Republicans Defend Tax Havens Against Obama Crackdown

President Obama and Treasury Secretary Tim Geithner announced on Monday a crackdown on offshore tax havens that could produce $210 billion in new tax revenue over the next decade.

The White House will face opposition to the proposal from the business community and Congress. Before the announcement, a Republican leadership staffer circulated an email citing a Bloomberg report saying the proposal "would be the biggest tax increase on U.S. corporations since 1986." And Senate GOP leader Mitch McConnell (Ken.) said later on Monday that he could not endorse Obama's plan since it "gives preferential treatment to foreign companies at the expense of U.S.-based companies."

But the amount Obama's plan would reportedly save is a far cry from the estimated $1 trillion the United States loses to offshore tax havens over a ten-year period. A 2008 Senate report (PDF) estimated that "the United States loses an estimated $100 billion in tax revenues due to offshore tax abuses" every year.

In January, the Government Accountability Office issued a report (PDF) that found that 83 of the 100 largest publicly traded U.S. corporations reported subsidiaries in countries listed as tax havens or "financial privacy jurisdictions."

Many of those corporations are beneficiaries of billions in taxpayer dollars under the Troubled Asset Relief Program. Morgan Stanley, for instance, boasts 273 subsidiaries in tax havens, with 158 in the Cayman Islands alone. Citigroup's got 427, with 90 in the Cayman Islands, and 59 of Bank of America's tax-haven subsidiaries are there as well.

The GAO found 18,857 businesses are registered at just one address in the Cayman Islands -- the "Ugland House." The report said that "Ugland House registered entities included investment funds, structured-finance vehicles, and entities associated with other corporate activities."

The Treasury Department pooh-poohed the GAO's list of countries because there is no agreed-upon definition of a tax haven. "Even though coming up with a list of countries has significant appeal, any list of countries is likely to be under-inclusive as well as over-inclusive," the Treasury wrote. "Moreover, because any such list is likely to be regarded as a blacklist and may be used as the basis for the imposition of sanctions or other negative measures, such a list may inappropriately negatively affect our economic and other relations with listed countries."

On tax day, April 15, the U.S. Public Interest Research Group issued a report with a state-by-state breakdown of the cost to taxpayers of corporate tax evasion in offshore havens.

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Comments

[follow the money]

speaking of money



remember these guys?

http://www.halliburtonwatch.org/

[The Ghost]

Higher Taxes Spur Growth:

http://www.scientificamerican.com/article.cfm?id=the-social-welfare-state&ref=sciam

[One more Thing]

Let's see. Republicans party of torturers and tax cheats!

Let's not get into morals!

[Taz2]

Rachel Maddow nailed it tonight, Republican's are "Supportive of Tax Dodgers" including ones that were Bailed-Out by American Tax Payer's"

I Hope Huffpo can post the clip of her going over how many Off-Shore accounts the Banks have, it was classic, factual and entertaining!

[johnr49]

"Factual and entertaining" - I think that sums up Rachel beautifully.

[hollybork]

Supportive of Tax Dodgers? Yup. Supportive of Torturers? Yup. Supportive of suppressing science and exploiting technology in persuit of wealth? Guilty. Supportive of invasions of privacy rights? Sure, why not. Civil Rights? Nope. Supportive of Universal Healthcare? Never. Supportive of legal fairness in credit instruments? Not on your life. Supportive of expanding legal protection for civil unions of gays? Ha, kick them to the curb, buddie.

Pick an issue. The Rethuglicans are on the wrong side.

[ncmom54]

As a small business owner maybe I'm a bit envious that the priviledged can afford tax attorneys to help them maximize their resources. but why didn't they liquidate their off-shore assets when times were getting tough? oh my, was it not a good time to sell? Just let the taxpayers bridge that problem. many, many small companies didn't have an option and they're still loosing. It would just be nice to see the mega companies pay the same (Overall) tax rate as Main Street. it's going to be interesting to see how the GOP spins this in the faces of their 'joe the plumbers'.

[barbarica]

nc, we're talking about apples and oranges. In your case, you are the company. As you well know, many "small business owners" are really just individuals incorporating for the purposes of avoiding taxes. There was a debate a few years ago, where a gubernatorial candidate who advocated higher taxes, made a few million dollars and paid $5000 in taxes. The corporations is made up of shareholders who all have to pay their taxes. The individual business owner should pay based on their profits just as any 1099 person does.

[ncmom54]

in my case? you have no idea what my case is and your assumption is dead wrong.

We cashed in what was left of our retirment investments (20 years worth) to keep the lights on and employees paid. our losses far exceed this years' allowable deduction.
It would be great if it were as simple as a 1099.

it is apples and oranges...and not surprising that you don't get it or care that working class business (true capitalists), all our employees and their families ARE paying a higher rate of taxes.

Good for AIG to be able to reserve such awesome bonuses, that's money in the economy. BUT AIG and others with offshore tax shelters should not be restored with my employees' tax dollars without equitable reinvestment.

there's a real world out here where the pain threshold is becoming unbearable.

[StellaRay]

What will be interesting about how the Gop spins this? It will end up at no. Like it always does with them.

But for the sake of conversation, their current spin is that the thousands of businesses who all claim the same address in the Caymens, are not taking advantage of a loophole, but are in fact loyally following the laws of the land. And the sick things is, they are. It's all currently legal.

It should tell everyone something about the greed of the GOP and how far this country has run amuck that we've allowed this to happen. The party that insists you wear a flag on your lapel is more than happy to cheat Americans out of tax money from the rich, while they refuse to help the middle class to fight the crisis they created.

[freethinkergirl]

Having been a small business owner over the last 35 years I know I paid far more taxes than the big Corps.

But I have a clean conscience, I paid my employees well, gave them 3 weeks paid vacation per year and paid for their health care. My husband and I were always the ones that took a "hit" when things did not go well. That is the beauty when owners work side by side with their employees.

My husband and I are now retired, we worked hard to get where we are. It saddens us to see how the "big boys" scre.wed this country (and us by extension).

[mjtaylor22]

thank you for your comment, the gop always useses the small biz rhetoric, but I know and many more know now that they never have intentions to help small biz like yours, their small biz tends to target these tax haven types.
yours is the thype of biz our nation should be supporting yes indeed, not corp ginats who are no more persons thatn the papers that created them.

[hollybork]

"Such people" as you say, who buy their through legal guidance or campaign contributions to get out of taxes may benefit from tax loop holes or off shore tax havens. They may be financially privileged. They are not morally gifted. They are not patriotic Americans. It is not patriotic to shirk your share of taxes, as proven by Al Capone and Leona Helmsley.

[liberalbug]

I don't quite understand how the GOP will throw a fit if Obama's cabinet nominees owe a bit in back taxes, yet have no problemo, whatsoever, with multinational corporations cheating on their taxes. Bit of a double standard, isn't it?

[freethinkergirl]

This surprises you of the GOP? You probably pay more individual taxes than these corps do.

We need new bumper stickers:

"Too poor to qualify for Repug tax cuts".

[StellaRay]

Excellent point liberalbug!

However, the sad thing is these offshore tax havens are legal. How mind blowing is it that we can't really accuse these corporations of cheating because we were asleep at the wheel when laws were passed that gave the key to the highway to those who would use it to plunder our country.

There can be no underestimating the bravery of President Obama. This has been going on for decades. No one can be surprised that the republicans didn't stop it. But then, either did Bill Clinton.

[The Ghost]

The Clintons: Republican Lite!

[manamongst]

They are legal to own but illegal to own with an intent to evade taxes. Hence the hiding oof identities and boardmembers and trustees.

ncmom54 they didn't liquidate for a few reasons. They may have been able to avoid illegality within 'intent to evade' but there is no hiding it once one liquidates or evacuates said offshore account. And besides I personally think people are underestimating the level of HUBRIS. Do you really think the execs of these exotic financial instruments care about the health of a company when they won't need to work another day in their life? Do you think Citi's 437 subsidiarys were simply used to cloud the tax pond water? Taxes are the shiny little ball that takes your eye off of slush funds to pay your senator, to keep ill gotten assets off books, to hide loses, steal legitimate money from the company. slow regulators down, throw regulator off, create fake company's...why is that important.

[hollybork]

They are legal because of three fundamental things.
Money is power.
The people with money have enough power to get the tax code changed just for them.
The people who change the tax code, work on behalf of BIG MONEY, but are elected by us.

Time to take back our government, and not just the Presidency.

[mehaterush]

Yes, It's definitely a double standard, but then again, double standards are what the GOP is all about.

[jinxed]

No, its onlyn a problem if then Dems owe taxes

[mjtaylor22]

it is called being a hypocrite
get it republican= hyprocrite lyer, fake bible thumper, and corporate hooker. oh and tax cheat

[b0y1duh]

If you have ever had the stomach to listen at talk radio or conservative FOX News you will hear them throw the term 'wealth envy' around quite frequently. To make it simple, what they really mean to say is that why most Americans pay their fair share of taxes the guys at the top are free to cheat the US government and flaunt this fact without reprecussions. The removal of tax havens poses a serious fight if no proposes class warfare. These guys who have been dodging taxes would rather inflict bodily harm on themselves than to part with their nest egg. However, some of their nest egg does belong to the US government just as my nest egg does!

[Findley]

While they hoodwink the rightwing Billy Bobs, FOX protects the Big Tax Cheats. It's the old smoke and mirror game AKA "a fool and his money..."

[StellaRay]

Boy1duh, this is abso-fricking-lutely class warfare. No one wants to call it that because that's not supposed to exist in a democracy. But hello, India is a democracy too and also the home of the caste system.

I wish more people saw this as class warfare. I wish they understood that the GOP and the leaders of the financial industry have done everything they can do to set themselves up as emperors and us as serfs.

And we have let them do it. Please dear God, let's stop it now. It's not too late, but if people persist to believe that this country still operates under the myths of their childhoods, we're in deep weeds.

[hangdogit]

With the GOP about to explode in fury if anyone (besides foreigners) is prosecuted for torture, it is no suprise that they back tax evasion -- they are the anti-tax party after all.

[barbarica]

hang, practically every Obama nominee admitted to tax evasion...

[The Ghost]

Never more that a few thousand, and never on purpose (evasion).

[Mavsreader]

They've since paid, so your point is? Companies should amend and pay? Finally some common ground.

[StellaRay]

As if a matter of degree is irrelevant. I won't defend those who have run afoul of tax laws by a few thousand bucks, although I'm thinking a staggering amount of Americans would run into the same problem if they tried to run for political office, and that includes republicans and democrats, not to mention all the rest of us.

But OK, fine. Let's buy into your argument. So then, can we assume you are totally, unequivocally behind Obama's attempts to close legal loopholes to tax evasion? Good. Because we'll add a lot more to our coffers by going after those thousands of businesses who all claim one address in the Caymen Islands than we will by going after democrats or republicans with a tax problem.

[weatherwaxx]

And had to admit it and pay up.

Time for the big corporate boys to do the same.

[LynnW49]

**And Senate GOP leader Mitch McConnell (Ken.) said later on Monday that he could not endorse Obama's plan since it "gives preferential treatment to foreign companies at the expense of U.S.-based companies."** Well, gee whiz, I guess I have me a big ol' tax break coming for my little company because otherwise the US tax system would be giving preferential treatment to MY foreign competitors. And those folks in high tech and help desk jobs whose work got outsourced to India? Refund their taxes for the past 10 years! Mitch McConnell is an unspeakable pile of . . .

[hollybork]

Mitch McConnell's comments are idiocy.

[Kram]

The democrats should start making commercials and airing them. Let the dupes who still vote for their own economic destruction see what their republican pals are all about.

Let these corporate fascist republicans bury themselves with their own anti-american positions!

[barbarica]

It's just a common sense issue to me. The company makes money, they give some back to the shareholder as a dividend. The shareholder pays taxes on it. The stock goes up because the company made money, the shareholder sells, and pays taxes on his income. The corporation is really just a clever way for society to create jobs. If you tax the corporation, then you will effectively kill jobs, reduce the profits of the individual, making him poorer, and so thereby reduce what the govt collects in taxes from the individual. Then the corporation moves offshore, moving capital and many jobs with them. On a personal note, I don't work for the US govt and so I'm not looking to them. It's a healthy corporation that will pay my wages so I want them left alone; and so therefore, I am not arguing against my own interests as you guys are fond of saying.

[TheBender]

Careful, the Lefties on the site can not tolerate reason. You will be denigrated. PC and civility only apply to those who express conflicting opinions.

[weatherwaxx]

If the corporation sucks the money out of the US, hides it in tax shelters, then exports the JOBS, where's the benefit to the US?

--I mean working Americans, not the top 1% income bracket.

When you folks start coming up with rational answers, we'll stop making fun of your circular, self-sabotaging doubletalk.

[UpstateNY]

Maybe you wouldn't have to pay such high taxes if the corporation paid their fair share. Truth is that these are taxes they are avoiding by illegal means. How could anyone think that was okay?

Have you tried to avoid paying your taxes by illegal means? What happened when the IRS found out? It's that simple for me.

[Montgriz]

What you say is true enough, but eventually, like all scemes, it comes to an end. By being rewarded for off shore job creation by those left behind, sooner or later, your own job or income will disappear. Frankly, by opening call centers in India and other similar places, American companies have probably hurt their bottom line since, like me, most Americans want to deal with someone who speaks their language.

The only way to reform our tax codes is to trash it all and implement a new system either a national sales tax, or a flat tax with deductions for mortgages and health costs only.....Of course, by so doing, our politicians would have nothing left to sell ....and would be forced to be honest....and we all know that won't happen

[barbarica]

Mont, the point is we are forcing them to locate offshore. The India stuff is a different issue.

[The Ghost]

"If you tax the corporation, then you will effectively kill jobs"

There is no evidence of this, it's just an urban myth.

[johnb3950]

A corporation as a mechanism for creating jobs? what a laugh! .Most corporations - especially the financial ones - are mechanisms for creating money for execs and shareholders. Jobs are incidental and in fact a necessary evil,. from the corporate point of view. Banks would LOVE to operate with zero labor costs - witness the push to online and ATM, away from teller service

It was not always like this - Henry Ford was OK with having a strong workforce and paying them well. And there are companies that have shaken free of the evil thinking that says they owe nothing to anyone except the shareholders - not true: they have responsibilities to their employees, to the customers, to their vendors, and, notably, to the society that provides the infrastructure in which they operate - transport, communications, education. That last is where corporate taxes come in.

Incidentally, during the postwar German "economic miracle," an executive's status was measured by how many employees he had, not by how much money he made for himself or the shareholders. Yes, a company was expected to make a profit, but status came from size, in employees. It's changing now as more countries get infected by the American disease.

[barbarica]

So you want everyone to work for the US Govt? Yall's grand scheme to put everything under the federal umbrella is not going to work.

[rfshunt]

"Henry Ford was OK with having a strong workforce and paying them well."

Well, that's what he said, anyway. And in some ways backed that up with real action. However, he fought bitterly against unionization.

http://www.fi.edu/learn/case-files/ford/union.html

[peter777]

Here comes another series of votes by GOP Congressmen against the interests of the vast majority of American people. I am beginning to think that the GOP is really anti-American and traitorous in its views.

[hangdogit]

They are so patriotic as to toy with secession (apparently no specific recollection of the Civil War). I can't really be suprised by anything they say or do,

[Humanistpuppy]

Hey, I didn't know Tom DeLay participated in HP.

Say hi to Abramoff--Tommy...

[somsoc]

I can't stand it. If Obama proposes it, it must be wrong--no matter what, so sayeth the Grand Obstreperous Perverts, that is all they can say -- NO. Mitch McConnell would sell his grandmother out if Obama had a plan that did something that made her life better; then again, he has no grandmother. The GOP is so tied at the hip to the moneyed interests that if there is ten cents involved they will sell their soulless personages to gain a favor. And they wonder why their popularity is in the to!let. ROTFLMAO

[hollybork]

Are you suggesting Mitch McConnell is a POD PERSON with no grandmother? Interesting thought.

[TJCole]

Corporate criminal tax evasion, simple as that....

[TheBender]

Do any of you Lefties realize that a tax loophole, like it or not, is a legal component of the tax code? You may not like that detail, but c'est la guerre. Every administration, therefore, changes the tax code to create their own version of fair. In this case, the President will bleed those who are successful to pander to his voter base.

[tiredofthesameoldstuff]

You mean the same corporations that hire idiots to lead them into ruin? That give out huge bonuses and have a pay four hundred times that of a worker while every other corporation outside the US only has their CEOs have wages and bonuses at most fourty times that of the workers? Funny how these foriegn corporations make as much profit or more profit then the US corporations yet do not do these loopholes.

Me thinks you are just ignorant of corporatitions outside the US as well as US tax history.

For most of this countries history corporations and those making over 250,000 had marginal tax rates of 60-90%. Funny how whenever that was lowered and the marginal tax rate on the middle class was raised the economy actually slowed down. Could it be that the middle class actually drives the economy and high taxes on corps and the rich cause them to smartly invest as a way to get exemptions and generate more income so they are more wealthy? Instead American corps do all sort of trickey and high risk often downright unethical and often so gray area that most countries consider these types of actions illegal for their corporations and banks to engage in. Me thinks we need to trim the idiots who have breed corporations and bussinesses in the states who think they some sort of royalty that can breed future heirs that just have to do nothing to make money.

[LeftyLucy]

No, most Lefties are not successful unless you count collecting multiple welfare checks success.

[somsoc]

Actually it is not legal, it is just one that they have a legal opinion from an attorney the likes of Bybee to justify their use of the offshore haven. They still use various subtrafuges to hide their assets and they don't dare bring them directly back into the US so they concoct veiled transactions with non-existent entities to falsify transactions for the purpose of moving money.

[The Ghost]

Anyone greedy enough to have a Congressman in their pocket breaks laws like they were bubble wrap.

[weatherwaxx]

Legal only because the corporations bought enough legislators to put it into law.

I love you right-wing cluckers... chickens voting for colonel sanders. You'd be funny if you weren't so bloody ignorant.