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Here's a riddle for you: What do Donald Trump and Hillary Clinton have in common? And no, it's not that if Donald Trump were a woman he'd garner less than 5% of the vote. And it's not that Hillary rolls her eyes just like Mary Pat Christie when she hears The Donald going after women. And it's not that Hillary attended The Donald's wedding to Melania (though she did). And while The Donald is the first American presidential candidate to openly campaign on a platform of American decline, Hillary is still stuck in a world of too-many-superlatives for the waning American century. ("Despite what other candidates say, we believe in the goodness of our people and the greatness of our nation.")
So none of the above. And yet they do have something in common, an address they share. And no, it's not Trump Tower in New York City or even the Trump International Hotel and Towers in Panama City that TomDispatch regular Nomi Prins, author of All the Presidents' Bankers: The Hidden Alliances That Drive American Power, discusses in today's post. It's 1209 North Orange Street, a "squat, yellow brick office building" in Wilmington, Delaware, one of three states -- the other two being Nevada and Wyoming -- that operate right in this country like onshore Panama Cities. It's there at the blandly named Corporation Trust Center, according to Rupert Neate of the Guardian, that Trump and Clinton (along with Apple, Walmart, Coca-Cola, a pile of other Fortune 500 firms, and several hundred thousand more outfits) have registered companies capable of taking full advantage of "strict corporate secrecy rules, business-friendly courts, and the 'Delaware loophole,' which can allow companies to legally shift earnings from other states to Delaware, where they are not taxed on non-physical incomes generated outside of the state."
So, as Prins points out today, the two leading candidates for the presidency actually share a secret life. Think of it as a kind of private assignation -- for their monies, if not themselves -- in a place that may still be located in the United States but is nonetheless offshore from where most of the rest of us live. They are both, in other words, tax haven aficionados, and in this election season if you want to become one, too, then head offshore with Nomi Prins into the borderless world where so much of our money disappears. Tom
Gimme Shelter (From the Tax Man)
Disappearing Money and Opportunistic Candidates
By Nomi Prins with Craig Wilson
There's a pile of money hiding offshore. It's true that jobs are also leaving the United States because American companies find it convenient to cut labor costs by moving manufacturing abroad, the economic issue you're hearing most about in this election season. But the stunning amount of money that continues to flow across American borders (and those of other countries), and eventually disappears into the pockets of the corporate and political elite, ultimately causes even more damage to our finances and our lives.- Advertisement -
While the two leading candidates for the presidency, Donald Trump and Hillary Clinton, have indeed suggested cosmetic fixes for a situation that only grows more extreme with the passage of time, they have themselves taken advantage of numerous tax "efficiency" strategies that make money evaporate. Of course, you shouldn't doubt for a second that they'll change their ways once in the Oval Office.
As with so much in our American heritage, there's a history to the "offshore" world, too. Finding places to shield money from tax collection first became commonplace among upper-crust industrialists, bankers, and even public servants back in the 1920s. Treasury Secretary Andrew Mellon, a millionaire mogul who served presidents Calvin Coolidge, Warren Harding, and Herbert Hoover (and had a knack for cutting taxes on the wealthy), left office under mounting congressional probes into his tax evasion strategies.
Fast-forward about a century and tax dodging has been woven into the fabric of the lives of the affluent and corporate worldwide in an extraordinary way. According to an April 2016 Oxfam report, the top 50 U.S. companies are hoarding more than $1.4 trillion in cash offshore.
What's more, for every dollar that these firms spent lobbying Congress for "favorable" tax treatment (a collective total of $2.6 billion between 2008 and 2014), they received $130 dollars in tax breaks and $4,000 in subsidies from the U.S. government. These companies, including Pfizer, Goldman Sachs, Dow Chemical, Chevron, Walmart, IBM, and Procter & Gamble, created "an opaque and secretive network" of more than 1,600 company subsidiaries located in tax havens that they decided to disclose. (Because of the weak reporting requirements of the Securities and Exchange Commission, there could be thousands more.) According to a March 3rd report from the Citizens for Tax Justice, the Fortune 500 companies are now saving $695 billion in federal income taxes on a total of $2.4 trillion in offshore holdings.
Americans can't afford to ignore such tax games, since we're the ones who, in effect, wind up paying the taxes these firms don't. For government policymakers, such tax evasion is a grim matter of attrition, since the U.S. (and other countries) plunge ever deeper into debt thanks to such antics and then find themselves cutting services or raising taxes on us to cover the gap between the money they're losing and the taxes they're collecting.
Not only are such firms unpatriotic, they are parasitic and while they're at it, they use similar techniques -- let's not call it theft (though it is) -- to avoid tax payments in the poorest places on Earth. As Oxfam reports, "the biggest burden" of tax havens "falls on the poorest people." In the process, they only increase already oppressive levels of inequality globally.- Advertisement -
Tax "secrecy" specialists -- people working in the money-hiding field -- help rich individuals, multinational corporations, political leaders, terrorists, and organized crime groups divert cash and capital, sometimes in staggering amounts, from local economies into an obscure, complex, multi-layered global financial network that operates outside any national or international regulatory or tax system. Given this, isn't it a little surprising that the top candidates for the presidency barely pay lip service to the impact of such hidden money? What toothless policies they have proposed to deal with the phenomenon will do little or nothing to change it.
The Panama Papers
U.S. trade agreements generally include rosy promises about partnering with regional economies around the world to encourage the flow of goods and services across borders. At the same time, they generally are focused on the obliteration of barriers that in any way restrict money from flowing out of the United States or into the embrace of other nations. The free movement of capital, or financial globalization as it's called, has been a bedrock Washington policy for a century and, since the 1980s, places like Panama -- a renowned tax haven -- have abetted this process.