Sen. Carl Levin, speaking on one of his favorite topics – closing offshore tax havens – was at the National Press Club this morning to address the Financial Accountability and Corporate Transparency Coalition.
The Michigan Democrat was joined by Nick Shaxson, author of “Treasure Islands,” which details the overseas hideaways where the wealthy stash their money tax-free. Levin discussed two pieces of legislation he hopes to reintroduce which would crack down on tax dodgers.
Here’s some of what he had to say at the Washington event:
What’s at issue, he said, is “the contrast between those millions of ordinary Americans fulfilling their legal and civic obligation to pay taxes to Uncle Sam, while others, most of them wealthy individuals or profitable corporations, are taking evasive action to dodge the very same obligations.
“Many of those tax dodgers will use offshore tax havens to hide income and assets, and shelter them from taxes. Which means that the families who pay their fair share will have to pay more, because they will have to carry the load for the tax dodgers using offshore havens to evade their taxes.
“Nick Shaxson admirably lays out the history of how tax havens have become such an insidious feature of the global economy. Today, folks around the globe know to go offshore to hide money. They know tax havens can be used to hide funds not only from tax authorities, but from law enforcement, courts and creditors.
“Enron had over 400 offshore subsidiaries. A single building in the Cayman Islands, called the Ugland House, serves as the mail drop for nearly 19,000 companies incorporated there for tax-dodging purposes. Hedge funds whose employees live right here in the U.S. pretend to be based in tax havens to dodge U.S. taxes, and some companies keep their money offshore so they don’t have to pay one thin dime to support this country – in fact, they get tax refunds instead.
“The Senate Permanent Subcommittee on Investigations, which I chair, has spent more than a decade exploring how offshore tax havens conceal wealth, distort commerce, and abet crime, money laundering and corruption.
“The truth is that tax havens have declared economic war on honest countries, including the United States, by helping U.S. taxpayers dodge U.S. taxes and rob the U.S. Treasury of needed funds.
“The ongoing drain on the U.S. Treasury is massive – and it bears directly on the budget and deficit debate. In 2006, our subcommittee estimated that offshore tax abuses cost our treasury about $100 billion a year in lost revenues. The big budget debate this year focused on about $70 billion in proposed budget cuts, which means the revenues lost to tax havens might have – all by themselves – resolved the problem.
“Now I am not so naïve as to believe that if we had that lost tax haven revenue, we would avoid contentious debates over the budget.
“But whether you, like me, believe the budget cuts proposed by House Republicans are too deep, or whether you are a Tea Party fan who would use that revenue to fund additional tax cuts, there is no doubt that closing down tax haven abuse would make a big dent in the problems we face.
“While offshore tax abuse remains rampant, the news is not all bad. There have been some recent successes in the effort to rein in the problem.
“Last year, Congress enacted the Foreign Account Tax Compliance Act which, when it becomes effective in 2013, will require overseas banks to disclose to the IRS all accounts opened by U.S. depositors. If they don’t disclose, those banks will face a 30 percent withholding tax on all their U.S. income.
“That new law hopefully will help flush out hidden bank accounts by giving foreign banks a reason to disclose them. In another important step, in 2010, after a long battle, the IRS succeeded in piercing Switzerland’s veil of bank secrecy and forced its largest bank, UBS, to provide the names of thousands of U.S. clients who had opened hidden Swiss bank accounts.
“Similar efforts to identify tax cheats at other tax haven banks are under way.”
