Why Do Tax Havens Still Exist?

Posted February 19, 2014

by Jerry Alatalo

“Luxury and avarice – these pests have been the ruin of every state.”

– Marcus Porcius Cato (234 – 149 B.C.)

361a-1It’s been years since the International Consortium of Investigative Journalists (ICIJ / icij.org) released banking records from the British Virgin Islands that exposed the names and account information of thousands of tax haven users from around the world. At the time, the release caused an avalanche of publicity surrounding the worldwide industry called tax avoidance through “tax havens”, implemented by the largest corporate, accounting and legal firms on Earth.

The wealthiest individuals on the planet suffered extreme embarrassment to the point where politicians using tax havens had to resign from office in nations around the world. Politicians feigned shock and surprise at the expose, and spoke empty words like “we cannot stand for this… this has to be addressed..” and since then nobody has heard any more about it.

Why do tax havens still exist?

This seems a reasonable question to ask after the absolutely astounding revelations from ICIJ years ago. Here in America, there have been no reports of “landmark legislation” to end tax havens – or actions which have led to media-sensation reports of tax avoidance crimes committed by well-known politicians or wealthy persons or corporations. One can see a parallel between the issue of tax havens and tax avoidance with the total absence of prosecution of Wall Street fraudsters whose crimes brought down the world’s economy during the years 2000-2008. What is easily detected as far as connections between tax avoiders/tax haven users and Wall Street white-collar criminals is number one, the lack of accountability for what they have done.

Secondly, and perhaps most importantly, another connection between the groups is that they are all very wealthy. The only person in the United States government who has expressed concern about corporate avoidance of tax, much less tax havens and the need to close them down, is Senator Bernie Sanders. There have been no lawmakers in Washington, D.C. who have become outspoken on the specific issue of tax havens, or who have offered legislation to totally eliminate the problems associated with tax havens.

President Barack Obama evidently does not feel that the decades-old tax avoidance industry (and it is an industry orchestrated by the largest accounting, legal, and financial firms in the world) is important. He made no mention of tax havens in his recent State of the Union address. How is it that what could be the largest and most economically relevant scandal in history has been basically swept under the rug?

The mainstream media evidently does not feel that tax havens is a large enough issue to investigate thoroughly and report on. ABC, CBS, NBC, CNN, and PBS have offered no journalistic products to their audiences. While hour after hour of discussions about “fiscal cliffs” and “raising of the nation’s debt limit” and “sequestration” pound the airwaves, not a peep about corporations and wealthy individuals’ stashing the profits and cash in offshore havens like the Cayman Islands, British Virgin Islands, or any of dozens of locales around the world engaging in the huge tax avoidance/secrecy industry.

Nowhere found are the responses/opinions on tax havens coming from Queen Elizabeth or members of her “royal” family, Queen Beatrix of the Netherlands or her “royal” family, any multi-billionaires, or CEOs of major transnational corporations. Perhaps it would be good to know especially the British royal family’s views on tax havens, since most of their crown colonies are indeed tax havens. The question which needs to be asked is: is anyone going to take the issue of tax havens on directly, get to the bottom of it, and finally take actions to solve this major, major problem?

Now, this worldwide industry has operated for decades, so how is it that world leaders are acting so “surprised and shocked” – like they are only just learning about it? Frankly, any politician who does not admit that they have been aware of tax avoidance schemes and havens’ existence for decades is simply lying.

Perhaps the talk given by journalist/author Thomas Frank in the following video can help to explain why tax havens are a forgotten international scandal. Mr. Frank is the author of “Pity The Billionaire”, a book which delves into recent political movements, mainly the Tea Party, whose adherents have come to accept some of the ideas of Ayn Rand, whose “Atlas Shrugged” Mr. Frank describes as “reverse Marxism”.

In contrast to nineteenth century populism, where people exhibited a sense of neighborliness and civility, the populism of the Tea Party is illustrated by applause of an audience after presidential candidate Ron Paul was asked the question: “should we just let people without health insurance die?” Mr. Frank points out that, when confronted with the idea of Wall Street re-regulation, the typical Tea Party response is “get the government out of our lives” – failing in every way to understand that deregulation led to the crash of the entire world’s economy.

He shares his experience of watching a Tea Party sympathizing TV journalist reporting from the Chicago Board of Trade (CBOT) and, with reference to government bailout funds being directed to struggling homeowners facing foreclosure, instead of to the financiers who created the crash, the reporter goes on a tirade about “losers (homeowners)need to lose… we shouldn’t have to bail them out!” Mr. Frank goes on to describe how in the last century most people looked upon the CBOT and Wall Street operations as the pits of hell, whose actions ripped off the average citizens and left people poor and suffering.

“Atlas Shrugged” adorers, according to Mr. Frank the “flim-flam of our time”, have the idea that “meddling government” is the problem, not the wealthy billionaire tycoons avoidance of their fair share of taxes or white-collar criminals in the banking and finance sector. This way of thinking had reached the minds of so many Americans that in 2012 investment banker, 14% tax bracket, and tax haven user, Mitt Romney actually had a shot of getting elected – a situation that persons in Germany reacted to in talks with Mr. Frank by saying “What? That (Romney’s victory) could happen?”

Political discourse in America has devolved to the point where Social Security, one of the best social justice programs ever created, is now seen by many Ayn Rand disciples as an “injustice of protection of the weak”, and call for reform/privatization. Interstate highways, disaster relief, food stamps, overturning Citizens United, Wall Street regulation and prosecution, closing tax loopholes/tax havens, unemployment benefits, mention of 1950’s top tax rate of 91%, opposition to secret corporate-lawyer-written trade agreements,, a hike in the minimum wage, national parks, ending the Fed, etc. represent more “leeching, parasitic activity by the losers of society”.

But why do tax havens still exist?

****

(Thanks to Free Speech TV @ YouTube)

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