wordpress-seo domain was triggered too early. This is usually an indicator for some code in the plugin or theme running too early. Translations should be loaded at the init action or later. Please see Debugging in WordPress for more information. (This message was added in version 6.7.0.) in /home4/thesafb4/public_html/wp-includes/functions.php on line 6114__construct() instead. in /home4/thesafb4/public_html/wp-includes/functions.php on line 6114__construct() instead. in /home4/thesafb4/public_html/wp-includes/functions.php on line 6114__construct() instead. in /home4/thesafb4/public_html/wp-includes/functions.php on line 6114__construct() instead. in /home4/thesafb4/public_html/wp-includes/functions.php on line 6114__construct() instead. in /home4/thesafb4/public_html/wp-includes/functions.php on line 6114__construct() instead. in /home4/thesafb4/public_html/wp-includes/functions.php on line 6114id was set in the arguments array for the "Homepage Content" sidebar. 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(This message was added in version 4.2.0.) in /home4/thesafb4/public_html/wp-includes/functions.php on line 6114__construct() instead. in /home4/thesafb4/public_html/wp-includes/functions.php on line 6114__construct() instead. in /home4/thesafb4/public_html/wp-includes/functions.php on line 6114__construct() instead. in /home4/thesafb4/public_html/wp-includes/functions.php on line 6114__construct() instead. in /home4/thesafb4/public_html/wp-includes/functions.php on line 6114__construct() instead. in /home4/thesafb4/public_html/wp-includes/functions.php on line 6114__construct() instead. in /home4/thesafb4/public_html/wp-includes/functions.php on line 6114__construct() instead. in /home4/thesafb4/public_html/wp-includes/functions.php on line 6114\u201cTax the rich!\u201d: Politicians\u2019 favorite election pitch. Why?<\/p>\n In one word: loopholes<\/em>.<\/p>\n All laws and regulations have loopholes you can drive a truck through\u2014if<\/em> you have enough money.<\/p>\n All laws and regulations have loopholes you can drive a truck through\u2014if<\/em> you have enough money.<\/p>\n And if that loophole is not immediately apparent, all you need to do is hire an enterprising lawyer and\/or accountant to find it or create it.<\/p>\n Needless-to-say, to afford that \u201ctruck\u201d you need to be rich. And the richer you are, the more \u201ctrucks\u201d you can afford.<\/p>\n But the beautiful thing about a loophole is it\u2019s perfectly legal (when properly established).<\/p>\n So, who can take advantage of a loophole in the law?<\/p>\n We all can.<\/p>\n But the loopholes available to the poor and middle class are penny-ante stuff compared to the \u201ctrucks\u201d the super-rich can afford.<\/p>\n If you have managed to reduce the amount of tax you have to pay on millions of dollars of income to an insignificant number, you\u2019d be crazy to crow about it from the rooftops. So\u2014understandably enough\u2014examples of the super-rich\u2019s tax minimization schemes are hard to find.<\/p>\n One well-documented example will suffice: Kerry Packer. Australia\u2019s richest man when he died in 2005 was worth A$6.5 billion (US$4.94 billion).<\/p>\n Packer owned the Sydney-based Consolidated Press group. A newspaper and magazine publisher started by his grandfather, Robert Clyde Packer, in 1919, which his father, Sir Frank Packer, expanded into television and casinos. \u201cFather and son each engaged in a series of complicated schemes . . . to keep their dues to a minimum.”[1]<\/sup><\/a><\/p>\n Kerry Packer took advantage of every legal loophole he (or, rather, his accountants, lawyers, and other tax advisors) could find. With the result that\u2014<\/p>\n And in \u201cthe six years from 1987 to 1992 . . . the Packer empire earned $1.445 billion in profits and paid $91 million in tax”\u2014or 7%.[3]<\/sup><\/a><\/p>\n To put this in perspective, at the time most Australian companies paid 30% to 39% of their profits in tax, company profits of $1.445 billion would normally attract a tax of $433.5 million or more.<\/p>\n Packer had managed to reduce his company\u2019s tax bill by an incredible $342.5 million!<\/p>\n And he didn\u2019t neglect his personal tax. On his dividend income of $35 million to $50 million a year, \u201cKerry Packer pays remarkably little tax. He appears indeed to pay a lower rate of tax than his gardener, or should one say gardeners.\u201d[4]<\/sup><\/a><\/p>\n In 1991, a parliamentary inquiry asked Packer whether his tax arrangements were contrary to the spirit of the law. He replied:<\/p>\n Kerry Packer was telling the truth: he was minimizing <\/em>his taxes, not evading <\/em>tax.<\/p>\n How he achieved these results legally is a fascinating story. One which we non-billionaires can only dream about.<\/p>\n The reason that we can know so much about his scheme is because, unsurprisingly, Packer\u2019s \u201clow\u201d tax bill inevitably attracted the attention of the Australian Tax Office (ATO). For example,<\/p>\n Another Australian taxpayer had established a similar scheme. The Australian Tax Office disallowed his tax deductions, whereupon the Federal Tax Commissioner was taken to court\u2014and lost.<\/p>\n Another part of Packer\u2019s \u201canti-tax\u201d structure was a chain of companies and trusts around the world.<\/p>\n Another part of Packer\u2019s \u201canti-tax\u201d structure was a chain of companies and trusts around the world.<\/p>\n Between 1984 and 1990 [a] small [London] shopfront played home to a number of Consolidated Press\u2019s offshore companies, making it in effect Packer\u2019s international headquarters. In the last of the 1980s these UK companies earned some $370 million in tax-free profits at a time when the Packer empire employed only a handful of people in the United Kingdom doing business. While the various companies were nominally based in the UK, they were in fact run from Hong Kong. As a result, they were not required to pay UK tax. Yet, for reasons that the ordinary person might find hard to grasp, they also paid no tax at all in Hong Kong because they did not actually do business there either.[7]<\/sup><\/a><\/p><\/blockquote>\n Packer was taking advantage of UK \u201coffshore companies\u201d: though incorporated in the United Kingdom, no tax was due if all their business was offshore. While in Hong Kong only domestic-source<\/em> income was taxable. With the additional advantage that there was no Hong Kong tax on interest, dividends, or capital gains.<\/p>\n As you can imagine, such structures incur considerable expenses. Not just the costs of the necessary tax-haven companies, trusts, and their directors and administrators, but also the employment of an unknown number of lawyers, creative accountants, and tax advisors. Probably running into millions of dollars a year.<\/p>\n Plus, additional costs in protecting such structures from attack from tax authorities; and changes that are made as tax departments everywhere attempt to close existing loopholes which inevitably entail that the Packers and their ilk must search for new ones.<\/p>\n And when the taxman attacks, there are the costs of defense.<\/p>\n In 1984, to relate one instance, the Australian Tax Office won a court battle, and, so, gaining access to the accounts of Packer-related trusts and companies thought to be involved in offshore tax-minimization schemes.<\/p>\n In 1987, the ATO and Packer went to \u201cwar\u201d again\u2014in the United States.<\/p>\n The ATO sought and gained cooperation from the IRS which then attempted to access details of accounts held by Packer-related companies in various American banks.<\/p>\n Unsurprisingly, Packer\u2019s lawyers challenged the IRS in the American courts\u2014and won.<\/p>\n I hate to think how much Packer had to pay those lawyers. To cite just one example, many years ago I was involved in a legal dispute in the United States, and at the recommendation of a friend, hired his New York lawyers. Who charged $5,000 a month just to answer the phone!<\/p>\n At those kinds of rates, which are not uncommon, Kerry Packer was probably spending several million dollars a year on lawyers and accountants.<\/p>\n Gargantuan expenses\u2014but money well spent.<\/p>\n And money that is . . . (you guessed it??) . . . tax deductible!<\/em><\/p>\n Packer\u2019s complex and expensive tax-minimization schemes certainly paid off in spades, cutting his tax bills by up to $200 million a year!<\/p>\n We can confidently conclude that some $2 billion, give or take, of the increase in his net worth from $100 million in 1974 to $6.5 billion at the time of his death in 2005 can be attributed to his creative use of the entirely legal tax loopholes available only to the super-rich.<\/p>\n We can be certain that Kerry Packer is far from alone. Just think of the “dynasties of wealth” which persist for several generations. Like the Kennedys and the Rockefellers in the United States\u2014though while still rich, they\u2019ve dropped off the list of the richest families:<\/p>\n <\/p>\n
\nThe super-rich will be laughing up their sleeves.<\/strong><\/p>\nLegal Loopholes You Can Drive a 747 Through<\/h3>\n
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In the financial year 1991\u201392 Kerry Packer\u2019s Consolidated Press group earned a profit of A$623 million before tax and had a positive cash flow of almost A$2 billion. The group\u2019s provision for income tax was a mere $5 million, less than 1 percent of profits.<\/em> Its actual tax payment made during the year was an almost identical $6 million. [Emphasis added.<\/em>][2]<\/sup><\/a><\/h4>\n<\/blockquote>\n
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\u201cI am not evading tax in any way, shape, or form. Of course, I am minimising my tax. Anybody in this country who does not minimise his tax wants his head read.\u201d[5]<\/sup><\/a><\/h4>\n<\/blockquote>\n
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[One] feature of [Packer\u2019s] scheme that fascinated the taxman was that the interest due to [a] Hong Kong trust was paid into a bank account in Sydney and re-lent interest-free (at the direction of the trustee) to one of Packer\u2019s private companies in Australia, so that Packer continued to have use of the money. No funds were actually remitted to Hong Kong.[6]<\/sup><\/a><\/h4>\n<\/blockquote>\n