On the Other Hand...

CBS: A Blind Eye, Leading

by Jim Davies

There are none so blind as those who will not see, and at the end of this century of immense influence by broadcasters - supposedly, "independent" members of a "fourth estate", providing one of the many checks on government power that the Founders were quick to protect with Amendment #1 - CBS is, like all of those companies that fill our TV screens daily, as blind as a bat.

The particular program that draws that remark is its flagship "60 Minutes." Sometimes there, they get it right; their revelations about unjust imprisonment, for example, have been most valuable. But when it comes to the really important stuff about government power (money and economics) CBS shows its true colors, its utterly reprehensible pro-government bias, its true enmity to freedom.

Do the media bear more responsibility than government schools, or less, for creating the gross ignorance and confusion about such things that massively impede this once-free people? - it's quite hard to tell. The more intelligent children must get to sense that they are being subjected to propaganda every day under compulsion, regardless of their own wishes; whereas the "off" button is conveniently located on every TV remote. Not watching is a free option. So maybe there is a subliminal filter placed in front of everything that Teacher Says, a skepticism; but when the indoctrination is received by choice, that guard may well be down. And it goes on not for just (!) 12 years, but for the rest of life.

The Offshore Companies

So to the particular outrage that made me boil with anger against this agent of falsehood, masquerading as an entertainer and educator.

CBS put it out on October 24th. The segment revealed the interesting fact that the cruise-ship industry pays little or no US tax. And the whole bias of the producers was that this was UNFAIR! - that "our laws" should be changed so that they can no longer dodge their responsibilities!

The fact that Carnival and all the other 16 major cruise operators have been smart enough to structure themselves so as to pay virtually no profits tax is not challenged. What I object to is the drum-beat of CBS insistance that this "loophole" should be closed by US legislation; that the cruise operators should be brought into line with less creative companies who do shovel money into the US government treasury, instead of encouraging those other companies to follow the shining example set by the likes of Holland-America!

See, what they have all done is to register their ships and their companies offshore (in Panama, or Liberia, or Bahama etc) where profit taxes are low or non-existent. So "whereas they make their large profits out of predominantly American tourists, they pay no US taxes!" Shock! Horror!

There was a rich choice of low points to the segment, but perhaps the lowest came when someone pointed out that foreign airlines, too, pay no US taxes; and on the screen came a picture of a British Airways 747. Ah yes, said CBS, but they pay tax to the UK government! Just as if that answered the objection. CBS seems welded to the notion of Big Governments, foreign as well as domestic!

The shipping lines, of course, likewise pay tax to the governments where their companies may be incorporated. It's just that those governments are frugal enough to operate with tax rates that are so low as to be insignificant, so providing a permanent rebuke to the voracious US government appetite for money earned by productive people. The contrast was obvious if you were looking for it, as I was, but it was never pointed out that way by anyone at CBS.

The broadcaster did, it's true, observe that passengers got a good deal thanks to the fact that the operators did not have to pass along taxes in the ticket price - though it wasn't put quite that plainly. But another thing CBS did not do was to present a list of winners and losers; and they even implied that the (largely foreign) crew members got a raw deal, since they were paid less than the US minimum wage. The actual list would have shown that customers win because the ticket price is lower than if Uncle was clawing some more loot; the cruise lines obviously win, as anyone does absent tax; the ports and suppliers win because the whole industry is larger than it would be if burdened by tax; and certainly the crew members win because they have a job, with pay and conditions that are lucrative compared to their alternative back home in, say, an impoverished Mexican village.

The only loser on that list would have been government. Boo-Hoo.

Go, Do Thou Likewise

In revealing the fact that offshore companies can legally avoid US taxes, CBS unquestionably had the aim of vilifying the companies, not the taxers. Even so, since freedom-seeking eyes are open and freedom-loving ears know better than not to filter anything that comes over government-licensed TV, we can salvage something really useful from this "60 Minutes" segment, despite its producers' intention. We can each emulate the cruise lines, and go offshore!

Now, that's easiest for corporations, not hard for self-employed individuals, and hardest, I grant, for salaried persons. In fact if you're resolved to stay working for a wage or salary, the only useful thing you can draw from the knowledge CBS revealed is the idea of at least placing assets offshore - of banking and saving not in a US bank whose every record is an open book to any Federal spy who happens by, but in, say, the jurisdiction of Switzerland or one of its many recent rivals around the world. Place them in a family trust in Vanuatu, or wherever takes your fancy; and encourage the trust to make wise and profitable investments - untrammelled, of course, by any tax. A wonderful way to prepare for a comfortable and early retirement on a tropical beach.

But any company, or self-employed person, can indeed follow the cruise lines. It's been done for years by the savvy and well-informed. The classic structure is that the owner of Company A, operating in Philly, is a holding Company B, basking in the sunshine of Grand Cayman. A small island, incidentally, whose total bank deposits exceed those of the whole State of California.

Now, Company A works and prospers, but is heavily burdened by management fees and other charges by its parent, Company B. So much so, in fact, that it ends the year with zero profits... and so, of course, pays zero US profits tax. Company B, meanwhile, makes quite large ones - but, whaddayaknow, the Cayman tax rate is a big round zero, so B pays no more tax than A. And it just might happen that the shareholders of Company B are identical to those of Company A - though we can never be sure, because under Cayman law, very properly, the only way to find out is to get a Court order, and that is exceedingly hard.

A similar arrangement can be created by an individual who contracts himself out to different companies - a software writer, who performs work for a different company each month. Or any retailer, or professional. The gain is enormous, and not hard to figure. Knowledge of this choice of arranging our affairs is not what CBS intended to hand us, but we can thank them anyway, kind of.

The advantages of such "offshore technology" are so large and numerous that I've made it one of my business interests to help make the knowledge more widely available. There are several excellent educational companies, for example (often holding their seminars aboard one of the very cruise ships which CBS so envied!) to which I can introduce the interested reader. More information can be found at my web page by clicking here in the usual way.

© Copyright Jim Davies 1999

Jim Davies lives in New Hampshire,
and enjoys contemplating which way is up.

The above is Edition # 303

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