Tag Archives: Simon Black

EU to impose pan-Europe tax system and tax ID number for every European — and wants to make it global

In about two weeks on June 23, Brits will vote in the EU or Brexit referendum to decide whether the UK should leave or remain in the European Union.
Before they vote, Brits should really heed the information below. If you have family, friends, or acquaintances in the UK, please send this post to them or share on social media.
BrexitThe European Union is a confederation of 28 countries, each of which, being independent sovereign entities, has its own taxation system.
As described by Simon Black of Sovereign Man, some EU countries, such as Belgium and France, have punishingly high tax rates. Belgium’s is the highest, where:

  • The tax rate is as high as 50% if you earn even a modest income.
  • Contributions to Social Security are 13% for employees and 35% for employers.
  • 21% Value-Added Tax.
  • Businesses are subject to a 30% corporate tax rate, a 3% “crisis surcharge”, and a 5% “fairness tax”.
  • Altogether, the Belgian government’s tax revenue eats up about 45% of GDP, which means that the government takes almost half of all economic output.

In contrast, Estonia and Ireland have some of the lowest tax rates in the EU:

  • Estonia’s profits tax is 0%! And yet the government consistently runs a budget surplus.
  • Ireland has had a low-tax regime of just 12.5% on corporate profits for years, and recently announced a new tax regime for certain companies as low as 6.25%. These low tax rates have attracted substantial investment (and jobs) from huge multinational companies, all of which has boosted the Irish economy.

Black observes: “So the Irish government essentially takes a small slice of a rapidly expanding corporate pie, as opposed to Belgium and France’s huge slice of a shrinking pie. It’s not rocket science. If you create reasonable incentives, businesses will invest, the economy grows, and everyone wins.”
But the European Parliament means to put an end to some of its member countries’ low tax rates and tax havens through something called a Common Consolidated Corporate Tax Base, which in effect means the governments of EU member states will no longer have control over its tax systems.
On May 27, 2016, the European Parliament (of unelected representatives) released details of a tax directive that will create a pan-European tax system, complete with a brand new Tax ID number for every European which, if the EU has its way, would be expanded into a Global Tax ID number for everyone in the world.
The proposal ostensibly is to combat “tax avoidance” by multinational corporations — the boogeyman — and to enforce “fairness of tax systems” in the interest of “social justice”. But its real purpose is to increase taxes across the board if the EU thinks a member state (like Ireland) doesn’t charge “enough” tax.
The tax directive is outlined in Hugues Bayet’s “Report on the proposal for a Council directive laying down rules against tax avoidance practices that directly affect the functioning of the internal market,” EU Committee on Economic and Monetary Affairs, May 27, 2016. Below are some important measures of the directive (words between quotation marks are from the Report):
(1) The Problem: “In an effort to reduce their global tax liability, cross-border groups of companies have increasingly engaged in shifting profits, often through inflated interest or royalty payments, out of high tax jurisdictions into countries with lower tax regimes.
(2) Statement of purpose: “If we are to have a reliable single market, the Member States must come to an agreement on tax matters. […] An OECD study has estimated that aggressive tax optimisation by multinationals causes losses to state budgets all over the world amounting to between USD 100 and 240 billion every year. This represents between 4 and 10% of global corporate tax revenues. Above all, it represents a significant loss of revenue for States, thus reducing their ability to invest in action that would promote employment, combat poverty and develop effective health systems for all. […] the Commission’s proposal as a positive step towards limiting tax evasion by multinationals. […] The main aim of this report is to ensure that enterprises pay their taxes where they make their profits. […] The Union believes that combatting fraud, tax evasion and tax avoidance are overriding political priorities, as aggressive tax planning practices are unacceptable from the point of view of the integrity of the internal market and social justice.”
(3) Proposed Solutions:

  • A single tax rate for all businesses in the EU: “The Commission . . . recognises that a fully-fledged Common Consolidated Corporate Tax Base (CCCTB), with an appropriate and fair distribution key, would be the genuine ‘game changer’ in the fight against artificial BEPS strategies. In light of this, the Commission should publish an ambitious proposal for a CCCTB as soon as possible, and the legislative branch to conclude negotiations on that crucial proposal as soon as possible. […] it is also urgent and necessary to lay down a single set of rules for calculating taxable profits of cross-border companies in the Union by treating corporate groups as a single entity for tax purposes [….] Specific measures are therefore proposed to use this directive as a tool to ensure compliance by current secrecy and low tax jurisdictions with the international push for tax transparency and fairness. […] The Commission shall develop a common method of calculation of the effective tax rate in each Member State, so as to make it possible to draw up a comparative table of the effective tax rates across the Member States.”
  • Tax ID number for every European: “Proper identification of taxpayers is essential to effective exchange of information between tax administrations. The creation of a harmonised, common European taxpayer identification number (TIN) would provide the best means for this identification. It would allow any third party to quickly, easily and correctly identify and record TINs in cross-border relations and serve as a basis for effective automatic exchange of information between Member States tax administrations.”
  • Global Tax ID number: “The Commission should also actively work for the creation of a similar identification number on a global level, such as the Regulatory Oversight Committee’s global Legal Entities Identifier (LEI).”
  • Black list, with sanctions, to identify countries in EU and in the world with low tax rates: “An Union-wide definition and an exhaustive ‘black list’ should be drawn up of the tax havens and countries, including those in the Union, which distort competition by granting favourable tax arrangements. The black list should be complemented with a list of sanctions for non-cooperative jurisdictions and for financial institutions that operate within tax havens.”

(4) Goal for action: “The Commission shall present a legislative proposal for a harmonised, common European taxpayer identification number by 31 December 2016.
On June 8, 2016, the final vote on the EU’s proposal to impose a single tax system on all its member states, as well as a Tax ID number for every European, was:

  • 20 + (Yes)
  • 15 – (No)
  • 21 zero – 0 votes, which probably mean not-present or no-opinion.

EU vote on single tax system June 2016See also:


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U.S. banks are not sound, says federal report

Every year since 1977, three powerful agencies — the Federal Reserve Board of Governors, the FDIC (Federal Deposit Insurance Corporation), and the Office of the Comptroller of the Currency — undertake a review of America’s banks, specifically of their large syndicated bank loans — all loans of $20 million or greater that are shared by three or more financial institutions.
The annual review typically starts in March, with the results published around the beginning of the third quarter as the Shared National Credit Review (SNCR).
According to international investor Simon Black of Sovereign Man, this year’s SNCR was published last week, which says U.S. banks are not sound:

Late last week, a consortium of financial regulators in the United States, including the Federal Reserve and the FDIC, issued an astonishing condemnation of the US banking system.

Most notably, they highlighted “continuing gaps between industry practices and the expectations for safe and sound banking.”

This is part of an annual report they publish called the Shared National Credit (SNC) Review. And in this year’s report, they identified a huge jump in risky loans due to overexposure to weakening oil and gas industries.

Make no mistake; this is not chump change.

The total exceeds $3.9 trillion worth of risky loans that US banks made with your money. Given that even the Fed is concerned about this, alarm bells should be ringing.

Simon Black explains that in banking, there are three primary types of risk from the consumer’s perspective:

1. Fraud Risk: Is your bank stealing from you?

The case of MF Global shows that fraud in the Western banking system is clearly not zero. MF Global was once among the largest brokers in the United States. But in 2011 it was found that the firm had stolen funds from customer accounts to cover its own trading losses, before ultimately declaring bankruptcy. See:

2. Solvency risk: Does your bank have a positive net worth?

Like any business or individual, banks have assets and liabilities. For banks, their liabilities are customers’ deposits, which the bank is required to repay to customers. Meanwhile, a bank’s assets are the investments they make with our savings. If these investments go bad, it reduces or even eliminates the bank’s ability to pay us back.

This is precisely what happened in 2008; hundreds of banks became insolvent in the financial crisis as a result of the idiotic bets they’d made with our money.

3. Liquidity risk: Does your bank have sufficient funds on hand when you want to make a withdrawal or transfer?

Most banks only hold a very small portion of their portfolios in cash or cash equivalents, not just physical cash, but high-quality liquid assets and securities that banks can sell in a heartbeat in order to raise cash and meet their customer needs to transfer and withdraw funds.

For most banks in the West, their amount of cash equivalents as a percentage of customer deposits is extremely low, often in the neighborhood of 1% to 3%. This means that if even a small number of customers suddenly wanted their money back, and especially if they wanted physical cash, banks would completely seize up.

Black writes, “Each of the above three risks exists in the banking system today and they are in no way trivial. Now we have a report from Fed and the FDIC, showing their own concern for the industry and foreshadowing the solvency risk.”

The following are excerpts from the Federal Reserve’s press release on this year’s Shared National Credit Review, Nov. 5, 2015:

Credit risk in the Shared National Credit (SNC) portfolio remained at a high level, according to an annual review of large shared credits released today by federal banking agencies. […]

Leveraged lending, which accounts for approximately one quarter of the SNC portfolio, remained a focus of the agencies. This year’s review found that banks are making progress in aligning their underwriting practices with the leveraged lending guidance issued by regulators in 2013. However, the review highlighted continuing gaps between industry practices and the expectations for safe and sound banking. Leveraged transactions originated within the past year continued to exhibit structures that were cited as weak by examiners. The persistent structural deficiencies found in loan underwriting by the agencies warrant continued attention.
The review also noted an increase in weakness among credits related to oil and gas exploration, production, and energy services following the decline in energy prices since mid-2014. Aggressive acquisition and exploration strategies from 2010 through 2014 led to increases in leverage, making many borrowers more susceptible to a protracted decline in commodity prices.
Oil and gas commitments to the exploration and production sector and the services sector totaled $276.5 billion, or 7.1 percent, of the SNC portfolio. Classified commitments–a credit rated as substandard, doubtful, or loss–among oil and gas borrowers totaled $34.2 billion, or 15.0 percent, of total classified commitments, compared with $6.9 billion, or 3.6 percent, in 2014.

To read the 2015 Shared National Credit Review in PDF, click here.

Black’s advice, other than finding a safer banking jurisdiction are:

  1. Hold physical cash. Physical cash serves as a great short-term hedge against all three risks, with the added benefit that there’s no exchange rate risk. All you have to do is go to your nearest ATM machine, take out a small amount at a time and build up a small pool of cash savings.
  2. Own real assets, e.g., real estate property, gold and silver. There may be a time where we are faced with the consequences not only of a poor banking system, but also of decades of wanton debt and monetary expansion. At that point, the only thing that will make any sense at all is direct ownership of real assets.


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Federal govt spends 26% of tax revenue to pay the interest on our national debt

The U.S. national debt is now more than $17½ TRILLION dollars. (To visualize what one trillion dollars looks like, click here.)

That’s the official figure, which amounts to more than 108% of America’s gross national product (GDP).

In other words, we owe more than (108% of) what we produce.

The unofficial or real figure of our debt, according to some economists, is even higher.

Debt that is not paid has to be “serviced,” that is, the INTEREST that accumulates on that debt must be paid. Not to pay the interest would means insolvency or bankruptcy.

To service our gargantuan national debt, the criminal federal government is taking more than 25 cents from each tax dollar to pay the interest. More than a quarter (26%) of the government’s tax revenue goes to pay just the INTEREST, not the principal, of our national debt.

To make things even worse, as if things are not bad enough, the criminal POS in the White House is still OVER-spending, which means the government is still borrowing more, which means our $17½+ TRILLION debt is still increasing, by every second.

It doesn’t take a financial genius to know this is simply unsustainable.

And yet, EVERYONE — from the criminal in the White House, to the criminals in Congress, to the criminals on welfare — whistles past the grave, behaving as if  nothing calamitous is happening.



Simon Black writes for Sovereign Man, March 25, 2014:

By the 19th century, the Ottoman Empire had become a has-been power whose glory days as the world’s superpower were well behind them.

They had been supplanted the French, the British, and the Russian empires in all matters of economic, military, and diplomatic strength. Much of this was due to the Ottoman Empire’s massive debt burden.

In 1868, the Ottoman government spent 17% of its entire tax revenue just to pay interest on the debt.

And they were well past the point of no return where they had to borrow money just to pay interest on the money they had already borrowed.

The increased debt meant the interest payments also increased. And three years later in 1871, the government was spending 32% of its tax revenue just to pay interest.

By 1877, the Ottoman government was spending 52% of its tax revenue just to pay interest. And at that point they were finished. They defaulted that year.

This is a common story throughout history.

The French government saw a meteoric rise in their debt throughout the late 1700s. By 1788, on the eve of the French Revolution, they spent 62% of their tax revenue to pay interest on the debt.

Charles I of Spain had so much debt that by 1559, interest payments exceeded ordinary revenue of the Habsburg monarchy. Spain defaulted four times on its debt before the end of the century.

It doesn’t take a rocket scientist to figure out that an unsustainable debt burden soundly tolls the death knell of a nation’s economy, and its government.

Unfortunately, it can sometimes take a rocket scientist to figure out what the real numbers are; governments have a vested interest in not being transparent about their debts and interest payments.

In the Land of the Free, for example, the government routinely doesn’t count interest payments that they make to the Social Security Trust Fund.

They’ve managed to convince people that those debts don’t matter ‘because we owe it to ourselves.’

Apparently in their minds, solemn promises made to retirees simply don’t count.

It’s like a person who is in debt up to his eyeballs with both credit card companies and family members has no compunction about stiffing Grandpa.

Obligations are obligations, no matter who they’re owed to.

Taking this into account, total US interest payments in Fiscal Year 2013 were a whopping $415 billion, roughly 17% of total tax revenue. Just like the Ottoman Empire was at in 1868.

Here’s the thing, though– it’s inappropriate to look at total tax revenue when we’re talking about making interest payments.

The IRS collected $2.49 trillion in taxes last year (net of refunds). But of this amount, $891 billion was from payroll tax.

According to FICA and the Social Security Act of 1935, however, this amount is tied directly to funding Social Security and Medicare. It is not to be used for interest payments.

Based on this data, the amount of tax revenue that the US government had available to pay for its operations was $1.599 trillion in FY2013.

This means they actually spent approximately 26% of their available tax revenue just to pay interest last year… a much higher number than 17%.

This is an unbelievable figure. The only thing more unbelievable is how masterfully they understate reality… and the level of deception they employ to conceal the truth.

See also:

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How bankrupt govt steals your money in 8 steps

As news on the Great Cyprus Bank Robbery keep getting worse, the latest being the country’s corrupt finance minister Michael Sarris saying that as much as 80% of “large” bank deposits can be confiscated, Americans should be on the alert to copycat moves by our feral government and bankers. All the more because the American Left are applauding the theft of Cypriots’ bank savings.
Tyler Durden of ZeroHedge warns us that when bankrupt insolvent governments “run out of fingers to plug the dikes,” history shows that they fall back on a very limited playbook.
Simon Black of Sovereign Man blog has enumerated 8 steps in the playbook of bankrupt governments:
1. Direct confiscation: As Cyprus showed us, bankrupt governments are quite happy to plunder people’s bank accounts, especially if it’s a wealthy minority. Aside from bank levies, though, this also includes things like seizing retirement accounts (Argentina), increases in civil asset forfeiture (United States), and gold criminalization.
big govt
2. Taxes: Just another form of confiscation, taxation plunders the hard work and talent of the citizenry. But thanks to decades of brainwashing, it’s more socially acceptable. We’ve come to regard taxes as a ‘necessary evil,’ not realizing that the country existed for decades, even centuries, without an income tax. Yet when bankrupt governments get desperate enough, they begin imposing new taxes… primarily WEALTH taxes (Argentina) or windfall profits taxes (United States in the 1970s).
3. Inflation: This is indirect confiscation– the slow, gradual plundering of people’s savings. Again, governments have been quite successful at inculcating a belief that inflation is also a necessary evil. They’re also adept at fooling people with phony inflation statistics.
4. Capital Controls: Governments can, do, and will restrict the free-flow of capital across borders. They’ll prevent you from moving your own money to a safer jurisdiction, forcing you to keep your hard earned savings at home where it can be plundered and devalued. We’re seeing this everywhere in the developed world… from withdrawal limits in Europe to cash-sniffing dogs at border checkpoints. And it certainly doesn’t help when everyone from the IMF to Nobel laureate Paul Krugman argue in favor of Capital Controls.
5. Wage and Price controls: When even the lowest common denominator in society realizes that prices are getting higher, governments step in and ‘fix’ things by imposing price controls. Occasionally this also includes wage controls… though wage increases tend to be vastly outpaced by price increases. Of course, as any basic economics textbook can illustrate, price controls never work and typically lead to shortages and massive misallocations.
6. Wage and Price controls– on STEROIDS: When the first round of price controls don’t work, the next step is to impose severe penalties for not abiding by the terms. In the days of Diocletian’s Edict on Prices in the 4th century AD, any Roman caught violating the price controls was put to death. In post-revolutionary France, shopkeepers who violated the “Law of Maximum” were fleeced of their private property… and a national spy system was put into place to enforce the measures.
7. Increased regulation: Despite being completely broke, governments will dramatically expand their ranks in a last desperate gasp to envelop the problem in sheer size. In the early 1920s, for example, the number of bureaucratic officials in the German Weimar Republic increased 242%, even though the country was flat broke from its World War I reparation payments and hyperinflation episode. The increase in both regulations and government officials criminalizes and/or controls almost every aspect of our existence… from what we can/cannot put in our bodies to how we are allowed to raise our own children.
8. War and National Emergency: When all else fails, just invade another country. Pick a fight. Keep people distracted by working them into a frenzy over men in caves… or some completely irrelevant island.

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5 tools to protect your privacy online

Every day it seems we hear more news about our online privacy being compromised and violated.
More than 2 years ago, we already were warned that companies and governments are gathering unprecedented amounts of data about every click, link, and status update you make. Google, for example, builds an online profile on its users, keeping track of our searches and the sites we visit.
Some very useful tips from Simon Black of SovereignMan.com, Feburary 15, 2013:
Online privacy is becoming more important by the day. And nobody is going to give it to you, you have to take steps yourself to secure it.
Below are five different tools and services that will get you started. You can set up most of the tools below in 5 minutes. Each of them will go a long way in securing your privacy online.

1. Tor Browser

Tor is a great weapon in the fight for online anonymity as it allows you to surf the web without giving up your location and other personal data to the websites you visit.
The Tor Browser Bundle is the easiest and most secure way to get started; simply download it, and start surfing the web with the Tor Browser. It’s available for Windows, Mac, and Linux.
Learn more about and download the Tor Browser Bundle here

2. Duck Duck Go

If you want privacy, don’t search with Google.
Google store all of your searches to customize ads for you, but even worse, they can hand over the whole list of searches to any government agency that are curious about what you’ve been looking at for the last couple years.
A better alternative is Duck Duck Go, a completely anonymous search engine that does not store any information about you or your searches. The search results are essentially identical to Google’s, so there’s no loss of quality.
Search with Duck Duck Go here

3. HTTPS Everywhere

HTTPS Everywhere (S is for security) is a plug-in for Firefox and Google Chrome that tries to force a website to connect in secure mode, thus encrypting your traffic with the website you are visiting. This makes your browsing more secure because it prevents eavesdropping thieves or state-mafia from intercepting your unencrypted Internet traffic.
Download HTTPS Everywhere here

4. Cryptocat

Cryptocat is an encrypted chat that beats Facebook and Skype when it comes to security and privacy. If you want to chat in private then this is one simple solution. It’s also open source, which means you can see the full code and be sure there are no government “backdoors” built in.
Read more about and download Cryptocat here

5. Silent Circle

Silent Circle is a new player on the market, but it is founded by “old” players in the security and encryption industry. One of the founders, Phil Zimmerman, is also the creator of PGP, one of the most-used encryption platforms in the world.
Silent Circle is a suite of products offering:

  • Encrypted email
  • Encrypted video chat
  • Encrypted phone calls
  • Encrypted text messaging

Silent Circle is the only service on this list that is not free. But having the gold standard of encryption may be worth it for you.
Read more about Silent Circle here
I’ve already started using Duck Duck Go as a search engine. Alas, Silent Circle does not yet offer encrypted e-mail service, but the site does say it’s “coming soon”.

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Brace yourself for 15% increase in food prices

Remember this?

Brace yourself for some painful

and this?

Those are pics of the Great Drought of 2012, America’s worst drought since 1936. More than half (54.6%) of the contiguous 48 states was in drought by the end of June.

That kind of extensive and extended drought has consequences, and we’ll all be experiencing one of them soon. Brace yourself for higher food prices coming to your local supermarket, of a projected 15% increase. If your weekly grocery bill is $200, this means it’ll go up to $230.

Along with rising food prices will be social-political unrest. Last summer, two researchers from the New England Complex Systems Institute published a short paper examining the correlation between rising food prices and civil unrest.

Emma Rowley and Garry White report for the UK’s Telegraph, Sept. 23, 2012, that the world is “on track” for “agflation” — agricultural commodity inflation (of grain and oilseed) that will translate into record food prices within a year due to the US drought and similar water shortages in the farming belts of Russia and South America.

World food prices look set to hit an all-time high in the first quarter of next year – and then keep rising, according to the analysis from Rabobank, a specialist in agricultural commodities. By June 2013, the basket of food prices tracked by the United Nations could climb 15% from current levels.

Rabobank predicts “the coming year will see the world economy re-enter a period of agflation as grain and oilseed stocks decline to critically low levels, pushing the FAO [Food and Agricultural Organization] Food Price Index above record nominal highs set in February 2011.” The index offers a useful proxy for the prices paid by world consumers for food.

For policy-makers, the pick up in food inflation signals problems, as high food prices tend to magnify social unrest. “Politics and economics are inextricably linked as exemplified by the Arab Spring, which was preceded by a rise in food prices,” note Hermes fund managers in a recent report.

The good news is that Rabobank thinks the consumer impact could be less painful this time around compared to 2008, when there were severe shortages of wheat and rice. That is because today’s shortages are being seen more in crops used as animal feed, such as corn and soybeans, whereas in 2008, falling wheat stocks and various bans on rice exports capped the amount of grains available for direct consumption by people.

However, rising prices in animal feed crops will lead to higher meat and dairy prices, although consumers feeling the squeeze can switch from animal protein to staple grains.In the shorter term, higher slaughter rates as producers respond to rising feed costs should temporarily increase the meat supply. But the ultimate result will be smaller animal herd sizes, which will reduce meat and dairy production and ramp up prices.

None of this will translate into a rise in official inflation because, conveniently, the federal government does not include food and gas prices in its inflation calculation.

Simon Black of Sovereign Man has some advice for us:

Individuals can hedge their exposure in a number of different ways. The simple option is to invest in agricultural ETFs or long-term futures contracts. But I can hardly recommend this as a course of action given the massive systemic risk in the financial system.

Just as we often recommend holding physical gold and silver rather than owning a gold ETF, it’s much better to own physical agricultural assets.

If you’re on a budget, small gardens can be planted for a pittance as long as you’re willing to roll up your sleeves. Even if you live in an urban area surrounded by a sea of concrete, tabletop hydroponic and aquaponic systems can be set up on the cheap… and they’re easy to maintain.

If you have more capital to deploy, consider buying agricultural property, preferably overseas. Buying foreign real estate is a great way to move money overseas, plus it gives you a place to go if you really need to escape.


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