to walk us through the definition, 138 00:07:10,080 --> 00:07:11,920 Speaker 1: I can, but before I do, did you ever hear 139 00:07:11,960 --> 00:07:14,600 Speaker 1: about the FDR scheme to make taxes more popular. I 140 00:07:14,600 --> 00:07:17,280 Speaker 1: don't think so. So this happened right after Pearl Harbor. 141 00:07:17,600 --> 00:07:20,120 Speaker 1: Roosevelt reached out to Irving Berlin and got him to 142 00:07:20,160 --> 00:07:24,160 Speaker 1: write a song called I Paid My Income Taxes. This 143 00:07:24,880 --> 00:07:28,160 Speaker 1: super peppy song about all the Mr small Fries out 144 00:07:28,160 --> 00:07:31,360 Speaker 1: there who actually doing this super patriotic duty by paying 145 00:07:31,360 --> 00:07:33,840 Speaker 1: their taxes and paying for the bombers in the sky 146 00:07:33,920 --> 00:07:35,800 Speaker 1: that are going to win the war. And I think 147 00:07:35,880 --> 00:07:40,360 Speaker 1: FDR wanted every American like singing along proudly. But of course, 148 00:07:40,760 --> 00:07:42,680 Speaker 1: I paid my income tax Today is not a song 149 00:07:42,760 --> 00:07:44,320 Speaker 1: that gets a ton of air play. I mean, it's 150 00:07:44,360 --> 00:07:46,400 Speaker 1: kind of weird. There's not been a remix of it. 151 00:07:46,880 --> 00:07:50,679 Speaker 1: I'm sure Kanye has got in the works. But let's 152 00:07:50,800 --> 00:07:53,320 Speaker 1: let's get back to your original question, which was explaining 153 00:07:53,400 --> 00:07:56,480 Speaker 1: what makes a tax haven. So most people think of 154 00:07:56,560 --> 00:08:00,000 Speaker 1: them as these places with very low to non existent taxes, 155 00:08:00,160 --> 00:08:02,960 Speaker 1: and that's definitely true, but there are two other key 156 00:08:02,960 --> 00:08:07,080 Speaker 1: factors that are usually involved. One is secrecy, and many 157 00:08:07,120 --> 00:08:09,480 Speaker 1: of these countries and territories have laws that prevent them 158 00:08:09,480 --> 00:08:13,600 Speaker 1: from sharing financial info with foreign countries and tax authorities. 159 00:08:14,360 --> 00:08:16,800 Speaker 1: This is, of course great if you're doing something suspicious 160 00:08:16,920 --> 00:08:20,040 Speaker 1: or planning to do something suspicious. So these places kind 161 00:08:20,040 --> 00:08:22,720 Speaker 1: of argued that the bank or client relationship is similar 162 00:08:22,760 --> 00:08:27,280 Speaker 1: to doctor patient confidentiality or you know, a lawyer client privilege. 163 00:08:27,560 --> 00:08:30,040 Speaker 1: And the other key factor is that tax havens usually 164 00:08:30,080 --> 00:08:32,920 Speaker 1: make it very easy to incorporate there. Yeah, they do. 165 00:08:32,960 --> 00:08:35,240 Speaker 1: I don't know. Did you hear the Planet Money episode 166 00:08:35,240 --> 00:08:37,640 Speaker 1: on this topic. I didn't. It was great. The host 167 00:08:37,720 --> 00:08:40,640 Speaker 1: decided to set up a shell corporation and Belize, and 168 00:08:40,679 --> 00:08:42,520 Speaker 1: so they call the number to set it up. They 169 00:08:42,520 --> 00:08:45,640 Speaker 1: reached customer service in Latvia who helped them create a 170 00:08:45,679 --> 00:08:48,080 Speaker 1: Swiss bank account and for a little more money, they 171 00:08:48,120 --> 00:08:51,120 Speaker 1: could actually keep themselves off the paperwork and set up 172 00:08:51,160 --> 00:08:53,960 Speaker 1: a fake board of directors. All it took was a 173 00:08:53,960 --> 00:08:56,200 Speaker 1: week or two and in just about seven days or 174 00:08:56,200 --> 00:08:59,280 Speaker 1: so they have this newly registered company and Belize, which 175 00:08:59,320 --> 00:09:03,679 Speaker 1: they named Believable, which is the best part. That's amazing. Also, 176 00:09:03,760 --> 00:09:06,120 Speaker 1: and this is very important to note, but much of 177 00:09:06,120 --> 00:09:08,760 Speaker 1: what we're talking about is not illegal. I mean, it 178 00:09:08,840 --> 00:09:11,920 Speaker 1: might be shady and unethical, but largely most of this 179 00:09:11,960 --> 00:09:14,200 Speaker 1: stuff can be buttoned up so that it's not illegal, 180 00:09:14,480 --> 00:09:17,280 Speaker 1: and of course it isn't just private citizens avoiding their 181 00:09:17,320 --> 00:09:22,160 Speaker 1: taxes through creating shell corporations. It's actual corporations doing it too, exactly. 182 00:09:22,240 --> 00:09:24,360 Speaker 1: In fact, it's almost become this point of pride for 183 00:09:24,400 --> 00:09:27,920 Speaker 1: corporations to pay as little as possible. But the accounting 184 00:09:28,040 --> 00:09:31,160 Speaker 1: is super complicated. Like to give you a comparison, the 185 00:09:31,280 --> 00:09:34,360 Speaker 1: editor of The Guardians said, the sort of accounting gymnastics 186 00:09:34,400 --> 00:09:38,280 Speaker 1: that's being used is quote as intelligible to the average 187 00:09:38,320 --> 00:09:42,120 Speaker 1: person as particle physics. I know he's not exaggerating. Like, 188 00:09:42,200 --> 00:09:44,920 Speaker 1: there's this book called The Heavens, which is this beautiful 189 00:09:45,000 --> 00:09:48,079 Speaker 1: photographic tour of tax hadn's and one of the spreads 190 00:09:48,080 --> 00:09:50,160 Speaker 1: early in the book shows how hard it is to 191 00:09:50,200 --> 00:09:53,640 Speaker 1: live without using companies that rely on tax shelters. It's 192 00:09:53,679 --> 00:09:56,880 Speaker 1: basically every company you use, Like, let me pull up 193 00:09:56,920 --> 00:10:01,359 Speaker 1: a few of these. So Amazon routes it's money through Luxembourg. 194 00:10:01,880 --> 00:10:05,240 Speaker 1: Google uses a method called the double Irish and Dutch sandwich, 195 00:10:05,360 --> 00:10:09,000 Speaker 1: which I know it sounds delicious, but it's combined with 196 00:10:09,040 --> 00:10:12,480 Speaker 1: the scheme in Bermuda to make their tax burden completely negligible. 197 00:10:12,920 --> 00:10:15,840 Speaker 1: From two thousand and two twelve, Apple set quote the 198 00:10:15,920 --> 00:10:19,920 Speaker 1: gold standard for these companies by shifting seventy four billion 199 00:10:19,920 --> 00:10:22,920 Speaker 1: dollars into an Irish subsidiary, and they reduced their tax 200 00:10:22,960 --> 00:10:26,240 Speaker 1: burden to just two Like can you imagine only paying 201 00:10:26,240 --> 00:10:29,280 Speaker 1: two percent on your taxes? And it's not just them, 202 00:10:29,280 --> 00:10:33,760 Speaker 1: It's like Starbucks, co, Kin's, tan PACs, you, Lett Pringles, Pepsi. 203 00:10:33,960 --> 00:10:36,560 Speaker 1: Every corporation is doing this. I think you named every 204 00:10:36,559 --> 00:10:39,960 Speaker 1: company out there. It's almost like steroids and sports. I mean, 205 00:10:40,000 --> 00:10:42,120 Speaker 1: you don't want to admit that your favorite athlete might 206 00:10:42,120 --> 00:10:45,040 Speaker 1: be juicing. But at the same time, if everyone's doing it, 207 00:10:45,160 --> 00:10:47,760 Speaker 1: how do you compete? But let's give a super basic 208 00:10:47,800 --> 00:10:51,280 Speaker 1: illustration of how this works. Sure, so let's say I'm 209 00:10:51,280 --> 00:10:54,520 Speaker 1: growing flowers and exporting them from Honduras, and they cost 210 00:10:54,559 --> 00:10:57,280 Speaker 1: me a hundred dollars to like row and package them. 211 00:10:57,679 --> 00:11:00,000 Speaker 1: Then I might sell them to my shady Shell company 212 00:11:00,120 --> 00:11:02,719 Speaker 1: for a hundred dollars. So on the books, I make 213 00:11:02,880 --> 00:11:05,640 Speaker 1: zero profit and Honduras and as a result, I don't 214 00:11:05,640 --> 00:11:09,120 Speaker 1: pay any taxes there. And then Shady Shell, which I 215 00:11:09,160 --> 00:11:12,600 Speaker 1: operate from this sunny tax haven, takes these flowers and 216 00:11:12,600 --> 00:11:15,640 Speaker 1: sells them to a grocery store in Germany for five dollars. 217 00:11:16,240 --> 00:11:19,440 Speaker 1: And this is of course entirely a paper transaction, because 218 00:11:19,559 --> 00:11:22,280 Speaker 1: actually taking the flowers from Honduras to my tax shelter 219 00:11:22,400 --> 00:11:25,720 Speaker 1: to Germany would be inefficient. So it's just on the books. 220 00:11:25,760 --> 00:11:28,760 Speaker 1: But because shady Shell pays no corporate taxes and then 221 00:11:28,880 --> 00:11:32,160 Speaker 1: once the sale goes through to Germany, I'm theoretically looking 222 00:11:32,240 --> 00:11:35,640 Speaker 1: at a four profit right, And so that example maybe 223 00:11:35,640 --> 00:11:38,560 Speaker 1: a little oversimplified, but the principle is there. If you 224 00:11:38,600 --> 00:11:42,280 Speaker 1: can run the money through multiple countries, sometimes anonymously, and 225 00:11:42,320 --> 00:11:45,400 Speaker 1: if you have super savvy international tax lawyers looking at 226 00:11:45,559 --> 00:11:49,320 Speaker 1: paper transactions, you can reduce your tax burden dramatically. Yeah, 227 00:11:49,320 --> 00:11:52,240 Speaker 1: it's baffling. So tell us a little about tax havens, 228 00:11:52,240 --> 00:11:54,599 Speaker 1: which aren't exactly a modern phenomena, and I think you 229 00:11:54,679 --> 00:11:56,600 Speaker 1: might have to go into a history professor mode for this, 230 00:11:56,760 --> 00:11:59,800 Speaker 1: So I'm gonna pull out this lectern. All right, thank 231 00:11:59,800 --> 00:12:02,640 Speaker 1: you will help. So, so, modern tax havens have been 232 00:12:02,640 --> 00:12:05,640 Speaker 1: around for over a century now. Our first tax havens 233 00:12:05,640 --> 00:12:08,160 Speaker 1: as we think of them, emerged after Great Britain started 234 00:12:08,200 --> 00:12:11,440 Speaker 1: loosening their governance over places like Hong Kong and Gibraltar 235 00:12:11,600 --> 00:12:14,760 Speaker 1: and the Channel Islands and other places that were protectorates 236 00:12:14,760 --> 00:12:17,800 Speaker 1: in their system. These places made it easier for people 237 00:12:17,840 --> 00:12:20,480 Speaker 1: to hide their money, and this is where the first 238 00:12:20,520 --> 00:12:23,400 Speaker 1: idea of offshore accounts came up. So as we get 239 00:12:23,480 --> 00:12:26,360 Speaker 1: into the nineteen hundreds, we start seeing wealthier people hiding 240 00:12:26,400 --> 00:12:30,000 Speaker 1: money in places like Bermuda and Monaco because these governments 241 00:12:30,000 --> 00:12:32,720 Speaker 1: wanted in on the action and they realized they could 242 00:12:32,720 --> 00:12:35,680 Speaker 1: make money in other ways through real estate and other 243 00:12:35,760 --> 00:12:39,440 Speaker 1: local spending, by offering incredibly strong tax incentives for people 244 00:12:39,480 --> 00:12:42,120 Speaker 1: to bring their money there, and of course for corporate 245 00:12:42,160 --> 00:12:45,240 Speaker 1: tax havens in the US. Delaware has been learning business 246 00:12:45,240 --> 00:12:47,439 Speaker 1: away from places like New York and New Jersey as 247 00:12:47,440 --> 00:12:49,960 Speaker 1: far back as the late eighteen hundreds. So you know, 248 00:12:50,040 --> 00:12:53,120 Speaker 1: I'm a proud son of Delaware. Every time you say 249 00:12:53,120 --> 00:12:55,040 Speaker 1: something negative about my home state, I'm gonna have to 250 00:12:55,080 --> 00:12:58,600 Speaker 1: counter with a positive fact. So this one's gonna be uh. 251 00:12:58,840 --> 00:13:01,760 Speaker 1: Dr Heimlich of the Haimlich maneuver was born there. Oh 252 00:13:01,800 --> 00:13:05,000 Speaker 1: that's an excellent fact, Mango. Actually I always just assumed 253 00:13:05,040 --> 00:13:07,680 Speaker 1: he was German. I know, are you defending Switzerland on 254 00:13:07,720 --> 00:13:09,920 Speaker 1: today's program too, because if you want to talk about 255 00:13:09,920 --> 00:13:13,479 Speaker 1: the granddaddy of tax shelters, that story starts in Switzerland. 256 00:13:13,480 --> 00:13:15,920 Speaker 1: I'm not. But before we get into that, what do 257 00:13:15,920 --> 00:13:17,760 Speaker 1: you say we play a game? That sounds pretty good. 258 00:13:23,280 --> 00:13:24,680 Speaker 1: So who do we have on the line today, Mango. 259 00:13:25,120 --> 00:13:28,120 Speaker 1: We cast a wide call and found two listeners who 260 00:13:28,160 --> 00:13:33,560 Speaker 1: actually admitted to paying their taxes to real taxpayers's okay, well, 261 00:13:33,640 --> 00:13:36,079 Speaker 1: let's let's meet him first. We have Donald. Now, Donald, 262 00:13:36,160 --> 00:13:38,520 Speaker 1: We've read about your illustrious career and the fact that 263 00:13:38,559 --> 00:13:41,240 Speaker 1: you're from Chicago, but the thing that really stood out 264 00:13:41,240 --> 00:13:43,520 Speaker 1: to us is that you are the world's biggest Janet 265 00:13:43,600 --> 00:13:46,880 Speaker 1: Jackson fan. Is this true? Absolutely? I am a card 266 00:13:46,920 --> 00:13:51,000 Speaker 1: carry member of the nation. Is it a little bit 267 00:13:51,040 --> 00:13:53,559 Speaker 1: easier these days to be the number one ranking Janet 268 00:13:53,600 --> 00:13:58,800 Speaker 1: Jackson fan than it was, say, twenty years ago? It's 269 00:13:58,880 --> 00:14:03,400 Speaker 1: it's a tough time. We're doing what we can. Well, 270 00:14:03,400 --> 00:14:05,480 Speaker 1: welcome to part Time Genius. We're glad to have you. 271 00:14:05,600 --> 00:14:07,760 Speaker 1: And John. We understand you are the founder of a 272 00:14:07,800 --> 00:14:11,040 Speaker 1: company called Chow and Iamo, which offers these boutique travel 273 00:14:11,080 --> 00:14:13,760 Speaker 1: experiences across Italy. But I need to ask you how 274 00:14:13,760 --> 00:14:17,880 Speaker 1: many vespas have you written in the past year? Um? Three? Three? 275 00:14:18,040 --> 00:14:20,720 Speaker 1: Is that true? Oh? I've only crashed one of them? Okay, 276 00:14:20,760 --> 00:14:24,600 Speaker 1: good good, alright, Well, welcome to part time Genius. So mango. 277 00:14:24,680 --> 00:14:27,320 Speaker 1: What are we having these taxpayers play today? We're playing 278 00:14:27,320 --> 00:14:29,880 Speaker 1: a game we invented, and it's a really stupid game 279 00:14:30,000 --> 00:14:33,360 Speaker 1: called death and something that rhymes with taxes? All right? 280 00:14:33,400 --> 00:14:35,640 Speaker 1: And what are our guests playing for? So this week, 281 00:14:35,720 --> 00:14:37,800 Speaker 1: like every other week, they're playing for a chance to 282 00:14:37,800 --> 00:14:40,680 Speaker 1: win a note to their mom or boss that will 283 00:14:40,680 --> 00:14:44,080 Speaker 1: send singing their praises. Okay, alright, so let's play. So 284 00:14:44,480 --> 00:14:47,280 Speaker 1: we've all heard that Ben Franklin said nothing was certain 285 00:14:47,400 --> 00:14:51,120 Speaker 1: other than death and taxes. And these are all phrases 286 00:14:51,160 --> 00:14:53,960 Speaker 1: that rhyme with that. So let's give an example. If 287 00:14:54,000 --> 00:14:57,280 Speaker 1: we said nothing is certain other than dying and John 288 00:14:57,360 --> 00:15:02,360 Speaker 1: Coltrane's instrument, you'd say death and sexes, Death and sexes. 289 00:15:02,440 --> 00:15:06,400 Speaker 1: That make sense to you, guys, all right, excellently. So 290 00:15:06,480 --> 00:15:08,800 Speaker 1: here's how this is going to work. Instead of just 291 00:15:09,280 --> 00:15:11,800 Speaker 1: regular chimes, because we need to know who's going to 292 00:15:11,840 --> 00:15:15,040 Speaker 1: be buzzing in, we're gonna give you guys, animal noises 293 00:15:15,120 --> 00:15:17,520 Speaker 1: to you. So, Donald, how do you feel about being 294 00:15:17,560 --> 00:15:21,280 Speaker 1: our moor? All right? John? Do you want to be 295 00:15:21,320 --> 00:15:25,880 Speaker 1: our Caca? So we're gonna play some death and something 296 00:15:25,920 --> 00:15:30,160 Speaker 1: that rhymes with taxes? Okay, here we go. Question number one, 297 00:15:30,840 --> 00:15:32,800 Speaker 1: don't forget to buzz in with your animal noises when 298 00:15:32,840 --> 00:15:40,840 Speaker 1: you know the answer. Dying and Lizzie Borden's weapon of choice. Okay, 299 00:15:41,080 --> 00:15:44,520 Speaker 1: what do you think? John? Um? Is it? Death and axes? 300 00:15:44,680 --> 00:15:48,560 Speaker 1: Well done? All right? Question number two, Donald, you ready? 301 00:15:48,840 --> 00:15:52,520 Speaker 1: Dying and a scanning machine that transmits documents over the 302 00:15:52,560 --> 00:15:59,560 Speaker 1: phone line. I heard of coca first, John, What is it? Death? 303 00:15:59,560 --> 00:16:02,600 Speaker 1: In fact? Death and facts is okay? He's got to 304 00:16:02,840 --> 00:16:04,560 Speaker 1: I think this next one's going to Donald. I just 305 00:16:04,600 --> 00:16:08,360 Speaker 1: feel it all right. Question number three Dying and a 306 00:16:08,400 --> 00:16:15,360 Speaker 1: painful hair removal process. I'd rather not indulge in. Go ahead, John, 307 00:16:16,960 --> 00:16:20,720 Speaker 1: Death and wax. He's got it all right. Question number 308 00:16:20,720 --> 00:16:24,240 Speaker 1: four dying and something I'd buy at a movie theater? 309 00:16:26,720 --> 00:16:31,040 Speaker 1: What is it? John? Death and snacks is okay? Here 310 00:16:31,040 --> 00:16:33,560 Speaker 1: we go. Now, remember we're not using any last names 311 00:16:33,280 --> 00:16:38,360 Speaker 1: in yep. Death and snacks is Question number five dying 312 00:16:38,520 --> 00:16:44,240 Speaker 1: and Harvey Weinstein's movie company if he had two of them? 313 00:16:44,320 --> 00:16:50,480 Speaker 1: Let's hear it, Donald, Yes, he's in it all right. 314 00:16:50,560 --> 00:16:54,160 Speaker 1: Here we go. Question number six Dying and a long 315 00:16:54,240 --> 00:16:59,960 Speaker 1: haired bovine like animal that grazes into bet. What is it? John? 316 00:17:00,320 --> 00:17:03,520 Speaker 1: Death and y That was a good one. That was 317 00:17:03,600 --> 00:17:05,800 Speaker 1: one of a toughie. I didn't I didn't know if 318 00:17:05,800 --> 00:17:08,359 Speaker 1: anybody would get that one. All right, we've got our 319 00:17:08,440 --> 00:17:13,679 Speaker 1: last one here, number six, dying and stuff that we 320 00:17:13,840 --> 00:17:17,119 Speaker 1: use Philoso four so it doesn't collect on our teeth. 321 00:17:17,840 --> 00:17:28,040 Speaker 1: Oh okay, let's hear it. And yes, don't question yourself. 322 00:17:28,040 --> 00:17:30,240 Speaker 1: You just gotta go with it, man, all right. So 323 00:17:30,280 --> 00:17:34,600 Speaker 1: what's our final score here? Mango? So John destroyed Donald 324 00:17:34,720 --> 00:17:37,680 Speaker 1: with the score of five to two. Unfortunately, I think 325 00:17:37,680 --> 00:17:40,879 Speaker 1: we can send notes. I think so too. I feel 326 00:17:40,880 --> 00:17:43,320 Speaker 1: good about that. So thank you guys for coming on 327 00:17:43,359 --> 00:17:45,800 Speaker 1: to Part Time Genius and playing a little game with us. 328 00:17:46,240 --> 00:17:59,200 Speaker 1: Thank you, thanks for having us. Welcome back to Part 329 00:17:59,200 --> 00:18:01,720 Speaker 1: Time Genius. We're talking about tax havens today, so that 330 00:18:01,720 --> 00:18:06,480 Speaker 1: when Mango becomes a billionaire, he'll know exactly where my bad, 331 00:18:06,560 --> 00:18:09,280 Speaker 1: my bad. Now. There are dozens of tax shelters around 332 00:18:09,280 --> 00:18:12,240 Speaker 1: the world, each offering a unique mix of perks. But 333 00:18:12,320 --> 00:18:14,520 Speaker 1: remembering that we want to be on a sunny island 334 00:18:14,520 --> 00:18:17,359 Speaker 1: when we incorporate Shady Shell, which is our incredibly shady 335 00:18:17,359 --> 00:18:20,080 Speaker 1: shell company. Tell me about these tax havens. Are they 336 00:18:20,119 --> 00:18:23,000 Speaker 1: all in the tropics? Well, that's definitely the image most 337 00:18:23,000 --> 00:18:25,280 Speaker 1: people have when they think of tax havens, like palm 338 00:18:25,320 --> 00:18:29,320 Speaker 1: trees and flip flops and blue waters. But tax havens 339 00:18:29,359 --> 00:18:32,240 Speaker 1: aren't all in the tropics. Well, let's come back to 340 00:18:32,240 --> 00:18:34,480 Speaker 1: the locations that aren't so sunny in just a minute. 341 00:18:34,480 --> 00:18:36,760 Speaker 1: But why are so many of them in the tropics. 342 00:18:36,760 --> 00:18:39,760 Speaker 1: So much of it comes down to diversifying revenue streams. 343 00:18:39,800 --> 00:18:42,760 Speaker 1: Like many islands in warm places recognized that their economies 344 00:18:42,760 --> 00:18:46,000 Speaker 1: were overly dependent on tourism, so they decided to expand 345 00:18:46,000 --> 00:18:49,040 Speaker 1: into financial services. Is a way to diversify and generate 346 00:18:49,040 --> 00:18:51,399 Speaker 1: new money, and some of these moved towards this in 347 00:18:51,480 --> 00:18:53,640 Speaker 1: the fifties and sixties, but a lot of them only 348 00:18:53,640 --> 00:18:56,280 Speaker 1: turned into tax shelters going into the Internet age, when 349 00:18:56,560 --> 00:18:58,119 Speaker 1: all you needed to set up an account was a 350 00:18:58,119 --> 00:19:01,480 Speaker 1: good phone line and internet. So take a place like 351 00:19:01,560 --> 00:19:04,679 Speaker 1: the Micronesian nation of Nauru. The country used to be 352 00:19:04,680 --> 00:19:07,040 Speaker 1: a massive phosphate mine, and for a short while, the 353 00:19:07,040 --> 00:19:10,000 Speaker 1: people were considered the richest on Earth. But the tiny 354 00:19:10,119 --> 00:19:12,919 Speaker 1: nation was just stripped and stripped of all its natural 355 00:19:13,000 --> 00:19:17,360 Speaker 1: resources until the country's interior was basically uninhabitable. And then 356 00:19:17,400 --> 00:19:20,159 Speaker 1: the island trust made some really bad investments and was 357 00:19:20,240 --> 00:19:22,800 Speaker 1: fleeced out of its wealth. So when the country needed 358 00:19:22,880 --> 00:19:26,639 Speaker 1: quick money, transforming into a tax haven seemed pretty attractive. 359 00:19:27,400 --> 00:19:30,200 Speaker 1: So you know, I I loved the reporter Jack Hit 360 00:19:30,400 --> 00:19:32,600 Speaker 1: I mean, the guy from This American Life. Yeah. So 361 00:19:32,720 --> 00:19:34,640 Speaker 1: Jackett did this piece for the New York Times where 362 00:19:34,640 --> 00:19:36,679 Speaker 1: you traveled to Nauru to knock on the door of 363 00:19:36,720 --> 00:19:40,240 Speaker 1: this place that registered thousands of shell corporations. And what 364 00:19:40,359 --> 00:19:43,240 Speaker 1: he found, other than a basically an empty building with 365 00:19:43,320 --> 00:19:46,440 Speaker 1: a maiden, was that the country wasn't just offering tax 366 00:19:46,480 --> 00:19:50,480 Speaker 1: shelter services, but they also started offering these ridiculous packages. 367 00:19:50,960 --> 00:19:53,160 Speaker 1: Like one of the schemes was that for twenty five 368 00:19:53,600 --> 00:19:55,480 Speaker 1: dollars you could set up your own bank on the 369 00:19:55,480 --> 00:19:58,440 Speaker 1: country to run your transactions through and make your transfer 370 00:19:58,520 --> 00:20:02,439 Speaker 1: seem more official. It's crazy, yeah, So the hope was 371 00:20:02,480 --> 00:20:05,080 Speaker 1: that all these twenty five dollar deals would add up. 372 00:20:05,240 --> 00:20:07,320 Speaker 1: All right, So I see why these island nations get 373 00:20:07,320 --> 00:20:09,800 Speaker 1: into the game. But what are the biggest tax havens 374 00:20:09,800 --> 00:20:12,000 Speaker 1: in the world. Well, as you mentioned earlier, the king 375 00:20:12,080 --> 00:20:14,480 Speaker 1: is still Switzerland when it comes to private wealth. You 376 00:20:14,520 --> 00:20:16,600 Speaker 1: know what's funny is that we all know about Swiss 377 00:20:16,600 --> 00:20:19,560 Speaker 1: bank accounts because almost any movie from the seventies or eighties, 378 00:20:19,600 --> 00:20:22,280 Speaker 1: where there was a ransom, you'd have some smart criminal 379 00:20:22,400 --> 00:20:25,320 Speaker 1: always demand that money get put into a numbered Swiss 380 00:20:25,359 --> 00:20:28,640 Speaker 1: bank account. It's kind of the gold standard of offshore accounts. 381 00:20:28,720 --> 00:20:31,480 Speaker 1: So why is it always Switzerland. Well, this goes back 382 00:20:31,520 --> 00:20:33,800 Speaker 1: to something I read from Nicholas Shackson where he offers 383 00:20:33,840 --> 00:20:36,840 Speaker 1: up Switzerland as this amazing case study for how global 384 00:20:36,840 --> 00:20:40,240 Speaker 1: perceptions don't match up with reality. Like the Switzerland we 385 00:20:40,320 --> 00:20:42,679 Speaker 1: think of is super clean, and the people are honest 386 00:20:42,720 --> 00:20:45,719 Speaker 1: and punctual, and it operates efficiently, so of course it's 387 00:20:45,760 --> 00:20:48,960 Speaker 1: at the bottom of the corruption perception index because it 388 00:20:49,000 --> 00:20:51,960 Speaker 1: seems like an honest place for business. Right, everything about 389 00:20:51,960 --> 00:20:54,719 Speaker 1: Switzerland seems to run smoothly. I mean, I saw this 390 00:20:54,800 --> 00:20:56,639 Speaker 1: thing that even the way they deal with pets is 391 00:20:56,680 --> 00:20:59,200 Speaker 1: more orderly, Like if you're a dog owner in Switzerland, 392 00:20:59,400 --> 00:21:01,760 Speaker 1: you have to take a training course and then passive 393 00:21:01,800 --> 00:21:05,000 Speaker 1: tests on proper care for your pop and of course 394 00:21:05,040 --> 00:21:07,480 Speaker 1: there are taxes based on your dog size and weight. 395 00:21:07,560 --> 00:21:09,560 Speaker 1: So it's not a strain on society. Oh man, my 396 00:21:09,640 --> 00:21:13,000 Speaker 1: family is famous for having nothing but disobedient and spoiled dogs. 397 00:21:13,119 --> 00:21:14,840 Speaker 1: Like my mom used to keep the temperature in our 398 00:21:14,840 --> 00:21:18,720 Speaker 1: house uncomfortably low, just so our super fuzzy dog was comfortable. God, 399 00:21:19,040 --> 00:21:21,760 Speaker 1: we wear jackets and keep the space heater going just 400 00:21:21,920 --> 00:21:24,800 Speaker 1: so the dog was Okay. It sounds pretty terrible, but 401 00:21:24,960 --> 00:21:28,280 Speaker 1: in Switzerland everything seems totally by the book and straight laced. 402 00:21:28,800 --> 00:21:31,639 Speaker 1: And if you compare that corruption perception list to the 403 00:21:31,680 --> 00:21:36,720 Speaker 1: Tax Justice Network's financial secrecy list, it's completely flipped and 404 00:21:36,720 --> 00:21:39,479 Speaker 1: the Swizzard number one on that list. Basically, they are 405 00:21:39,520 --> 00:21:42,240 Speaker 1: the shady bank capital of the world, and they've been 406 00:21:42,240 --> 00:21:44,560 Speaker 1: that way for a while now, right, So people often 407 00:21:44,600 --> 00:21:46,520 Speaker 1: think it goes back to World War Two, but the 408 00:21:46,560 --> 00:21:49,000 Speaker 1: system is actually much older than that. I think it's 409 00:21:49,040 --> 00:21:52,239 Speaker 1: your turn to play professor now. Sure. So there's this 410 00:21:52,320 --> 00:21:55,439 Speaker 1: lord that Switzerland enacted its secrecy laws to protect Jewish 411 00:21:55,440 --> 00:21:58,040 Speaker 1: money from the Nazis, and that's a nice story, but 412 00:21:58,080 --> 00:22:01,040 Speaker 1: it isn't exactly true. I mean, the Swiss have always 413 00:22:01,040 --> 00:22:03,880 Speaker 1: been happy to take money from both sides. But Shackson 414 00:22:03,920 --> 00:22:07,080 Speaker 1: basically shows that the Swiss realized very early, way back 415 00:22:07,119 --> 00:22:10,160 Speaker 1: in sixteen nineteen during the Thirty Years War, that being 416 00:22:10,200 --> 00:22:13,879 Speaker 1: neutral in wartime was really good business. So that was 417 00:22:13,920 --> 00:22:16,679 Speaker 1: in the sixteen hundreds, and by seventeen thirteen, Geneva had 418 00:22:16,720 --> 00:22:19,960 Speaker 1: already codified it. They had bound Swiss bankers to be 419 00:22:20,040 --> 00:22:24,320 Speaker 1: completely confidential. So between being neutral and stable and now 420 00:22:24,440 --> 00:22:26,960 Speaker 1: armed with this cloak of secrecy, like, all of that 421 00:22:27,040 --> 00:22:30,360 Speaker 1: made Switzerland the super attractive holding ground for wealthy families. 422 00:22:30,880 --> 00:22:33,040 Speaker 1: Like if you were rich and you wanted to protect 423 00:22:33,080 --> 00:22:36,399 Speaker 1: your assets from invading forces, Switzerland made a lot of sense. 424 00:22:36,640 --> 00:22:38,480 Speaker 1: And if you were rich and didn't want to pay 425 00:22:38,560 --> 00:22:42,040 Speaker 1: higher taxes to your government to subsidize the war, Switzerland 426 00:22:42,080 --> 00:22:44,800 Speaker 1: also made sense. So either way, clients knew they could 427 00:22:44,800 --> 00:22:47,560 Speaker 1: count on Swiss discretion to keep their money safe. So 428 00:22:47,600 --> 00:22:50,720 Speaker 1: they were early war profiteers, I guess. And even though 429 00:22:50,760 --> 00:22:53,240 Speaker 1: some of these privacy laws have been chipped away a bit, 430 00:22:53,400 --> 00:22:56,159 Speaker 1: Switzerland is still estimated to have about a quarter of 431 00:22:56,200 --> 00:22:58,640 Speaker 1: the world's offshore wealth. I mean, that is a ton 432 00:22:58,800 --> 00:23:01,720 Speaker 1: of money. Of se statistic is a little bit misleading 433 00:23:01,720 --> 00:23:04,439 Speaker 1: because most of the rankings don't group the United Kingdom 434 00:23:04,520 --> 00:23:07,600 Speaker 1: with other places under its jurisdiction. Yeah, that's right. Like 435 00:23:07,720 --> 00:23:09,919 Speaker 1: if you did group the UK together with places like 436 00:23:09,960 --> 00:23:13,359 Speaker 1: the Cayman Islands in Jersey and Bermuda and the rest 437 00:23:13,359 --> 00:23:15,919 Speaker 1: of its network, it would be by far the largest 438 00:23:15,920 --> 00:23:19,080 Speaker 1: tax haven. I mean these places are at least partly independent, 439 00:23:19,119 --> 00:23:21,880 Speaker 1: but their governance is appointed by the Queen and their 440 00:23:21,920 --> 00:23:24,760 Speaker 1: laws are decided in London. I mean the Queen's faces 441 00:23:24,800 --> 00:23:27,120 Speaker 1: on all of their money, so I'd say they're pretty British. Yeah, 442 00:23:27,160 --> 00:23:30,480 Speaker 1: that's pretty British. It's weird because the deeper you dig, 443 00:23:30,520 --> 00:23:33,960 Speaker 1: you realize everyone's hands are dirty. Like Francis President is 444 00:23:34,000 --> 00:23:37,560 Speaker 1: technically the co Prince of Andorra, which is a principality 445 00:23:37,640 --> 00:23:40,200 Speaker 1: but has also functioned as a tax haven for decades, 446 00:23:40,640 --> 00:23:43,000 Speaker 1: and London is heavily implicated and all of this dark 447 00:23:43,040 --> 00:23:45,760 Speaker 1: money scattered around. I know. I read that when Margaret 448 00:23:45,760 --> 00:23:48,080 Speaker 1: Thatcher died it was revealed that our six million pound 449 00:23:48,160 --> 00:23:50,399 Speaker 1: town home was registered to a company in the British 450 00:23:50,440 --> 00:23:54,520 Speaker 1: Virgin Islands. And Private Eye magazine they did this investigation 451 00:23:54,600 --> 00:23:57,760 Speaker 1: on Britain's Ministry of Justice and they discovered the tax 452 00:23:57,800 --> 00:24:01,240 Speaker 1: tribunals were operating out of a building owned in Gibraltar. 453 00:24:01,800 --> 00:24:04,040 Speaker 1: It's hard to keep your mind out of conspiracy theory 454 00:24:04,119 --> 00:24:06,159 Speaker 1: territory when you read stuff like that. I know, it 455 00:24:06,200 --> 00:24:09,080 Speaker 1: gets so murky between what's legitimate and what isn't right, 456 00:24:09,240 --> 00:24:12,200 Speaker 1: Like there's this outrage online about how the BBC has 457 00:24:12,240 --> 00:24:14,679 Speaker 1: never aired a big tax expose about all of this 458 00:24:14,840 --> 00:24:17,919 Speaker 1: because it's rejected a few opportunities and I don't know, 459 00:24:17,960 --> 00:24:20,320 Speaker 1: maybe the ones that got pitched weren't any good. I know. 460 00:24:20,560 --> 00:24:22,640 Speaker 1: So I remember when I was an editor and people 461 00:24:22,680 --> 00:24:25,119 Speaker 1: always used to ask why we hadn't done a Bigfoot article, 462 00:24:25,480 --> 00:24:28,000 Speaker 1: and this Bigfoot believer society got on our case, we're 463 00:24:28,000 --> 00:24:31,040 Speaker 1: not publishing anything pro Bigfoot, and I was like, if 464 00:24:31,040 --> 00:24:33,280 Speaker 1: you could just tell me one good fact, maybe I'd 465 00:24:33,320 --> 00:24:37,679 Speaker 1: run something. So speaking of British overseas territories, have you 466 00:24:37,680 --> 00:24:39,800 Speaker 1: actually heard the story of how the Cayman Islands got 467 00:24:39,800 --> 00:24:42,680 Speaker 1: its start? I don't think, Oh it's so good. So 468 00:24:42,800 --> 00:24:45,520 Speaker 1: in the sixties, the Bahamas was where wealthy people used 469 00:24:45,520 --> 00:24:47,919 Speaker 1: to route their money and it was considered the smart 470 00:24:48,040 --> 00:24:50,840 Speaker 1: bent because of its connection to London banks and the 471 00:24:50,880 --> 00:24:53,720 Speaker 1: perceived stability. Plus it was just a short plane ride 472 00:24:53,760 --> 00:24:56,760 Speaker 1: from Miami and Cuba or whatever. But when the country 473 00:24:56,760 --> 00:25:00,359 Speaker 1: elected its first black president, suddenly all these wealthy clients 474 00:25:00,400 --> 00:25:04,280 Speaker 1: got skittish and started looking for another British protectorate close by, 475 00:25:04,320 --> 00:25:07,440 Speaker 1: and the Caymans was this truly podunk island. At the time, 476 00:25:07,520 --> 00:25:10,399 Speaker 1: like really pod on and from the descriptions it was 477 00:25:10,440 --> 00:25:13,719 Speaker 1: just swarms of mosquitoes chasing cattle around and it had 478 00:25:13,720 --> 00:25:16,600 Speaker 1: a bit of diving tourism. But the bankers, and I'm 479 00:25:16,640 --> 00:25:20,800 Speaker 1: being totally serious here, we're communicating by Morse code because 480 00:25:20,880 --> 00:25:23,719 Speaker 1: they because there weren't proper phone lines on the island. 481 00:25:23,920 --> 00:25:26,600 Speaker 1: It was that undeveloped, and in less than a decade 482 00:25:26,640 --> 00:25:29,920 Speaker 1: it was built up specifically to accommodate this financial white flight, 483 00:25:30,040 --> 00:25:33,280 Speaker 1: which is doubly heartbreaking. Yeah, and today, of course the 484 00:25:33,320 --> 00:25:36,119 Speaker 1: Caymans are like the crown jewel of tax shelters. Like 485 00:25:36,200 --> 00:25:38,520 Speaker 1: there's this place on the islands called the Ugland House 486 00:25:38,760 --> 00:25:42,520 Speaker 1: where some nineteen thousand shell corporations have been filed. And 487 00:25:42,560 --> 00:25:44,680 Speaker 1: what was it Obama said about it. I think he said, 488 00:25:44,720 --> 00:25:47,119 Speaker 1: either this is the largest building in the world or 489 00:25:47,119 --> 00:25:50,440 Speaker 1: the biggest tax scam. On I'm going with tax scam. 490 00:25:51,040 --> 00:25:53,800 Speaker 1: I mean the Ugland who started Andreas Ugland has a 491 00:25:53,920 --> 00:25:57,000 Speaker 1: museum stocked with rare ferraris and Bentley's and motor flights, 492 00:25:57,520 --> 00:25:59,840 Speaker 1: so I think he's done all right for himself. Plus 493 00:25:59,840 --> 00:26:02,280 Speaker 1: the opposedly there's some really shady money going through the 494 00:26:02,320 --> 00:26:05,960 Speaker 1: caynans like Shackson got this former financial officer to talk 495 00:26:06,000 --> 00:26:08,480 Speaker 1: to him off the record, and so supposedly the money 496 00:26:08,480 --> 00:26:12,000 Speaker 1: that's flowing through includes deals for international arms rings and 497 00:26:12,119 --> 00:26:14,439 Speaker 1: drug money and all that James Bond stuff we were 498 00:26:14,440 --> 00:26:16,080 Speaker 1: talking about on the top, and we know you're a 499 00:26:16,160 --> 00:26:20,000 Speaker 1: James Bond expert from and law enforcement in places like 500 00:26:20,080 --> 00:26:23,320 Speaker 1: Jersey and the British Vision Islands. They're frustrated because instead 501 00:26:23,320 --> 00:26:25,600 Speaker 1: of being able to investigate things, they're encouraged to give 502 00:26:25,600 --> 00:26:29,560 Speaker 1: out routine traffic stop violations instead of following the paper trails. Yeah, 503 00:26:29,560 --> 00:26:31,840 Speaker 1: it's insane. Well, what good is a great beachy tax 504 00:26:31,880 --> 00:26:34,919 Speaker 1: shelter if it isn't safe for pedestrians? All right, so 505 00:26:34,960 --> 00:26:37,560 Speaker 1: we've touched on England and Switzerland. But here's something that 506 00:26:37,600 --> 00:26:40,040 Speaker 1: may surprise our listeners, and that's where the US falls 507 00:26:40,080 --> 00:26:42,280 Speaker 1: and all of this. Yeah, it's crazy because we hear 508 00:26:42,320 --> 00:26:44,159 Speaker 1: so much about how the U s Is losing so 509 00:26:44,240 --> 00:26:46,800 Speaker 1: much of its potential tax revenue to tax havens around 510 00:26:46,800 --> 00:26:48,879 Speaker 1: the world, but it turns out the US is quickly 511 00:26:48,880 --> 00:26:52,280 Speaker 1: becoming what some describe as a mega tax haven. This 512 00:26:52,320 --> 00:26:55,400 Speaker 1: is because states like Nevada, Wyoming and yes, your beloved 513 00:26:55,440 --> 00:26:59,240 Speaker 1: Delaware provides such easy ways for companies to avoid their taxes. Well, 514 00:26:59,320 --> 00:27:01,960 Speaker 1: you know my belove of Delaware, but also Bob Marley's 515 00:27:02,119 --> 00:27:04,280 Speaker 1: worked in a car plan Wilmington's for a little while 516 00:27:04,359 --> 00:27:07,280 Speaker 1: before becoming a reggae star. Good fact, Maga I had 517 00:27:07,320 --> 00:27:10,080 Speaker 1: to avoid by Delaware references here. Now, it turns out 518 00:27:10,080 --> 00:27:13,280 Speaker 1: these states allow people to maintain their anonymity more than 519 00:27:13,320 --> 00:27:16,520 Speaker 1: almost any other tax havens around the world. In fact, 520 00:27:16,560 --> 00:27:18,879 Speaker 1: some of these states don't even really require you to 521 00:27:18,880 --> 00:27:21,600 Speaker 1: provide your identity when setting up a company there. So 522 00:27:21,720 --> 00:27:25,000 Speaker 1: I obviously benefited from Delawarees tax structure. Right. We had 523 00:27:25,040 --> 00:27:27,639 Speaker 1: wonderful public schools and good services, and when I was 524 00:27:27,640 --> 00:27:30,359 Speaker 1: growing up it was a really moderate state. And so 525 00:27:30,480 --> 00:27:32,480 Speaker 1: I've always heard Delaware was a great place to start 526 00:27:32,480 --> 00:27:35,280 Speaker 1: a business, but I didn't quite realize how easy it 527 00:27:35,320 --> 00:27:37,680 Speaker 1: is for foreigners to set one up there. Like it's 528 00:27:37,720 --> 00:27:40,159 Speaker 1: honestly harder to get a library card than it is 529 00:27:40,200 --> 00:27:42,800 Speaker 1: to set up a business, because with a library card, 530 00:27:42,880 --> 00:27:45,119 Speaker 1: all you need to do is like show your identification 531 00:27:45,520 --> 00:27:47,720 Speaker 1: and then an electricity bill, and then you have to 532 00:27:47,760 --> 00:27:50,320 Speaker 1: do it within standard hours. And you don't have to 533 00:27:50,359 --> 00:27:52,600 Speaker 1: do any of this with the business. You just kind 534 00:27:52,600 --> 00:27:54,600 Speaker 1: of to tell them what your businesses and provide a 535 00:27:54,600 --> 00:27:57,520 Speaker 1: point of contact. Right And in Delaware, the government offices 536 00:27:57,560 --> 00:28:00,280 Speaker 1: actually stay open until midnight Monday to third is day 537 00:28:00,280 --> 00:28:04,159 Speaker 1: to accommodate the business, and nine thirty on Friday you 538 00:28:04,160 --> 00:28:06,800 Speaker 1: can get a corporation created and under an hour, which 539 00:28:06,880 --> 00:28:09,080 Speaker 1: is just astounding. Yeah, that's one of the things you 540 00:28:09,119 --> 00:28:11,159 Speaker 1: hear growing up a lot that there are more corporations 541 00:28:11,200 --> 00:28:13,640 Speaker 1: in the state than people. And it's why the movie 542 00:28:13,720 --> 00:28:16,879 Speaker 1: Fight Club is supposedly based in Delaware. But Delaware is 543 00:28:16,920 --> 00:28:19,600 Speaker 1: carved out this little niche for itself because it functions 544 00:28:19,680 --> 00:28:21,920 Speaker 1: very much like that shady shell example. At the top, 545 00:28:22,040 --> 00:28:25,960 Speaker 1: there are a few intangible assets like things like trademarks 546 00:28:25,960 --> 00:28:28,720 Speaker 1: and royalties and copyright that Delaware won't tax, So a 547 00:28:28,760 --> 00:28:31,480 Speaker 1: company can basically run its accounts through a shell corporation 548 00:28:31,480 --> 00:28:35,600 Speaker 1: in Delaware, assign those profits to those intangible assets, and 549 00:28:35,600 --> 00:28:38,320 Speaker 1: then reduce its tax burden along the way. And all 550 00:28:38,360 --> 00:28:41,000 Speaker 1: of this looks better in terms of public perception than 551 00:28:41,120 --> 00:28:44,680 Speaker 1: running your accounts through an offshore account. Like both Donald 552 00:28:44,680 --> 00:28:47,200 Speaker 1: Trump and Hillary Clinton have companies registered in the same 553 00:28:47,240 --> 00:28:50,440 Speaker 1: building in Delaware, and while that in itself doesn't mean anything. 554 00:28:50,640 --> 00:28:52,600 Speaker 1: I'm pretty sure neither of them lived there. Yeah, I 555 00:28:52,600 --> 00:28:55,080 Speaker 1: don't think so. Well. Those laws work even better for 556 00:28:55,080 --> 00:28:57,560 Speaker 1: foreigners cycling their money through the US than for US 557 00:28:57,640 --> 00:29:01,320 Speaker 1: citizens because these very tax laws catered to them, and 558 00:29:01,360 --> 00:29:03,680 Speaker 1: as a result, the US has quickly become one of 559 00:29:03,720 --> 00:29:06,920 Speaker 1: the top destinations for foreigners to hide their assets and 560 00:29:07,040 --> 00:29:09,640 Speaker 1: not pay taxes in their home country. And one of 561 00:29:09,680 --> 00:29:12,600 Speaker 1: the main reasons these states have become such prime destination 562 00:29:13,080 --> 00:29:15,600 Speaker 1: is because the US refused to sign the o e 563 00:29:15,640 --> 00:29:19,640 Speaker 1: c D, which was the Organization for Economic Cooperation and Development, 564 00:29:20,080 --> 00:29:22,880 Speaker 1: and this initiative was established to allow countries to share 565 00:29:22,920 --> 00:29:27,720 Speaker 1: banking and investment information. But despite nineties seven other countries 566 00:29:27,720 --> 00:29:30,800 Speaker 1: signing on, the US was one of four who did not. 567 00:29:31,600 --> 00:29:33,480 Speaker 1: So if you live outside the United States and you're 568 00:29:33,520 --> 00:29:36,040 Speaker 1: looking for a great place to hide your millions and billions, 569 00:29:36,320 --> 00:29:38,600 Speaker 1: for only five hundred or six hundred dollars, you can 570 00:29:38,600 --> 00:29:41,920 Speaker 1: set up your shell company in Delaware and maintain total anonymity. 571 00:29:42,120 --> 00:29:44,720 Speaker 1: I love that the US was one of four, and 572 00:29:44,800 --> 00:29:46,400 Speaker 1: so I looked at the other three and do you 573 00:29:46,400 --> 00:29:50,200 Speaker 1: know who those superpowers were? Now? It's bar Rain, Nauru 574 00:29:50,480 --> 00:29:54,800 Speaker 1: and Vanuatu, and good companies. But back to Delaware for 575 00:29:54,880 --> 00:29:57,080 Speaker 1: a second. Well, it does have a great beach and 576 00:29:57,160 --> 00:29:59,680 Speaker 1: as much as I can boost the state, which did 577 00:29:59,720 --> 00:30:02,680 Speaker 1: you know? The ladybugs the state bug And it's because 578 00:30:02,680 --> 00:30:05,440 Speaker 1: the second grade class wrote the governor to suggest it, like, 579 00:30:05,560 --> 00:30:07,560 Speaker 1: that's how adorable my state is. We I think we 580 00:30:07,600 --> 00:30:09,400 Speaker 1: get it. I think we like you. You like Delaware. 581 00:30:09,600 --> 00:30:12,600 Speaker 1: But for all my propaganda, I wouldn't exactly call it tropical, 582 00:30:12,760 --> 00:30:23,280 Speaker 1: so we should cross it off the list. So our 583 00:30:23,280 --> 00:30:24,920 Speaker 1: guest today is the co host of one of our 584 00:30:24,960 --> 00:30:28,120 Speaker 1: favorite podcast, Stuff You Missed in History Class. She and 585 00:30:28,160 --> 00:30:30,760 Speaker 1: her co host Tracy Vie Wilson always make me feel 586 00:30:30,800 --> 00:30:33,200 Speaker 1: so much smarter, with recent episodes on everything from the 587 00:30:33,280 --> 00:30:36,440 Speaker 1: Kentucky Derby's first fifty years to the life of Lucille 588 00:30:36,480 --> 00:30:39,280 Speaker 1: Ball to a brief history of foreign food in the US. 589 00:30:39,840 --> 00:30:42,760 Speaker 1: Is such a fascinating and smart podcast. Holly Fry, Welcome 590 00:30:42,800 --> 00:30:44,760 Speaker 1: to Part Time Genius. Thank you so much. Do you 591 00:30:44,840 --> 00:30:47,440 Speaker 1: make us sounds so much smarter than we probably really are. 592 00:30:47,760 --> 00:30:49,720 Speaker 1: You guys are so smart. We love the show. We've 593 00:30:49,760 --> 00:30:51,880 Speaker 1: been fans for a long time now. Holly, I know 594 00:30:51,920 --> 00:30:55,560 Speaker 1: one of your passions is historical fashion. Speaking of fashions. 595 00:30:55,600 --> 00:30:58,440 Speaker 1: Listeners don't always know that one of your huge, huge 596 00:30:58,480 --> 00:31:01,640 Speaker 1: passions is Star Wars. One of the delights of being 597 00:31:01,640 --> 00:31:05,280 Speaker 1: able to come into this office is seeing and I 598 00:31:05,360 --> 00:31:08,080 Speaker 1: mean this like, it's so awesome to see every day 599 00:31:08,120 --> 00:31:10,520 Speaker 1: what you've put together. As far as your attire related 600 00:31:10,560 --> 00:31:12,800 Speaker 1: to Star Wars. Tell us a little about this my 601 00:31:12,840 --> 00:31:17,560 Speaker 1: crazy Star Wars. Well, um, most of it I make 602 00:31:18,880 --> 00:31:21,840 Speaker 1: because when you can't find what you want, you have 603 00:31:21,880 --> 00:31:24,040 Speaker 1: to make it. Um. And then a while back, I 604 00:31:24,080 --> 00:31:27,800 Speaker 1: actually got into designing my own fabric. So now, like 605 00:31:28,400 --> 00:31:31,240 Speaker 1: I often get into this weird conversation with people will 606 00:31:31,280 --> 00:31:33,800 Speaker 1: go go, oh, I love that dress. Where did you 607 00:31:33,840 --> 00:31:35,080 Speaker 1: get in And I'll say, oh, I made it, And 608 00:31:35,120 --> 00:31:36,400 Speaker 1: then they look sad and they go, oh, well, where 609 00:31:36,400 --> 00:31:38,080 Speaker 1: did you buy the fabric? And I'm like, I had 610 00:31:38,080 --> 00:31:41,720 Speaker 1: a custom printed, and I feel guilty because I'm like 611 00:31:41,840 --> 00:31:44,200 Speaker 1: dashing their hopes of having And how long has this 612 00:31:44,240 --> 00:31:48,480 Speaker 1: been going on? Which part sewing like putting together your 613 00:31:48,520 --> 00:31:51,920 Speaker 1: own as a kid. Yeah, I started sewing when I 614 00:31:52,000 --> 00:31:54,200 Speaker 1: was three, so I was curious. You know you're into 615 00:31:54,320 --> 00:31:57,440 Speaker 1: historical faction, like you have any thoughts on what we 616 00:31:57,440 --> 00:31:59,920 Speaker 1: should bring back? Oh? I always tell people I want 617 00:31:59,920 --> 00:32:03,520 Speaker 1: to bring the bustle back. I mean, it's just to 618 00:32:03,560 --> 00:32:06,240 Speaker 1: accommodate the fact that I'm kind of a lady with 619 00:32:06,280 --> 00:32:08,720 Speaker 1: a big butt. But I think the bustle is awesome. 620 00:32:09,240 --> 00:32:12,280 Speaker 1: I love it. It's really not it's completely impractical. It's 621 00:32:12,320 --> 00:32:13,840 Speaker 1: hard to drive. I've done it. But it's hard to 622 00:32:13,920 --> 00:32:17,080 Speaker 1: drive a car wearing a bustle. You've done that, Yeah, 623 00:32:17,120 --> 00:32:19,640 Speaker 1: don't do it. It's really not smart. Okay, I'll just 624 00:32:19,680 --> 00:32:21,560 Speaker 1: try to wish. We should not do this. You should 625 00:32:21,560 --> 00:32:24,000 Speaker 1: not because there's no way to sit where where there 626 00:32:24,120 --> 00:32:26,920 Speaker 1: isn't like a you know, twelve inch gap between your 627 00:32:26,960 --> 00:32:29,040 Speaker 1: back and the back of the seats. So it's really 628 00:32:29,080 --> 00:32:31,320 Speaker 1: not like the safest thing. So we did a history 629 00:32:31,360 --> 00:32:33,280 Speaker 1: book a while back, and it was really odd to 630 00:32:33,320 --> 00:32:35,840 Speaker 1: me that it only got placed on like the dad's table, 631 00:32:36,200 --> 00:32:39,240 Speaker 1: And so I was curious, you know, I love the 632 00:32:39,240 --> 00:32:42,120 Speaker 1: fact that you've got two awesome women hosting your podcast, 633 00:32:42,240 --> 00:32:44,640 Speaker 1: and I was curious, like, how much you think about 634 00:32:44,640 --> 00:32:46,240 Speaker 1: this and how how much you're thinking about like getting 635 00:32:46,280 --> 00:32:49,880 Speaker 1: girls into history. Um a bit, you know. Part of it, 636 00:32:49,920 --> 00:32:52,680 Speaker 1: I think is that in a lot of cases, history 637 00:32:53,320 --> 00:32:56,760 Speaker 1: has been written by white guys, so it's kind of 638 00:32:56,800 --> 00:32:59,600 Speaker 1: like by us and for us. So there isn't always 639 00:32:59,600 --> 00:33:03,040 Speaker 1: a lot. There hasn't historically been a lot for women 640 00:33:03,120 --> 00:33:05,800 Speaker 1: and girls to really gravitate to. It's like, yeah, we 641 00:33:05,840 --> 00:33:08,400 Speaker 1: know the George Washington thing, that's fine. Were there not 642 00:33:08,440 --> 00:33:12,000 Speaker 1: any women back then you could talk about? And there were, 643 00:33:12,040 --> 00:33:14,720 Speaker 1: and there were people of all kinds of flavors and 644 00:33:14,840 --> 00:33:19,920 Speaker 1: you know, colors and cultural backgrounds and genders, and that 645 00:33:20,160 --> 00:33:22,480 Speaker 1: never really got talked about, which is why it's super 646 00:33:22,520 --> 00:33:24,800 Speaker 1: fun for us to be able to go, hey, did 647 00:33:24,840 --> 00:33:27,960 Speaker 1: you not know that there was actually, you know, one 648 00:33:27,960 --> 00:33:30,000 Speaker 1: of the richest people in the world in the late 649 00:33:30,040 --> 00:33:32,720 Speaker 1: eighteen hundreds in early nineteen hundreds was a woman because 650 00:33:32,760 --> 00:33:36,680 Speaker 1: she was a really astute investor, Like people don't always 651 00:33:36,720 --> 00:33:39,560 Speaker 1: know that Hetty Green, I was gonna say, I was 652 00:33:39,560 --> 00:33:41,640 Speaker 1: gonna say, okay, got it, making sure you were going 653 00:33:41,680 --> 00:33:46,160 Speaker 1: to say who it was Green. She's fascinating and slightly 654 00:33:46,160 --> 00:33:49,000 Speaker 1: problematic character, but she you know, people don't know that 655 00:33:49,040 --> 00:33:53,280 Speaker 1: there were women making moves right along with men throughout history, 656 00:33:53,320 --> 00:33:56,080 Speaker 1: even though they're not often spotlighted, which is a perfect 657 00:33:56,120 --> 00:34:00,840 Speaker 1: segue into that's right. This whole episode is about taxes 658 00:34:00,880 --> 00:34:02,880 Speaker 1: and tax haven so I'm glad that you brought up 659 00:34:02,920 --> 00:34:05,640 Speaker 1: Hetty Green, and so we are going to quiz you 660 00:34:05,680 --> 00:34:08,280 Speaker 1: on this, mango. What's our game today? It's called tax 661 00:34:08,400 --> 00:34:11,239 Speaker 1: or tax fraud, and it's pretty simple. We're gonna give 662 00:34:11,239 --> 00:34:13,799 Speaker 1: you a super strange tax law and you're gonna tell 663 00:34:13,840 --> 00:34:17,280 Speaker 1: us whether it's real or not guessing tax or tax fraud. 664 00:34:17,400 --> 00:34:19,839 Speaker 1: Oh no, I'm gonna sound like a fool. No, no, 665 00:34:19,840 --> 00:34:22,880 Speaker 1: no no. So if we were going to say, for example, 666 00:34:23,280 --> 00:34:26,320 Speaker 1: in Hawaii, you can take a thirty two dollar deduction 667 00:34:26,440 --> 00:34:29,560 Speaker 1: by showing that you're related to Barack Obama, you would 668 00:34:29,600 --> 00:34:32,719 Speaker 1: say I thought it was gonna be about pineapples when 669 00:34:32,719 --> 00:34:36,560 Speaker 1: you said Hawaii, you know a little bit about pineapple business. 670 00:34:36,880 --> 00:34:38,600 Speaker 1: This is how she's gonna do this. She's gonna take 671 00:34:38,640 --> 00:34:40,640 Speaker 1: it on a tangent. She'd be like speaking of pineapples, 672 00:34:40,680 --> 00:34:42,600 Speaker 1: like no, no no, no, you're gonna say, no, that's a fraud. 673 00:34:43,719 --> 00:34:45,840 Speaker 1: You're so good at this, all right? And what is 674 00:34:45,880 --> 00:34:49,359 Speaker 1: Holly playing for the started secondary career as a tax layer? 675 00:34:49,440 --> 00:34:55,400 Speaker 1: Now this clearly I'm on it. Well as always, Holly's 676 00:34:55,400 --> 00:34:59,160 Speaker 1: playing for our hard earned admiration. Well, you can put 677 00:34:59,200 --> 00:35:03,239 Speaker 1: that in a drawer there, alright, well, here we go. 678 00:35:03,320 --> 00:35:06,840 Speaker 1: We got a few questions. First one, England has a 679 00:35:06,920 --> 00:35:10,040 Speaker 1: TV tax where color TVs are taxed more than black 680 00:35:10,080 --> 00:35:14,160 Speaker 1: and white TVs. However, if a blind person has a television, 681 00:35:14,480 --> 00:35:17,320 Speaker 1: he or she has to pay only half that tax. 682 00:35:17,920 --> 00:35:20,520 Speaker 1: Tax or tax fraud, I would believe that of Britain. 683 00:35:21,080 --> 00:35:26,719 Speaker 1: That's true. Okay, alright. Number two, if you're about to 684 00:35:26,800 --> 00:35:29,759 Speaker 1: inherit a goldfish, you should move to Kansas, where proud 685 00:35:29,840 --> 00:35:33,200 Speaker 1: goldfish owners can claim a twenty five dollar deduction for 686 00:35:33,320 --> 00:35:37,600 Speaker 1: goldfish related expenses. I'm gonna go with no tax frauds. 687 00:35:37,680 --> 00:35:39,960 Speaker 1: She's too, but if you were in Italy that might 688 00:35:40,000 --> 00:35:43,560 Speaker 1: be more realistic. They have very heavy animal protection laws 689 00:35:43,560 --> 00:35:46,320 Speaker 1: and goldfish are included in those. Question Number three, ankle 690 00:35:46,400 --> 00:35:48,839 Speaker 1: socks are tax differently from other socks. In the state 691 00:35:48,880 --> 00:35:52,359 Speaker 1: of Wyoming, knee socks are considered professional wear and her 692 00:35:52,400 --> 00:35:55,600 Speaker 1: sited as being useful in insect protection for day labors, 693 00:35:55,840 --> 00:35:59,600 Speaker 1: while ankle socks and also flip flops are considered frivolous. 694 00:35:59,680 --> 00:36:04,080 Speaker 1: Foot apparel tax or tax f aus is the sales tax. Yeah, 695 00:36:04,120 --> 00:36:07,440 Speaker 1: I would totally believe it. Unfortunately, she has now gotten 696 00:36:07,440 --> 00:36:09,120 Speaker 1: one wrong. I was worried that maybe you were too 697 00:36:09,200 --> 00:36:13,040 Speaker 1: smart for this. Games here two for three, it does, 698 00:36:13,239 --> 00:36:15,040 Speaker 1: it does kind of make I mean in Wyoming, of 699 00:36:15,120 --> 00:36:20,279 Speaker 1: all places, Yeah, alright, number five and Wyoming, alright. Number four, 700 00:36:20,960 --> 00:36:24,600 Speaker 1: candies made with flour think kit cats or maltballs get 701 00:36:24,680 --> 00:36:30,359 Speaker 1: taxed significantly lower. In Chicago, I'm gonna go with yes, 702 00:36:30,920 --> 00:36:33,640 Speaker 1: that's right, it's absolutely true. Why why is that? It's 703 00:36:33,640 --> 00:36:37,359 Speaker 1: because things with flower are considered foods, so kick cat 704 00:36:37,520 --> 00:36:39,840 Speaker 1: or actually a piece of licorice, which for some reasons 705 00:36:39,880 --> 00:36:42,640 Speaker 1: made with flower only gets a one percent tax, while 706 00:36:42,719 --> 00:36:45,240 Speaker 1: like nerd candies would get a six percent tax. Alright, 707 00:36:45,360 --> 00:36:47,759 Speaker 1: she's three for four so far. Two more. Number five. 708 00:36:48,160 --> 00:36:52,240 Speaker 1: In Texas, you can take deductions for tickets to high school, college, 709 00:36:52,360 --> 00:36:56,520 Speaker 1: or professional football games. Attending a high school soccer game, however, 710 00:36:56,600 --> 00:36:59,919 Speaker 1: gets you no benefits. I don't know if it's true, 711 00:37:00,000 --> 00:37:03,120 Speaker 1: and I totally believe it. I want you want it 712 00:37:03,200 --> 00:37:06,719 Speaker 1: to be true, but it's unfortunately tax rodin that right, 713 00:37:07,160 --> 00:37:10,920 Speaker 1: watching the soccer game isn't a benefit. Yeah, because Texas 714 00:37:11,000 --> 00:37:13,520 Speaker 1: is football country, right, I could see them being like 715 00:37:13,680 --> 00:37:22,280 Speaker 1: not not with the European alright. Last one. In Oregon, 716 00:37:22,440 --> 00:37:26,359 Speaker 1: double amputees can take a fifty dollar tax credit. They 717 00:37:26,360 --> 00:37:29,279 Speaker 1: should surely get some kind of tax credit. So, yes, 718 00:37:29,480 --> 00:37:32,200 Speaker 1: it is true. It is so for those of you 719 00:37:32,239 --> 00:37:34,360 Speaker 1: who have not checked out stuff you missed in history class, 720 00:37:34,440 --> 00:37:35,800 Speaker 1: you definitely need to do it. It's one of the 721 00:37:35,880 --> 00:37:38,399 Speaker 1: best podcasts out there. Thank you so much, Holly Fry 722 00:37:38,440 --> 00:37:40,320 Speaker 1: for joining us. Oh it's my great pleasure. Thank you. 723 00:37:40,680 --> 00:37:57,960 Speaker 1: Thanks Lolly. Welcome back to Part Time Genius. We've been 724 00:37:58,000 --> 00:38:00,400 Speaker 1: talking about all the ways we're going to protect our billions, 725 00:38:00,440 --> 00:38:02,839 Speaker 1: and we've been a little surprised at exactly where people 726 00:38:02,880 --> 00:38:05,680 Speaker 1: seem to be keeping their money, and especially surprised at 727 00:38:05,719 --> 00:38:07,600 Speaker 1: how big a role the United States is playing in 728 00:38:07,640 --> 00:38:10,719 Speaker 1: the tax haven community community. It sounds like such a 729 00:38:10,960 --> 00:38:14,000 Speaker 1: quaint place, all these sweet billionaires just holding onto their money, 730 00:38:14,080 --> 00:38:16,480 Speaker 1: sticking their tongue out at the tax man. They're doing 731 00:38:16,520 --> 00:38:19,480 Speaker 1: it anonymously, of course, but it has gotten much harder 732 00:38:19,520 --> 00:38:21,640 Speaker 1: to hide money and tax havens around the world, I 733 00:38:21,719 --> 00:38:24,560 Speaker 1: mean kind of. As for setting up an offshore company, 734 00:38:24,680 --> 00:38:26,239 Speaker 1: it's not really that much harder than it was a 735 00:38:26,280 --> 00:38:28,719 Speaker 1: few years ago. Banks seem to be requiring a few 736 00:38:28,800 --> 00:38:30,799 Speaker 1: more hoops to jump through, but for the most part, 737 00:38:30,880 --> 00:38:34,040 Speaker 1: you just have to provide identification proof of address and 738 00:38:34,080 --> 00:38:36,799 Speaker 1: then sign onto their terms and conditions. Yeah, that's definitely true. 739 00:38:36,840 --> 00:38:39,000 Speaker 1: But the US has tried to make it more difficult 740 00:38:39,040 --> 00:38:41,759 Speaker 1: for those trying to maintain their secrecy because more tax 741 00:38:41,840 --> 00:38:45,440 Speaker 1: havens are now sharing information with the US government when asked, 742 00:38:45,480 --> 00:38:47,760 Speaker 1: at least so. In two thousand and ten, the Foreign 743 00:38:47,760 --> 00:38:50,759 Speaker 1: Account Tax Compliance Act was passed in the US and 744 00:38:50,840 --> 00:38:53,560 Speaker 1: that requires foreign banks to provide information to the U 745 00:38:53,719 --> 00:38:56,800 Speaker 1: s Treasury. And while the US can't force other countries 746 00:38:56,840 --> 00:38:59,080 Speaker 1: to agree to it, the US is of course big 747 00:38:59,200 --> 00:39:01,320 Speaker 1: enough to make it very difficult for foreign banks to 748 00:39:01,400 --> 00:39:04,200 Speaker 1: operate here if they didn't. So some of the places 749 00:39:04,280 --> 00:39:07,200 Speaker 1: we've talked about, like Switzerland and the Cayman Islands have 750 00:39:07,320 --> 00:39:09,920 Speaker 1: now agreed to it and provide information to the US government, 751 00:39:10,080 --> 00:39:12,520 Speaker 1: And that can definitely help officials track down crimes and 752 00:39:12,600 --> 00:39:15,279 Speaker 1: lost taxes. But the corporations and the wealthy are just 753 00:39:15,480 --> 00:39:18,200 Speaker 1: so good at dodging. I mean, I forget who said this, 754 00:39:18,360 --> 00:39:20,840 Speaker 1: but one journalist referred to the crackdown like trying to 755 00:39:20,920 --> 00:39:23,600 Speaker 1: plug a damn with tennis rackets, Like it's going to 756 00:39:23,680 --> 00:39:26,120 Speaker 1: slow things down, maybe, but that money is still going 757 00:39:26,160 --> 00:39:29,320 Speaker 1: to flow through. It's this unwinnable game of cat and mouse. 758 00:39:29,480 --> 00:39:32,120 Speaker 1: And you look at a corporation like Ikea, which is 759 00:39:32,280 --> 00:39:35,920 Speaker 1: massively profitable, but partially because it registers itself as a 760 00:39:36,040 --> 00:39:40,680 Speaker 1: nonprofit company. I mean, Ikea considers itself a charitable organization 761 00:39:40,920 --> 00:39:44,440 Speaker 1: just to get the massive tax breaks, which is so brazen. Well, 762 00:39:44,600 --> 00:39:47,280 Speaker 1: to be fair, I looked up the Ikea Charities mission 763 00:39:47,440 --> 00:39:50,440 Speaker 1: and is quote to create a better everyday life for 764 00:39:50,520 --> 00:39:53,560 Speaker 1: them many, which is just so wonderfully big. It really 765 00:39:53,600 --> 00:39:55,880 Speaker 1: makes me want to spend more my time volunteering in 766 00:39:55,920 --> 00:39:59,520 Speaker 1: an Ikea. But you're right, there are so many avoidance schemes. 767 00:39:59,640 --> 00:40:01,759 Speaker 1: Now we're number A. Few years ago, the company called 768 00:40:01,840 --> 00:40:05,160 Speaker 1: a Vy, the pharmaceutical giant and maker of Humera. They 769 00:40:05,200 --> 00:40:08,200 Speaker 1: acquired one of their rivals, a company called Shire, which 770 00:40:08,280 --> 00:40:11,120 Speaker 1: is a European company. It was this massive deal, not 771 00:40:11,320 --> 00:40:14,160 Speaker 1: just for the fifty five billion dollar figure, but because 772 00:40:14,200 --> 00:40:16,480 Speaker 1: of the fact that it allowed Abby to take advantage 773 00:40:16,520 --> 00:40:20,319 Speaker 1: of a tax loophole in the US something called an inversion. Now, 774 00:40:20,440 --> 00:40:22,320 Speaker 1: this is where a company that has at least twenty 775 00:40:22,760 --> 00:40:27,080 Speaker 1: foreign ownership can then reincorporate abroad. So if the acquiring 776 00:40:27,120 --> 00:40:30,759 Speaker 1: company is bigger, they can invert and become a subsidiary 777 00:40:30,840 --> 00:40:34,120 Speaker 1: of the company they just acquired, and suddenly their tax 778 00:40:34,200 --> 00:40:36,680 Speaker 1: burned to the I R S is much much smaller. 779 00:40:37,080 --> 00:40:39,600 Speaker 1: And this means that even though the company's executives are 780 00:40:39,600 --> 00:40:42,400 Speaker 1: sitting in Chicago, the company now files out of the 781 00:40:42,440 --> 00:40:44,680 Speaker 1: island of Jersey, which is a tiny island in the 782 00:40:44,719 --> 00:40:47,680 Speaker 1: English Channel. Estimates put the cost to the U. S 783 00:40:47,760 --> 00:40:51,279 Speaker 1: Treasury at over one billion dollars. The total cost of 784 00:40:51,320 --> 00:40:54,560 Speaker 1: inversions to the US is estimated nearly twenty billion dollars 785 00:40:54,640 --> 00:40:56,839 Speaker 1: over the next decade. This was so much more fun 786 00:40:56,920 --> 00:40:58,239 Speaker 1: to think about when it was just the idea of 787 00:40:58,360 --> 00:41:00,440 Speaker 1: us sitting on a beach somewhere and not to taxes. 788 00:41:01,360 --> 00:41:03,160 Speaker 1: But we might as well answer the question what's the 789 00:41:03,239 --> 00:41:05,680 Speaker 1: best island to park your billions? And I guess that 790 00:41:05,719 --> 00:41:08,200 Speaker 1: would be my home state, Delaware, which is on the 791 00:41:08,280 --> 00:41:12,400 Speaker 1: island of North and Sweet. I don't know if that counts, 792 00:41:12,680 --> 00:41:14,879 Speaker 1: I mean, but I figured you can put your money 793 00:41:14,960 --> 00:41:18,839 Speaker 1: there and live abroad. Like I took Island Magazines Top 794 00:41:18,960 --> 00:41:21,760 Speaker 1: twenty Islands in the World, reordered it by the cheapest 795 00:41:21,800 --> 00:41:24,239 Speaker 1: place to get a gallon of milk because I love 796 00:41:24,320 --> 00:41:26,839 Speaker 1: cereal and because it's really expensive to get a gallon 797 00:41:26,920 --> 00:41:29,480 Speaker 1: of milk in these places, it's like twelve dollars in 798 00:41:29,520 --> 00:41:32,719 Speaker 1: the Bahamas, I think, right, So top sunny islands with 799 00:41:32,840 --> 00:41:35,800 Speaker 1: cheapest milk prices and you get Honduras, where a gallon 800 00:41:35,880 --> 00:41:38,319 Speaker 1: will set you back two dollars and property taxes are 801 00:41:38,320 --> 00:41:40,880 Speaker 1: super cheap. That way you can finally get your lifelong 802 00:41:40,960 --> 00:41:44,239 Speaker 1: dream of turning your billions into trillions while perfecting your tan. 803 00:41:44,560 --> 00:41:46,520 Speaker 1: I don't like milk that much, so I think I'll 804 00:41:46,760 --> 00:41:48,400 Speaker 1: stay put for the time being. But do you know 805 00:41:48,480 --> 00:41:50,720 Speaker 1: what time it is? Time for our part time genius 806 00:41:50,760 --> 00:41:57,200 Speaker 1: backed off? You know it? And you got it that 807 00:41:57,400 --> 00:41:59,120 Speaker 1: that actually didn't sound as cool as I thought it, 808 00:41:59,400 --> 00:42:02,600 Speaker 1: But anyway, you first. So this is this great fact 809 00:42:02,680 --> 00:42:04,520 Speaker 1: I know we've talked about in the past, and that's 810 00:42:04,600 --> 00:42:07,400 Speaker 1: that in the seventies, the king of Tonga, King Tupu 811 00:42:07,520 --> 00:42:10,799 Speaker 1: the Fourth, had the greatest, most trivial act of colonization 812 00:42:10,880 --> 00:42:14,560 Speaker 1: in history. He heard about this tiny uninhabited island called Minerva, 813 00:42:14,760 --> 00:42:16,640 Speaker 1: which was nearby and had been set up by this 814 00:42:16,840 --> 00:42:19,759 Speaker 1: rich American, but it was in his territory. So he 815 00:42:19,840 --> 00:42:22,320 Speaker 1: took a couple of rowboats and a brass band and 816 00:42:22,680 --> 00:42:24,600 Speaker 1: basically had them play a song when he took down 817 00:42:24,640 --> 00:42:26,800 Speaker 1: the old flag and declared it part of his kingdom. 818 00:42:26,920 --> 00:42:28,960 Speaker 1: I like his style. I know. It was this super 819 00:42:29,120 --> 00:42:32,879 Speaker 1: silly act, made sillier by this ceremonial band. But it's 820 00:42:33,000 --> 00:42:35,320 Speaker 1: only in rereading about the episode that I learned that 821 00:42:35,440 --> 00:42:38,719 Speaker 1: Minerva was actually supposed to be this libertarian paradise for 822 00:42:38,880 --> 00:42:41,080 Speaker 1: rich people, and it was supposed to double as a 823 00:42:41,160 --> 00:42:44,439 Speaker 1: tax shelter. Of course, startup tax shelters tend to fare 824 00:42:44,480 --> 00:42:47,359 Speaker 1: better when they're protected by bigger nations army. I would 825 00:42:47,400 --> 00:42:49,719 Speaker 1: think so. So. Well, you know what Nixon said the 826 00:42:49,760 --> 00:42:52,360 Speaker 1: famous lines, people have got to know whether or not 827 00:42:52,480 --> 00:42:55,120 Speaker 1: their president as a crook. Well, I am not a crook. 828 00:42:55,440 --> 00:42:57,759 Speaker 1: He wasn't just talking about Watergate. He was agreeing to 829 00:42:57,880 --> 00:43:01,239 Speaker 1: release his tax return. After turning over his files, it 830 00:43:01,360 --> 00:43:04,280 Speaker 1: turned out he owed four hundred and seventy one thousand 831 00:43:04,360 --> 00:43:08,279 Speaker 1: dollars in back taxes plus entries. Did you know that 832 00:43:08,480 --> 00:43:11,480 Speaker 1: Mexico artists can pay their taxes and artwork. Well, the 833 00:43:11,560 --> 00:43:14,320 Speaker 1: program launched in ninety seven, and the basic idea was, 834 00:43:14,520 --> 00:43:17,520 Speaker 1: instead of going after artists to pay back taxes, why 835 00:43:17,560 --> 00:43:19,719 Speaker 1: not let them pay with their art. It's the only 836 00:43:19,800 --> 00:43:21,840 Speaker 1: program of its kind around the world, and today the 837 00:43:21,920 --> 00:43:25,480 Speaker 1: state owns seven thousand paintings and sculptures from prominent artists. 838 00:43:25,600 --> 00:43:27,960 Speaker 1: I like this idea. I know it's it's pretty good. 839 00:43:28,239 --> 00:43:31,040 Speaker 1: So did you know the US charges Olympic medal winners 840 00:43:31,160 --> 00:43:33,560 Speaker 1: taxes on the medals they win? Doesn't that seem out 841 00:43:33,640 --> 00:43:36,320 Speaker 1: racis us? Here's another one about the I R S. 842 00:43:36,600 --> 00:43:38,640 Speaker 1: Did you know that the agency actually has a plan 843 00:43:38,719 --> 00:43:41,759 Speaker 1: for how to collect taxes after a nuclear event. The 844 00:43:41,840 --> 00:43:45,360 Speaker 1: section was added in nine and it specifies that thirty 845 00:43:45,480 --> 00:43:49,800 Speaker 1: days after a disaster, the service will concentrate on collecting taxes. Again. 846 00:43:50,120 --> 00:43:51,960 Speaker 1: I just like that. They'll give you a month off, 847 00:43:52,040 --> 00:43:53,640 Speaker 1: but then it's back to business. That's nice to them 848 00:43:53,680 --> 00:43:56,719 Speaker 1: to give that time. So when two thousand eleven, Romania 849 00:43:56,800 --> 00:44:02,759 Speaker 1: started charging which is six income tax their witchcraft services, yeah, 850 00:44:02,800 --> 00:44:05,240 Speaker 1: a few of the witches were overjoyed because it actually 851 00:44:05,320 --> 00:44:08,080 Speaker 1: meant they were finally legal. They didn't have to work 852 00:44:08,200 --> 00:44:11,320 Speaker 1: under the table witchcraft. But a number of other witches 853 00:44:11,360 --> 00:44:13,760 Speaker 1: banded together to put a curse on the tax collection. 854 00:44:13,840 --> 00:44:17,520 Speaker 1: And that's good. I was not expecting to hear of witchcraft. Fact. 855 00:44:17,719 --> 00:44:20,239 Speaker 1: I think you win this week's fact off, but before 856 00:44:20,280 --> 00:44:22,440 Speaker 1: we sign off, we should give this week's Part Time 857 00:44:22,480 --> 00:44:24,919 Speaker 1: Genius Award. Who do you think deserves that honor this week? 858 00:44:25,239 --> 00:44:29,080 Speaker 1: I think we should give this episode's award to Ulysses, Kansas, 859 00:44:29,239 --> 00:44:32,920 Speaker 1: the entire town, well, the new town nine. To avoid 860 00:44:33,000 --> 00:44:36,200 Speaker 1: a massive real estate tax, Ulysses moved all of its 861 00:44:36,239 --> 00:44:41,160 Speaker 1: buildings and people, which included twelve saloons, restaurants, a school house, 862 00:44:41,239 --> 00:44:44,799 Speaker 1: a church, even an opera house two miles down the road. 863 00:44:45,680 --> 00:44:48,240 Speaker 1: I guess in an episode all about off shore accounts 864 00:44:48,280 --> 00:44:50,839 Speaker 1: and this elaborate accounting schemes. I like that they used 865 00:44:50,880 --> 00:44:52,840 Speaker 1: brute force just to move the town a little away 866 00:44:53,160 --> 00:44:55,920 Speaker 1: to Yeah, it's genius. So congrat City Hall of Ulysses. 867 00:44:56,000 --> 00:44:58,200 Speaker 1: In honor of your forefathers. You're going to get a 868 00:44:58,280 --> 00:45:00,239 Speaker 1: certificate to put on your fridge, which is going to 869 00:45:00,320 --> 00:45:03,759 Speaker 1: make all the surrounding towns fridges very jelly. Let's hope so. 870 00:45:04,120 --> 00:45:06,040 Speaker 1: And if you're interested in taxes, be sure to check 871 00:45:06,080 --> 00:45:09,480 Speaker 1: out Nicholas Shackson's Treasure Islands and The Heavens. Both are 872 00:45:09,480 --> 00:45:12,399 Speaker 1: incredible reads. That's it for today's Part Time Genius. Thanks 873 00:45:12,440 --> 00:45:29,400 Speaker 1: so much for listening. Thanks again for listening to part 874 00:45:29,480 --> 00:45:31,640 Speaker 1: Time Genius. Be sure to subscribe wherever you listen to 875 00:45:31,719 --> 00:45:33,960 Speaker 1: your podcasts, and because we're a brand new show, if 876 00:45:34,000 --> 00:45:36,040 Speaker 1: you're feeling extra generous, we'd love it if you'd give 877 00:45:36,080 --> 00:45:38,840 Speaker 1: us a rating on Apple Podcast. Part Time Genius is 878 00:45:38,880 --> 00:45:41,520 Speaker 1: produced by some of our favorite geniuses. It's edited by 879 00:45:41,560 --> 00:45:44,359 Speaker 1: Tristan McNeil, theme song and audio mixing by Noel Brown. 880 00:45:44,719 --> 00:45:47,719 Speaker 1: Our executive producer is Jerry Rowland. Our research team is 881 00:45:47,760 --> 00:45:50,520 Speaker 1: Gay Loesier, Lucas Adams on a white Field, The Toronto, 882 00:45:50,680 --> 00:45:53,799 Speaker 1: Austin Thompson and Meg Robbins. Jason Hok is our chief 883 00:45:53,880 --> 00:46:06,160 Speaker 1: cheer leader, Ditto