================================================= Expat Worlds Bi-Monthly Digest ================================================= 28 April, 2005 Vol. 7, Issue 07 .....IN THIS DIGEST..... ==== THE STORY =================== -=How Big Business Evades Taxes=- ==== OTHER EZINES ================ ==== EW SPECIAL ================== -=The W.G.Hill 'PT" Collection on CD-ROM=- ==== HUMOR, TRIVIA, NEWS AND MORE... == -=Trivia=- -=News Story=- -=Jokes=- ==== THE RESOURCE TIP ============= -=Spyware Cops=- ==== INSIDE THIS MONTH EXPAT WORLD == -=Table of Content=- ==== THE STORY ================================== HOW BIG BUSINESS EVADES TAXES By Lucy Komisar Were you stunned by the revelation, days before your taxes were due, that nearly two-thirds of companies operating in America reported owing no taxes from 1996 through 2000? That over 90 percent of large corporations -- with at least $250 million in assets or $50 million in gross receipts -- reported owing taxes of only 5 percent or less? The law requires firms to pay 35 percent tax on U.S. profits. Had big business complied, corporate income taxes in 2002 would have been $308 billion instead of only an estimated $136 billion. Do you wish you knew the corporate secret? Is your town or state suffering from service cutbacks because tax revenues are down? Would you like to cut your tax bite from the current 15 to 35 percent to 5 percent or zero? How do corporations do it? The General Accounting Office report, commissioned by Senators Carl Levin (D-MI) and Byron Dorgan (D-ND) and released April 5, gave a clue to how. It's called "transfer pricing," or improperly shifting income to lower-tax countries. Firms set up offshore "subsidiaries" which, on their books, perform functions that let them cut onshore taxes. They may sell their own "logo" to the subsidiary and then pay a high price to "rent" it back, deducting "rent" as expense. They may move money to the subsidiary and "borrow" it back, deducting interest payments. If several of their subsidiaries are involved in a deal, the firms may grossly inflate profits assigned to those in offshore tax havens, which levy no or minimal taxes on "profits" claimed there. The U.S. firm may "trade" with an offshore "shell" it owns -- a phony company set up in a tax haven -- pretending it's buying goods or services at a high price or selling its product low, to create deductions. Because the tax haven keeps owners' names secret, the IRS won't know the company is "trading" with itself. Professors Simon J. Pak (Penn State University) and John S. Zdanowicz (Florida International University) examined the impact of over-invoiced imports and under-invoiced exports on 2001 U.S. tax revenues. Would you buy multiple vitamins bought from China at $850 a pound, plastic buckets from the Czech Republic for $973 each, tissues from China at $1,874 a pound, a cotton dishtowel from Pakistan for $154, and tweezers from Japan at $4,896 each? By contrast, U.S. companies, on paper, were getting very little for their exports. If you were in business, would you sell multiple vitamins to Finland at 61 cents a pound, bus and truck tires to Britain for $11.74 each, color video monitors to Pakistan for $21.90, missile and rocket launchers to Israel for $52.03 and prefabricated buildings to Trinidad for $1.20 a unit? Comparing claimed export and import prices to real world prices, the professors figured the 2001 U.S. tax loss at $53.1 billion. We all know that Enron cheated investors by using offshore firms to pretend that money it borrowed was money it earned. We later found it also used shells to hide income from the IRS. Enron had 881 offshore subsidiaries: 692 in the Cayman Islands; 119 in the Turks and Caicos; 43 in Mauritius and 8 in Bermuda. Enron had no office in the Cayman's, but Box 1350 there received mail for 500 affiliates. Enron's 1996 through 2000 pretax U.S. profits were $1.8 billion, but it paid no tax in four of those five years. It even got a rebate! Because of fancy paperwork that invented tax losses even while it was boasting of profits to investors, Enron got back $381 million from the IRS. Bob McIntyre, who heads the Washington-based Citizens for Tax Justice, says that in 1996-2000, Goodyear's profits were $442 million, but it paid no taxes and got a $23-million rebate. Colgate-Palmolive made $1.6 billion and got back $21 million. Other companies that got rebates in 1998 included Texaco, Chevron, PepsiCo, Pfizer, J.P. Morgan, MCI WorldCom, General Motors, Phillips Petroleum and Northrop Grumman. Microsoft, run by the world's richest man, reported $12.3 billion U.S income in 1999 and paid zero federal taxes. In the past two years, Microsoft paid only 1.8 percent on $21.9 billion pretax U.S. profits. There are some 55 "offshore" zones, including legendary Switzerland; the Caribbean with money-laundries Grand Cayman, Antigua, Aruba and the British Virgin Islands; European favorites Luxembourg, Liechtenstein, Monaco, Austria, Cyprus; and British Channel Islands Jersey, Guernsey, Isle of Man. Many banks in "offshore" centers are subsidiaries of major international banks, including Citibank, Bank of New York and Credit Suisse. Why does Washington tolerate the offshore tax evasion system? Because powerful people benefit. With President Bush on its board, Harken Energy set up an offshore network that cut its taxes. White House spokesman Dan Bartlett defended Harken for seeking "tax competitiveness," the preferred euphemism. When Vice President Cheney ran Halliburton, it increased its offshore subsidiaries from 9 to at least 44. ==== OTHER EZINES & BOOKS ======================== ASIAN TIMES ONLINE Asia most trusted source for news, business,commentary and analysis from throughout Asia and our world. (www.atimes.com). ----- SURVIVAL BOOKS Go to and check it out! ----- japan-guide.com Extensive, up to date online guide on Japan living and travel related information. http://www.japan-guide.com/ ==== EW SPECIAL ================================= THE W.G.Hill 'PT" COLLECTION ON CD-ROM Expat World has a five book set, all on a single CD, written by W.G. Hill of "PT" fame. This "Hill CD" will tell you things even your lawyer won't tell you even if he knew! The 5 books on the CD are: * PT (Perpetual Traveler, Past Tax-payer, Prepared Thoroughly, etc.) * The Passport Report * PTO - Portable Trades and Occupations * The Invisible Investor * How to Become an Honorary Consul General For details and book excerpts go to or website at or directly to the info page at ==== HUMOR, TRIVIA, NEWS AND MORE... ================ NEWS STORIES Prime Minister's Residence Sold on Web Site NEW DELHI (Reuters) - India's intelligence department is investigating reports that a fraudster sold an American businessman the prime minister's residence in the heart of New Delhi recently, a leading daily reported on Sunday. The businessman forked out 35 million rupees ($802,600) for the house that was up for sale on a Web site as a "huge sprawling mansion in the heart of Lutyen's Delhi with 24x7 running water and electricity," the Hindustan Times said. He soon received the title deed for the house and arrived in the Indian capital late in March to take possession of the house for an office he planned to set up only to discover he had been cheated. --- Jesus recruited to fight tax cheats TAX officials in Sierra Leone have infuriated Christians with the publication of newspaper advertisements saying Jesus Christ supported the paying of taxes. Christians furious over ads saying Jesus supported taxes From correspondents in Freetown The half-page advertisements said that when Jesus was asked if he was against a law requiring the payment of taxes to the Roman emperor he replied: "Pay the emperor what belongs to the emperor and pay to God what belongs to God," quoting from the Gospel of Matthew (22:17-21). It continued: "all Christians should follow the teachings and example of Jesus Christ. This week: pay your taxes." The advertisements provoked the anger of Christians, who make up 30 percent of the population of the west African nation. Anglican priest Thomas Carew said he could not "believe his eyes" while the Methodist pastor Cyril William described it as a "blasphemy" and called on the tax department to drop the ads. A tax department spokesman said the initiative "was to encourage people to pay their taxes as soon as possible". --- A Law Dogs Would Write, if They Were Lawyers... ROME (Reuters) - Dog owners in Turin will be fined up to $650 if they don't walk their pets at least three times a day, under a new law from the city's council. People will also be banned from dyeing their pets' fur or "any form of animal mutilation" for merely aesthetic motives such as docking dogs' tails, under the law about to be passed in the northern Italian city. "In Turin it will be illegal to turn one's dog into a ridiculous fluffy toy," the city's La Stampa daily reported. Italians can already be fined up to 10,000 euros and spend a year in prison if found guilty of torturing or abandoning their pets, but Turin's new rules go into much greater detail. Dogs may be led for walks by people on bicycles, the rules say, "but not in a way that would tire the animal too much." Italy considers itself an animal-loving nation and in many cities stray cats are protected by law. Still some 150,000 pet dogs and 200,000 cats are abandoned in Italy every year, according to animal rights groups. To enforce the law, Turin police would rely largely on the help of tipsters spotting cruel treatment by their neighbors, La Stampa reported. It said the 20-page rulebook gives Turin the most stringent animal protection rules in the country. It even bans fairgrounds from giving away goldfish in plastic bags. ----- No birdies at the North Pole Open WITH warm parkas, orange balls and rifles to keep polar bears at bay, golfers teed off this week in an ice-breaking tournament in the Svalbard islands near the North Pole, organizers said. It said the 20-page rulebook gives Turin the most stringent animal protection rules in the country. It even bans fairgrounds from giving away goldfish in plastic bags. With temperatures dropping as low as minus 28 degrees Celsius with wind chill, six golfers bundled up to do battle for the first Spitsbergen Open world ice golf trophy - a crystal polar bear - on an Arctic green that was, well, more white than green. "You obviously lose a lot of the feeling when you play with big gloves. In order to win you have to be tough: the winner took his gloves off each time it was his turn," the promoter of the event, Arne Kristoffersen, told AFP. The Svalbard archipelago, also known as Spitsbergen and located in the Arctic Ocean, is the northernmost inhabited region in the world. Residents number 3000 and there are almost as many polar bears, but few trees to get in the way of a golf shot. The tournament was played with orange golf balls, which are easier to spot in the snow, and under the protection of an armed guard - local regulations stipulate that a rifle must be carried at all times outside residential areas. "The polar bears were most noted for their absence," organisers said, not without a sigh of relief. Registration is already open for the 2006 edition, the Svalbard Wildlife Service said. ----- Oxymoron: never again ----- "I was recently on a tour of Latin America, and the only regret I have was that I didn't study Latin harder in school so I could converse with those people." -- J. Danforth Quayle, former U.S. Vice-President ----- When I read about the evils of drinking, I gave up reading. -- Henny Youngman ----- ABBOTT AND COSTELLO MEETS WINDOWS Costello: Hey, Abbott! Abbot: Yes, Lou? Costello: I just got my first computer. Abbot: That's great Lou. What did you get? Costello: A Pentium II-266, with 40 Megs of RAM, a 2.1 Gig hard drive, and a 24X CD-ROM. Abbot: That's terrific, Lou. Costello: But I don't know what any of it means!! Abbot: You will in time. Costello: That's exactly why I am here to see you. Abbot: Oh? Costello: I heard that you are a real computer expert. Abbot: Well, I don't know- Costello: Yes-sir-ee. You know your stuff. And you're going to train me. Abbot: Really? Costello: Uh huh. And I am here for my first lesson. Abbot: O.K. Lou. What do you want to know? Costello: I am having no problem turning it on, but I heard that you should be very careful how you turn it off. Abbot: That's true. Costello: So, here I am working on my new computer and I want to turn it off. What do I do? Abbot: Well, first you press the Start button, and then- Costello: No, I told you, I want to turn it off. Abbot: I know, you press the Start button- Costello: Wait a second. I want to turn it off. Off. I know how to start it. So tell me what to do. Abbot: I did. Costello: When? Abbot: When I told you to press the Start button. Costello: Why should I press the Start button? Abbot: To shut off the computer. Costello: I press Start to stop. Abbot: Well Start doesn't actually stop the computer. Costello: I knew it! So what do I press. Abbot: Start Costello: Start what? Abbot: Start button. Costello: Start button to do what? Abbot: Shut down. Costello: You don't have to get rude! Abbot: No, no, no! That's not what I meant. Costello: Then say what you mean. Abbot: To shut down the computer, press- Costello: Don't say, "Start!" Abbot: Then what do you want me to say? Costello: Look, if I want to turn off the computer, I am willing to press the Stop button, the End button and Cease and Desist button, but no one in their right mind presses the Start to Stop. Abbot: But that's what you do. Costello: And you probably Go at Stop signs, and Stop at green lights. Abbot: Don't be ridiculous. Costello: I am being ridiculous? Well. I think it's about time we started this conversation. Abbot: What are you talking about? Costello: I am starting this conversation right now. Good-bye. ----- A farmer comes home with a lively young bull. His two old bulls have fallen on sad days. He's letting them hang around for old times' sake. The minute the new bull is put into the pasture, he starts servicing the cows. At about the fourth cow, one of the old bulls starts to paw the ground and snort. The other asks, "Why are you doing that?" The old bull answers, "I don't want him to think I'm one of these cows!" ==== THE RESOURCE TIP ============================ SPYWARE COPS Spyware Cops is an Adware, SpyWare, Key Loggers, Trojans, Dialers, Hijackers, Trackware, Thiefware remover, Big Brotherware removal utility with multi-language support. It scans your memory (for active memory ad components, which are not stored on your hard drive and last only as long as the computer is powered up), registry, & drives for known adware modules & for known SpyWare parasites & scum-ware components and lets you remove them safely from your system. Get it at ==== INSIDE THIS MONTH EXPAT WORLD =============== EXPAT WORLD NEWSLETTER (VOL.17 ISSUE 04) Table of Content: - QUALITY OF LIFE - THE WORLD IS RATED - AROUND THE WORLD WITH EXPAT WORLD - LETTER FROM AMERICA - INSIDE THE ABC NEWS UFO DOCUMENTARY HOAX - -- THE KNOWLEDGE BOX -- - "FOR EXPATRIATE LIVING" - INTERNATIONAL SNIPS AND CLIPS - TOP NOTCH UNI'S WORLDWIDE - THE TOP THIRTY UNIVERSITIES - CRAPPER RAPPER - TOILET PAPER USED TO BE REALLY CRAPPY YOU MISSING SO MUCH Each week the EXPAT WORLD DIGEST gives you just a smattering of what you can find in the EXPAT WORLD newsletter that we produce once a month. Why not get the whole story and subscribe now to our electronic version for just US $30 per year. Go to our website: www.expatworld.net to sign up. ********************************************************************* EXPAT WORLD - the newsletter of international living URL - http://www.expatworld.net Email - office@expatworld.net ---------- End of Expat World Digest --------------------------------