Respectfully submitted by Lawrence E. Rafferty (rafflaw)- Guest Blogger
Recently, the ICIJ, better known as the International Consortium of Investigative Journalists released a report detailing hundreds of thousands of off-shore companies whose sole product or service is to hide income from many countries tax authorities. “A cache of 2.5 million files has cracked open the secrets of more than 120,000 offshore companies and trusts, exposing hidden dealings of politicians, con men and the mega-rich the world over.
The secret records obtained by the International Consortium of Investigative Journalists lay bare the names behind covert companies and private trusts in the British Virgin Islands, the Cook Islands and other offshore hideaways.
They include American doctors and dentists and middle-class Greek villagers as well as families and associates of long-time despots, Wall Street swindlers, Eastern European and Indonesian billionaires, Russian corporate executives, international arms dealers and a sham-director-fronted company that the European Union has labeled as a cog in Iran’s nuclear-development program.” ICIJ.org
When I read this article several days ago, I was struck by the sheer volume of money and the huge numbers of companies and wealthy individuals who were allegedly hiding income from their respective country’s tax authorities. As the above quote noted, there are more than 120,000 companies vying for the tax evasion business from countless numbers of the ubber wealthy who just can’t find it in their hearts to pay their fair share of taxes.
We always here the argument in this country from the wealthy and those supporting the wealthy in Congress and the Senate, that the wealthy already pay more than enough and the poor and middle class don’t pay enough taxes! If I understand the ICIJ report, all of those people whose names were disclosed as evading taxes were all wealthy people. I was sure that I would find somewhere in the report that the rest of us tax paying poor and middle class must have some sort of tax haven in order to hide a buck or two from the IRS.
As hard as could search, I was unable to find a single company trying to sell tax evasion funds and depositary accounts for someone making $50,000 or less a year. I guess that this tax evasion gap was just an oversight by the international tax evasion community. Surely they pine for the opportunity to offer their “services” to the vast and under served silent, but poorer majority.
Two prominent and wealthy Americans made this auspicious list of alleged tax evaders. “Among nearly 4,000 American names is Denise Rich, a Grammy-nominated songwriter whose ex-husband was at the center of an American pardon scandal that erupted as President Bill Clinton left office. A Congressional investigation found that Rich, who raised millions of dollars for Democratic politicians, played a key role in the campaign that persuaded Clinton to pardon her ex-spouse, Marc Rich, an oil trader who had been wanted in the U.S. on tax evasion and racketeering charges.
Records obtained by ICIJ show she had $144 million in April 2006 in a trust in the Cook Islands, a chain of coral atolls and volcanic outcroppings nearly 7,000 miles from her home at the time in Manhattan. The trust’s holdings included a yacht called the Lady Joy, where Rich often entertained celebrities and raised money for charity. Rich, who gave up her U.S. citizenship in 2011 and now maintains citizenship in Austria, did not reply to questions about her offshore trust.
Another prominent American in the files who gave up his citizenship is a member of the Mellon dynasty, which started landmark companies such as Gulf Oil and Mellon Bank. James R. Mellon – an author of books about Abraham Lincoln and his family’s founding patriarch, Thomas Mellon – used four companies in the BVI and Lichtenstein to trade securities and transfer tens of millions of dollars among offshore bank accounts he controlled.
Like many offshore players, Mellon appears to have taken steps to distance himself from his offshore interests, the documents show. He often used third parties’ names as directors and shareholders of his companies rather than his own, a legal tool that owners of offshore entities often use to preserve anonymity.” ICIJ.org
I realize that the quoted article notes above that Ms. Rich gave up her American citizenship in 2011, but I wonder if she knew that her name would be disclosed along with such auspicious company? Mr. Mellon seems to have made a career or a profession out of allegedly evading the IRS. Shouldn’t the rest of us have the opportunity to hide our hundreds in these off shore accounts? What’s good for the goose is supposed to be good for the gander. Isn’t it?
After this report broke, it seems that the IRS and its fellow tax collectors around the globe suddenly became interested that thousands of its citizens may be evading taxes!
“It appears our international investigation of offshore tax havens may have prompted government tax authorities to go public with their own data digging operations in pursuit of international tax evasion.
On Thursday, the U.S. Internal Revenue Service, along with British and Australian tax authorities, jointly announced that the three nations “have each acquired a substantial amount of data revealing extensive use of such entities [tax havens] organized in a number of jurisdictions including Singapore, the British Virgin Islands, Cayman Islands and the Cook Islands.” These are roughly the same jurisdictions being investigated using a similar amount of leaked data by the International Consortium of Investigative Journalists (ICIJ), the international arm of The Center for Public Integrity” Nationofchange.org
Did the IRS actually believe that the wealthy were being model citizens and paying all of the taxes that they should be according to the law? Did they really not know of this community of alleged tax evaders before the stuff hit the proverbial fan? Personally, I find it hard to believe that our IRS was caught with its pants down when it comes to wealthy citizens allegedly evading taxes. Do you believe it?
While we are at it, the millions of poor and middle class citizens who are paying their fair share of Federal and state and local taxes have been accused by members of the media and members of Congress that we are not paying enough. Is it wrong for a country to expect all of its citizens to pay their fair share of taxes? What should our country do about the wealthy and corporations that continue to claim that they are overpaying, while the rest of us, in many cases, are paying at even higher percentages than our wealthier counterparts and our largest corporations?
The latest example of how the tax system and the economic system is skewed in favor of the wealthy and corporations is the latest deadline for student loan payers. The interest rate for student loan is about to double unless Congress acts soon. One Senator has introduced a bill that will mandate that the student loan rate should equal the same rate of interest that the big banks pay to the Federal Reserve for loans.
“On July 1, without action from Congress, Stafford loan interest rates for some 7 million students are set to double from 3.4 percent to 6.8 percent….Warren…would prevent that hike and take the additional step of cutting the rate to 0.75 percent — the same rate that big banks are allowed to borrow at — for one year until Congress can achieve a more permanent fix.
“Our students are being crushed by debt,” Warren told TPM in an interview late Wednesday. Under her legislation, the Federal Reserve would float money to the Department of Education, which would provide federally guaranteed student loans at 0.75 percent for all those who are currently eligible for them — at the same rate it offers banks.” Truth-Out.Org
What a novel idea. Senator Warren is suggesting that the common folk be treated just the same as those big banksters who broke the economy. Maybe there is hope yet for the silent economic majority! Then again, I wouldn’t hold your breath!