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!
43 thoughts on “Tax Havens For the Wealthy, But What About the Rest of Us?”
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I’d love to know exactly how many dentists were identified.
Philip S. Zivnuska DDS
you are right that the wealthy and large corporations have stacked the taxation deck in their favor. Maybe it is time to turn the tables on them?
Who needs offshore tax havens when they can be created as nonprofit or foundation?
You are incorrect. It is not a spending problem. It is a problem of demand. Without out jobs people do not have the money to spend and create the demand necessary. The austerity nonsense just feeds into that. You may want to check your facts on Reagan again. He raised taxes numerous times and more than doubled the debt. He did create demand by massive military spending.
The domestic tax shelters used by regular Americans are attacked and closed by the IRS, usually as having “no economic substance” instead of tax benefits.
It’s funny that the overseas tax shelters used by big corporations and the wealthy are located in PO boxes in the Cayman’s or elsewhere. But these are never challenged by the IRS as having no “economic substance” except for their tax benefits. So what economic substance does a PO Box in a tax haven have?
One treatment for the wealthy and powerful and another for everyone else.
What about a story on how people with money get away with crimes while people without money are guilty the minute they step into a racist court room???
Former Enron CEO and current jailbird Jeffrey Skilling should be out of jail in just four years, skipping nearly a decade of his prison sentence for corporate fraud and graft.
As the world’s richest people are prone to do, Skilling is getting out of jail early with a combination of cash payments and legal maneuvers.
In exchange for early release, Skilling is paying Enron’s victims some $40 million in shut-up money and has generously agreed to stop suing everyone involved with his conviction and sentence in 2006.
Skilling’s promised payments would equal 0.1% of the $40 billion Enron stole under Skilling’s leadership. He was originally sentenced to 24 years behind bars, but his total sentence would be half of that if his lawyers get approval on this latest scheme.
Skilling’s appeal went to the Supreme Court in 2010, and the justices agreed with his attorneys that the original conviction was “based in part on an invalid legal theory known as the ‘theft of honest services.’”
The same judge who sentenced Skilling will rule at the next hearing, on June 21 in Houston.
Occupy Houston, game on.
This is another rut in that muddy, foggy road we call “U.S. History”, as a famous General long ago pointed out:
(The Universal Smedley, 1933 Speech). What passes for ‘history’ in our educational system is little more than the fog of lore.
It is a fashion choice of the particular group we hang with.
during Reagan, revenues were up substantially. The historical record is on the internet. You can look it up. But spending is the real culprit so it doesnt really matter what we do unless that is controlled. Congress could take in 12 trillion a year and they would spend it all.
But based on what has happened historically, revenues would increase if the top rate was lowered to 15%. But then Reagan did let the interest rate from the FED be set by the market so who knows.
So other than anecdotes and a 130 year old irrelevant USSC ruling you got nothing. Don’t change the subject, show some proof that 10-15% flat tax would be enough to fund the Federal government. Please use actual numbers
Carville and Begalla say Reagan was responsible for the largest tax increase in history and he put the top rate at 35%. We had a top tax rate of 90% in the 50’s, Kennedy reduced it to 75% and the economy picked up, then Reagan reduced it to 35% and the same thing happened. I see a trend, reduce the top rate to 15% and exempt anyone making less than $35,000/year. Do it in 3 states for 2 years, if it doesnt work then dont implement it nation wide.
You get all the money you need and you reduce the power of the wealthy to influence government to their benefit. I know it doesnt make sense to progressives and lefties but that is what will happen.
What do you think we had at the beginning of this country? It was an aristocratic society that was far from the ideal of our founding. What do you think changed that? It wasnt the progressives contrary to their beliefs and progressive history. It was “almost laissez faire” capitalism, that was what broke the back of the moneyed interests back then, see Gibbons v. Ogden.
“Gibbons v. Ogden, case decided in 1824 by the U.S. Supreme Court. Aaron Ogden, the plaintiff, had purchased an interest in the monopoly to operate steamboats that New York state had granted to Robert Fulton and Robert Livingston. Ogden brought suit in New York against Thomas Gibbons, the defendant, for operating a rival steamboat service between New York City and the New Jersey ports. Gibbons lost his case and appealed to the U.S. Supreme Court, which reversed the decision. At issue was the scope of the commerce clause of Article I, Section 8, of the Constitution; this provides that Congress shall have the power to “regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes.” Chief Justice John Marshall held that the New York monopoly was an unconstitutional interference with the power of Congress over interstate commerce. He condemned the view that the states and the federal government are equal sovereignties. Federal power is specifically enumerated, but within its sphere Congress is supreme. State legislation may be enacted in areas reserved to the federal government only if concurrent jurisdiction is feasible (as in the case of taxation). The decision was highly influential in its explication of the federal structure of the United States.”
Read more: Gibbons v. Ogden | Infoplease.com http://www.infoplease.com/encyclopedia/history/gibbons-v-ogden.html#ixzz2TArfK11F
“Visa must be drummed out and replaced with independent payment schemes.” -Julian Assange”
Damn straight! Although I would say we dont need to drum them out, just let the free market and a better idea take its course. Free from the fetters of government regulations which promote and prop up Visa at the expense to to rest of us of a better, more economical idea.
let a billion ideas flourish, such is the power of the free market. It is coming and it is the only thing that will free the people from the tyranny of the duopoly; the nexus of wealth and government.
If there is one thing I despise worse than government, it is rich people who use government to prosper to the detriment of the rest of us.
Bron = “if we would have an across the board tax on all income of any kind, passive or active of 10-15%, . . . and we would have all the money we needed.”
Please provide some data that supports this. Back when Steve Forbes was pushing this bullshit he picked a 19% flat tax. The problem, in addition to greatly increasing the burden on lower incomes, was that it only returned about 66% of the current structure at the time. His claim was that the magic of trickle down would more than make up the difference. But we have pretty well demonstrated over the last 40 years that while what gets trickled down is golden it is not money
Do you think the wealthy are going to give up their break on investment income? The progressive ax system is not the problem. The problem is the wealthy are controlling who writes and enforces the tax laws.
if we would have an across the board tax on all income of any kind, passive or active of 10-15%, we would not need the IRS nor would we need the billions we spend each year on accountants to do tax work plus we would all pay the same percentage of our income and we would have all the money we needed.
The bonus would be since there would be no deductions of any kind, there would be no reason for granting favors for tax concessions and the power of lobbyists would decrease.
You are spot on with your comment concerning an impeachment being a wet dream.
According to the wealthy and big corporations, taxes are other “people’s” problems.
Taxes are the cost of admission. You would not expect Disney World to be free, why would you expect your country to be free? We can argue about how the money is raised or how it is spent but anyone who says that taxes are theft of that there should be no taxes or that they should not have to pay has the reasoning power of a 4 year old – they want what they can get but do not want to pay for it.
He is not going to be impeached over anything. No more than Bush, who was far more deserving of impeachment. That is a conservative wet dream, just like some anti-2A people envision a Constitutional Convention so the Second Amendment can be revised or repealed. Not gonna happen.
There have been far worse scandals in almost every Presidency since Washington. Hyperbole sells, common sense gets drowned out.
Well speaking of taxes and the IRS.
Obama is going to end up being impeached over this IRS Scandal.
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