Sunday, May 24, 2009


Blowback is a term used to describe the unintended consequences of military interventionism. Ron Paul quoted the 9/11 commission's use of the term in describing why terrorists want to kill Americans.

Today we have financial blowback.

Andy Thompson of Association of Private Client Investment Managers and Stockbrokers (APCIMS) said: "The cost and administration of the US tax regime is causing UK investment firms to consider disinvesting in US shares on behalf of their clients. This is not right and emphasises that the administration of a tax regime on a global scale without any flexibility damages the very economy it is trying to protect.

One executive at a top UK bank who didn't want to be named for fear of angering the IRS said: "It's just about manageable under the current system - and that's because we're big. The danger to us is suddenly being hauled over the coals by the IRS for a client that hasn't paid proper taxes. The audit costs will soar. We'll have to pay it but I know plenty of smaller players won't.

When it costs too much to comply with a tax code, people and businesses will either stop participating or do it illegally. There's not much difference between banks, oil companies, or even drug cartels. They will all follow the money.

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