On the Third Hand: Panama

On the one hand, some rich people probably put their money in the now infamously breach-prone Panamanian tax haven system because they were trying to simplify their finances, or get a little bit of extra, legitimate privacy.

On the other hand, some of the Panamanian account holders were probably ordinary crooks.

Some, apparently, might be examples of an even more terrible form of crookedness: People who shout loudly about how other people should pay all of their taxes, no matter how absurdly high or complicated those taxes might be, or who may even be in charge of the ferocious tax compliance enforcement systems, while cheating on their own taxes. Or, while aggressively exploiting “legal” but awful loopholes to reduce their tax bills “legally.” 

But, on the third hand: Some people might have put assets in those Panamanian accounts for a different reason: They were afraid their governments would confiscate their assets for no particularly good reason whatsoever.

Or, that their governments would impose the kinds of restrictions on the movement of assets that would amount to a de facto confiscation.

Americans planning for long-term care (LTC) expenses might laugh at the idea of our fine government confiscating our retirement savings, let alone our LTC money. But, really, what else is the current low interest rate environment but a polite way to confiscate the future money of people who bought long-term care insurance (LTCI), variable annuities, or other products that are supposed to help people get through retirements that are set to start a decade or so from now?

See also: Lloyd’s of London takes ‘massive hit’ from low investment return

Setting rates so low is a way to confiscate LTCI money and use it to prop up the housing market and stock market, so that boomers who got in when the getting was good can muddle through well enough, and not think too much about tomorrow, or that day that will soon be here.

Another kinder, gentler way is to confiscate retirement money is to let inflation soar. Inflation tends to favor workers and borrowers over retirees who are living off of money invested in bonds (in other words: money lent to big borrowers).

Traditionally, Democrats have been warm to the idea of openly “taxing the rich.”