Tax Havens Hearing

This morning the Permanent Subcommittee on Investigations, which I chair, is holding a hearing to look at two banks that have relied on secrecy and deception to hide, not just the tax avoidance schemes of their clients, but the actions they themselves took to facilitate U.S. tax evasion.

Click here to watch the hearing live.

Each year, the United States Treasury loses an estimated $100 billion in tax revenues from offshore tax abuses. Tax havens are engaged in economic warfare against the United States and honest, hardworking American taxpayers.

First is LGT, a private bank owned by the royal family of Liechtenstein. Lichtenstein is a tiny alpine nation whose 35,000 citizens would fill one-third of the University of Michigan football stadium. It has no airport, but supports 15 banks that together boast of holding more than $200 billion in assets. Lichtenstein also boasts of secrecy laws that are more stringent than even those that have made Switzerland synonymous with hidden bank accounts.

The second bank is UBS, a Swiss bank. It is one of the world's largest financial institutions, the world's largest manager of private wealth, and a public company of international renown. Yet, as we will hear today, UBS has an estimated 19,000 so-called "undeclared accounts" for U.S. citizens with an estimated $18 billion in assets that have been kept secret from the IRS.

Again, click here to watch the hearing live starting at 9:30am.

Comments

[mcostello]

Here is an obvious but understated idea:
Write a into law that no company that does not pay US corporate taxes cannot get US federal contracts.

You might not get re-elected, but I would remember you as a great AMERICAN.

[paixa3]

Dear Senatory Levin; I will believe you are sincere when you PUBLISH the list of offenders.

[rockyroad]

Senator Levin,

PUBLISH THE LIST.

[rockyroad]

humility, that would be humility.

Sorry Senator Levin, I am a product of "No child left behind," and well, you know . . .

[nypoet22]

the war against the middle class has many fronts, and globalization has paved the way for attacks from all sorts of directions that in the past tended to be a little less convenient. unfortunate, but how do we fix it? the only successful class revolutions i've ever heard of all ended up in communism, which was cruel, despotic and ultimately counterproductive for the countries involved. i favor class revolution in theory, but in order for it to work, someone has to come up with a way to contain it so it doesn't swallow up the good with the bad.

[paixa3]

I do think the French revolution brought communism, nor pure socialism to France. The striking point is it took TWO DAYS.

[twogunmojo]

and 20 billion goes to mexico in the form of cash payments to undocumented workers...all untaxed....and the rich guys can afford to live in a non-extradition country....so good luck with the prosecution

[rockyroad]

And Mr. Levin,

Those workiing for the companies that shafted their shareholders by hiding assets abroad should have to forego the proceeds of the options and bonuses exercised, vested or "earned" within three years of whatever debacle if those options or bonuses had not originated within eight to ten years of that time. Seems a little convoluted, but that's the game.

Like you, I know a little about bank fraud. (the Isle of Man, Corfu, Belize, China and Switzerland . . . ) I am familiar with law firms that set up accounts in all of these havens. Most of the partners no longer practice and the firms no longer exist. . . . some still do and flourish. These are exactly the firms that will defend and prosecute cases, which is the reason that it is unconscionable that anyone except a governmental body either defend or prosecute these cases.

Without fail, the attorneys that arrange these transactions work for the most prestigeous, well-connected firms in the world. . . . not small fish.

You will need a special prosecutor with impeccable integrety and courage.

Please, do your job. Get it done.

[rockyroad]

Normally, I wouldn't cross-post, but I lost a lot.

Heck, the more I think about it the angrier I become.

If you lost money on dot coms in 2000, or when your company's stock went from $68 a share to $9.96 overnight, invested in Enron or corporate disasters in the last 20 years, you should be furious. Execs in these companies live large today. They head up VCs, live in mansions and live under the radar.

Some live so low you wouldn't know they exist, they do. One brags he has millions but has no bank account or assets. He's on the board of BGoA and only associates with 1%ers, who know that he's a rotten apple . . .

No American is untouchable. Investors' billions must be returned and crooks must go to jail, as should their facilitators. Lawyers must not collect a dime. Gov't prosecutors should collect proceeds ,taxes, shareholder rolls and distribute the proceeds plus interest and penalties according to companies' financial records, refusing predatory class action lawyers. Also sue the companies' insurers. Only true victims should benefit. The trickle-down effect of putting all cash back into the economy will more than pay for itself. Fine the crooks and sieze their assets.

It's the perfect Elliott Ness scenario. . . . a crime that RICO was designed to prosecute. Treble damages plus interest.

Yes, some giants will tumble, but the middle class will rise again. So will faith in America, as well the integrety of the financial

[CAPTAINSKIPPY]

Sure hope the Chinese don't find out how these two small players are able to grab some big bucks from the IRS.

[thepeoplechoose]

Senator Levin,
Would you please fix this. Our system of taxation levies taxes on normal working persons and we pay according to the system devised while persons of wealth and corporations have all manner of ways to avoid paying their lawful share. This is very clearly broken.

I was born in 1949 and in 1950 approximately 49% of federal revenue was obtained from business. Today that figure hovers around 16%.

It is obvious that in the last fifty plus years the system of taxation has been totally turned on its head. We have too many people who do nothing but manipulate money for a living but don't produce a thing. No nation can prosper under the scheme that has evolved. It takes tangible goods and services to really make things work.

All the laws that have been passed and the mergers allowed have created a circumstance where the wealth of the nation has become centrally controlled by too few major banks and corporations. In the absence of a comprehensive regulatory scheme that degree of control will inevitably be abused. That is exactly what has occurred. You and every other lawmaker has to understand that you have created an impossible situation that is inequitable in every way possible. The push to socialize risk and privatize profit has got to be changed. And you have to regulate the hell out of these private financial institutions. The reason for that is they are playing with our money under a scheme you created.

[mark227]

You know, you can send in more money to the IRS than just what they say.

[indypete]

You can also hide your money in a foreign country to avoid paying taxes... it's unpatriotic but the present regime seems to encourage it.

[bgregs]

NO THEY DON'T! They ONLY encourage you if you're rich!!

[bgregs]

And why would you send them money that they aren't telling you to pay? Honestly, who would do this? It's like sending extra allimony to your ex wife.

[paixa3]

probably worse...............LOL

[jbowen43]

The biggest tax haven is the U S Tax Code that makes some kinds of income special and taxes those incomes at a lower tax rate or exempts them from taxes altogether. Income is income and no income is special. All should be taxed at the same progressive rates as wages and salaries. Enough of giving a tax break to those whose income is comprised of dividends, capital gains, and inheritance income. Restore the tax brackets that were in effect in the 1950's. Tax corporate income, too.

[UnbiasView]

And you would want to give 70-92% of your money to the government every pay check because why?

[BilCon]

That would be a marginal tax rate. The populace would riot if we worked for 10ish percent of what we earned. Personally, I agree with Laura Ingraham on this point: If the Average American had to send quarterly checks to the IRS instead of having the taxes withheld, the tax code would not last long in its current form and the legislative branch of our republic would be held to a higher standard in how they spend OUR money.

[BilCon]

Taxation of Corporate income already happens. This is followed by taxation of dividends, taxation of inheritance income, and taxation of tax refunds. All of these following taxes have 1 thing in common. They are all taxes on income that has already been taxed.
As far as the Tax brackets are concerned, I would prefer that they not apply to production, but rather to consumption.

[HypocrisyAlarm]

I don't think that's quite correct. The principal on investments has been taxed but not the earnings thereon. The difference between what one paid for an investment and what one receives through its liquidation is income. In the case of inheritance, the money is changing hands. It is, therefore, income to the beneficiary. I agree with you that taxing a tax refund is double taxing.

I fail to see the fairness in taxing these kinds of income more lightly than the income received from working. In the case of inheritance, few estates leave enough money to surpass the tax-free threshhold anyway.

I've heard these points stated by my father -- he's an R. Are you, as well?

[writeaway]

In 2003, the IRS collected appx. 780 billion from federal income tax, 40% from AGI's of less than $140,000. Same year, the IRS collected appx. 720 billion from FISA, most paid by middle and lower income people since its only collected on the first $102,000 (2008).
Corporations paid only $130 billions. It should be fairly obvious that middle and lower income taxpayers pay most of the federal taxes. Following the Bush tax cuts and more off shore scheming, the pendulum probably tilts more toward the middle and lower income folks sharing a much bigger burden in federal taxation.
As for double taxation, how about me paying federal income tax, Social Security tax, state income tax,some pay municipal income tax, city sales tax, state sales tax property tax and several more little taxes on various things. How many are we up to now.
The government and rich folks try to convince us that they pay most of the tax. Thats baloney. Trying to justify extending the Bush tax cuts and even add to them by McClain.

[CFAmick]

In the small chance that you might answer this question, Se. Levin... do congressmen trade stocks via the bank set up to serve members of congress? And if so, do you pay a fee to borrow on margin? Thanks.

[libertyanne]

Boy I can't imagine why anybody would want to avoid an intrusive government that tracks your
every move and completely evicerates your autonomy.
Not to mention one that uses a vacuum cleaner to empty our pockets and a salt-shaker to return a paltry amount of our own money back to us. And we have no say as our money gets spent to survail us and take away our freedoms in the name of an air-tight "safety" that can never exist in the real world.

[Redrover666]

I take it then that you will be voting for Ralph Nader?

[speakingtruth2power]

As a liberal populist, I want a new America to emerge from the dark days of living under

the Bush Crime Syndicate over the last forty years and begin to lead the world away from

corporatism and towards real democracy. International businesses have grown too large

and too powerful to be regulated by any one country and this blog by Senator Levin is just

part of the dark picture of a future where governments no longer govern, corporations do.

ST2P.

[paixa3]

Truth: Corporations already do govern. I think you are looking at the present, rather than the future.

[davidpeace]

If you are really sincere about tax reform, Senator, then give serious consideration to people's thoughts posted on this blog and others, even those that think they are paying way too much at 15% on $1Billion income. The last are the real whiners Gramm talked about. As for the banks, you as a legislator have the power to rein them in. Quite simply, pass a law telling them to open the books or to close their doors in the US and forbid citizens doing business with them. If we can forbid people doing business with countries, then why not a particular business, or class of businesses? Seems simple to me, and it wouldn't need a bunch of lawyerese to do it, I should think, which IMHO is how those loopholes get started.

[Bladernr1001]

Banks are already highly regulated.....lot of good that did.

[akryan]

A lot of the regulations that were put in place on them after the great depression were rolled back under bush and Phil Gram, specifically on lending and liquidity, which is why we are where we are.

[bgregs]

Banks USED to be highly regulated!! Then we had a major round of deregulation, followed by the bush admin simply refusing to ENFORCE the regulations still on the books, and THAT'S why we are in the boat that we are in right now!!

[vippy]

I have to agree with you! The IRS announced 2 months ago that 25% of the ones making over
$ 200,000 did not pay ONE PENNY in taxes. I always believed the middle class is screwed in '
that respect. Nothing to deduct and no money to ship it off-shore. However, the rich can never
get not richer, like they can take their millions along with their hearse to their next life I don't understand. Enough is enough. Why did congress not jump on this then and change the
loophole for off-shore deposits? Looks like they are part of the problem.

[BillOfRights]

Don't really "rich" people spend a lot of money? Wouldn't it make sense to tax spending rather than earning money? That way we would not care where people store their money.

BTW, the 100 billion dollars in tax revenue that the Senator says is lost each year - would that just be individuals, or does that include corporations?

[BrettnCalgary]

The natural counterargument is that poorer people spend a larger % of their income out of necessity. A poor family with little savings is spending 100% of their income, while a billionaire would only be spending a much smaller percentage as his wealth accrues. It's not that I disagree with the idea, just that it would need a system of progressive credits for those at the bottom, kind of like the inverse of escalating income tax brackets.

Before people argue about how to tax, the question has to be settled first: Do you agree that those who have benefited more from your nations economic system and infrastructure, should pay more, not merely in absolute amounts, but in percentages? I support progressive taxation and our taxation levels here at home. If you believe that it should be a flat % for everyone, well, have fun with that.

The United States problem seems to me to not be how taxes apply only, but whether they should apply at all. To an outside observer it looks like America wants a free lunch, to have all the great stuff money can buy for government, but to not have to pay for it. Any responsible citizen should see that you need higher taxes, the only debate should be where they need to be levied. Anyone who proposes further tax cuts is mad in the head at this point. Someone who wants to renew the Bush cuts that expire is delusional or a pandering lier.

[vippy]

I have to ask the question, how come the city, the state or the government always have funding available for sports events, etc. yet the bridges and other infra-structure is abandoned? Who can afford a baseball ticket these days, the rich. Middle class is
trying to keep gas in their cars so they can get to work. Some people have two and 3 jobs and it still does not get them ahead. How come congress is so quick to vote themselves a $ 15,000 annual pay increase and then turn around and vote against the
min. income just blows my mind. And to thank them for it, we will vote them in again and again.

[foolchild0]

Check out Mike Gravel's tax plan some day, he's got an innovative voucher idea that makes a Fair Tax work pretty well, I think.

[bgregs]

As long as you are taxing something like the market, as well! You must tax EVERY transaction, EVERY time, or a tax on spending will not work!

[RoloTomassi]

Such would work about as well as the "trickle-down" function of supply-side economics; when you add the human greed factor and well-healed individuals' propensity to do everything possible to avoid taxation in any form on any transaction, you'd end up with far less tax revenue....

[smharden]

Dear Senator Levin,

One thing, Phil Gramm.