Offshore Tax Havens & 70% Tax Rate: A History Lesson

Between 1945 and 1973, US Federal Government Individual income tax revenue remained relatively flat. It increased by 300% between 1973 and 1989.   And between 1989 and 2005 it increased again by about 300%.  These time frames loosened individual tax rates.  

In 2012, it was revealed that Mitt Romney had over $250million in offshore accounts immune from Federal taxation.   In 2015, The Atlantic published an article about offshore accounts in which the author quotes a gentleman she interviewed in the British Virgin Islands as stating that offshore accounts are a ‘left-leaning agenda’.   She also provided an interesting insight from the prospective of the islands chosen as the havens; ‘as the financial services industry gained momentum in these island havens crime rates shot up’.   But these offshore accounts aren’t only to evade income taxes, they also effectively hide money from potentially costly divorces and lawsuits, including government authority lawsuits, often empowering the elite to operate above the law with complete immunity.  

One form of an offshore account is called the ‘Asset Protection Trust’.   The Rothschilds are the largest progenitors of such arrangements, but most wealthy elite utilize these instruments routinely.   Facebook founder, Eduardo Saverin, utilized the loopholes of wealth protection by simply denouncing his US citizenship and re-establishing citizenship in Singapore.  Singapore’s top tax rate is 22%, $0 capital gains tax, and $0 inheritance tax.

While many people believe offshore banking is a relatively new financial scheme, it actually has its origins in 1815 in Vienna.  The reason? Exorbitant taxes imposed by monarchial governments.  France was the first EU nation to offer offshore haven to the elite and wealthy wanting to evade taxes and protect their money from the monarchies.  BY the end of the 1800’s these offshore accounts were estimated to hold billions.

After WWI, Caribbean offshore havens became the rage for wealthy Americans due to the proximity of the islands.  Americans saw these arrangements as a means to protect their wealth from wars and depressions.

In 1929, London courts declared that any monies held in offshore accounts were exempt from taxation by the British authorities.

Switzerland saw the burgeoning business and as competition had risen throughout European banks, Switzerland extended the policy of privacy;  The Swiss Banking Act of 1934 made it illegal for banks to provide personal or account information on any of its clients even if requested by government authorities.

All these havens gained traction when the British and US governments began attempting to rail in the offshore accounts by raising the top tax bracket to 70%.   As such the beginning of the collapse of middle income earners began its descent creating the ever growing skew of income disparity. In the US it came as a consequence of the election of FDR, a Democrat, who ushered in The New Deal by Executive Order and the confiscation of all personal holdings of gold. As an ally of Stalin, FDR mobilized the war effort of WWII – but by then the wealthy elites of the US did not participate in the financial application given their money was safely harbored in offshore accounts and unattachable.  His actions were likely the springboard that ushered in the greatest leap into income disparity in history since monarchial rule.

The purpose for the confiscation of personal holdings of gold was to bail out the private banking system known as the Federal Reserve which had over-extended its credit.   As European countries presented their notes demanding gold in exchange which was supposed to be held in US Reserve banking institutions, the Federal Reserve realized they didn’t have the physical gold to pay off the notes so FDR simply confiscated personal holdings, and gave it to the Federal Reserve so as to payoff reserve debt owed to European countries.

The Chairman of the Federal Reserve at this time was Eugene Meyer, an American financier who was cited as being worth $40 million as of 1915.   In today’s dollars adjusting only for inflation, $40million would equate to just shy of $1billion.  Along with JP Morgan, Andrew Mellon, and Ogden Mills, Meyer and his entourage were known as The Four Horsemen of The Apocalypse.   In 1933 Meyers bought the Washington Post and his descendants held it until it was sold Amazon’s Bezos in 2013.  Including during the blitz of the CIA agenda, Operation Mockingbird. 

In the end, the 70% tax rate taught us that the higher the rate the more likely wealth managers will help you find a means to evade taxes putting a heavier burden on the remaining middle class and lower class to fund the government, depleting Social Security as deficits borrow from the fund, and ultimately bankrupting the economy.  So Ocasio-Cortez and Bloomberg and Gates and Buffet, and all those wealthy elite who support such a tax increase will be laughing all the way to the Cooke Islands at the stupidity of those who think this is a solution to anything.

FDR was independently wealthy having inherited everything and never working in the real world business sector.   He and the elite wealthy of the time are directly responsible for the evolution of tax evasion, the quash of the middle class, and the rise of wealth disparity.  They were Democrats and they were Republicans, they were The Swamp.