Komisar's article below from the spring issue of Dissent fails to recognise the economic reality of low domestic tax regimes - much of the international offshore banking is eliminated and a prosperous domestic economy is allowed to flourish. At a time when much of Western Europe is awakening to the huge potential for low and flat rated corporate and income tax scales, there are still many opponents of the current techniques the corporates and high net worth individuals use to avoid onshore tax liability.
These international price transfer transactions cost huge amounts of taxpayer funds to police and prosecute, and are the inevitable result of excessive tax burden in the home jurisdiction. With a predominance of social engineering experiments and massive welfare spending remaining in much of the developed world, governments need to learn to develop citizens who accept personal responsibility for life outcomes.
I cannot comment on the US context of the author's article, but welfare dependency is a key issue elsewhere in the world. Until this is accepted philosophically at state level, the corporate world will continue to be expected to support those who simply can't be bothered in life, and will continue to pursue offshore banking strategies to minimise the tax plunder.
The Dirty Little Secret of Financial Globalization by Lucy KomisarThe debate about cutting taxes for corporations and the wealthy is a false one. The issue is not whether transnational corporations and the very rich benefit from tax cuts, but that many of them walk away from all taxes. A General Accounting Office report found that between 1996 and 2000, 61 percent of all U.S. companies paid zero federal taxes. They accomplish this primarily through "profit laundering," a phrase that ought to be on the lips of every social critic.
Massive profit laundering sucks resources out of the United States and other countries, beggars public programs, and lays waste the social contract on which taxation must be based: that everyone pays a fair amount. It hobbles legislators and officials who want to spend money on social programs but can't dispute right-wing arguments that "there is no money." There is no money because it's been filched from public coffers with the help of the world's big banks, investment companies, and offshore financial centers. The scam is accomplished via offshore shell companies and bank accounts, and it is happening on a global scale.
Article comments
1 - Nancy
Please take pity, the petro dollar is dying and the Euro is taking over. The free ride for the US is almost over, so do not drive out the remaining wealth/resources of the well-to-do in the country.
They will simply expatriate and take their wealth with them, (as they are already doing because of the high taxes *(going higher) in the country). That scenario leaves us "worker bees" to shoulder the TOTAL burden all by our selves and we have far less to work with when it comes to resources.
Somehow we, as a country of diverse people, have to re-group and re-think our position
The government has got to find ways to 'cut back', instead of demand more and more money from it's citizens, otherwise history will repeat it's self and those with the ability will up and leave the sinking ship. This is traditionally what has always happened throughout history when the government of any country got too greedy and too heavy-handed... those with the assets, liquidated them and got up and left.
There will always be "places to go", there will always be a shelter offered somewhere for wealth, the tax top-heavy nations of the world cannot go around and militarily attack every nation that offers the opportunity to the individual with assets who wants to bring those assets to their country, and that is what it would eventually come down to.
Why? Because "money talks and you-know-what talks"! Nothing ever changes under the face of the sun, read history and understand that higher and higher taxes spell the demise of the country that imposes them. We will die....a painful economic death if we don't try to keep our wealthy individuals to help us.
NEV
2 - J. Gosline
This article was taken from Dissent magazine's Spring 2005 issue without permission. You may continue to post this article on your blog if you provide a link to Dissent's Web site (www.dissentmagazine.org) and credit us with publishing this article. If you choose not to do this, remove this article from your blog immediately. Thank you for your cooperation.
Sincerely,
The Editors
Dissent Magazine
3 - Eric Olsen
Dear J., I have responded by email and made appropriate changes. Thanks, EO
4 - Aaman
That's a great website/mag - thank you for bringing it to our attention
5 - Jeremy
Sorry about that, it was forwarded to me by a friend, fixed.
6 - Tapart News Advocate
The USA government start funding the moving of production outside the USA to places like Mexico in 1956. It was supposed to be a temporary program to help the Mexican economy while bringing cheaper products into the USA.
The program continued on through the years and just prior to the passing of the NAFTA trade agreement in 1994, 2000 US factories had moved to Mexico. NAFTA just confirmed what was going on for a long time. However after NAFTA was passed the number of factories moved to Mexico accelerated and by the time President Bush took office, there were 4000 former US factories in Mexico.
Right after NAFTA was passed President Clinton had to rush billions of dollars to Mexico to shore up the Peso. This should have demonstrated the failure of the programs from 1956 on but power and money run the show. The workers who are the core of the economies are still left out of the rewards. They also have very little voice in their destinies while world banks play a control game. International entities like the WTO control the flow of so called free trade while controlling the flow of wealth.
For more information, see Tapart News and Art that Talks global issues at http://www.tapsearch.com/tapartnews http://pages.zdnet.com/arklineart/tapin
And ask your leaders if the above is true or not. We do not need any conspiracy theories to know that something really went wrong with the workday all around the world and it was power and greed that ruled the process.
7 - L. Burike Files
So much of the discussion seems to be about taxes and privacy. I am aware of many offshore businesses that left the EU and US because of regulation and litigation. The offshore companies are tax neutral but have located in offshore jurisdictions just to survive litigation and the consequences of special interest groups. A perscription fulfilment company left the US for offshore because of lobbyist pressure from the drug companies to shut them down. (Note they fill only 5 and above and thus deal with things like Lipator etc...) I know of dozens of software companies that moved offshore to stem the tide silly litigation, they had won all of the litigation about fees and annual renewals - but paid hundreds of thousands of dolllars of unreimbursed legal fees every year to win those suits. In many offshore centers winner of the suit has the loser pay the legal fees.
So while we rant about offshore as a haven for criminals and tax cheats - the criminals are in the EU and US - and may or may not use offshore.
How many of us are insured indirectly by Bermuda companies, or invest in offshore stocks by and through a Cayman Fund since US mutual funds cannot directly invest in companies not in the US????
How many ways are we touched by offshore companies - every day - and don't realize it.
In short the offshore jurisdiction would only exist - in classic economic terms - if they offered a competitive advantage.
Just some fodder for thought - to maybe - divest our "big county" point of view.
Burke