The U.S. Congress, soon to be in increased control by the Democrats, will waste no time in helping President-elect Barack Obama to fulfill his campaign promise to "shut down the tax havens," Senator Carl Levin (D-MI) predicted last week.
Levin, the long-time Senate leader in attacking tax havens, predicted that his legislation, the Stop Tax Haven Abuse Act,. S. 681, first introduced in 2007, will become law next year with the support of the President Obama, who was one of the bill's original co-sponsors.
At the time Senator Obama claimed: "This is a basic issue of fairness. We need to crack down on individuals and businesses that abuse tax laws so those who work hard and play by the rules aren't disadvantaged."
"The President-elect has co-sponsored our bill, which goes after the misuse of these tax havens, the avoidance of taxes by American taxpayers, individuals and corporations using the Cayman Islands and all these other places to avoid paying their bills to Uncle Sam," Sen. Levin said in an interview broadcast on Bloomberg Television last Friday.
I predicted as much some weeks ago when I wrote: "As we have been warning for the past year, president-elect Barack Obama is about to fulfill his campaign promise; he is reported ready to crack down brutally on international tax havens as soon as he assumes office on January 20, 2009."
Invented Fictions
It is not too much to say that Senator Levin is a fanatic when it comes to his often irrational attacks on tax havens. He has created numerous false myths to support his radical views.
Among these myths is Levin's constantly upped estimate that as much as $100 billion in revenue owed under U.S. tax laws goes uncollected annually because of assets hidden offshore. Levin started with $40 billion, went to $50 billion and more recently has settled on the $100 billion un lost taxes figures -- all numbers invented by him and his Senate staff without a shred of proof. Even the IRS commissioner declined to endorse these preposterous figures.
Economic Warfare?
Typical of Senator Levin's wild claims is his statement that "tax havens are engaged in economic warfare against the United States and honest, hardworking American taxpayers. In my opinion that is a patent and absurd lie.
Big spending, high tax politicians such as Carl Levin, resent these jurisdictions because globalization has made it much more difficult to impose confiscatory tax rates. Indeed, tax rates have dropped dramatically since 1980, in part because havens have facilitated greater tax competition among nations.
Daniel J. Mitchell, senior Cato Institute fellow specializing in tax issues, has pointed out that competition from tax havens has reduced taxes worldwide and that the leading tax havens (for non-citizens) in the world are, in fact, the United States and the United Kingdom.
In February 2007, Sen. Levin and then Senator from Illinois, Barack Obama, introduced their bill, ironically, along with co-sponsor, liberal Republican Sen. Norm Coleman, now locked in a close recount of votes in Minnesota. (Coleman played along with the Democrats on this and other issues and is now getting his reward).
Destroyer of Rights
Senator Levin has a long history of attacks on the financial privacy and individual rights of Americans.
Start with the fact that in the post 9-11, 2001 congressional panic, Levin somehow conned the gullible Bush White House into adopting some of the worst parts of the PATRIOT Act. These Levin provisions helped destroy Americans' financial privacy and gave government police virtually unchecked power over domestic U.S. financial and banking activity.
Bad Bill
In the case of "The Stop Tax Haven Abuse Act," among other enormities, the bill creates an unprecedented blacklist of 34 offshore jurisdictions presumed to be "tax evasion" sites. U.S. Internal Revenue Service court filings, identifying these 34 locations as "probable locations for US tax evasion", were used as the basis for the list.
This illogical presumption is based only on the fact they have high degrees of financial privacy guaranteed by law. The bill gives the U.S. Treasury secretary free reign "to take special measures against foreign jurisdictions and financial institutions that impede U.S. tax enforcement." It also requires all U.S. banks and other financial institutions to act as spies and report to the IRS any offshore financial activity by clients.
A companion Levin-Obama bill even goes so far as to curtail centuries-old legal rights to create and operate freely offshore trusts, corporations, and other entities traditionally used to protect assets. Ignoring the U.S. Constitution and the presumption of innocence, the senators legislation would force any American with offshore financial activities to prove their actions do not involve illegal tax evasion.
A Case for Tax Havens
In most case, tax havens are free and independent jurisdictions. These countries freely are making their successful way in this world of global economics by offering low or no taxes on foreigners who do business there. Unlike the United States, where Levinism has systematically destroyed financial privacy, tax ands asset haven nations, such as Switzerland and Panama, guarantee financial privacy by law.
If Senator Levin's prediction is correct, (and the political and congressional odds are that he is), his radical bill soon could become law. The only obstacle would be a possible Senate filibuster by conservative senators. But the bill will be falsely portrayed as a means of gaining $100 billion more each year in supposedly lost taxes. How many senators have the guts to expose this lie and vote no?
Last Word
So, having been warned, there is still a window of opportunity before Big Brother's anti-offshore law comes into effect. Consider exercising your rights while they still exist...
It is legal to have and use an offshore bank or other financial account. It is legal to create and donate assets to an offshore asset protection trust or family foundation. It is legal to form and operate an international business corporation (IBC). It is legal to acquire dual citizenship and a second passport. It is legal voluntarily to end U.S. citizenship and thereby remove yourself from the U.S. tax system. It is legal to purchase offshore life insurance and annuities that allowed deferred taxes. It is legal to invest in offshore mutual and hedge funds, precious metals and real estate.
If you want more information on any or all of these points, I tell you in detail here, Where To Stash Your Cash.
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