Tax Havens For the Wealthy, But What About the Rest of Us?


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.”  

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.”

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”

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!

43 thoughts on “Tax Havens For the Wealthy, But What About the Rest of Us?”

  1. ap,

    Since you had several versions of essentially the same post, I approved the one with the fewest/cleanest links and was cleared by askimet. A couple were clearly flagged for link issues though as they were not cleared. Sorry for the inconvenience. Hopefully WP will have the spam filter back on its leash soon.

  2. You’re right raff…. I will say comerica is fairly good right now…

  3. WikiLeaks publisher Julian Assange stated “Visa thinks it can arbitrarily blockade publishers and businesses that Washington finds offensive. Visa is a threat to national economic sovereignty. Visa must be drummed out and replaced with independent payment schemes.” -Julian Assange

  4. WikiLeaks publisher Julian Assange stated “Visa thinks it can arbitrarily blockade publishers and businesses that Washington finds offensive. Visa is a threat to national economic sovereignty. Visa must be drummed out and replaced with independent payment schemes.”

    For the next 49 days you can donate to WikiLeaks

    Friday May 10th 2013, 23:55 BST

    After over two years of financial censorship, Visa opened today for donations to WikiLeaks for the first time since December 2010, after its contractor in Iceland, Valitor (formally Visa Iceland) was ordered to do so by Icelandic Supreme Court.

    At the same time Visa/Valitor decided to abuse a clause in its contract to terminate the service again as of 1 July 2013 again without any explanation. Direct credit card donations to WikiLeaks will be blockaded from midnight June 30. By engaging in such conduct Valitor and Visa Europe have decided to subvert a clear and decisive judgment from the highest court in Iceland. These credit card companies continue the politically motivated acts of censorship of WikiLeaks and continue taking part in the unlawful banking blockade against the media organisation alongside MasterCard, PayPal, Western Union and Bank of America. No court or administrative body, including the US treasury, has ever found in their favour in this matter.

    The service termination on July 1st by Visa through Valitor will be challenged in court. At the same time a compensation claim will prepared by WikiLeaks and its service provider in Iceland, DataCell, for the unlawful closing of the payment gateway from July 2011 until today.

    WikiLeaks publisher Julian Assange stated “Visa thinks it can arbitrarily blockade publishers and businesses that Washington finds offensive. Visa is a threat to national economic sovereignty. Visa must be drummed out and replaced with independent payment schemes.”

    Donate here:

  5. Here’s hoping that the IRS follows up on every lead, gets all back taxes owed — every penny — levies fines of 150% of what’s owed …. and puts people in jail — I mean the Uber Rich …

    Regarding the list …. Not only look for Romney but his partners in crime the Koch Brothers !!!!

    Oh, sorry, I just woke up … It was all a dream

  6. Raff,

    Excellent….. You know…. You’re right…. The way to do it in the US is to form a church or some other nonprofit and tax full advantage of the loopholes….

    If you’ll recall R Alan Stanford would not give up names like the US wanted….. So they railroaded him under a Ponzi scheme….. All because he said it was based on the value of the bank stock…… Him…. I have about a thousand shares of stock worth .0075 per share that I paid between $24.00 and $40.00 for….. I think I’d trust his Ponzi scheme over what’s happened here……the bank stock i have/had are or were reputable banks….

  7. As is usually the case with any “expose” on tax avoidance schemes that is covered in most routine publications, the focus is on the small potatoes, not the big fish of tax avoidance. The really big tax dodgers are the major international corporations and the really wealthy (in which Denise Rich does not qualify). A very large percentage of the business of the major accounting firms is in helping those mega wealthy groups and individuals to dodge taxes. The fact is that the tax laws are written exclusively for the benefit of the mega wealthy, as the politicians are on their payroll. And even when the mega wealthy are caught red-handed, and there is no loophole for them, they will hire an army of tax lawyers and accountants to battle it out with the less knowledgeable and ill equipped IRS attorneys and accountants.

    Thus, Warren Buffett’s company owes more the $1 billion in back taxes, but he hasn’t paid a dime of that money, let alone any portion of the interest and penalties. If his company has to pay anything at all, it will be a settlement of pennies on the dollar.

    Many years ago, one small potato of the New York upper income crowd, Leona Helmsley, made the mistake of telling the dirty little secret of taxes. She said, “Only the little people pay taxes.” Truer words have not been spoken. But poor Leona had committed a terrible sin in doing so. She had broken the Code of Omertà among the wealthy that such secrets are not to be divulged by anyone within the group. Leona paid dearly for the sin of revealing the truth, and the IRS and the full weight of the US. Government proceeded to destroy her. Of course, the public and the media ate this story up, and looked at it as a come-uppance for the “evil” Ms. Helmsley. “See,” they would say, “the US Government isn’t in the pockets of the wealthy, and the fact that the Government went after Helmsley proves it.”

    The IRS had their poster-girl for tax evasion by the wealthy. But the real game continues and the big fish continue to get away.

  8. Can someone scroll the names and tell us if Mitt Romney is in there. I think the real name is Willard Milton Romney, but it might be under an a/k/a 47 such as Mittster.

  9. I already said I was AY2, a while ago. Just kidding. Somebody took offense then somebody else told me to use my real name so I did.

    The charter for the Federal Reserve expires in August, 2013.

  10. “Is it wrong for a country to expect all of its citizens to pay their fair share of taxes?”
    Yes, I think it is.
    Taxes seem fundamentally unreasonable; you do not get to choose your government (as many people who have voted will note, the person you vote for does not always win), or what taxes they set, or how those taxes are spent, except by leaving the country. And then you just have a different government that wants taxes from you.

  11. My first legal job was tax lawyer in a major city in the US, so I didn’t need to read the article. My hope is that folks like “Anonymous” will invade the accounts of the uber rich an “Robin Hood” it to a suitable location. Nice to dream, eh? Hey, I am old and naive.

  12. One of the names in there is Blind Melon Chitlington who used to frequent the marina here where us dogs hang out. He was sort of blind and not a Mellon of the East Coast version and not related to the musician with a similar name. He gave out the best dog biscuits of anyone at that time period. He had a boat called The Bundle. He sailed off a few years ago and said he was “going offshore to score”. We did not know what he meant.

  13. Respectfully submitted by Lawrence E. Rafferty (rafflaw)- Guest Blogger
    I worked for the IRS for 4 years and 2 months. They fired me. I started in Chicago, and got fired in Milwaukee.

    Try to do what’s right. No deed goes unpunished.

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