Americans’ faith in their financial
system has rarely been so low. Presidential candidates in both parties, from Sen. Ted Cruz on the right to Sen. Bernie Sanders on the left, argue that our politicians are bought by Wall Street and that regulators are captured by the industries they oversee.
Eight years after the global financial crisis, politicians are tapping into deep skepticism among Americans about the way money flows here and around the world. The skepticism has had impact beyond the campaigns: It has helped stall, for instance, important trade agreements like the Trans Pacific Partnership and stoked opposition to the Export-Import Bank.
Comes now one more blow. About 11.5 million documents taken from a single Panamanian law firm reveal the way the global elite — from world leaders to ordinary rich folks — have taken advantage on a massive scale of laws that permit secretive and often suspicious transactions to remain covert and nearly untraceable.
Already, Iceland’s prime minster has resigned. Spanish authorities are looking into possible tax violations by an offshore firm revealed to be owned by the aunt of the reigning Spanish king.
So far, Americans have not been named among the dozen or so world leaders found to have had hidden interests in off-shore companies. But USA Today has reported that the documents do reveal that the law firm in Panama has helped create more than 1,100 offshore firms in America in the past 15 years, mostly in Nevada and Wyoming. Indeed, Nevada is now one of the world’s 10 busiest tax havens, on a list that includes British Virgin Islands, the Bahamas and Samoa.
We should be clear: Establishing a company in Nevada, even if its owners, employees, and primary business functions all are located in another country, isn’t usually illegal. It’s legal in the same way that major American corporations have in recent years kept profits from overseas sales parked in offshore accounts in order to avoid paying U.S. taxes.
But as President Barack Obama told reporters last week. “The problem is that a lot of this stuff is legal, not illegal.”
The U.S. Treasury Department is on the cusp of announcing another round of rules that will require banks to know who their customers are, and what their business is. That’s a start. A simpler tax code — with fewer incentives to shelter ownership — is another.
In the meantime, companies — and the law firms and accountants and banks that help them — that continue to use such tactics to avoid taxes and shield from scrutiny both their owners and their operations must cop to their role in furthering the mistrust ordinary Americans have for their financial system.
— The Dallas Morning News, April 11, 2016