When in doubt about some asserted statistics, the late U.S. Senator from North Carolina, Sam Ervin, a country lawyer, used to recall the old adage that "figures don't lie, but liars do figure."
A classic example of the truth of this saying is U.S. Senator Carl Levin (D-MI) (left).
For several years Levin has repeated the fiction that "offshore tax abuses rob the U.S. Treasury of an estimated $100 billion each year..." Levin insists that the IRS supposedly loses US$100 billion a year because thousands of American tax payers use offshore tax havens and banks to hide their income and evade taxes.
Levin's mythical "$100 billion" figure has never been proven, in spite of a four-inch long footnote #1 in one of his subcommittee's 2008 reports trying to justify that absurd number.
Calling Dr. Goebbles
Levin's $100 billion figure sounds like something Hitler's propaganda minister, Josef Goebbels, would have dreamed up to impress the gullible masses. As Goebbels said: "If you tell a lie big enough and keep repeating it, people will eventually come to believe it."
So let's do the arithmetic on Levin's "$100 billion" in allegedly lost taxes, or as our friend Vern Jacobs CPA says "the absurdity of these preposterous claims about how much taxes are being lost because of tax havens."
Simple Arithmetic Proves the Lie
Here are Vern's interesting and damning calculations:
"Senator Levin, President Obama and others who are using offshore tax havens as scapegoats are claiming (with a straight face) that the U.S. is losing $100 billion a year in tax revenues because of the offshore tax havens.
"So if we assume that this revenue might have been subject to the highest rate of federal income tax of 35% it means that there is a little bit shy of $300 billion in unreported taxable income every year.
"But how would those hidden earnings be generated? If we assume it's from passive investments generating a return of about 5%, there would have to be somewhere close to $6 trillion of hidden assets in the offshore tax havens.
A Trillion Here, a Trillion There
"A quick search with Google turned up a Wikipedia page that states that the entire U.S. Gross Domestic Product in 2008 was a bit over $14 trillion and the GDP of the entire world was about $60 trillion -- based on estimates by the World Bank.
"So that would mean that the amount of hidden assets in the tiny islands in the Caribbean and a few other places in the world are holding assets owned by U.S. persons equal to nearly half of the U.S. GDP and about 10% of the GDP of the entire world. And bear in mind, this does not include any assets from residents of other countries who are not subject to U.S. income taxes. This alleged hidden stash is just from Americans who are cheating on their taxes.
As Vern adds: "Gimme a break."
** To learn about the many current offshore opportunities my best-selling book, Where To Stash Your Cash: Tax Havens of the World, explains all.
** The Sovereign Society is a recognized voice in the complex offshore world. Join the Sovereign Society and keep informed.
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