Conason: Time to Find Corporate Billions Kept Offshore
By Susie Madrak Tuesday Mar 24, 2009 5:30pmJoe Conason writes this week about how companies keep their corporate interests offshore - to evade paying their fair share of taxes:
According to the Government Accountability Office, nearly all of America's top 100 corporations maintain subsidiaries in countries identified as tax havens. As the GAO notes, there could be reasons other than avoiding the IRS to set up branches in places such as Singapore, Luxembourg and Switzerland, where taxes are light or nonexistent and keeping clients' illicit secrets is considered a matter of national pride.
But what reason other than evasion could there be for Goldman Sachs Group to set up three subsidiaries in Bermuda, five in Mauritius, and 15 in the Cayman Islands? Why did Countrywide Financial need two subsidiaries in Guernsey? Why did Wachovia need 18 subsidiaries in Bermuda, three in the British Virgin Islands, and 16 in the Caymans? Why did Lehman Brothers need 31 subsidiaries in the Caymans? What do Bank of America's 59 subsidiaries in the Caymans actually do? Why does Citigroup need 427 separate subsidiaries in tax havens, including 12 in the Channel Islands, 21 in Jersey, 91 in Luxembourg, 19 in Bermuda and 90 in the Caymans? What exactly is going on at Morgan Stanley's 19 subs in Jersey, 29 subs in Luxembourg, 14 subs in the Marshall Islands, and its amazing 158 subs in the Caymans? And speaking of AIG, why does it have 18 subs in tax-haven countries? (Don't expect to find out from Fox News Channel or the New York Post, because News Corp. has its own constellation of strange subsidiaries, including 33 in the Caymans alone.)
When the cost of these shenanigans was last estimated two years ago, the U.S. government's annual loss in revenue due to tax avoidance by major corporations and super-rich individuals was pegged at about $100 billion -- considerably more than a rounding error, even today. But of course that is only a rough assessment, as is the estimate of $12 trillion in untaxed assets hidden around the world. Nobody will know for certain until the books are opened and transparency is established.
[...] None of these tax havens could exist without the connivance or at least the cooperation of the world's most powerful governments, which remain dominated by financial industry lobbyists even now. The Organization for Economic Cooperation and Development has sought greater transparency from the tax havens for years, hearing promises from most and defiance from a few.
[...] Perhaps the UBS case indicates a change in that unwholesome trend and a renewed willingness on the part of American authorities to crack the tax havens -- which was not a priority, to put it mildly, of the Bush administration. As a senator, Barack Obama supported legislation to break open the secret financial regimes, by retaliating against countries and principalities that refuse to cooperate. Now Congress and the White House should pass such legislation and make breaking the tax havens a high priority in partnership with the European Union, the OECD and World Bank. They could start by threatening to outlaw transactions between American banks and financial institutions in any country that rejects new rules for transparency and reciprocal information.
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If corporations are considered people--which they are, thanks to the 1886 Supreme Court case (Santa Clara County versus Southern Pacific Railroad)--certainly they ought to be held to the same laws as people, pay their fair share of taxes and be legally responsible for evading them.
You wonder where our tax base went? Why personal taxes continue to go up, but we never seem to have enough money for roads, schools, health care, anything? Because of this.
@bamboozled
except of course that a corporation is *not* a person, but simply a legal means of avoiding personal responsibility.
Ironic, isn't it? We've had Supreme Court decisions that said people are property , and Supreme Court decisions that said property is people . I'm just waiting for somebody to close this stupid circle and be done with it.
"In 2008, Blackwater sued the City of San Diego to force the city to issue them a certificate of occupancy for its training facility in Otay Mesa before the plan went through the city's public review process. "U.S. District Judge Marilyn Huff ruled in Blackwater's favor. Blackwater is a person and has a right to due process under the law and would suffer significant damage due to not being able to start on its $400 million Navy contract.""
I think there's legitimate cause to be scared a judge uttered the words "Blackwater is a person."
Why do I suddenly have visions of some cheap Japanese horror movie where they dump so much black pollution into a pond of water that it just has to turn into an evil Blackwater person? Even worse, an evil Blackwater monster that has it's civil rights protected by the Supreme Court. Can you imagine how hard it would have been for Godzilla to kill the Smog Monster if it was being protected by a phalanx of civil liberties lawyers?
The Supreme Court has ruled that some people are property.
The Supreme Court has also ruled that some properties are people.
Therefore some properties are properties.
Sorry to throw a silly syllogism at you.
A = B
and
C = A
therefore
B = C
Actually, I'm a big fan of formal logic, so feel free to throw syllogisms at me anytime! :)
It's true that some properties are properties (circular definition), but you couldn't prove it by this syllogism because it contains a fallacy of concealed quantification. If some (of many) people are property, and some (of many) properties are people, in order for this to prove that some properties are properties the SAME people that were defined as properties must also be defined as people. That may not be the case. In fact, in the real examples I used, they are not. The people who were ruled to be property (slaves) were not also defined as corporations. (Except in medical terms, I guess. And to point to the medical definition of slaves as "corporate entities" would be a fallacy of argumentum ad verecundiam, wouldn't it?)
(Thank you for giving me a nice dose of logic today. :)
But I would definitely like to understand how the court reached that opinion.
Does it matter? What was the legalese they used to justify overturning the Florida Supreme Court decision to recount the votes from the election, and handing the presidency to Bush in 2001? Regardless of what it said in the documents, it was pure party partisanship. I'm sure the 1886 decision wasn't any different.
Basically, you can find a legal precedent for just about anything you want to justify, and a lot of what the Supreme Court rules on doesn't even have a precedent to begin with. I don't think I ever had much respect for the Supreme Court. There's nothing wrong with the institution per se, but it's been abused from day one by bad politicians who appoint and confirm the wrong people to it.
I sometimes look at Supreme Court rulings the same way I look at the Bible. You can find a verse to justify almost any action.
Thom Hartmann has often discussed this case on air and in a few of his books. The clerk of court who recorded the proceedings had mis-titled the judge's decision, which in its misconstrued form seemed to read that the railroad company was granted personhood -- which was NOT the decision of the judge. Further, the clerk (if memory serves) was conflicted either by his having worked for the railroad or having been a sort of lobbyist for them, so this "error" probably wasn't a mindless. Regardless of the substance of the judge's decision, "corporate personhood" has become a defacto law now, based on numerous precedents which themselves are based on that clerical error.
..to demonstrate that these corporation exist primarily as social parasites?
While I don't think there is anything the IRS can do to recover those relocated assets, Congress needs to pass a law that punishes corporations that engage in the practice in the future.
American Corporations spend lots and lots of money each year hiring crooked Wall Street accounting firms that know how to fluff the paperwork so no pays a dime in taxes.
So why in the HELL would any company feel the need to set up some bogus off shore shadow account?
Could it be:
For laundering drug money?
For paying bribes to politicians, law enforcement officials, and judges.
or,
Perhaps the money gets put into off shore accounts so it can be transfered into off shore accounts belonging to the CEO.
Or,
All of the above...
Prostitution. The sex trade is a lucrative industry in many nations.
But, I'm going to wager all of the above.
I'd add funding terrorism to keep the rubes pliant too.
http://www.youtube.com/watch?v=dbxZhx2eENo&fe...
an insider/worker at UBS became a whistler blower when he found out UBS was providing a TAX haven for approxiamtely 52,000 u.s. citizens. i believe UBS has decided NOT to turn over the names instead they pay a fine. this is usual and customary for many wealthy people. they move their money to make money. the UBS clients/accounts are said to be about 100 billion in TAX revenue.
That would recover some of the losses to the taxpayer.
Unfortunately, what will probably come of this whole debacle isn't Congress closing those loopholes, but creating other loopholes, much as they did with campaign finance laws.
It was my understanding that UBS was going to both pay the fine, AND release the list of names of tax evaders.
But, I don't recall off shore accounts being de rigueur for the wealthy elites and corporations 30 or 40 years ago. Conversely, I also seem to recall that during Dwight D. Eisenhower the wealthy paid a 91% income tax. What I'm trying to say is can't we get back to the more progressive tax code that we apparently used to have and which apparently did pretty damn well for the majority of American citizens.
for a democratic society, not so much to build revenue but to prevent severe inequality (sound familiar?). The 91% was actually the marginal rate, paid on the last dollar as they say. The actual rate was around 55-60%. I think it's best not to focus on the 91% as--aside from being inaccurate--feeds the no-tax Republicans/Libertarians argument against progressive taxation.
On that note, what always amazes me is that people rarely point out the difference between a wealthy person, who's taken care of basic needs and then some, paying an extra dollar of tax, and an average working person doing that. And that the wealthy benefit more from most infrastructure and other government-provide benefits than to the middle-class and poor, and that's before you factor in their greater ability to exploit loopholes and other tax-avoidance gambits.
http://www.nothirdsolution.com/2008/02/06/tax...
But...I don't get it! According to our friends at The Cato Institute tax haven countries are GOOD for us! They "compete" for our tax dollars by forcing our government to lower their taxes, the same way that department stores compete for our business by lowering their prices.
(Of course, there's always that little detail about paying taxes in one country while actually LIVING in another. But that doesn't seem unfair to me. I mean, haven't you ever heard of somebody buying a Rolls Royce while paying for a Volkswagon? Well, trust me, it happens all the time.)
and the wingnut on the street is whining about a homeless person getting free food stamps.
To be fair both welfare systems could use a little improvement.
"When the cost of these shenanigans was last estimated two years ago, the U.S. government's annual loss in revenue due to tax avoidance by major corporations and super-rich individuals was pegged at about $100 billion"
There is a homeless person getting free food stamps? Where? We can't afford this, it will bankrupt us.
Will there ever come a time when we will not be told these Robber Barons need a tax break? Is there a rate low enough for these bastards?
Here we are seeing that even under Bush's record low tax rates they still were not paying there fair share. Regulation and Punishment for Not paying taxes are the only way in my mind these people will ever pay their share.
Not surprisingly, one of the things that Phil Gramm and the Republican Congress did while they were busy drafting the Gramm-Leach-Bliley Act was was to starve the IRS for funding, so that it had to lay off most of the tax lawyers who were sophisticated enough to decipher the complicated tax returns of the fortune 500. Apparently it's un-American for the IRS to even DO their job of COLLECTING taxes. I don't have the links to the newspaper articles with me, here, but maybe somebody else can link to those NYT articles detailing how the IRS can recover an additonal 300 billion by just getting the top 1% of income earners to pay the taxes that they LEGALLY OWE, even under the record low Bush tax rates. Apparently, having record low tax rates for top income earners wasn't enough, they STILL had to evade.
that's a good point. phil Gramm was/is on the board for UBS. they're a big player in the TAX haven game.
Phil Gramm and John McCain are two of the main "culprits" behind this deregulation rape of the american public.
Gramm was toxic to McCain's campaign; now we'll get to the bottom of how they worked in tandem once Gramm left Congress to remove ALL regulations on these shysters on Wall Street.
John McCain will soon become "persona non grata" in this country.
I found the link about the IRS and the estimated 300 billion they can recover if they actually have the lawyers to scrutinize the tax returns of the fortune 500.
Time for 'regime change' in the Caymans? Maybe that would get their attention?
If they're harboring potential terrorists, and terrorist financing, and won't stop those practices, we need to take it to the U.N. for a vote, not listen to the results of the vote, act unilaterally and invade.
This is a different kind of war, right? Isn't that what Bush said? Besides, it'll be good for the economy.
Rah roh
Where are the names of those individuals who had been exposed for having Swiss bank accounts?
Americans will chew them to shreds and deservedly so. These "conjobs" are evading our tax codes while enjoying the lifestyle and corporate perks of living in the US.
Let them all pay up or be put behind bars.
These oligarchs, both dem and repub, will never allow their offshore havens to be ended. The author is certainly correct in his assessment of the situation, but he is woefully naive in thinking anything will ever be done about it.
These are the companies who select our presidents and congresscritters. Never forget that.
If you truly believe that, then all hope is gone. Just hook the chains to your legs and pull that rope. Nothing you can do, nothing anyone will do, all is lost.
It depends on what you mean by hope. I still have hope, but my hope is tempered with reality. Our current political system is corrupt. Expecting hopeful results from corrupt politicians is foolhardy.
I do believe President Obama will take on many of these
outrageous tactics in time. Let's give him 8 years!
The "Laundry List" of Corrections is a long one and off-shore accounts is on it.
It would certainly be nice if that were true, but when you look at Obama's ties to Wall Street it is very obvious that he is in their pocket. Again, I had high hopes for Obama -- but that was before I realized just how wedded to the financial industry he is.
March 20, 2009
Lynnley Browning--The New York Times Media Group
Snip - "The U.S. authorities have widened their criminal investigation into the Swiss bank UBS concerning offshore tax fraud to include independent lawyers and accountants from Switzerland and the United States who worked with the bank, according to people briefed on the matter."
[ http://www.hispanicbusiness.com/finance/2009/... ]
Besides the drama, this was a interesting DVD.
[ http://www.youtube.com/watch?v=7Y9YZxA5uM8&eu... ]
I have. They are essentially about the size of a small county, with only a few thousand residents. All flat, and typical caribbean island landscape. Nothing unique, no big skyscrapers or large banks with their emblems emblazoned on the outside, no factories (other than t-shirts and other tourist trinkets), and no sizeable financial wherewithal other than tourism.
So how does this become such a financial capital? Beats me.
To answer your question, tax laws, or lack thereof. That is all it takes to become a financial capital.
I believe that corporations are considered "people" only with respect to rights. As for responsibilities, their only responsibility is to maximize profits for their shareholders. Yet somehow along the way, that responsibility has been extended to giving as much money as is possible to their executives. Do you see a conflict here? The more money the executives take, the less the shareholders get. I smell lawsuits.
With an average income of around $42,000, Caymanians enjoy the highest standard of living in the Caribbean. According to the CIA World Factbook, the Cayman Islands GDP per capita is the 12th highest in the world. The islands print their own currency, the Cayman Islands Dollar (KYD), which is pegged to the U.S. dollar at a fixed rate of 1 KYD = 1.20 USD.
Amended: (CIMA)> http://www.cimoney.com.ky/section/currency/de...
Snip - Formal United Kingdom approval for the issue of a new and independent currency in the Cayman Islands was given in September 1970 and the Currency Committee was charged with the responsibility of introducing the currency and proposing the appropriate legislation.
In 1972, Cayman Islands Currency Board introduced notes in denominations of 1, 5, 10 and 25 dollars. 40 dollar notes were introduced in 1981, however they revoked a few years later, followed by 100 dollars in 1982 and 50 dollars in 1987. In 1997, the Cayman Islands Monetary Authority (CIMA) took over issuance of paper money, issuing notes for 1, 5, 10, 25, 50 and 100 dollars
collaboration with the Nazis (Historic Footage)
[ http://www.youtube.com/watch?v=W2JkpQ4b3J0 ]
Operation Bernhard > http://en.wikipedia.org/wiki/Operation_Bernhard
In 1969, under the leadership of David Rockefeller, the bank became part of a bank holding company, the Chase Manhattan Corporation.
[ http://en.wikipedia.org/wiki/Chase_Manhattan_... ]
In July 1996 The Chase Manhattan Bank was purchased by Chemical Bank of New York, which had acquired Manufacturers Hanover Corporation several years earlier.
In December 2000, the combined Chase Manhattan completed the acquisition of J.P. Morgan & Co., one of the largest banking mergers to date. The combined company was renamed JPMorgan Chase & Co. In 2004 the bank also acquired Bank One, making Chase the largest credit card issuer in the US and JPMorgan Chase also acquired Bear Stearns & Co. and Washington Mutual in 2008.
Note:Who gave the "Cayman Islands" their banking rules?(United Kingdom)
"The Cayman Islands are a major international financial center. With the biggest sectors being "banking, hedge fund formation and investment, structured finance and securitization, captive insurance, and general corporate activities."
There was a run on WaMu by its customers of a mere $17 billion, so something weird was going on, somebody was lying about something.
http://seekingalpha.com/article/97495-on-wamu...
which pretty much makes it the sale or theft of the century.
And I believe WaMu are trying to sue the gov to reclaim some insane figure it paid in taxes.
WaMu holding company sues FDIC
Snip - "The holding company for failed savings and loan Washington Mutual Inc, has sued the Federal Deposit Insurance Corp. for billions of dollars in claims in connection with the September seizure and sale of the Seattle-based thrift to JPMorgan Chase & Co."
[ http://www.bizjournals.com/tampabay/stories/2... ]
And...
JPMorgan sues FDIC and Washington Mutual
Snip - "JPMorgan Chase & Co. on Tuesday filed a countersuit against the Federal Deposit Insurance Corp. and the holding company of Washington Mutual Inc. in an attempt to protect its purchase of the failed bank’s assets."
[ http://www.bizjournals.com/dayton/stories/200... ]
Money is not the only answer, but it makes a difference.
[Barack Obama]
Snip - "On the weekend of September 13th, AIG's senior leaders were summoned to the offices of the New York Federal Reserve. Regulators from Dinallo's insurance office were there, as was Geithner, then chief of the New York Fed. Treasury Secretary Hank Paulson, who spent most of the weekend preoccupied with the collapse of Lehman Brothers, came in and out. Also present, for reasons that would emerge later, was Lloyd Blankfein, CEO of Goldman Sachs. The only relevant government office that wasn't represented was the regulator that should have been there all along: the OTS."
[ http://crooksandliars.com/susie-madrak/spitze... ]
That darn AIG... :-(
Washington Mutual, Inc. is a savings bank holding company and the former owner of Washington Mutual Bank, which was the United States' largest savings and loan association.
On September 25, 2008, the United States Office of Thrift Supervision (OTS) seized Washington Mutual Bank from Washington Mutual, Inc. and placed it into the receivership of the Federal Deposit Insurance Corporation (FDIC).
Even without these offshore tax havens coming into play I've always argued with people who keep shouting 'tax breaks! tax breaks!' that most major corporations and such already hardly pay any taxes due to loopholes, etc. My dad was a corporate lawyer for many years so I know how it works and that's why these companies have teams of lawyers (one of the reasons). The one city I lived in for awhile there was a huge international company with a few different sites around town and it was well known they paid less taxes then most individuals who lived there. Then the recent news that most of the bank bailout recipients were 'behind' on paying taxes, and you gotta wonder how much more of a break they need, or can get, when the GOP keeps shouting for their precious tax breaks.
on paying their tax burden, its rampant in those circles.
As that dead rich bitch famously said "only small people pay taxes"
Corporate CEO to politician:
"If you can help me hide $100,000,000 in off-shore accounts, I'll give you ten thousand dollars in cash for your campaign.
Politician to corporate CEO:
"OH, THANK YOU, SIR, for your generosity!"
[This was supposed to be attached to a different comment... so removed from here.]
I was sideling up to your comment... Next thing I knew, "Pooof!" you were gone. :-)
WATCH: Separation of Corporation and State: The Birth of the 28th Amendment Movement
Snip - "Every so often an idea comes along that rings with such clarity and purpose that it ignites the imaginations of millions of people. That spark of excitement becomes hope, hope becomes action, action becomes community, and that community grows to become a movement. Marine biologist, author, fisherma’am, and Exxon Valdez survivor, Dr. Riki Ott has such an idea."
(With short video clip)> http://www.chelseagreen.com/content/watch-sep...
The GOP wanted Bush's expensive wars but still wants more tax cuts and more cuts on regulatory rules for huge corporations and the ultra wealthy. How does that work?
Oh yeah, it's called fascism.
And remember what happened to Mussolini?
I think the fascist corporatocracy would do well to read up on that.
He's just another re-Thug tool.
*
99% of people who rail and bitch about the "rich" are simply jealous and envious that THEY are not rich themselves, and would take the same measures to preserve their wealth as the rich do, if they actually HAD any. And most of them know it, but would never admit it publicly. They think it would be great for the government to take away the "rich" peoples' money, as long as it's done to somebody else and not them.
But I wouldn't use my wealth to cheat the system.
I don't hate rich people because they're rich...I hate them because they use every trick, every loophole, to get away with not paying taxes like everyone else, and they have taken over govt, using their wealth to influence policy in their favor.
The list goes on.
So, capnmike, your theory surely applies to many, but not all. And nowhere near 99% I'm thinkin.
With money, who needs friends?
[Frank Gorshin]
A bank is a place where they lend you an umbrella in fair weather and ask for it back when it begins to rain.
[Robert Frost]
Yes, the NYT (correctly) reported on 14 February 2009 that UBS would pay a $780M fine and release SOME client names to the US government. Minor little detail, right?
Well, six days later on 20 February here is the story from the Guardian/UK http://www.guardian.co.uk/business/2009/feb/2... It turns out that UBS turned over 300 names. Yep, only 300. UBS-Switerland had 52,000 US-citizen clients. Of that, the US DoJ had already tagged 20,000 as being "interesting." They gave up only 300.
Like the old saying goes (and appropos for traditional media reports): the large print giveth, and the small print taketh away.
It may be just me but I see money laundering in this set-up.
I got one for you...remember this one?
http://www.boston.com/bostonglobe/editorial_o...
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