American Tax Avoidance and Panama

Remember though, as Bloomberg News said back in January, before the “Panama Papers” were known: The World’s Favorite New Tax Haven Is the United States.

Kudos to MSNBC for writing up the story of the (lack of) Americans discovered in the “Panama papers”.

The Wall Street Journal earlier pointed out that 617 intermediary companies that were listed in the papers that operate here in the USA, but no details will be available until sometime in May. So far the only American directly implicated is Marianna Olszewski a financial “pundit” from NY.

article-doc-9n7p3-3x3xJf8qEp7439795a58657c8166-790_636x382[1]As I remarked in my original post about the Panama Paper release, this is no reason for Americans to feel smug. The MSNBC spells out the reasons for that, importantly because for the most part:

  • Delaware, Nevada, along with the U.S. Virgin Islands, are known in particular for loose regulations and low taxes. You can park your money in America behind a dubious corporate facade, without going “offshore”. America rates third behind Switzerland and Hong Kong as a popular tax haven, and far higher than Panama, at 13th. When you here about those massive corporations with billions overseas, it’s not actually sitting in banks in 3rd world countries, it’s often in “tax avoidance” holding companies, who have their cash here in the USA. It’s all bookkeeping entries a rather than overseas.
  • US Tax rates are already super-low, contrary to what you hear from Presidential candidates. Super-rich Americans have less need to seek tax havens because they have less to lose.

Many small and large American and foreign companies help wealthy clients set up offshore shell corporations — that itself is not illegal, as long as the those they set them up for are not trying to hide criminal proceeds or dodge tax obligation.

Remember though, as Bloomberg News said back in January, before the “Panama Papers” were known: The World’s Favorite New Tax Haven Is the United States. Remember, for each dollar a corporation or wealthy individual doesn’t pay, it has to get made up somewhere. That either means someone else pays it, or services get cut.

Fran Hendys offshore blog has good coverage of tax related issues, it’s her specialist subject, where as I just angry more people can’t see what is going on.

Author: Mark Cathcart

Formerly an Executive Director of Systems Engineering and a Senior Distinguished Engineer at Dell. Prior to that, an IBM Distinguished Engineer working for the Systems Group in NY and Austin. I’m currently “retired until further notice”.

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