Hopefully not too late to change course on this one: There has been a huge international effort to reach a meaningful treaty on international financial crime. After painful teeth-pulling from Switzerland, the Caribbean, etc., everyone was on board, except...the Bush Administration, which expressed fears of an "international tax police."
I expect they will change course, and that it is not too late to implement these accords. I understand people's desire for privacy, but to have a chance against international criminals some information must be shared.
I hope that out of the WTC tragedy, we may take a close look at ourselves, and see reforms that should be made. The U.S. is just way too friendly to white-collar criminals in general, whether tax-evaders or market manipulators (give the SEC the money to do its job, it is starved for funds.)
When I see people who have ripped off hundreds of millions of dollars, the life savings of so many people, go to jail for 6 months because "they didn't hurt anyone," I am not happy.
Why are the laws so favorable to white-collar criminals?
Because they are made by white-collar criminals?
Doc
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The first (Foreign Affairs) article is very good but limited to 500 words online. The emphasis is not on taxation.
The second (Guardian) article is the liberals lambasting the good ol' boys on taxes.
foreignaffairs.org
Follow the Money
by William F. Wechsler
From Foreign Affairs, July/August 2001
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500-word preview
William F. Wechsler was Special Adviser to the Secretary of the Treasury from 1999 to 2001. He previously served as Director for Transnational Threats on the staff of the National Security Council and as Special Assistant to the Chairman of the Joint Chiefs of Staff.
SECRETS AND LIES
As the international financial system has expanded, so too have financial abuses -- money laundering, tax evasion, and rogue banking. Globalization is now changing the nature of these age-old problems, threatening to undermine U.S. diplomatic, economic, and even strategic interests. Multilateral efforts have begun to combat these abuses and have already achieved some impressive results. But time is running short for the Bush administration to act, and its decisions now will determine whether these multilateral efforts will continue.
Financial abuses have been around for as long as there have been finances to abuse. Money laundering and tax evasion are often viewed as complicated, boring matters hinging on the minutiae of tax codes and regulatory laws. But that image masks a destructive, often bloody reality. Drug cartels, arms traffickers, terrorist groups, and common criminal organizations use banks to launder their dirty money, making it appear as the product of legitimate business. Tax evaders structure transactions to hide their wealth from legitimate authorities, weakening national tax bases. Corrupt government officials exploit banks to facilitate their own misdeeds, breeding a lawless business culture and undermining public confidence in national financial systems. And the underregulated banking systems that facilitate these abuses have sparked financial meltdowns around the world.
The United States and many of its economic allies have long understood these threats and know that "following the money" can unearth big vulnerabilities in criminal syndicates. Over the years, their governments -- remembering that Al Capone was put behind bars for tax evasion rather than murder -- developed legal and regulatory regimes to help detect and deter financial abuses. Banks and other financial-service providers were regulated and supervised. Money laundering and tax evasion were criminalized, banks were required to identify and report suspicious transactions, company-incorporation and trust-formation laws were passed to encourage transparency, and law enforcement agencies developed specialized investigative skills.
As criminal organizations began to operate across international borders, national regulators and law enforcement agencies began to share information. In recent decades, international standards for financial transparency were established through such multilateral organizations as the Financial Action Task Force (FATF) and the Basel Committee on Banking Supervision. But these efforts were not truly global. For the most part, only wealthy countries with well-developed financial systems participated; smaller and less-developed countries were mainly absent from these discussions. This did not seem a problem, however, because most of the world's funds routinely passed through a small number of highly developed economies. In comparison, the banking systems in the developing and then-communist nations were exceedingly small and not globally integrated.
Even among nations with well-developed financial systems, however, a few countries took different approaches. Switzerland and the Cayman Islands, for example, were notoriously reluctant to disclose information on their secret bank accounts. Moreover, they shared . .
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guardian.co.uk
Death is now the only certainty
While President Bush is in the White House, the world's devotees of tax havens will still be laughing all the way to the bank
Will Hutton
Sunday May 6, 2001
The Observer
The British and the other Europeans still don't understand. The United States has changed. Its political centre of gravity has moved away from the two liberal seaboards to the extraordinarily conservative South and Wild West, which want no truck with the outside world unless wholly on their terms. Since the Sixties, American conservatives have waged war on liberalism in any guise with an almost Leninist zeal and have now captured the American state. They intend to make victory pay.
Thus the calming official voices who argue that all incoming American administrations have teething problems with their allies and that normal relations will be established as they have before need to be disabused. Bush and those behind him intend to alter the US and the international system for good.
So the spectacle a few days ago of some hundred conservative policy-wonks, administration officials and key aides of Republican leaders of the Senate and House of Representatives crowding into what seems ,at first sight, an obscure seminar on 'tax competition' at the Heritage Foundation, one of the ringleader conservative think-tanks, is not to be shrugged off as something going on in a far-off land. It will affect us all.
US conservatives, opposed to international treaties to limit climate change, criminality and the proliferation of nuclear weapons, have another target in their sights. They want to preserve tax havens and the apparatus that supports global tax avoidance - and in truth, evasion - in the name of promoting the minimal state, 'tax competition' and 'financial privacy'. They intend to wage war against the 'international tax police' in the form of the Paris-based government club of economic forecasters, the OECD, which is working towards an agreement obliging tax havens to be more open about who is avoiding what tax in their jurisdiction. Between now and July, when the OECD is set to publish a list of rogue tax havens which will be the subject of potential trade sanctions for not co-operating, the American Right wants to wreck the initiative and is putting intense pressure on the Bush administration to pull out.
Tax havens have become indispensable instruments in the construction of a very particular global business civilisation whose ideology has it that government is illegitimate and tax avoidance is not merely an useful business ploy, but a moral imperative in order to avoid hard- earned profits being squandered by the state on welfare spending. Messrs Berlusconi and Murdoch, for example, could not have built their empires without the capacity to house their businesses and profits in offshore havens. Both see tax avoidance as the proper responsibility of any international citizen.
They are merely the most conspicuous representatives of a far broader culture. Hardly any of the Fortune 500 companies in the US and FTSE 100 companies in Britain pay remotely appropriate levels of tax given their profitability. One-third of global GDP is estimated to be directed through tax havens. Every Western industrialised country is suffering from falling tax yields from wealthy individuals and corporations as they move offshore, so displacing more tax on to average and below average earners to compensate, fuelling the growing mood that tax is too high.
The growth of the Mafia, organised crime and the drug cartels would be impossible without the capacity to shelter their profits offshore. Every African despot has salted billions away in tax havens. They are not good news.
Except in the eyes of American conservatives. Gone are the days when the American Right concentrated on making an economic case against taxation as a disincentive. The argument is still deployed, but it is now secondary to the larger proposition. All state activity diminishes the liberty of the individual; all wealth is the result of individual effort. Therefore, taxation is pernicious. It confiscates wealth that properly belong to individuals. It intrudes into our financial privacy to calculate what is due, only to finance state action that diminishes liberty and, if spent on welfare, education or health, undermines the incentive to take responsibility for ourselves. It is to be opposed to the last.
Lawrence Lindsey, Bush's national economic adviser, is a staunch advocate of financial privacy. Dick Armey, House majority leader, characterises the OECD as part of a 'a global network of tax police'. Senator Don Nickles, the assistant majority leader in the Senate, wants a reversal of an agreement that will infringe American sovereignty waged by high-tax, high-welfare Europe against low-tax countries. Even the Democrats' black caucus has joined in, seeing implicit racism in the way so many Caribbean islands have been identified as tax havens. Add in the right-wing think-tanks thundering away along with every right-wing columnist and the atmosphere is pretty feverish.
The Treasury and OECD cling to the notion that rationality will prevail, that the aim is not to prevent tax competition between countries but unfair tax competition, and that information-swapping and transparency about tax affairs - the heart of the OECD's efforts - are hardly menacing. They don't get it. There isn't a single authoritative voice in the US speaking up for the idea that taxation is a citizen's downpayment for membership of the community, that wealth creation has social as well as entrepreneurial roots and that the state is fundamentally legitimate and not a tool of socialism. Like the Labour Party, about to enter a second election pledging no rise in income tax rates, no serious challenge to the conservative worldview is mounted.
My guess is that the tax-haven initiative is a dead duck. Bush will agree neither to any action against so-called 'ring-fencing', in which tax havens offer secretly favourable treatment to companies, nor to information-swapping. which conservatives portray as an infringement of sovereignty. The best that can be hoped for is some voluntary code of best practice, a charter for the world's tax cheats.
The only hope for anything better is if the European Union insists that all companies trading within member-state jurisdictions comply with the OECD code, but that again requires Europe's politicians, especially those in Britain, to make a case for the EU.
Otherwise, Bush's good ol' boys won't give a damn. |
