CNBC Champions Abusive Tax Havens: Dangerous to Your Health

At least twice last week, CNBC publicly backed countries that shelter the income of US citizens from US taxes, aka, tax havens, abusive tax shelters. According to CNBC's Larry Kudlow, these tax havens provide "tax competition."

Senator Carl Levin (D-MI) chaired hearings on these abusive tax havens. Between 40,000-45,000 US citizens have secret, numbered, Swiss bank accounts. That is, 40,000+ Americans do not pay their fair share.

They, and others using similar tax havens, deprive the US government of $100B per year.

That is $1 trillion in a decade, the estimated cost over the same period to the taxpayers of Universal Health care reforms President Obama will propose. So, in a real sense, these 40,000+ are stealing your healthcare.

Swiss banking laws make it a crime for anyone in Switzerland to reveal the names of the persons associated with those accounts. Although the Union Bank of Switzerland (UBS) has agreed to cease-and-desist from allowing US citizens to keep anything but regular banking (checking and savings) accounts, thus forcing these 40-45;000 to find other secret venues, UBS has admitted to fostering these abusive practices and agreed to pay a large fine.

But that fine is less than 1% of the uncollected taxes.

That's not so fine.

Nor is the United States powerless. First, we need to recognize this for what it is -- economic war against the United States by its own citizens in collaboration with a foreign government. What they slime their way out of paying, YOU pay, either in taxes or interest servicing the debt.

You pay in other ways, mostly in sapping the will of the country to take on universal healthcare because "we do not have the money", "it is too expensive." Those complaints wear thin in an era of enormous deficits brought on by the disastrous Bush policies, but they worked for 60 years. The fight is not over; they may win again.

Second, if this is indeed an attack against the US with perpetrators sheltered by a foreign government, we ought to react as we have in other wars. For example, during World War I, all German companies were forced to divest themselves completely of their US subsidiaries.

If Switzerland does not change its bank secrecy laws to permit the divulging of those 40,000 names, Swiss companies should be forced to divest their US subsidiaries. Here are a few giant Swiss companies that would be impacted: Novartis, Hoffmann-LaRoche, United Bank of Switzerland.

Third, we ought to impose severe punishments for those who are found to have accounts in countries with bank secrecy laws. Long jail terms and payment of back taxes with large penalties is a good place to start.

Anyone care to guess some of those among the 40,000? Dick Cheney seems to me a good guess. He was CEO of Halliburton, whose KBR subsidiary was a Swiss company; while Cheney was Halliburton's CEO they did big business with Saddam Hussein's Iraq and Iran. The Bush family--i.e., not necessarily George W himself-- is described Kevin Phillip's book as squarely among the traditional financial elite that had little qualms of whom it was they were financing between the two World Wars. I would guess they have had Swiss accounts for at least 3 generations.

What about Larry Kudlow himself? When he speaks about this, or other matters, ought we not have full disclosure? Why is he so passionate about these abusive tax havens? How can he claim to be a patriot, and at the same time applaud the bleeding of our Treasury by our own citizens protected by foreign governments?

What about Madoff? If he does not have accounts squirreled away in the world's secret banking countries, then his status as the evil genius of our time is in jeopardy.

Then, of course, the others--prominent politicians? Pillars of society? Financial elites? Are they likely to pontificate about their patriotism?

You can bank on it.

Will this prevent anything from being done about it?

Yes, unless you care about your health.