Obama: “biggest tax scam on record”

Tax Haven Series

Obama

05 Jan 2008

"You've got a building in the Cayman Islands that supposedly houses 12,000 corporations. That's either the biggest building or the biggest tax scam on record."

US Uncut, Yes Men to Bust Corporate Tax Dodgers in Cayman Islands, June 18

http://www.thenation.com/blog/161338/us-uncut-yes-men-bust-corporate-tax-dodgers-cayman-islands

10 Jun 2011

The activism groups behind a widely circulated (and false) AP report stating GE would return its entire 2010 tax refund of $3.2 billion to the US Treasury appear to be getting the band back together. US Uncut and The Yes Men are planning another event to draw attention to the massive problem of corporate tax dodging, but this time they’re taking their activism directly to the source of America’s lost revenue: the Cayman Islands.

One of Obama’s stock applause lines was a true-life story he would tell about a single building in the Cayman Islands which houses 12,000 corporations. "That's either the biggest building,” then-Senator Obama would say, “or the biggest tax scam on record.” Cue wild applause. The building Obama was referring to is called the Ugland House in George Town, and it actually houses about 19,000 registered companies. Since being elected, however, President Obama has done little to stem the problem of corporate tax havens. Legislative paralysis is precisely why US Uncut and The Yes Men are planning this action to draw the American people’s attention back to the problem of tax dodging.

http://theyesmen.org/



Ugland House



Tax Havens Shift Tax Burdens

Tax Haven Series

Treasure Islands by Nicholas Shaxson, 2011, Excerpts

In the large economies, tax burdens are being shifted away from mobile capital and corporations onto the shoulders of ordinary folks. The rich have been paying less, and everyone else has been forced to take up the slack. Tax havens overturn the healthy dynamics by providing escape routes for their elites. The secrecy jurisdictions are the biggest culprits.

Tax Haven Investments

Tax Haven Series

Treasure Islands by Nicholas Shaxson, 2011, Excerpts

The two biggest sources of foreign investment into China in 2007 were not Japan or the United States or South Korea but Hong Kong and the British Virgin Islands. Similarly, as of 2009 the biggest source of foreign investment into India, at over 43 percent of the total, is the treaty haven of Mauritius, a rising star in the offshore system. It also specialized in channeling Chinese investments into Africa’s mineral sectors. Mauritius illustrates how the British spiderweb is no imperial relic but a modern and self-renewing system. Although French-speaking, the country has a long history of British colonial involvement. Mauritius set up its offshore center in 1989 under the tutelage of experts mostly from the City of London, Jersey, and the Isle of Man. The Netherlands is another major European tax haven. In 2006, while the Irish musician Bono browbeat Western taxpayers to boost aid to Africa, his band, U2, shifted its financial empire to the Netherlands to cut its own tax bill.



Chinese officials stole $120 billion, fled mainly to US

http://www.bbc.co.uk/news/world-asia-pacific-13813688

2011 Jun 17

Thousands of corrupt Chinese government officials have stolen more than $120bn (£74bn) and fled overseas, mainly to the US, according to a report released by China's central bank. The officials used offshore bank accounts to smuggle the funds, according to the study posted on the People's Bank of China website this week but which has since been removed. It said the officials smuggled about 800 billion yuan into the US, Australia, Canada and Holland through offshore bank accounts or investments, like property or collectables.  The stolen funds were covered up by disguising them as business transactions by establishing private companies to receive the money transfers.

Tax Haven Secrecy

Tax Haven Series

Treasure Islands by Nicholas Shaxson, 2011, Excerpts

Tax havens don’t just offer an escape from tax. They also provide wealthy and powerful elites with secrecy and all manner of ways to shrug off the laws and duties that come along with living in and obtaining benefits from society – taxes, prudent financial regulation, criminal laws, inheritance rules, and many others. Offering these escape routes is the tax havens’ core line of business. It is what they do.

Offshore secrecy shifts control over information and the power that flows from it toward the insiders, helping then take the cream and use the system to shift the costs and risks onto the rest of society.

These zones of ultra-freedom for financial interests are so often repressive places, viciously intolerant of criticism. The offshore world is steeped in a pervasive inverted morality: Turning a blind eye to crime and corruption has become good business practice: a way of attracting money; while alerting forces of law and order to wrong doing has become the punishable offense. Here in the tax havens, rugged individualism has morphed into disregard, even a contempt, for democracy and for societies at large.

City of London – Tax Haven Mothership

Tax Haven Series

Treasure Islands by Nicholas Shaxson, 2011, Excerpts

This network of offshore satellites does several things for the City of London. First, it gives it a global reach. These jurisdictions funnel money through to London. Second, the spiderweb lets the City get involved in business that might be forbidden in Britain, giving the financiers in London sufficient distance from wrongdoing to allow plausible deniability.  By the time the money gets to London, it has been washed clean.

Offshore Magic Circle: Its members are made up of highly profitable multijurisdictional law firms mostly originating in Britain or its Overseas Territories and Crown Dependencies: a smartly dressed regiment of accountants, lawyers, and bankers forming a private global infrastructure that, in league with captured legislatures in the secrecy jurisdictions, makes the whole system work.

City ‘to be offshore currency market for China’

http://www.bbc.co.uk/news/business-16505795

11 Jan 2012

Talking to bankers and lawyers, there is growing optimism that the City of London will join Hong Kong as an offshore center where the Chinese currency, the Renminbi, can be traded - and that an announcement on all this may not be far off. The RMB would be on its way to becoming a proper globally traded currency, commensurate with China's status as the world's second biggest economy.

Tax Haven Structure

Tax Haven Series

Treasure Islands by Nicholas Shaxson, 2011, Excerpts

The world tax havens can be divided roughly into four groups: a set of continental European havens, a British zone of influence centered in the City of London and parts of Britain’s former empire, a zone of influence focused on the United States, and a fourth category holding unclassified oddities like Somalia and Uruguay.

Each jurisdiction offers one or more offshore specialties. Each attracts particular kinds of financial capital, and each develops a particular infrastructure of skilled lawyers, accountants, bankers, and corporate officers to cater to their specific needs.

The drug smugglers, terrorists, and other criminals use exactly the same offshore mechanisms and subterfuges – shell banks, trusts, dummy corporations, and so on – that corporations use. Offshore connects the criminal underworld with financial elites and binds them together with multinational corporations and the diplomatic and intelligence establishments. Offshore drives conflict, shapes our perceptions, creates financial instability, and delivers staggering rewards to les grands, the people who matter. Offshore is how the world of power now works.

Expropriating Wealth

Plutonomy Series

Citigroup Plutonomy Report, 2005, Excerpts

Organized societies have three ways of expropriating wealth - through the revocation of property rights, through the tax system, or to slow down the rate of wealth creation. The three levers governments and societies could pull on to end plutonomy are benign. Property rights are still intact and taxation policies are neutral to favorable.

There seems little threat from the first of these challenges: blatant expropriation of property by governments. There are few examples of governments changing the rules in the plutonomies and engaging in widespread nationalization, or asset re-distribution. Governments have learnt the lessons of regulatory certainty and the sanctity of property rights.

The more likely means of expropriation is through the tax system. Corporate tax rates could rise and personal taxation rates could rise. Dividend, capital-gains, and inheritance tax rises would hurt the plutonomy. In the U.S., the current administration’s attempts to change the estate tax code and make permanent dividend tax cuts plays directly into the hands of the plutonomy.

So long as economies continue to grow, there is little threat to Plutonomy.