Saturday, July 07, 2012

Offshore outrage: Will we eliminate taxes on corporations and the rich?

The Vanity Fair piece that has everyone looking at Mitt Romney in a new light was written by a British journalist named Nicholas Shaxson. His work prompted me to start looking into Romney's links to criminals and spies. (See here, and there will be much more coming.)

Last year, Shaxson wrote a book called Treasure Islands, about the world of offshore banking and the unaccountability of the world's financial elite. I have not read it. However, I have read what George Monbiot of the Guardian has had to say about it. Monbiot, who rarely displays much emotion in print, seems outraged.

He is also infuriated by a new British tax proposal which he calls "the heist of the century." Basically, U.K. Prime Minister David Cameron is pushing for a new scheme which will allow corporations and the wealthy to escape paying taxes altogether.

The scheme is simple: In order to relieve corporations from the burden of "double taxation," Cameron wants to institute a system in which British companies pay no tax whatsoever on monies earned in foreign countries. If a company sets up a tiny office or post-office box in an offshore haven, then the tax burden drops to zero or near-zero. This new system will not apply to small firms.

Cameron himself owes his family fortune to offshore tax havens. So, we learn, does Mitt Romney. This is a dodge available to the wealthy, not to you and me. During the primaries, all of the major Republican candidates advocated raising taxes on the "lucky duckies" who inhabit the lower end of the economic scale.

American companies already use offshore accounts to delay paying taxes. That's one reason why massive corporations like General Electric were able to avoid paying anything in 2010. If Romney institutes a system similar to Cameron's -- and some preliminary evidence indicates he will make the attempt -- Google "Romney double taxation offshore" for some interesting links -- the entire tax burden in this country will shift to working people.

By the way, a Republican apologist wants to convince us that Mitt Romney's tax rate is actually 143%. Poor Mitt! Don't you feel sorry for him? (The people who say that he's actually paying one tenth of that percentage are just liberal liars.)

Here's what the normally unflappable Monbiot had to say about Shaxson's book:
But I've just read Nicholas Shaxson's Treasure Islands – perhaps the most important book published in the UK so far this year – and now I'm not so sure. Shaxson shows how the world's tax havens have not, as the OECD claims, been eliminated, but legitimised; how the City of London is itself a giant tax haven, which passes much of its business through its subsidiary havens in British dependencies, overseas territories and former colonies; how its operations mesh with and are often indistinguishable from the laundering of the proceeds of crime; and how the Corporation of the City of London in effect dictates to the government, while remaining exempt from democratic control. If Hosni Mubarak has passed his alleged $70bn through British banks, the Egyptians won't see a piastre of it.

Reading Treasure Islands, I have realised that injustice of the kind described in this column is no perversion of the system; it is the system. Tony Blair came to power after assuring the City of his benign intentions. He then deregulated it and cut its taxes. Cameron didn't have to assure it of anything: his party exists to turn its demands into public policy. Our ministers are not public servants. They work for the people who fund their parties, run the banks and own the newspapers, shielding them from their obligations to society, insulating them from democratic challenge.

Our political system protects and enriches a fantastically wealthy elite, much of whose money is, as a result of their interesting tax and transfer arrangements, in effect stolen from poorer countries, and poorer citizens of their own countries. Ours is a semi-criminal money-laundering economy, legitimised by the pomp of the lord mayor's show and multiple layers of defence in government. Politically irrelevant, economically invisible, the rest of us inhabit the margins of the system. Governments ensure that we are thrown enough scraps to keep us quiet, while the ultra-rich get on with the serious business of looting the global economy and crushing attempts to hold them to account.

And this government? It has learned the lesson that Thatcher never grasped. If you want to turn this country into another Mexico, where the ruling elite wallows in unimaginable, state-facilitated wealth while the rest can go to hell, you don't declare war on society, you don't lambast single mothers or refuse to apologise for Bloody Sunday. You assuage, reassure, conciliate, emote. Then you shaft us.
Many would argue that, uh, Obama's shaft is bigger, because he is the acknowledged master of the conciliatory and reassuring pose. But let us give credit where due: Obama has sponsored legislation offering tax breaks to entice American countries to come back home. As bad a president as he has been, I don't think he will propose anything like Cameron's scheme.

Watch Shaxson on Democracy Now, embedded above. He clarifies the relationship between Wall Street and The City. 

Let's give the final word to Shaxson. The following text (acquired via a review) comes from his book:
America, the great democracy, is now in thrall to the world views of unaccountable, abusive and criminalized elites, in large part thanks to offshore finance. Having colonized the economic and political systems of the large nation states where most of us live, offshore finance has gone a long way in capturing our attitudes too.
Really great post! This is the real outrage of our time.
I couldn't read this since whoever posts the Rolling Stone blogs is so mentally underhung he can't manage to ensure the text at the margins can be read, but here's Matt's latest lament on why americans aren't freaking out over the LIBOR scandal.

See...the American public won't be following whatever horrors Mittwit has engaged in. Far more important to explore every angle of the Tom Cruise divorce.
Separated by a common language, united by greed.
The scam is the tax holiday. American companies who keep foreign earings offshore are not taxed on that money, but neither can they repatriate without it being taxed.

So they wait and lobby and lobby and wait all the while suggesting that for the good of the country that a tax amnesty is declared for companies to bring money back in the country. This has happened once already.

Thing is once you announce one tax amnesty there is no reason why anyone would assume it will be the last. So you reward delaying repatriating money and validate the decision to postpone repatriation and taxation.

Maybe what we have is outrage fatigue:
You guys realize that if Obama gets a second term the outcome will be the same, the rich will get their offshore tax breaks and the middle class will get the shaft.

The only difference being that under Obama(pun intended) the bots willingly drop their shorts and grease their butts.
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