Capital Flight: Micro and Macro

First the Micro, another tale of someone with lots of money actually wanting to pay less of it in taxes.

Paulson Said to Explore Puerto Rico as Home With Low Tax

John Paulson, a lifelong New Yorker, is exploring a move to Puerto Rico, where a new law would eliminate taxes on gains from the $9.5 billion he has invested in his own hedge funds, according to four people who have spoken to him about a possible relocation.

But capital flight is not just for meat & bone people, it's also for corporate persons. And their tax-avoidance actions tends to keep a lot more money out-of-country than the actions of mere individuals, even billionaires.

GE, Pfizer, Microsoft, Apple And Other Major US Corporations Are Parking More Cash Abroad To Avoid Paying Taxes

Some of the largest companies in the U.S. greatly boosted their tax-avoiding cash stockpiles abroad last year, according to recent surveys of company filings from the Securities and Exchange Commission

For example, the Jedi master of avoiding U.S. taxation, General Electric Company (NYSE:GE), increased its tax-free cash accumulation to $108 billion, up from an estimated $94 billion in 2010. Microsoft Corporation (Nasdaq:MSFT) increased its stockpile to $61 billion, up 36 percent from 2011 and up from $30 billion in 2010. Apple Inc. (Nasdaq:AAPL) raised its ante to $40 billion, up 73 percent from 2011.
 

The obvious: All of the above are doing this to avoid paying what they perceive as overly-high tax rates. They are parking their asses and assets in jurisdictions that offer more competitive rates.

 

Weather Report, Argentina

Forecast: Freezes, with a strong potential for food shortages and even more inflation.

Argentina freezes prices to break inflation spiral

Argentina announced a two-month price freeze on supermarket products Monday in an effort to break spiraling inflation. The price freeze applies to every product in all of the nation's largest supermarkets — a group including Walmart, Carrefour, Coto, Jumbo, Disco and other large chains. The companies' trade group, representing 70 percent of the Argentine market, reached the accord with Commerce Secretary Guillermo Moreno, the government's news agency Telam reported.

The laws of economics make some unambiguous predictions about the results of price freezes in inflation-plagued markets. We saw them in action here in the United States during the Nixon and Carter years. There will be shortages. And sooner rather than later, as people start stocking up to avoid the inevitable shortages.

None of which will break the inflationary spiral being experienced by Agrentina, which is solely the result of their printing-press spending.

UPDATE: Tyler Durden says it in more detail, and some caveats for America.

Journal of Predictable Results

Brazil gives prison inmates a holiday vacation... but thousands don't return

More than 2,400 Brazilian inmates are on the run after they were granted a holiday vacation home but surprised prison guards by failing to come back. Of the 26,486 given furloughs for good behavior over the Christmas and New Year's holidays, prison systems from 26 states and the Federal District report five percent remaining at large. Perhaps more surprisingly, however, is that the majority of 45,000 men and women willingly returned.

That really is surprising. Brazilian prisons are not known for their comfortable conditions. And as for the following, well, I told you so.

Obama recess appointments unconstitutional

A federal appeals court has overturned President Obama's controversial recess appointments from last year, arguing he abused his powers and acted when the Senate was not actually in a recess.

Heh. "L'état, c'est moi!" Um, not so much.

Unbelievable

Bloomberg: No One Has ‘Defended the Second Amendment as Much as I Have’

Mr. Bloomberg claimed to be the strongest defender of the Second Amendment around. "I don’t think there’s anybody that’s defended the Second Amendment as much as I have, Ray,” Mr. Bloomberg said to a caller who asked him why he was “so against” the constitutional passage.

Obscenely outrageous blatant lies like that are among the top reasons that I would not vote for Bloomberg for anything other than a one-way ticket out of this country. He has been a noisy and zealous gun-control and gun-ban advocate for years. Whether or not you support his public positions, it is a demonstrated and undeniable fact that he can not be trusted to ever tell the truth. If Bloomberg tells you the sun is going to rise in the east, I recommend personal verification that it does before believing him.

Corruption, in Brief

Gov't arrests illegal immigrant Senate intern

U.S. Sen. Robert Menendez employed as an unpaid intern in his Senate office an illegal immigrant who was a registered sex offender, now under arrest by immigration authorities, The Associated Press has learned. The Homeland Security Department instructed federal agents not to arrest him until after Election Day, a U.S. official involved in the case told the AP.

...Authorities in Hudson County notified ICE agents in early October that they suspected Sanchez was an illegal immigrant who was a registered sex offender and who may be eligible to be deported. ICE agents in New Jersey notified superiors at the Homeland Security Department because they considered it a potentially high profile arrest, and DHS instructed them not to arrest Sanchez until after the November election, one U.S. official told the AP. ICE officials complained that the delay was inappropriate, but DHS directed them several times not to act, the official said.
 

That's right, the cabinet agency charged with protecting Americans instructed one of their sub-agenices to leave an illegal alien sex offender at large because he worked for a Democratic Senator and his arrest might have embarrassed Democrats and affected the elections. And when said sub-agency made repeated requests to make the arrest, they were repeatedly turned down for purely political reasons.

Menendez's pre-election history with sex scandals didn't keep him from getting re-elected by a very comfortable margin, so it probably wasn't Menendez that DHS was worried about. Though this latest revelation does make one wonder if Sanchez-the-illegal-alien-sex-offender-and-Menendez-intern was booking Bob's travel itineraries.

That's the essence of political corruption, as compared to monetary corruption. Courtesy this time of Big Sister instead of Big Brother.

Capital Flight, Again

Two-thirds of millionaires left Britain to avoid 50% tax rate

In the 2009-10 tax year, more than 16,000 people declared an annual income of more than £1 million to HM Revenue and Customs.

This number fell to just 6,000 after Gordon Brown introduced the new 50p top rate of income tax shortly before the last general election.

The figures have been seized upon by the Conservatives to claim that increasing the highest rate of tax actually led to a loss in revenues for the Government.

It is believed that rich Britons moved abroad or took steps to avoid paying the new levy by reducing their taxable incomes.

Astounding. Who could have ever predicted it? Except everyone with three or more neurons to rub together.

The Irony and WTF, It Burns ...

Clinton asks Philadelphia crowd: ‘Who wants a president who will knowingly, repeatedly tell you something he knows isn’t true?’

You can't make this stuff up. Well, you could, but everyone would be sure it was snarky fiction.

Perverse Results Guaranteed

France taxes rich and business to slash deficit

President Francois Hollande's Socialist government unveiled sharp tax hikes on business and the rich on Friday in a 2013 budget aimed at showing France has the fiscal rigor to remain at the core of the euro zone.
The package will recoup 30 billion euros ($39 billion) for the public purse with a goal of narrowing the deficit to 3.0 percent of national output next year from 4.5 percent this year - France's toughest single belt-tightening in 30 years.

Anyone want to take bets on the over/under of moneys actually collected by the new tax rates? I want the under, with a side bet on the rate of higher-income individuals moving out of French taxing jurisdiction.

UPDATE 10/07/12: Rich businessmen pulling out of France as tax-hit looms Yeah, who could've seen that coming?

UPDATE 10/16/12: French business erupts in fury against "disastrous" François Hollande

France is sliding into a grave economic crisis and risks a full-blown “hurricane” as investors flee rocketing tax rates, the country’s business federation has warned.

Ponder This

California Farm Labor Shortage 'Worst It's Been, Ever'

When asked if any local residents have come out to apply to work in the fields, Craig Underwood replied, "None. Absolutely none." He is even having trouble finding truck drivers and other semi-skilled labor for jobs that pay $12-$18 an hour.

California ranks 3rd in unemployment in the United States at  10.7%, "losing" only to Nevada and Rhode Island. Think about that.

CORRUPT

Geithner, Treasury drove cutoff of non-union Delphi workers’ pensions

The move, made in 2009 while the Obama administration implemented its auto bailout plan, appears to have been made solely because those retirees were not members of labor unions.

The internal government emails contradict sworn testimony, in federal court and before Congress, given by several Obama administration figures. They also indicate that the administration misled lawmakers and the courts about the sequence of events surrounding the termination of those non-union pensions, and that administration figures violated federal law.

Do tell. Remember this when people claim that the auto industry bailout was to "save the American auto industry." No, it wasn't. It was to save the UAW's ass and pay them off for their cruical support of the Democrats that allowed them total control of the government for two years. Which is why we the taxpayers are still out over $50 BILLION, and why those who would have gotten a partial payback from an ordinary bankruptcy process got near-nothing, while the unions were made whole AND were gifted a major ownership share in the "new" Government Motors.