My Own Personal Tax Haven

In the beginning of last year The Government Accountability Office, which is the investigative arm of Congress, released a report on offshore tax havens. It was long. I knew it was going to be long because it was a PDF that took nineteen hours to download.

Because I’m a political junkie I read these things. And then I yell at my radio. Buried in otherwise stilted prose drafted by attorneys you might find something interesting. During the end of the Bush years the Department of the Interior admitted that corruption within the Mineral Management Service was so bad there were reports of government employees snorting methamphetamine off of toasters. Which is criminal because toasters could not have been the flattest surface available.

But since it was buried in a PDF nobody noticed. The PDF is the digital equivalent of hiding in plain sight. I’d be much more likely to attend confession if I could just slip the priest a thumb drive with SINS.PDF. We’d meet on a Friday night to avoid the news cycle.

In the GAO’s tax havens report the good stuff was secreted in the Appendix. In government reports they shouldn’t call it the Appendix: based on what I found a more accurate title would be the G-Spot.

Eighty-three of America’s top one hundred companies stash money illegally overseas. You may have heard of some of them – they’ve been in the news, mostly in stories about running out of money: Bank of America. Citibank. AIG. I’m sure Bank of America had a perfectly good reason to set up 59 foreign subsidiaries in the Caymen Islands. The Caymens have a population of 45,000, and there’s an ATM built into every coconut tree.

Why are the big corporations allowed to get away with this? What gives them the right to act illegally, with impunity. What about the little guy?

Although I’m a good citizen who votes and pays taxes I’ve had my encounters with the gray margins of the law. Inappropriate and perhaps off-label use of medical marijuana. An illegal weapons ring in third grade (water pistols). Blowing stop signs on my bicycle. Long ago I dabbled in the dark arts of computer hacking, but I’ve never profited on any exploits which I may or may not have allegedly committed across state lines (hi, NSA!). To be totally honest after one successful hack I was the recipient of an excellent booty call. But that was during the dot-com years. Hacking is for the young, who have much more time to devote to studying computer manuals and serving long prison terms.

Because of my anger at the banks who were hiding money as we bailed them out I wanted to do something.

I decided to set up my own offshore tax haven.

To make sure I could do this without being immediately arrested I contacted my attorney. He isn’t really my attorney, he’s my lawyer friend. Not that I’m being racist. He’s my friend who happens to be a lawyer. It’s not like I’m saying my “crazy robot friend” or my “Nigerian Arms Dealer who dabbles in piracy friend.”

I can’t use his real name so we’ll call him Ponzi. I asked Ponzi if there were any legitimate reasons to set up an offshore subsidiary. He gave me a hypothetical example. Say you own an ice cream truck company, and you have really high liability insurance, because you have a driver who has run over a bunch of kids. You want to have your assets, money you’ve already paid taxes on, overseas, so US courts can’t touch them.

“Has a client ever asked you to set up an offshore subsidiary? If you can tell me, that is?” I didn’t think he’d tell me because of client confidentiality. There was a pause in the conversation and back of my head got prickly and hot. Had I just crossed the friendship line?

“Yeah, pretty much the example I gave you was real,” said Ponzi.
Now I had my legal justification for my own personal tax haven. There had to be some ground rules.

First rule: I could only spend $200. It’s not like I have 200 bucks hanging around for any comedy essay, but I happen to have a $200 US Treasury Bond from 1991. If my math is right on this with interest that $200 is probably worth, give or take, seven hundred billion dollars. I got it in high school, from the local Republican Party, for community service or rigging elections. Can’t remember. The bond has been sitting in my drawer, and I haven’t done anything with it. If I set up my tax haven and got busted by the IRS, at least I could also bring down the Long Island Republican Party.

Second rule: everything had to be done online. This is partly because I hate talking on the phone. I’d rather e-mail Poison Control during an emergency:

OMG, I swallowed arsenic. LOL. WTF?

I sent an e-mail to Bank of America. They’re my bank, and I thought they’d help me out. My question was, “for somebody just starting out, is there anywhere you’d recommend I start a foreign tax shelter?”  They still haven’t gotten back to me. I’m so switching to a credit union.

It was time for some research. I fired up my web browser, then opened Google, then went to Facebook to change my picture, then went to Twitter to update my status, then went back to Facebook to make sure my Twitter status updated. Hours passed.

The Google result from “offshore tax haven” gave me one and half million hits. In the interest of time I picked the first one, in the British Virgin Islands. Why not? Sun. Sand. Who doesn’t like virgins?

But then I came across a website from Panama, and the Panamanians offered a host of reasons for why I should not set up my tax haven with the British Virgins. They were both passionate about what was wrong with banking in the BVI and totally incomprehensible: I was sold.

But I have a bone to pick with Panama. When I was in college I spent a semester hitchhiking across Central America, but when I got to the Panamanian border they wouldn’t let me in. I had a passport, money, a visa from their embassy and a bus ticket back to Costa Rica – I was only going to spend a weekend there – but they just said no. I guess they had filled their immigration quota of foreign college students with beards, dreadlocks and Guatemalan clown pants. That’s right, I had dreadlocks in 1993: I was alternative, I was multicultural, I was pulled over by every cop who saw me.

I wasn’t sure I wanted to trust the Panamanians but I wanted to show Panama that I’m not some punk college kid anymore. I was clearly a criminal mastermind.

Just as I was ready to download the enrollment forms I discovered the price. It was going to cost me $1700 to start my offshore tax haven. This joke was officially out of my price range.

I couldn’t believe it cost so much money to be a criminal. Back when I lived in Central America, it only cost about twenty-five cents to buy a Giant Bag of Weed. And if you were arrested, you could bribe your way out of jail and still have enough money left over for another Giant Bag of Weed.

That’s another story, but I’ll mention one thing: if the Lonely Planet guidebook warns you of drug dealers who are running a scam with the local police, believe it.

It was disappointing to learn that there’s a price barrier to a life of white collar crime. It sends a stern message: unless you have your two thousand bucks a year you should go back to selling water pistols to nine-year-olds.

I realized then what I have to do. I need to go down there and set up my new illegal bank account myself. I’m good at bargaining, and I’m sure I could talk them down from $2000 a year to a one time $200 fee.

And I’ll get to write the travel expenses off on my taxes… which I will never pay.