subject: Offshore banking — where did this concept begin & why has it thrived? [print this page] Offshore banking where did this concept begin & why has it thrived?
The longer I live the more "words" amaze me. Where did all these words we use everyday come from, and how were they derived? Truly, this is fascinating subject. And, as it so happens, no one seems to know how the word "offshore" came into being, but a tidbit of offshore history strongly indicates it was born in the UK.
Soon after the Second World War the British Channel Islands (Jersey and Guernsey), actually located close to the coast of Northern France, went into the so-called offshore financial business. So, it appears, that since these two islands were located "off the shore" of the main island, the word "offshore" was born. And, as these two islands, having an unusual constitutional status, they were afforded independence in domestic affairs including both banking and taxation.
Naturally, it didn't take long for them to realize they had a tiger by the tail. How is this? Being offshore from the Mother island they could offer moderately wealthy, middle class Brits a very safe, tax-free haven. And, to make the word "offshore" more inviting the British Labor government, as this time, was harassing their people with higher and higher taxes in the late 1940's Therefore, self-preservation reigned -- Brits fled to the Channel Islands and the word "offshore" became a permanent linguistic fixture,
Then, lo and behold, during the 1970's, British taxation became a dinosaur. They raised taxes as high as 95% and restricted the export of currency nothing like having a hungry wolf at your door. Of course, the super wealthy always had their secret Swiss bank accounts to protect them, but now the Channel Islands, being most convenient (just offshore) and English speaking, became a financial savior to many middle class Brits.
Now, moving forward in this brief "offshore history," in the 1980's and 1990's quite a number of Caribbean British colonies renounced their colonial status -- becoming free, sovereign nations. At the same time, but to a lesser degree, the same offshore mentality was taking hold in France.
Of course, becoming an independent nation always presents its financial problems no Mother Country to nurse upon. Nevertheless, taking the lead from the Channel Islands, these newborn states quickly saw the monetary advantages of becoming offshore financial service providers -- a quick way to financially stabilizing their country.
Since these Caribbean nations were in close proximity to the US, Canadian and South American markets, they were easy cherry pickings, for they offered "no questions asked" banking services for clients desiring to hide cash. At this time, offshore banking took on a unique name, "Samsonite Banking." Yes, during these years, with an attach case full of money, many savvy people were able to quickly transport their savings offshore and salvage their financial future.
However, a political agenda (read evil/greed agenda), in time, will always raise its ugly head. Politicians hate financial freedom! These Liberals, Leftists or whatever-you-call-them cannot tolerate people having monetary freedom. Why? They lose control of the people they need slaves to serve and fill the coffers of their pork-barrel programs. Therefore, they had to sabotage this offshore financial freedom concept by manufacturing a vicious propaganda campaign that all tax-haven jurisdictions were just incubators of money laundering, organized crime, and tax evasion.
Therefore, we now live in that lie and deceit. The truth is, as a whole, these offshore economies are prosperous and well regulated global financial centers. When all these offshore havens are objectively analyzed we find them offering both individuals and corporations outstanding worldwide financial services. These services can be characterized as trustworthy, operating with integrity, promoting financial freedom, and thereby adding great benefit and meaning to global commerce.
Today, because these political propaganda machines have blackened the words "offshore" and "tax haven," most offshore centers prefer to be known as "international financial centers" avoiding the so-called negative connotations. Though this is true, the word "offshore" still lives on and is defined in a good sense in our dictionaries. It has become a part of the English language and people know exactly what we mean when we say "offshore banking," whereas "international finance" has a much broader connotation.
Though the word "offshore" began as a local British financial concept it has grown to international status. Today, in reality, it simply means doing business outside of one's county no shoreline is needed or intended. Example: Switzerland, Liechtenstein and Andorra are landlocked no seashore but the definition of "offshore banking" still applies to them.
Tax avoidance or Tax Evasion? When speaking of moving money to an "offshore financial center" it is critical to understand the difference between these two terms. According to a definition expressed by the OECD (Organization for Economic Co-operation and Development), an offshore tax haven is a jurisdiction, which actively makes itself available for the avoidance of taxes, which would otherwise be paid in a higher tax jurisdiction.
Obviously, the keywords in the above paragraph are "tax avoidance." But, there is a second term, "tax evasion," that comes in to play. According to US tax law; "tax avoidance" is legal, while "tax evasion" is a crime. "Tax avoidance," beyond a doubt, is an absolute, moral, financial principle. It is simply the structuring of one's business affairs in such a way, without breaking the law, so that the minimum possible amount of tax is payable. Therefore, any offshore jurisdiction that offers beneficial instruments or opportunities for "tax avoidance," for personal financial privacy, and for asset protection falls into this financial tax-haven arena.
There is a US Supreme Court Case that has formed the basis of US "tax avoidance" law for decades, wherein Judge Learned Hand famously wrote: "Any one may so arrange his affairs that his taxes shall be as low as possible; he is not bound to choose that pattern which will best pay the Treasury; there is not even a patriotic duty to increase one's taxes... " Gregory v. Helvering, 69 F.2d 809, 810-11 (2d Cir. 1934).
Are you banking offshore? Are you financially thriving?
By Jack Godwyn
Ref: REWRITE#8 OffsBkg-WhereDidThisConceptBegin-Why Has It Thrived
