During the 1980 U.S. presidential debates in Cleveland, at one point President Jimmy Carter began to attack challenger Ronald Reagan on his record concerning Medicare. Reagan responding to Carter, rose to his full height, looked straight at the about to be ex-president of the United States and said, tilting his head to one side in his trademark gesture, "There you go again." Ronald Reagan corrected the president of the United States as if he were a stumbling school boy and it gave Reagan the debate, (and helped to give him the election).
Now I can say the same thing about the bogus Tax Justice Network (TJN), about which I have expounded before -- There they go again!
Their latest invented fiction against free enterprise, tax havens and global tax competition pretends to speak for the entire continent of Africa. TJN, a leading advocate for the high tax schemes of the EU, OECD and UN exists mostly in press releases. It issues phony reports full of fictional figures purporting to show that trillions in wealth are "hidden" in tax havens allegedly avoiding billions in taxes each year. TJN doesn't bother with proof, and the leftist media doesn't mind a bit.
TJN latest broadside charges, unproven, "more than $150 billion a year is looted from Africa through tax avoidance by giant corporations and capital flight using 'a pinstripe infrastructure' of western banks, lawyers and accountants." TJN also makes the astounding claim that "30% of sub-Saharan Africa's annual GDP has been moved to secretive tax havens." TJN has now set up its own African front group to expose what it calls "the full scale of the plundering, in which western companies and financial firms are complicit."
While Britain's government has been praised for putting poverty alleviation at the top of the agenda, TJN criticized it for what it claimed was a failure "to stamp out overseas tax abuses involving UK firms and for being the destination for money siphoned out of Africa by corrupt officials."
But the British Treasury would have none of it. Said they: "The government has effectively tackled both corporate and personal tax avoidance structures time and again. The UK is driving efforts to reach international consensus to overcome problems with capital flight and tax evasion."
Africa is indeed one of the most impoverished areas of the world, but much of that stems from the corruption and even madness of its leaders, such as Zimbabwe's Mugabe, whose policies have destroyed his country and its people.
Instead of creating fictional bogeymen for a compliant media, TJN should try dealing in a commodity it has so far avoided -- the truth.
http://baumanblog.sovereignsociety.com/2007/06/feral_beasts_co.html
Feral Beasts Continue Anti-Offshore Attacks
In one of his last public addresses, British Prime Minister Tony Blair has referred to the news media in general as a "feral beast"!
"The fear of missing out means today's media, more than ever before, hunts in a pack," he declared in a speech in London. "In these modes it is like a feral beast, just tearing people and reputations to bits. But no one dares miss out." Blair also quoted a past U.K. prime minister, Stanley Baldwin, who berated the news media for having "power without responsibility, the prerogative of the harlot through the ages," a charge that borrowed from Kipling.
In case you were wondering, "feral" means "characteristic of wild animals; ferocious; brutal." In other words, Blair -- and I agree -- sees the press as a wild and brutal pack bent on making "news" regardless of the truth or the damage done.
No better example of this kind of media damage (as well as political demagoguery) is the completely phony attack on the Cayman Islands by Senator Max Baucus (D-Mont), chairman of the U.S. Senate Finance Committee. Baucus and some of his leftist Senate colleagues, Dorgan (D-ND) and Levin (D-Mich), have been practicing the Big Lie technique perfected by Hitler's Propaganda Minister, Josef Gobbels.
Without a shred of proof these worthies have spun out a tail about offshore tax havens as being responsible for what they call the "tax gap" – upwards of $100 billion annually by which US taxpayers are alleged to be underpaying their taxes and under reporting their income, much of this loot supposedly stashed in offshore tax havens. With what passes as a straight face, Baucus and others piously claim they suspect that Americans are using bank secrecy laws and the ability to channel income through tax-free offshore vehicles to evade reporting income to the Internal Revenue Service.
And like all good story tellers, Baucus has found what he thinks is a dandy illustration of these sinister offshore doings - a five-story office building in the Cayman Islands, Ugland House, a nondescript structure that is home to over 12,000 companies legally incorporated in the islands. At a recent Senate hearing Baucus dramatically held up a photograph of the building, demanding to know what the companies in it were doing. Now he has carried the charade further by ordering U.S. government inspectors to fly to the Caribbean to inspect "shady transactions" in the building.
Of course the disingenuous Senator knows very well that the building is an official registry for corporations, mutual funds, hedge funds, insurance companies, trusts and other legal entities, not just those owned by Americans, but by people from all over the world. The Cayman government said "substantially all" of the answers to questions the Senate committee was requesting were "fully in the public domain".
Many U.S. firms have subsidiaries registered in the Cayman Islands. Big energy companies such as El Paso Corp., Transocean Inc. and GlobalSantaFe Corp. have subsidiaries there. So do hotel chain Marriott International, aerospace giant Boeing and food producers Sara Lee and Coca-Cola. Most U.S. companies have corporate units offshore for strategic, financial and tax reasons and they make no attempt to hide them.
And why should they? U.S. law allows corporations who register in the Caymans or in other tax havens to reduce their tax burden from the 35% the IRS taxes on domestic profits to zero offshore. (The U.S. 35% corporate tax is one of the highest in the world). Cayman collects neither personal nor business taxes. So why shouldn't U.S. companies reduce their tax expenses, allowing them to lower their prices, increase their profits and up their shareholder dividends.
Offshore financial centers such as the Caymans and British Virgin Islands have tightened up regulation of their financial sectors, partly as a result of prodding by the Organization for Economic Co-operation and Development and International Monetary Fund. A recent report commissioned on behalf of the International Trade and Investment Organization, a group of small countries with international financial centers, pointed out that many offshore centers had better standards than larger onshore ones, including the United States.
Dan Mitchell of the Cato Institute in Washington, D.C. put this demagoguery in perspective by suggesting Senate investigators also may want to travel to Wilmington, Delaware, where there are 120,000 companies registered at one building address and 200,000 companies at another building address.
As Mitchell says: "There is nothing wrong with lots of company registrations, of course, but politicians cannot resist going for cheap headlines".
http://baumanblog.sovereignsociety.com/2007/07/norwegians-plan.html
Norwegians Plan Attack Against Tax Havens
The certified political liberal Garrison Keelor, who chats weekly about "Lake Woebegon" on his PBS radio show, A Prairie Home Companion, often comments about the dark and inverted nature of Norwegians he knows in his home state of Minnesota.
But now the United Kingdom-based Observer reports that Norway's socialist government is leading a new campaign against tax havens and low-tax jurisdictions of all kinds. The basis for this unreasonable attack include totally false premises, such as the wild claim that poorer nations are being robbed of tax revenues because of the free movement of capital offshore. The fictional number of US$1 trillion supposedly is the annual figure lost to offshore tax evasion, according to these latest anti-tax haven warriors of the Left. This illicit campaign completely ignores the many benefits of global tax competition, including better tax policy, lower taxes and the protection of human rights, including the right to own and enjoy private property.
The Norwegian socialists claim London is a hub of offshore tax evasion led in large part by bankers, accountants and lawyers there. The Norwegian government says it wants to form a global coalition to "facilitate the recovery of assets illicitly stacked away in tax havens". Several left leaning countries are set to join, but Britain, recently classed as an "offshore financial center" by the International Monetary Fund, is not among them.
Meanwhile the World Bank, now headed by Robert Zoellick, is under pressure to establish its first study into what some leftists claim is the illicit cash flowing out of developing nations said to amount to ten times the US$100 billion spent on foreign aid and debt write-offs by rich countries that is siphoned out of developing and emerging countries. Honing in on their targets, the Left claims that corporations are responsible for 60 per cent of that figure through a web of trusts, nominee accounts and the mispricing of goods to escape tax. Cracking down on tax havens and the evasion of taxes by some of the world's biggest companies is seen as the "missing link" in the poverty alleviation agenda. Investigators and lawyers at a conference on the "Movement of Illicit Funds" in Washington last week claimed it was corporations and not corrupt politicians in the developing world that accounted for most tax evasion.
The Norwegian anti-tax haven plan is just the latest version of the many demagogic attacks and phony blacklists aimed at tax havens that have stemmed from leftist groups such as the Organization for Economic and Community Development (OECD), the UN and the EU, all of them lovers of high taxes and limited economic freedom.
Maybe all this nonsense is just another manifestation of that dark, foreboding nature of Norwegians of which Keelor often speaks. But that's no excuse for foisting their economic doom, gloom and stupidity on the rest of the world.
http://baumanblog.sovereignsociety.com/2007/07/chinese-governm.html
Chinese Government Eyeing Offshore Tax Avoidance
Another example of healthy, global tax competition in action: the Communist Chinese government is reported to be examining the issue of offshore tax avoidance after new figures confirm once again that the bulk of investment by Chinese based companies is flowing to and from traditional low-tax or no tax offshore havens.
A crackdown on the offshore activities of Chinese companies may come after data released by the Chinese Ministry of Commerce showed that between January and May 2007, Hong Kong topped the sources of capital investment list, followed by the British Virgin Islands, Japan, South Korea, Singapore, the U.S.A., the Cayman Islands, Samoa, Taiwan and Mauritius. With the exception of Japan and South Korea, all of these countries are tax havens of some note. (The U.S. is a tax haven for foreign investors, but not U.S. citizens or residents). The report stated that the figures reflect the actual amount of foreign capital invested from the various jurisdictions, which accounts for 86.16% of China's total foreign capital. Direct foreign inmvestment in China during 2006 exceeded US$60 billion.
Under current law domestic Chinese firms pay a corporate tax at a rate of 33%, but foreign-owned firms can reduce their rate through various tax breaks down to as low as 13% in some cases and can also set up low tax operations in various Chinese Special Economic Zones. By "round tripping," in which Chinese citizens set up offshore international business companies in Hong Kong and elsewhere, domestic Chinese firms can use them as mainland investment vehicles in order to qualify for foreign rates of tax. This legal and low tax practice has inflated China's foreign direct investment figures for years.
As a first step towards the reform of its tax system, China will be introducing a sort of corporate "flat tax" rate of 25% on 1 January 2008 and this single rate will apply to both domestic firms and foreign-owned firms.
http://baumanblog.sovereignsociety.com/2007/01/no_justice_in_t.html
No Justice In This Network
The so-called 'Tax Justice Network," a leftist high tax group, is back in the news because one of its less than brave leaders refuses to debate our colleague, Dan Mitchell of the Heritage Foundation of Washington, D.C.
After bragging that a local lawmaker from the Channel Island tax haven of Jersey would not engage him in a public debate on international tax competition issues, Richard Murphy of the UK-based Tax Justice Network was hoisted on his own petard when he refused to debate Dan Mitchell, a leading tax expert who has spoken at our Sovereign Society meetings. Mitchell issued his debate challenge after being made aware that Murphy was trying to get media attention by complaining that the Jersey lawmaker was allegedly ducking a public discussion.
Our friends at the Center for Freedom and Prosperity (CF&P) called Murphy's debate cowardice "unfortunate," since a debate with Mitchell would have been more than informative. Murphy's ultra-leftist group, the Tax Justice Network, is a leading advocate for the anti-tax competition schemes of the EU, OECD and UN. Mitchell, by contrast, is a co-founder of CF&P and is one of the globe's foremost scholars and commentators on the benefits of tax competition, fiscal sovereignty, and financial privacy.
The Tax Justice Network, (TJN) is not to be confused with the Cartoon Network's Justice League. The TJN is based in England, where all good socialists come from, and they seem caught in a time warp. These global do-gooders are socialist, in the Leninist sense; they're in that intermediate stage between capitalism, which they appear to hate, and communism, which even they must admit has failed miserably.
Phony Reports
In 2005 the TJN issued one of several phony reports full of fictional figures purporting to show that trillions in wealth are 'hidden' in tax havens and thus avoids billions in taxes each year. Pure, unadulterated bilge; and the new media ate it up and ran with it without questioning. The left-wing UK Guardian rhapsodized about as 'the most authoritative study of the wealth held in offshore accounts ever conducted.' Imagine!
If there was ever a case to apply the old saying I've quoted before, this is it: "Figures don't lie, but liars do figure."
What delighted the anti-wealth, pro-tax spasms of idealism from The Guardian and associated big government do-gooders, has been a phony report issued in 2005 by this leftist British lobbying group of bleeding heart accountants, the TJN. The TJN had put out these bogus anti-wealth broadsides before, always well received and parroted by an unquestioning liberal news media. And TJN lards its deceptions with actual numbers, which as everyone knows, makes its fake claims "authoritative"! That most of these numbers are invented without a shred of proof seems to make little difference.
Here's the TJN's major argument, supported only by facts they conveniently invent to suit their needs:
1) the world's richest folks supposedly are 'hiding' $11.5 trillion of assets in offshore havens, mainly to avoid paying taxes.
2) these high-net-worth individuals are said to earn $860 billion each year from these 'hidden" assets.
ERGO, claims TJN: Tax collectors of the world are losing $255 billion of taxes each year -- enough to feed millions starving children, cure hoards of old sick folks and even protect and neuter stray animals (or left-wing accountants).
More Taxes
Of course these "startling" financial revelations are the Tax Justicers justification for more taxes and tougher tax collections; they even want a global United Nations tax collection agency -- just like the IRS! Or the DMV? And not content to attack tax havens on their merits, the TJN falsely claims tax havens are hotbeds of corruption clogged with cash from drug dealers, Enron-like corporate thieves and terrorists.
William Woods, a member of the Sovereign Society Council of Experts and former head of the Bermuda Stock Exchange, accuses the TJN of major distortions. He's especially incensed at their charge that "corrupt officials in poor nations, illegally siphon huge amounts of money into bank accounts and shell companies in the Cayman Islands, Bermuda, and Jersey." Says Woods, who knows from first-hand experience: "What a load of rubbish. Tax havens have 'know your customer' rules
that far exceed those of London and New York."
Way down in the small print even the Justice Networkers admit that "most of money in off-shore accounts is probably legitimate" and that it is legal to place cash offshore. But even so, the TJN wants it all stopped. Now! How dare anyone with money be allowed legally to avoid taxes!
http://baumanblog.sovereignsociety.com/2007/03/offshore_news.html
Offshore News
* WASHINGTON: As we predicted recently, Congressional Democrats have come up with big spending plans for all sorts of attractive purposes, including expanded government programs for children's' and veterans health coverage. Sen. Kent Conrad, D-N.D., chairman of the Senate Budget Committee, proposes to pay for part of the billions this will cost by, among other things "improving taxpayer compliance, and eliminating offshore tax havens." Sen. Conrad is a sponsor of a radical bill that would severely restrict Americans rights to invest and bank offshore, on the apparent theory that all offshore activity is really tax evasion. Please, Senator! Get real!
* LONDON: As well as being favored by vacationers from the U.S. and U.K., Bermuda is home to a thriving insurance market that is threatening to eclipse Lloyd's of London. Several major insurance firms have left London and moved to Bermuda. Aside from the sun, sea and sand, Bermuda is a leading tax haven. A flood of insurers have been relocating there over the past few years to take advantage of zero per cent corporation tax, compared to 30% in London. Lloyd's insurer Kiln announced this week that it would be following Hiscox and Catlin, another U.K. insurer, and moving its HQ to Bermuda. Nothing beats tax competition.
* DUBLIN: Ireland is not being used as a Cayman Islands-style tax paradise by rich businessmen, the Taoiseach (Prime Minister) insisted in the Dáil (parliament) this week. PM Bertie Ahern was responding to claims by a Socialist Party member of parliament who said low corporation tax rates in the Ireland were "utterly immoral". Mr Ahern said that other nations in Europe were envious of Ireland's low-tax economy and job creation success and said low taxes were a primary attraction for businesses and jobs. "All commercial companies are entitled to organize their tax affairs in an efficient and legal manner so as to minimize the amount of tax payable. That's the way companies operate across the world," Ahern said. No backing down by the PM, and Ireland is indeed a tax haven for global businesses.
* LONDON: The loony left's Tax Justice Network (TJN) is at it again. TJN claims the Big Four accounting firms have been "legitimizing" the use of offshore tax havens and are bad for not taking a strong enough lead in international tax compliance. A TJN report says that major international accountancy firms all have offices in nearly all the major offshore tax havens. Really? Apparently that's proof to TJN that the Big Four are aiding tax evasion. Then again, the Big Four might be aiding tax compliance in offshore tax havens, a much more likely activity under the strict laws that now apply in all such offshore jurisdictions.
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