I responded to an article in Naked Capitalism today on Africa and the War Against Offshore Finance. Here is what that blog writer said.
Here’s what I see as the money quote:
[NDIKUMANA:] You also have to look at where the money is going. These banks are actually established in nations with rules, very clear rules about banking. When we say offshore centers, when we say secrecy jurisdictions, when we talk about banking secrecy, people may think that these are alien lands, in no-man lands, but actually you will be surprised to know, if you didn’t know—I’m sure you know, but for those who didn’t know, they will be surprised to hear that the biggest offshore centers are in countries like the U.K., in London, the U.S., in New York, Paris in France. These are the biggest offshore centers where you find banks colluding with corrupt leaders, corrupt private investors, in hiding and not disclosing their investments and their bank accounts, because some of it was acquired illegally, was transferred illegally, is held illegally in the sense that it’s not reported to the government.
Yeah, shocked, shocked, but this needs to be said over and over again. When I was picking this quote, I looked through the transcript for the qualifier that would distinguish “these banks” from the other, honest, banks. The ones that weren’t run by criminals. And oddly, or not, that qualifier wasn’t to be found…
Here is my comment:
While not condoning the hiding of accounts by dictators and criminals, I have to say that the US trying to stake out a moral high ground in this is laughable. Attempting to influence the US to pursue the dictators’ money through somehow attacking their accounts is naive.
I used to live in Switzerland, and was forced to divulge account by account information to the IRS. I am now retired in the US and was forced to give up any bank accounts in Switzerland, though my retirement comes from there and my children still live there.
The US has a clear contradiction in its policy towards foreign money. If you are an innocent US person earning money in a foreign country you are treated like a miscreant. If you are a foreign miscreant stashing your money in the US you are treated like a valued customer and not taxed.
The US is trying very hard to punish it’s self-created and a priori guilty tax cheats (self-created since it is USA laws and IRS regulations that make it so) who hide heinously money offshore (think Romney?). This is a fiscal extraterritoriality, similar to the projection of power by drones. On the other hand the US and states make it easy for other countries’ tax cheats to open post box corporate entities (think Delaware and Mr. Biden) numbered and anonymous accounts (think Nevada and Mr. Reid) The people of foreign countries may not even be tax cheats since most other countries (except I have been told Somalia and the US) do not tax their citizens if they live in another country. Those incomes may or may not come from legal sources.
The US wants to be the only one to play with these rules and would be shocked if e.g. Germany came knocking on the door of banks in America threatening them with dire consequences forcing banks to reveal if they had (or certify they don’t have) German account holders, requesting account by account level information, and imprisoning their executives if they ever set foot in Berlin. Things the US does do every year.
To be clear, I believe that the US’ efforts to punish tax cheats misses the mark and harms innocent citizens and the US in at least 3 ways: US citizens are no longer in the running for international posts, neither as executives in multinationals nor as teachers of English as a foreign language in another country; their tax and financial reporting burdens are too high. US citizens are not welcome as customers in foreign banks or financial firms in any way – which exacerbates our trade deficit. And lastly the US’ heavy handedness and arrogant attitude will invite retaliation sooner or later, in one form or another.
One last thing, there is a way in which corporations avoid taxation by not repatriating profits to the US, but leaving them in lower tax areas, which is illegal for individuals… corporate people are treated specially, now why does that not surprise me?
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