Emerging from the GOP nomination confusion is a much needed national dialogue on the abuse of offshore tax havens by both U.S. corporations and individuals.
Even though the topic of tax havens was generated by the tens of millions in personal wealth deposited in the Cayman Islands by Mitt Romney, the problem is bigger than one Republican candidate. According to a 2008 Senate Homeland Security Report, the United States loses an estimated $100 billion a year to abuses of offshore tax havens and this loss of revenue is growing.
It is of benefit to begin this examination by defining the nature and purpose of a tax haven. According to the internationally renowned magazine, The Economist, an area is defined as a tax haven if there exists a composite tax structure established deliberately to take advantage of, and exploit, a worldwide demand for opportunities to engage in tax avoidance. This definition is generally accepted as accurate throughout the world, with the possible exception of the Republican Party.
The modern concept of tax havens first appeared in the aftermath of World War I when many European nations raised taxes to help finance reconstruction after the war. Because Switzerland remained neutral in the Great War it was able to maintain a low level of taxes, therefore becoming one of the first tax havens. Again during World War II Nazi war criminals used Swiss capital havens to hide assets stolen from Holocaust victims. In 1998, Swiss banks agreed to a $1.25 billion settlement to the families of Holocaust survivors and their families.
Beginning in the 1980s, other areas such as the Cayman Islands began to serve as a tax avoidance haven for both corporations and individuals. Many well known corporations use the Cayman Islands as a tax refuge, including Morgan Stanley, Citigroup and the Bank of America to name a few. It is easy to see why the General Accounting Office claims that a crackdown on offshore tax havens would bring an additional 1 trillion dollars in revenue to America over the next 10 years.
The question becomes; what then should America do with the additional 100 billion in revenue each year to strengthen our economy and create jobs? First, we could use the increased revenue as incentives to corporations to create jobs here in the United States rather than outsourcing our jobs.
In addition, we could also use the revenue to support research and development here in the U.S. The key to America’s future success is directly tied to the amount of funding we place into research and development in areas such as information technology, medical research, energy alternatives, and high speed transit. America will quickly fall behind the rest of the world if we continue to cut funding for research and development.
The revenue should also be used to encourage young people to enter the fields of science, medicine, and engineering. Investment in education is the best vehicle to ensure that future generations of Americans have a strong economy and a better life than their parents. These ideas are just the beginning, there is so much good that could be done for the American people if we crack down on these offshore tax havens.
For most hard-working Americans there is no such thing as tax havens; they work hard and they pay their taxes, but there are too many in our country that think they are too important, too powerful, or too wealthy to pay taxes like the little people. Well I say to these privileged elite, this is still a nation of the people, by the people, and for the people, and corporations are not people, corporations are not patriotic, and they hold no love or allegiance to America, they are “international."
It is not corporations that fight and die defending America, it is hard-working, tax-paying Americans who do the tough job of dying for their country while corporations profit from war then show their total lack of patriotism by hiding their profits in tax havens in the Cayman Islands.