what are the Panama Papers?

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what are the Panama Papers?

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Oooooh this goes back a bit.

Basically there was a firm call Mossack-Fonseca that handled the financial affairs of many of the world’s wealthiest people (including numerous heads of state and former heads of state). Their job was to basically dodge as much tax as possible. They did this using fancy legal tactics (The details of which may be a bit involved for an ELI5 – but moving money about in ways that make it hard to tax is the gist). This allowed these rich people to pay little or no tax on their earnings or inheritances in some cases. And technically this was all legal (if highly unethical).

The documents that detailed all this tax dodging were leaked to the press, who, after a lot of hard work to interpret (apparently even the documents made it hard to see from whom the money was coming) published lists of people they had identified and how much money they didn’t pay tax on. There were a couple of terabytes of data handed over. Caught up a lot of important people. (Named Panama papers because Mossack Fonseca were based there).

In short, they showed how rich people and coorperations are able to dodge taxes for the countries they operate in.

Mostly through shell coorperations based in countries they dont actually opperate in.

Iirc the loophole is that they generally avoid repatriating money to the US to avoid tax and then find ways to use those assets domestically. I.e. if you make 1 billion overseas you’d owe in the ballpark of 350 million in taxes, but if you leave it off shore, you can’t spend it, but someone might not mind it as collateral on a loan, or you bring it in when you have capital losses to offset the gains.

a leak of the financial transactions of the world’s super-wealthy that outlines how they evade taxes.