Hidden On A Rock

A cruise can be both relaxing and informative. Mollie and I have been fortunate since our retirement to be able to afford a few cruises, including, just lately, to Bermuda, out of New York City where we sailed past Lady Liberty.

Jim at Ft. Hamilton, Bermuda

There has been something to see and learn on most of our cruises. The Canal in Panama was fascinating, a unique tribute to American engineering. In Alaska we saw the glaciers melting rapidly and marked the limits of their retreat. Quebec City has a gorgeous harbor and interesting culture. But what about Bermuda?

Located some 600 miles off our Eastern seaboard, about the Latitude of Charleston, SC, Bermuda is the site of Britain’s oldest and most populous remaining overseas territory. Wikipedia says this about it:

Bermuda has an affluent economy, with off-shore finance as its largest sector followed by tourism. In 2005, Bermuda was once even claimed to have the world’s highest GDP per capita, yet these statistics are hard to verify as Bermuda is not classified as a country but rather as a territory of the U.K.

Chart of Bermuda

Bermuda is, let’s be honest here, a dinky island, about 13 miles long and 3 miles wide at its widest. We sailed around it and its shoreline is virtually full of large houses with excellent ocean views. It is surrounded by numerous rocks and shoals and, unsurprisingly, is the site of many shipwrecks. There is no other land closer than 600 miles.

Originally a convenient naval base for whaling, privateering and merchant trading, it was a primary haven for the British Navy during the American Colonial unpleasantness and again during the War of 1812. It was also a convenient stop for Confederate blockade runners during the Civil War. But since those times its primary advantage appears to be – – isolation.

It has been a popular haven for the rich and famous for a long time. (Mollie and I were a little surprised to find most everything very expensive by ordinary standards. You might compare it to New York City.) Turns out though, it’s not what you see but what you don’t see that’s interesting. Bermuda is one of a number of places in the world that is very kind to corporations and rich people. There is no corporate income tax. A recent report, out just this month from the Greenling Institute, has interesting things to say. I offer the executive summary here:

  • In 2010, U.S. corporations avoided approximately $60 billion in U.S. corporate income taxes by using a variety of devices and gimmicks to shift profits to foreign subsidiaries, while the Fortune 100 companies received some $89.6 billion in federal contracts.
  • Since the Government Accountability Office reviewed this issue in 2008, top companies have added 44 new subsidiaries in countries identified by the GAO as tax havens.
  • The lost revenue would be more than enough to fund the entire budgets of the Environmental Protection Agency and the Departments of Energy and Labor combined.
  • One recent study found that eight of the top 12 companies effectively paid no federal income taxes from 2008 through 2010. In 2010, General Electric paid no federal income tax.
  • The official U.S. corporate tax rate of 35 percent largely exists in name only. The U.S. collects less in corporate taxes as a share of GDP than 24 out of 26 industrialized countries.
  • The share of the federal budget funded by corporate income taxes has dropped dramatically since the 1940s, from 28.8 percent of the budget to 10.3 percent.
  • Of the 77 Fortune 100 companies with subsidiaries in tax haven countries, 69 had federal contracts. The largest in terms of dollar amounts was General Dynamics, with nearly $15 billion in federal contracts and 14 subsidiaries in tax haven or financial privacy jurisdictions.
  • The pharmaceutical and tech sectors loom particularly large, including Merck, Pfizer, General Electric, Dell and Google. G.E., paying essentially no federal tax, had over $3 billion in federal contracts.
  • Google’s “Double Irish Dutch Sandwich”  illustrates the convoluted mechanisms used to hide profits overseas. Many other strategies are also used.

Surely I am not the only one who finds this information instructive regarding what is wrong with our tax system. Listening to GOP leaders one would think that poor corporate America is taxed to death, that the evil IRS job-killing tax-tentacles are draining our life blood. Hmm. Maybe not so much. For some information on specific companies taking advantage of Bermuda’s tax laxity, I found this LINK.

Mollie does Bermuda

Lady Liberty, Sunday Morning coming in.

We planned our vacation simply based on the desire to see someplace new and enjoy the beautiful art, dining and facilities of a cruise ship. It was only coincidental that my curiosity about this quiet, remote little island caused me to research it. I asked myself, why would anyone want to live in such an isolated place? There are no attractions, only a few beaches, nowhere to visit. It is a place of large houses with ocean views, nice golf courses, a large airport, but ever so tiny and isolated. Now I know, and so do you.

Seeing Lady Liberty on our return I couldn’t help musing, are we now the land of huddled masses yearning to be tax free?  When you turn over a rock, you never know what you’ll find, do you?  Hmm.  Cayman Islands, anyone?

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About Jim Wheeler

U. S. Naval Academy, BS, Engineering, 1959; Naval line officer and submariner, 1959 -1981, Commander, USN; The George Washington U., MSA, Management Eng.; Aerospace Engineer, 1981-1999; Resident Gadfly, 1999 - present. Political affiliation: Independent, tending progressive as the GOP recedes from its Eisenhower roots.
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13 Responses to Hidden On A Rock

  1. johncerickson says:

    My wife-to-be and I took a cruise to Bermuda shortly before we were engaged, in 1988. Unfortunately, I remember little of the island. Since the cruise was also a floating Star Trek convention, and I was quite focused on my wife-to-be, I paid little attention to the surroundings. Then again, having the opportunity to share my wife-to-be with my friend and first crush Grace Lee Whitney, as well as enjoying the scenery of Marina Sirtis in a rather skimpy bathing suit, I guess I can’t blame all the memory loss of the island on my headache medications! 😉

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    • Rawhead says:

      Grace Lee Whitney was getting pretty old in 1988. Probably still good for a drunken threesome though. My hat’s off to you.

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      • johncerickson says:

        Quite the contrary, Grace was still very beautiful. And she sings like an angel – as does Nichelle Nichols, BTW. No drunken anything, though, it was booze that got her kicked off Trek in the first season. I had also had alcohol problems; our friendship sprung from a casual conversation among a group of fans and her down in Florida over a year previous. Trek Cruise 87 out of Long Beach was the real treat – the person who was supposed to escort grace didn’t show, and I knew the con chairman, who dashed up to me before I had even found my cabin, told me she DESPERATELY needed my help, and asked if I would escort Grace during the cruise. I think I shocked her when I asked her how much I had to pay for the privilege, since the con had no spare money and she was trying to figure out how to reward me! 😀

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      • Rawhead says:

        Well I didn’t say she was ugly, just old. She’s 80 something now and still isn’t bad. I thought she was under-utilized on the show. I made it to a few cons back in the 70s and early 80s but moved on to other things after. I went to one stray con in Springfield, MO in the early 90s. I was up there for another trade show and there was a con at a nearby hotel. Marina Sirtis was there. I didn’t get to escort her though or anything. 😛

        Sorry, Jim, for the off-topic rambling. Looks like your vacation went well.

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        • Jim Wheeler says:

          No apology needed, Raw. I enjoy the asides as windows on personalities. If you do enough of them I may figure out who your are (do you think?). 🙂

          Incidentally I was an avid reader of science fiction in my youth and have always loved Star Trek – not to the point where I dress up weirdly but just for the pure entertainment value. Its writers were creative enough to develop and explore the characters and they tapped many of the great themes of literature as well as political issues. One imaginative episode that comes to mind as an example involved two races that thoroughly hated each other – one that was black on the left side and white on the right. The other was of course the opposite. Now that’s clever. And, I can’t help but add (don’t tell Mollie), Marina Sirtis is HOT.

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      • johncerickson says:

        No problem, Rawhead. I’ve just never had a hangup on certain ages – I happen to have the movie “Chicago” on in the background, and Renee Zellweger is supposed to be the hottie in that – no thanks, I’ll take Catherine Zeta-Jones. And I absolutely agree on Grace – if you get a hold of the DVD version of Star Trek IV, there’s a whole scene between her and Majel Barrett, at StarFleet HQ during the power outages, that was cut for time. And she’s the communications officer on Excelsior in Star Trek VI, though they don’t call her Rand by name.
        And my apologies too, Jim. Sorry to drag this off-topic, even if I gave you a little personal insight. Then again, I’ve flagged race cars at Road America in Wisconsin, photographed airshows across the country, and did WW2 re-enacting in American, British, Canadian, polish, and German garb as well. Not to mention the number of Chicago area sci-fi conventions I helped run. Does that help with your insights into me? 😀 (Oh, don’t forget my current best friend, Blackjack the goat…..)

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  2. hlgaskins says:

    Jim
    An excellent and fascinating read. I’ve traveled to more than a few places over the years but never to Bermuda. I did however study French in Quebec City, many years ago in a French immersion course that ran for 6 hours a day, five days a week, over seven months. Back then it was more quaint and less touristic than it is today.

    “Surely I am not the only one who finds this information instructive regarding what is wrong with our tax system. Listening to GOP leaders one would think that poor corporate America is taxed to death, that the evil IRS job-killing tax-tentacles are draining our life blood. Hmm.”

    I can second that! Even Anson and Geoff Caldwell take issue with corporate tax dodging. It’s one of the many small pieces of a scattered puzzle we call corporate America.

    “Seeing Lady Liberty on our return I couldn’t help musing, are we now the land of huddled masses yearning to be tax free? When you turn over a rock, you never know what you’ll find, do you? Hmm. Cayman Islands, anyone?”

    We find ourselves in the fix that we’re in now because those Cayman Island rocks are buying a voice to insure that things stay that way.

    Like

    • Jim Wheeler says:

      HL,

      I am reading McCullough’s “The Greater Journey” about Americans in Paris during the 19th century. (It is outstanding.) In 1851 the President of France revolted the government, dissolved the constitution and became a dictator with a grand view to fixing everything. Well, almost everything. Louis Napoleon was fixated on architecture while people were starving. As long as they starved quietly everything was OK, but pretty soon, guess what? All hell broke loose. “You can fool all the people some of the time – – – – “. Eventually, people will wake up, discover they can’t afford an Egg McMuffin any more, and they are going to be mad as hell at everybody in Washington. I just wonder how long it will take. (A double-dip recession can only speed it along.)

      Thanks for responding.

      Jim

      Like

    • Jim Wheeler says:

      Right, HL.

      You said,

      We find ourselves in the fix that we’re in now because those Cayman Island rocks are buying a voice to insure that things stay that way.

      I can’t help but add for others reading here that the “buying” of influence you mention was enormously enhanced by the Citizens United decision of the Supreme Court last January. The fix is in.

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  3. ansonburlingame says:

    Well hell Jim,

    I wrote a “long and learned” reply to all of the above and word press “ate it”!!!

    Bottom line of what I said is “money flies” and has done so since man started using money.

    Raise taxes and money flies, to Bermuda and elsewhere and it is much easier today than long ago.

    Where does money “fly to”? The the area of greatest ROI. And when ROIs are in the tank worldwide it goes to SAFE places where no one can take it away from you.

    The trick is to make money fly to “us” rather than “them”. All one has to do is increase the ROI for anyone’s money.

    Anson

    Like

    • Jim Wheeler says:

      I sympathize, Anson. I think from now on I will use a plain-text editor for any lengthy comments, save them, and then paste them in. I have been doing that for posts for some time now, being careful to use “paste and match style” instead of just “paste”. That seems to fix a lot of errors for my Apple software interface.

      Naturally, I agree that ROI rules. Business is cutthroat and there is still a visceral thrill in human competitors when they beat the game and get more chips than other people. That’s the engine of capitalism – we both know that. But I wonder if you fully appreciate the problem. I disagree that “All one has to do is increase the ROI for anyone’s money” is the solution. All that does is spice the avarice, because nobody ever gets enough. I submit that the answer is intelligent government regulation. But, obviously that’s not simple or easy in a polarized political environment, and the fact that the economy is global makes it even harder. Bottom line in this post: there are a lot of people successfully gaming the system to the extent that it is damaging our country.

      BTW, there is some interesting stuff in the Greenling report beyond just the executive summary. I haven’t even read it all myself, but just the charts are interesting.

      Jim

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  4. Pingback: Inside Big Money | Still Skeptical After All These Years

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