Tag: Money

Part 173- Money

Rovija Khapre 0 Comment Economics , , , , , , , ,
Part 173- Money

 Guess what Ireland’s famous for. Apple. Yeah, no seriously. I’m not joking. Up until like last Thursday I was sure Ireland was mainly known for it’s landscape and Irish whiskey and shamrocks. We’re adding Apple to the list now. Apple’s main headquarters are in Cupertino, California. Which now explains why I have Cupertino’s time zone on my phone despite it not being on the list. (The dots finally have connected.) Anyways, the main focus is on Apple’s other headquarters. The European headquarters.

Apple’s European headquarters are located  in Holly Hill, Co Cork in Ireland. I assure you there is something very important regarding why Apple chose to have it’s headquarters there, but before I explain, let’s go over basics. 

  • Shell Companies
  • Money Laundering
  • Cayman Islands/Swiss Accounts
  • Tax Avoidance
  • Panama Papers
So, shell companies. They are similar to what they sound like as they ARE shells of companies. They are pretty much like an empty shell. 
There’s nothing inside. It’s a firm with no current business activity or significant assets. Shell companies aren’t necessary illegal, but are sometimes used illegitimately for  reasons such as disguising business ownership from law enforcement or the public. But legitimately, they can be used to store a company’s money it’s raising before it launches, or for security reasons such as working in an unsafe region or country. 
When used illegitimately, shell companies are usually used during money laundering. Money laundering is pretty much just “laundering” money made through criminal activity like drug trafficking or terrorist funding,  in order to make it look clean. This money is, well, dirty, so so it needs to be laundered before it can actually be used. This is to make sure the money can be used effectively, and so there is no suspicion when using it. There are three parts in money laundering: placement, layering, and integration. The first, placement, comes from the need to deposit the money in legitimate financial institutions. The only way to do so is if it comes from legitimate sources, so often a business owned by the criminal organization is used. For example, a restaurant may inflate the receipts to funnel illegal cash through the restaurant and into the restaurant’s bank account. The next is layering. Layering consists of concealing the money through a series of transactions. This is to make it difficult to trace the original source. Layering is often done through chain-hopping which is the act of converting one cryptocurrency into another moving from one blockchain to another, mixing/tumbling which is the act of blending various transactions across several exchanges, or cycling. (More can be found at these links: complyadvantage.com and linkurious.com)
Not only that, shell companies can be used for tax avoidance. Tax avoidance is an action taken to lessen tax liability and maximize after-tax income. Simply put, finding a way to avoid paying taxes in a legal manner.  The best way to do so is setting up a shell company in a tax haven. 

What’s a tax haven? 

Before I explain let me interrupt. Happy New Year and Merry late Christmas. I actually spent my Christmas overseas and visited the Cayman Islands. We took a tour and had a lot of fun on our trip. In fact, on the tour we learned a lot of interesting facts about the islands, including one very important thing. The Cayman Islands have no income or withholding tax imposed on the individual. So like if something is $10, that’s all you have to pay. Literally. That makes the Cayman Islands a tax haven. Since no taxes are imposed, shell companies are commonly set up in the Cayman Islands to reduce tax bills and just get out of paying taxes legally. Another example includes Hong Kong, Switzerland, Panama, and even Ireland. See where I’m getting to? 
Ireland has a low tax rate of 12.5% , making it one of the lowest tax paying countries compared to the U.S. with a 35% rate. This is a reason why Apple long many other companies such as Google have shifted headquarters there. According to BBC, Apple created an avoidance structure that “helped it reduce it’s tax rate on profits outside the US to the extent that its foreign tax payments rarely amounted to more than 5% of its foreign profits.” In some years it’s dipped below 2%, and one Irish Apple Company had a tax rate for one year of 0.005% . For Apple, if tax haven benefits were not used, it would have owed the U.S. government $65.4 billion in taxes. However, this is about to change as Ireland announced in October 2021 that it will change it’s tax rate to 15% in 2024 (originally 2023). 
This entire process of tax avoidance is not new. It’s been around for a while. In 2016 11.5 million legal documents-called the Panama Papers- were leaked, containing personal financial information about many wealthy individuals and public officials. It exposed a network of 214,000 tax havens involving these officials and entities from 200 nations. Although most of the documents showed no illegal or inappropriate behavior, some of the shell companies set up by the firm from which the documents were leaked, were revealed to have been used for illegal purposes such as tax evasion and fraud. Hence, shell companies can be interpreted as illegal and used illegitimately. 
People with huge companies like Nike or Apple often do this for many reasons. One could be for greed. With so much money one would want to keep it to themselves. Not only that, with so much money they would have to pay higher taxes. Arguments against this include, “using the same amount of road someone making less than them uses”. Why should they pay more when they use the same services as others? As a result, they’ll try to pay lower taxes or even get out of it completely. Such methods as we’ve discussed include tax havens and shell companies. 
Why should we care about this? Well for starters, they aren’t paying their taxes. As I’ve mentioned before, taxes are essential to providing us benefits such as public school dunking, building roads, and other public services. Everyone pays a fair share of their income that they worked hard for these taxes and yet these big companies who have more wealth decide to reduce their amount simply because they want their money to themselves. If that’s so then why don’t we also keep our money to ourselves? Taxes take away a huge portion and we could easily use that money for so many other things instead. It’s simply not fair. If they can “escape” paying the tax in full amount, they why not us? Then what would happen? Would we be able to experience the luxuries of maintained, smooth roads, or having public education or other services? Most likely not. We need to pay our taxes, no matter how much money you make. It’s to benefit us and make our lives better. 
Sources + More Reading:
:. (2019, July 23). AML – Shell companies, front companies and the misuse of real estate. Finextra Research. https://www.finextra.com/blogposting/17537/aml—shell-companies-front-companies-and-the-misuse-of-real-estate

Anti money laundering (AML). (2005, July 21). Investopedia. https://www.investopedia.com/terms/a/aml.asp

Corporate Finance Institute. (2022, November 8). Tax haven. https://corporatefinanceinstitute.com/resources/economics/what-is-tax-haven/

GB, J. (2017, November 7). Where does Apple Pay taxes? Medium. https://medium.com/@javiergb_com/where-does-apple-pay-taxes-5a09955abd92

List of the world’s most notorious tax havens. (n.d.). Worlddata.info. https://www.worlddata.info/tax-havens.php

Lyons, K. (2021, October 7). Ireland’s status as tax haven for tech firms like Google, Facebook, and Apple is ending. The Verge. https://www.theverge.com/2021/10/7/22715229/ireland-status-tax-haven-google-facebook-apple

Money laundering: What it is and how to prevent it. (2003, November 24). Investopedia. https://www.investopedia.com/terms/m/moneylaundering.asp

Paradise Papers reporting team. (2017, November 6). Paradise papers: Apple’s secret tax bolthole revealed. BBC News. https://www.bbc.com/news/world-us-canada-41889787

Shell corporations: Everything you need to know. (n.d.). Business Intelligence Platform – Data on 13+ Million Companies – Red Flag Alert. https://www.redflagalert.com/articles/risk/shell-corporations-everything-you-need-to-know

Tax avoidance is a legal way to limit taxes; Tax evasion is not. (2007, May 10). Investopedia. https://www.investopedia.com/terms/t/tax_avoidance.asp

Tax brackets and federal income tax rates: 2022-2023. (2018, January 24). NerdWallet. https://www.nerdwallet.com/article/taxes/federal-income-tax-brackets#:~:text=There%20are%20seven%20federal%20tax,taxable%20income%20and%20filing%20status

Tax evasion. (2003, November 24). Investopedia. https://www.investopedia.com/terms/t/taxevasion.asp

What is a shell company (Shell Corporation)? – SmartAsset blog. (2022, September 27). SmartAsset. https://smartasset.com/investing/what-is-a-shell-company#:~:text=A%20shell%20company%20is%20a,customers%20with%20products%20or%20services

What is a shell Corporation? How it’s used, examples and legality. (2003, November 26). Investopedia. https://www.investopedia.com/terms/s/shellcorporation.asp#:~:text=A%20shell%20corporation%20is%20a,law%20enforcement%20or%20the%20public

Part 135- Money

Rovija Khapre 0 Comment Economics , ,

 We all know what currency/money is and can easily recognize it. But what about people who can’t? What do they have to do? 

Many countries have their currency in different sizes depending on the denomination, but in the United States, only the coins are different. Otherwise, the paper bills are all the same size. Frankly, the idea of having different colors or sizes for US dollars didn’t exist. Plus, it was cheaper to print them all in the same color and paper. Nowadays, it is expected for them to be the same color and size because it’s stayed this way. 

Countries such as India, Australia, and Malaysia, have a distinct length for each denomination. Not only are they different sizes, but a simple, money identifier card can be used. 

Tactile marks along the tool can help identify which bill is which when lined up to the card. Money identifier tools are also very useful. The user has to insert the money into one of the devices, and then the device will provide information about the bill through speech, or a combination of beeps or vibrations. 

Some governments tried a more direct approach. In Canada, money is produced in such a way that there are braille dots to indicate the value of the bill. 

A very simple way to identify the denomination of bills can be through folding. Particular bills can be folded in particular ways to identify which is which. To be honest, I don’t find this very efficient. Yes, folding may help but it also may be a hassle to fold a bill every single time in a very specific/particular way each time you get one. 

Okay, okay. I know I’m not some cheesy reporter or spokesperson telling you stuff, but I’ve really got to explain one- no two more things. Laws! Yes, laws. Specifically, ADA and IDEA laws. ( Oh and maybe a mention of the U.S. Currency Program in between.)
ADA stands for Americans with Disabilities Act. This is a civil rights law that “…prohibits discrimination against individuals with disabilities in all areas of public life, including jobs, schools, transportation, and all public and public places that are open to the general public.” This law is to make sure people with disabilities have the same rights and opportunities as everyone. IDEA stands for Individuals with Disabilities Education Act. Similar to the ADA, IDEA provides students with a disability with Free Appropriate Public Education. There are 4 parts to this law. Part A covers the general provisions of the law; Part B  covers assistance for the education of all children with disabilities; Part C covers infants and toddlers with disabilities; lastly, Part D consists of the national support programs administered at the FEDERAL level. 

Under the U.S. Currency program, U.S. citizens who are blind or visually impaired can obtain a currency reader device at no cost. The story behind this is quite interesting. You see, the BEP ( Bureau of Engraving and Printing) was directed to file a status report every six months on their project to provide meaningful access to the United States currency for blind and other visually impaired people. In May 2010 the Department of Treasury and the BEP issued a notice in the Federal Register to inform the public of the features BEP was proposing to the Secretary of Treasury. This included raised tactile features, large, high numerals, and a supplementary currency reader program. 

In April 2011 BEP developed an app called EyeNote to assist blind and visually impaired people in identifying U.S. currency. 2 years later, in June, BEP submitted its plan for Meaningful Access to U.S. Currency for Blind and Visually Impaired Individuals to the Treasury and the Senate Committee Appropriations. However, in September 2014, the GAO released a report saying that BEP fell behind schedule in its plans to produce U.S. currency with raised tactile markings. BEP estimated that currency with tactile features could be delayed until 2020. Until then, the GAO encouraged the government to focus on distributing currency readers while the plan for tactile features was developed. 
Maybe we will have a new type of U.S. Currency. Or I wonder if it will be a special order once only disabled people have this type of currency. Hmmmmmmm. I wonder… Or would that be harder? I personally think that tactile marks or even a bill reader are the best options for finding the denomination of bills. Only 1 out of 10 students learn braille so tactile marks may not be very common or effective unless we do something to increase the learning of braille. ( But we can’t force people.) Maybe just get them to memorize the tactile marks. They wouldn’t necessarily have to learn braille but instead just the needed dots/marks that are associated with the currency. Even if people don’t learn braille, we can always have bill readers which are already effective and useful today. Either way, they both help disabled people with bill denominations.
Even though the U.S. has come up with a solution- as I mentioned above- I think that they should consider or even try printing currency of different sizes. Even though we’ve been used to printing them all the same size would it be more effective to just change the size or would it be costly and a problem? It really doesn’t matter, to be honest. ADA was made to prevent discrimination against visually impaired people yet it can’t help with money? What if they’re out in public and don’t know how is around them? That person would know how much money they have, right? So now, when you think about it, the United States hasn’t really come up with anything for this problem. ( And it took me nearly 7- 8 paragraphs to get it through.)

https://www.banknoteworld.com/blog/the-dimensions-of-money-why-do-banknotes-come-in-different-sizes/