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Invade the Caymans!
INVADE THE CAYMANS!....In our current issue David Cay Johnston has a great piece about all the tax loopholes we ought to close as we tackle the long-term reengineering of our fiscal system. Here's my favorite:
The Obama administration could tell the Caymans — now fifth in the world in bank deposits — to repeal its bank secrecy laws or be invaded;since the island nation's total armed forces consists of about 300 police officers, it shouldn't be hard for technicians and auditors, accompanied by a few Marines, to fly in and seize all the records. Bermuda, which relies on the Royal Navy for its military, could be next, and so on. Long before we get to Switzerland and Luxembourg, their governments should have gotten the message.
Barring gunboat diplomacy (tempting as it is), there is no reason we cannot pass laws to block financial transactions with tax havens or even, Cuba-style, make it a crime for Americans to visit or do business with them without special permission. Congress could declare the hiding of funds a threat to national security and require that anyone with offshore assets disclose them to the IRS within 30 days and pay taxes, interest, and penalties within 180 days. For the holdouts, temporary special teams in the IRS and Justice Department could speedily pursue civil or criminal charges.
Boo yah! Other (slightly less bloodthirsty) suggestions include rules preventing companies from keeping two sets of books; increasing top marginal rates on the super-rich; reining in abuse of tax deferrals; ending utility scams (a new one to me); ditching the home mortgage deduction (good luck with that); bringing back usury laws; ending the burglar alarm subsidy (seriously); and a whole slew of others. A great read.
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Before anyone asks, yes, I know that's a Coast Guard patrol boat, not a Marine Corps boat. But it's a fun picture anyway.
That was an amazing article. Thanks!
How do we get that in the hands of the "right people?"
That is the question.....
"Congress could declare the hiding of funds a threat to national security"
Since when has Congress declared a threat to national security? Is there a joint national security committee under the new rules?
The past several dozen times I've read about threats to national security being declared (most of which were really mild), Bush was signing on the Executive Order dotted line.
South Korea used to have the death penalty for capital flight - maybe the US should try that, it would be more effective than invading the tax havens and it would result in worthier casualties.
I'll go, I'll go! I'll STORM Grand Cayman and establish a beachhead at teh Beach Club Colony Hotel. I'll storm strategic Rum Point! I'll cover all the blowholes so that toxic fumes may not be waved at our troops from the secret defensive blowhole tunnels. I'M IN CHARGE HERE!
What a bleak and depressing picture. The systems in place which have given us this BS are so entrenched that I see little of this ever being focused on. For that to happen, instead of invading the Caymans, guns would need to be trained at Congress.
Maybe it would make more sense to have reasonable corporate tax laws instead of invading the Caymans. That would mean reducing the top corporate rate.
But there are some bizarre inaccuracies in the article. It's not the case that companies overstate the taxes they pay. They state exactly how much they pay in taxes, that can't be hidden. What they overstate is profits.
This is also a recipe for disaster:
"Congress should restore protections so that workers get 100 percent of what they were promised, even if taxpayers have to make up the shortfall." What's to stop a bankrupt company (like GM) essentially run by the union (like the UAW) from promising lavish pensions and then relying on the feds to pay the bill? We already have a guaranteed pension system, it's called social security. One is enough.
Make Gordon Brown an offer he can't refuse - most of the world's tax shelters are British colonies.
Perhaps your writer should become conversant in international investment and tax treaties before proposing 19th c. style imperialism. Barring transactions with off-shore jurisdictions (he forgot to mention the Crown possessions of Jersey & Guernsey, never mind Mann) for the sole sin of having low taxation rates (yelling tax haven is entertaining, it would of course be more challenging to actually define it legally rather than engage in empty populist posturing) rather seems to run into issues with free investment.
Tighter auditing of transfer pricing might achieve what he desires in terms of preventing abuses, but taking American Cuban policy as a benchmark (ah what a success that particular policy is) and criminalising contacts with countries because you don't care for their tax policy is positively communist.
Ah, but Mr. Lounsbury, treaties and international law are so last millenium. 9/11 changed everything :-).
And though America's Cuban policy has utterly failed at its stated goal of deposing Castro (maybe another 40 years will do it), it has done a pretty good job of reducing American economic activity in Cuba.
...yes, I know that's a Coast Guard patrol boat, not a Marine Corps boat. But it's a fun picture anyway.
That's okay Kevin. The Coast Guard could help out. They have gotten quite butch since 911.
Writing to your Senators and Representatives assumes that they are working for the people, honest, and actually going to do something about a problem, when in reality money talks louder. There simply aren't enough saints available to staff a large institution that requires its members to voluntarily act against their own self interest and well being.
The "good ole boy" crowd that supports and legitimizes the corporate and individual greed of the monied political donors, who in turn support the candidates that follow through with the legislation that they paid for. Need more capital? Here's your tax break. Need less governmental intervention? Reduce the number of auditors and inform the supervisors to be more prudent in their investigative choices.
A favor for the donor class is $100K in the bank/campaign; 4000 e-mails from the general public are 4000 formatted return e-mails extolling their record and a trip to the "delete" button. "So happy to hear from you. Please keep me informed." The actual legislative bill, if any, dies in committee or is loaded with enough graft to negate any benefits to the people.
Those who expose governmental or corporate dishonesty, themselves become the vilified. Whistle blowers are systematically weeded out and destroyed by the corporate moguls that they expose.
Times have changed for homeland security. During the late 60s, the height of the cold war, there was a single dock in NYC (Brooklyn) where communist ships (usually Polish) would dock. Access was guarded by just one Coastguardsman armed with only a service .45.
Burglar alarm subsidy? What? Please explain.
I think David Cay Johnston is looking through the wrong end of the telescope. It's true that these offshore islands have laws that encourage financial businesses to locate there. Instead of attacking those countries, we should emulate them, so that more businsees would locate in the US.
I'm a regular consultant to a reinsurance company located in Bermuda. In the last 15 to 20 years, most American Property/Casualty reinsurers have recapitalized themselves in Bermuda. We should think about getting them back by making it attractive for them to be based here.
Better idea-appoint Mike Huckabee and Senator Levin to head up an investigation into Congressmen and ex-Congressmen's income and how much they paid taxes on-put them in charge of the UBS investigation as well. That should put the fear of God into Congress on their offshore and Caymun accounts-I am still wondering why Phil Gram isn't in jail?
We need to put this on the list for the revolution (in 2021, mark your calendars), because that's what it will take to change this situation.
Seriously. Does anyone think things are the way they are by accident? Does anyone think we can simply call these things mistakes and then correct them?
I hate to encourage the Lounsbury to be even more arrogant but he is correct about existing treaties and agreements.
They are no accident and the fact that they are inconvenient for hoi polloi is a feature, not a bug.
Shoot, look at how many shills are already bleating that we should be meeker followers of our corporate masters, not rebel against them.
I really wish people would wake up and smell the coffee. Hearing really good 'fixes' that have no chance in hell of happening is getting annoying to me.
Before you really fix something you have to really understand why it is in place and what it does.
Do these offshore banks actually exist or are they just a layover for paperwork headed to other banks? My guess is it would be more fruitful to raid US accounting firms.
On a lighter note, I have personally scouted the Cayman Islands and I would be very happy to go back again. They were especially lovely this time of year.
I realize you mean this as a joke, but the U.S. Coast Guard has been butch, as you call it, since 1790.
Here are some WWII photos of Guardsman in combat:
http://www.nps.gov/archive/wapa/indepth/extContent/wapa/coast_guard/cg7....
David: It's true that these offshore islands have laws that encourage financial businesses to locate there. Instead of attacking those countries, we should emulate them, so that more businsees would locate in the US.
What next, have the president and members of congress get down on their knees to provide extra stimulus for these businesses? Oh never mind, they already do that.
Hey, if these tinpot countries want low corporate taxes and lax (to put it mildly) oversight, let them. Just don't expect to do any business with the US.
LOL. It's funny people still have hope and propose good policies. Soon they will be jailed.
Once you realize this nation is beyond the tipping point in corruption and profligacy, then you can relax and enjoy the spectacle.
Luther,
I don't see things that way. I think the corruption and profligacy are the same as always, although I do admit if you are from Illinois you have a good reason to see things differently.
I think you are blaming symptoms, and the wrong symptoms at that. Fortunately more people are coming around to my understanding of things.
The idea that poor morals and character are ruining our country is finally being recognized as the smokescreen it is. The ultrarich are simply manipulating the rest of us as they always have, setting us on each other while they loot the treasury.
Sounds like it is time for Looneybury to change his knee pads. Those old ones are getting very worn ya know.
Such fools there are.
"...it's the end of the world as we know it and I feel fine..." - REM
Alex, wonderful one can always count on leftist tripe:
Hey, if these tinpot countries want low corporate taxes and lax (to put it mildly) oversight, let them. Just don't expect to do any business... Lax oversight? Most of the jurisdictions cited are fully compliant with international regs on Anti Money Laundering disclosure, etc as per GATF, anti terror financing disclosure and BASEL standards. Their core sin is not taxing heavily as the Left would like. Now there are actual dodgey places out there, but not those cited (unless again the standard is merely not to tax heavily, but that is a perfectly valid choice).
But of course for most commentators here, it is sufficient to wave the red flag of "Evil Rich People" and you feel quite comfortable blustering on.
You are wong The Caymans Island should not tax Shelter
It's odd that the author rails against the tax-GAAP difference and makes it sound as if companies are sneakily using two sets of books.
Rather, the gvt. has created the dual books system in order to give tax preferences for social goods. (investment in machinery, hiring, etc)
Lounsbury,
You disappoint me by continuing to make quick swipes at the low hanging fruit. Frankly I expect something a little more substantial from you. I think you have it in you. Why are you bothering with the cheap easy thrills?
Just waving the 'red flag of "evil rich people".'
Evil is as evil does.
Greed is evil. Not paying your fair share to support your civilization is also evil.
Can you salute that flag?
I admit the thought has occurred that AQ terrorists could've done a hell of a follow-up by trashing computers/robbing Cayman Island banks in a raid.
Talk about dealing a blow to the decadent capitalists!
'course, just waiting until the meltdown worked well, too.
make it a crime for Americans to visit or do business with them without special permission.
Yep, this is a sure fire way to end corruption, and not fascistic at all.
Laziness. Reporting season.
Lounsbury,
Ah. Fair enough. Honesty is a virtue. So is putting food on the table. You are an honorable man.