Come to the Caribbean — visit Mitt Romney’s money
❝In some circles, “redistribution” of wealth has become a dirty word, and recent efforts to make the tax system more progressive have run into serious political resistance, above all from Republicans. But whatever your political party, you are unlikely to approve of the illegal use of tax havens. As it turns out, a lot of wealthy people in the United States, Europe, and elsewhere have been hiding money in foreign countries — above all, Switzerland, Luxembourg, and the Virgin Islands. As a result, they have been able to avoid paying taxes in their home countries. Until recently, however, officials have not known the magnitude of that problem.
❝But people are paying increasing attention to it. A vivid new documentary, The Price We Pay, connects tax havens, inequality, and insufficient regulation of financial transactions. The film makes a provocative argument that a new economic elite—wealthy managers and holders of capital—is now able to operate on a global scale, outside the constraints of any legal framework. In a particularly chilling moment, it shows one of the beneficiaries of the system cheerfully announcing on camera: “I don’t feel any remorse about not paying taxes. I think it’s a marvelous way in life.”
❝Gabriel Zucman, who teaches at the University of California at Berkeley, has two goals in his new book, The Hidden Wealth of Nations: to specify the costs of tax havens, and to figure out how to reduce those costs. While much of his analysis is technical, he writes with moral passion, even outrage; he sees tax havens as a “scourge.”
His figures are arresting. About 8 percent of the world’s wealth, or $7.6 trillion, is held in tax havens. In 2015, Switzerland alone held $2.3 trillion in foreign wealth. As a result of fraud from unreported foreign accounts, governments around the world lose about $200 billion in tax revenue each year. Most of this amount comes from the evasion of taxes on investment income, but a significant chunk comes from fraud on inheritances. In the United States, the annual tax loss is $35 billion; in Europe, it is $78 billion. In African nations, it is $14 billion.
❝Zucman is the first economist to produce specific numbers of this kind, and to do so, he had to undertake some creative detective work. In order to identify hidden wealth, he focuses on “anomalies”—situations in which international balance sheets show, in aggregate, more liabilities than assets…Zucman puts it this way: “as far back as statistics go, there is a ‘hole’; if we look at the world balance sheet, more financial assets are recorded as liabilities than as assets, as if planet Earth were in part held by Mars.”
For the purpose of producing an accounting of hidden wealth, that is actually helpful, because “money doesn’t evaporate randomly into the ether, but instead follows a precise pattern of tax evasion…”
❝A strong virtue of Zucman’s book is that it puts a bright spotlight on an area in which significant reforms might appeal to people who otherwise disagree on a great deal. You might believe that the tax system should be made more progressive, or you might believe that it should be made less so. But whatever you think, you are unlikely to support a situation in which trillions of dollars are hardly taxed at all.
RTFA for quite a detailed discussion internal to Sunstein and Zucman. As complex as the topic – but, you learn even more about the politics of wealth and deceit.
The Republican Party is expected to approve a resolution this week, calling for repeal of an Obama administration law that is designed to crack down on offshore tax dodging…In what would be the party’s first appeal to scrap the law…
True to their dedication to time-wasting, we can expect 47 more attempts to follow another failure to make 19th Century capitalism the state religion.
Approved in 2010 after a tax-avoidance scandal involving a Swiss bank, FATCA requires most foreign banks and investment funds to report to the U.S. Internal Revenue Service information about U.S. customers’ accounts worth $50,000 or more…
Repeal seems unlikely, but more political heat from Republicans could further complicate and delay implementation, said financial industry lobbyists…
Defending the law, Treasury Department spokeswoman Erin Donar said in a statement: “FATCA continues to gain momentum and international support as we work with partners around the world to fight offshore tax evasion.”
In the tradition of rightwing politicians in American history, today’s Republicans want armies stationed around the world, highway and rail systems to move industrial products to market, a certain level of education [albeit minimal] and obedient Bob Cratchit-level bureaucrats to run the infrastructure – paid for exclusively by taxes on workingclass families, our ever-diminishing middle class. No taxes on wealthy individuals or corporations.
Perish the thought Republican family values include honesty, responsibility, paying your own way.
The United States has signed agreements with the Cayman Islands and Costa Rica to help those countries’ banks comply with an anti-tax evasion law starting next year…
The deals are part of the US effort to enforce the Foreign Account Tax Compliance Act…which was enacted in 2010 and is set to take effect in July 2014. FATCA requires foreign financial institutions to tell the US Internal Revenue Service about Americans’ offshore accounts worth more than $50,000. It was enacted after a Swiss banking scandal showed that 17,000 US taxpayers had hidden substantial fortunes overseas…
With these two deals, both signed this week, the Treasury has now finished 12 FATCA “intergovernmental agreements”…which help countries’ financial institutions comply with the law…
The trading of financial information, though not part of the Cayman Islands deal but included in many of the other 11 FATCA agreements, has rankled US banks. In April, the Texas Bankers Association and the Florida Bankers Association, both industry groups, filed a lawsuit attempting to block a Treasury Department rule that would allow the IRS to send certain bank account information to foreign governments.
Looks like Romney, his Republican peers in the billionaire boys club will have to put their sleazy tax accountants to work again – searching out places to hide their funds from any responsibility to pay taxes in the United States.
It’s always preferential to hide your money rather than run the risk of leaving it inside countries that may have favorable taxation plans for foreigners; but, still let the IRS know how much you have inside their borders. Or so I’ve been told. Never had enough money to worry about.
For European lenders with private-banking aspirations, a presence in Switzerland used to be a must. Now, with bank secrecy eroding and rising compliance costs chipping away at profits, more are saying adieu.
The number of foreign-owned Swiss banks fell to 129 by the end of May from 145 at the start of 2012, according to data from the Association of Foreign Banks in Switzerland. Assets under management slid by a quarter to $921 billion in the five years through 2012 as clients withdrew money or paid taxes on undeclared accounts…
…While Switzerland remains the biggest center for global offshore wealth with $2.2 trillion or about 26 percent of the market…departures may further chip away at the Alpine republic’s status.
“There will be a bit of a shakeout among private banks,” said Felix Wenger…co-head of the private-banking practice at consulting firm McKinsey & Co…“Specifically for Switzerland, some foreign players might conclude that an exit is a better option…”
The U.S. has been investigating Swiss banks and units of foreign banks in the country, including that of London-based HSBC, after UBS AG (UBSN) in 2009 avoided prosecution by admitting it fostered tax evasion and delivering data on about 4,700 accounts of Americans. France and Germany have been searching for tax dodgers using data stolen from Swiss banks and also sharing some of the information with authorities in other European countries.
Agreements with the U.K. and Austria to collect taxes on behalf of those countries on accounts held in Switzerland have been in force since January, and Switzerland is in talks with other European countries on taxing secret accounts. The country will join the international push against tax dodgers and help develop global standards allowing banks to share customers’ details to combat tax evasion, Finance Minister Eveline Widmer-Schlumpf said in June…
Everyone is so nice and polite. Fact is we’re discussing corruption and theft, money owed to any number of nations. Looks like Mitt Romney will have to move a couple of chairs over to make room in the Cayman Islands for more of his cheapskate buddies to move in from Switzerland.
Britain’s former top diplomat on the Cayman Islands should face a criminal inquiry for allegedly lying to police investigating corruption in the notorious tax haven, a Scotland Yard review has concluded.
Former governor Stuart Jack has been cited for possible attempts to pervert the course of justice over a Watergate-style break-in at a newspaper office on the islands, according to documents seen by The Independent on Sunday.
In the latest twist of a tortuous dispute played out under the island’s tropical blue skies and courtrooms thousands of miles apart, the Metropolitan Police says there are sufficient grounds for an investigation into Mr Jack and two other senior officials. The head of a police team sent in 2007 to investigate the allegations accuses them of misleading him and effectively scuppering his inquiry, according to the letters.
The claims against the three, which Mr Jack strongly denies, amount to possible “misconduct in public office, attempting to pervert the course of justice and possibly wasting police time”, according to a letter from the Yard’s Commander Allan Gibson to the island’s current governor, Duncan Taylor. “It is my view the allegations are serious and contain sufficient detail to warrant a criminal investigation,” he said.
The letter – copied to Simon Fraser, the head of the Diplomatic Service – poses awkward questions for the Foreign and Commonwealth Office (FCO): any inquiry is likely to inflame a long-running controversy and embarrass senior diplomats, the Cayman authorities – and the Met. If it does nothing, it faces accusations of hypocrisy after David Cameron last week called on the Cayman Islands and other British Overseas Territories to show greater transparency in their tax affairs.
The FCO is already fighting in the courts to block release of a document that could blow the lid off its attempts to avoid blame for the original bungled police inquiry. It began as a leaks investigation and ended as a multimillion-pound inquiry into alleged police wrong-doing. FCO officials have declined to release an inquiry report because its “disclosure could lead to a loss of confidence within the international community which could impact negatively on the Cayman Islands’ reputation and, more directly, on its financial services industry”…
Today, the Caymans is one of the world’s biggest offshore trading centres, worth billions of pounds, based on zero taxation and banking secrecy. It comes second only behind Switzerland in the Tax Justice Network’s financial secrecy index. Enron, the failed US energy giant, used hundreds of Cayman-registered subsidiaries to keep billions off its balance sheets…
Although Scotland Yard has called for an inquiry, it said it could not carry it out because it was “conflicted” owing to its former officers’ initial involvement. It indicated a non-British force should be brought in.
We could loan y’all investigators from the IRS. They have loads of experience ranging from leaks to tax avoidance. Of course – most of that experience is designed to aid tax avoiders not prosecute them.
We might accidentally arrest a candidate for president.
They are a large and diverse group that includes a Spanish heiress; the daughter of the former Philippine dictator Ferdinand Marcos; and Denise Rich, the former wife of the disgraced trader Marc Rich, who was pardoned by President Bill Clinton. But, according to a trove of secret financial information released Thursday, all have money and share a desire to hide it.
And, it seems safe to say, they — and thousands of others in Europe and far beyond, in places like Mongolia — are suddenly very anxious after the leak of 2.5 million files detailing the offshore bank accounts and shell companies of wealthy individuals and tax-averse companies.
The leaked files include the names of 4,000 Americans, celebrities as well as more mundane doctors and dentists.
It is not the first time leaks have dented a thick carapace of confidentiality that usually protects the identities of those who stash money in the British Virgin Islands, the Cayman Islands, Liechtenstein and other havens. Nor, in most cases, is keeping money in such places illegal…
…Lifting the curtain on the identities of those who keep their money offshore is likely to cause particular anger in austerity-blighted Europe, where governments have been telling people to tighten their belts but have mostly turned a blind eye to wealthier citizens who skirt taxes with help from so-called offshore financial centers…
The consortium of investigative journalists did not specify how it got the information or where it came from. On its Web site, the group said “the leaked files provide facts and figures — cash transfers, incorporation dates, links between companies and individuals — that illustrate how offshore financial secrecy has spread aggressively around the globe, allowing the wealthy and the well connected to dodge taxes and fueling corruption and economic woes in rich and poor nations alike.”
I’m confident there ain’t anyone from my neighborhood on the list. Might be some folks from the posh end of town, though. 🙂
A global super-rich elite has exploited gaps in cross-border tax rules to hide an extraordinary $21 trillion of wealth offshore – as much as the American and Japanese GDPs put together – according to research commissioned by the campaign group Tax Justice Network.
James Henry, former chief economist at consultancy McKinsey and an expert on tax havens, has compiled the most detailed estimates yet of the size of the offshore economy in a new report, The Price of Offshore Revisited, released exclusively to the Observer.
He shows that at least $21 trillion – perhaps up to $32 trillion – has leaked out of scores of countries into secretive jurisdictions such as Switzerland and the Cayman Islands with the help of private banks, which vie to attract the assets of so-called high net-worth individuals. Their wealth is, as Henry puts it, “protected by a highly paid, industrious bevy of professional enablers in the private banking, legal, accounting and investment industries taking advantage of the increasingly borderless, frictionless global economy”. According to Henry’s research, the top 10 private banks, which include UBS and Credit Suisse in Switzerland, as well as the US investment bank Goldman Sachs, managed more than $6.5 trillion in 2010, a sharp rise from $2.5 trillion five years earlier.
The detailed analysis in the report, compiled using data from a range of sources, including the Bank of International Settlements and the International Monetary Fund, suggests that for many developing countries the cumulative value of the capital that has flowed out of their economies since the 1970s would be more than enough to pay off their debts to the rest of the world…
The problem here is that “the assets of these countries are held by a small number of wealthy individuals while the debts are shouldered by the ordinary people of these countries through their governments,” the report says…
Leaders of G20 countries have repeatedly pledged to close down tax havens since the financial crisis of 2008, when the secrecy shrouding parts of the banking system was widely seen as exacerbating instability. But many countries still refuse to make details of individuals’ financial worth available to the tax authorities in their home countries as a matter of course…
And here in the United States, we are told we should kneel and pray in the direction of the Republican Party, vote to elect a leading representative of the tax cheats this report is all about – to be president of the country.
Daylife/Reuters Pictures used by permission
Sacked Olympus chief executive Michael Woodford says he has contacted the UK’s Serious Fraud Office about the Japanese firm’s accounting practices.
Mr Woodford, who was dismissed last week, told the BBC that he believed the camera-maker had paid out excessive sums in relation to takeover deals. He says he was fired for raising the issue, but Olympus says his different management style was to blame.
The SFO confirmed that Mr Woodford had contacted it.
Olympus said it would “consider” taking legal action against Mr Woodford for disclosing confidential information.
Mr Woodford said he had commissioned auditors PricewaterhouseCoopers to look into an alleged $687 million payment by Olympus to a Cayman Island company. He told the BBC that he was ousted after he distributed a copy of the PwC report on Wednesday night…
He says he was called into a board meeting on Friday at which the agenda had been changed. The only new item to discuss was his dismissal as chief executive with immediate effect, for which, he said, no reason was given.
After the board voted for his dismissal, he left the meeting and was followed to his office by a colleague…He was asked for the key to his flat, 51% of which he owned, and was told to get the bus to the airport as they had taken away his car…
According to Mr Woodford, auditors were unable to establish who owned the company in the Cayman Islands. He said questions still had to be answered: “To whom and for what did we pay this money..?”
A perfectly legitimate question within any legal corporate structure. Whether that structure is manipulated by officers dedicated to criminal pursuits is an entirely relevant question.
Sounds like Mr. Woodford asked that question. His dismissal is the only answer, so far.
President Obama has presented a far-reaching set of proposals that are aimed at the tax benefits enjoyed by companies and wealthy individuals harboring cash in offshore accounts. His remarks echoed the sentiment he voiced again and again during the presidential campaign, when he pledged to crack down on “illegal overseas tax evasion.”
The proposed tax overhaul, which will be fully unveiled later this week when the White House presents a more detailed budget, could help raise $210 billion in revenues over 10 years, the administration estimates.
While most Americans paid their fair share of taxes, Mr. Obama said, “there are others who are shirking theirs, and many are aided and abetted by a broken tax system.” Multinationals, he said, paid an average tax rate of just 2 percent on their foreign revenues. And some wealthy individuals hid their fortunes in foreign tax havens.
The president thus set up a frontal clash with big business over the tax advantages enjoyed by companies with extensive overseas operations…