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Poster Boy for Offshore Bank Accounts

Tax-Free Capitalism

by ROBERT HUNZIKER

The wealthy capitalist elites are at war against taxes!

This undeclared war is so substantive that its consequences have undermined the ability of major governments to provide social services to ordinary citizens, and it is a direct cause of unsustainable, mushrooming governmental deficits. While the wealthy elite have experienced an once-in-a-lifetime boost in income and inordinate wealth creation, major governments have been experiencing once-in-a-lifetime operating deficits and unprecedented debt-to-GDP ratios. These phenomena are a consequence of one another.

Governments cannot collect taxes on money that is vacationing offshore in numbered or imitation/pseudo/sham bank accounts!

The major accounting firms of the world are the prime movers & shakers, i.e., the feeder system, of tax-free capitalism.

The American Institute of CPA’s (“AICPA”) does have a Code of Professional Conduct, Article II Section 53.04 stating: “All who accept membership in the American Institute of Certified Pubic Accountants commit themselves to honor the public trust.” Well, well, well… time, and again, this trust has been tested and broken, e.g., Enron and the entire 2007-08 financial meltdown nightmare, but honestly, one has to wonder who’s left to pay dues to this forlorn organization.

Tax dodging is one of the largest businesses in the world according to a landmark study entitled “The Pin-Stripe Mafia: How Accountancy Firms Destroy Societies,” Austin Mitchell (MP, UK House of Commons) & Prem Sikka (University of Essex), Association for Accountancy & Business Affairs, United Kingdom, 2011: “All over the world tax revenues are under relentless attack from a highly organized tax avoidance industry dominated by four accountancy firms: Deloitte & Touche, PricewaterhouseCoopers, KPMG, and Ernst & Young  (the combined gross global annual revenues of the major accountancies of the world are $95 Billion, making them the 54th largest economy in the world.) They employ thousands of individuals for the sole purpose of undermining tax laws, which does not create any social value, but enables corporations and wealthy elites to dodge corporate tax, income tax, National Insurance Contributions (NIC), Value Added Tax (VAT) and anything else that might enable governments to improve the quality of life… The loss of tax revenues is a major cause of the current economic crisis that is inflicting misery on millions of people.”

Over the past few decades, coincident with the advocacy of Supply-side economics, commenced under President Reagan, it has become increasingly fashionable for capitalists to cheat governments by hiding money offshore.  One would think the Supply-side economic tenets of cutting taxes for the rich would be enough for them, for example, in America the top marginal tax rate has been cut from 70% under LBJ, whose presidency experienced the strongest annual GDP growth rate since WWII, to 35% today, but no, once the elite got the taste of more and more non-taxable income levels (they also achieved cuts in capital gains, dividends, and estates), it turned into an epidemic, and they simply can not get enough! In spite of Supply-side taxation windfalls for the super rich, they have migrated like swarms of locusts to offshore tax havens to avoid taxes altogether. The money fever led them to it!

And the authorities know all about it!

According to a recent extensive study (July 2012) conducted by James Henry, former chief economist of McKinsey & Company, the wealthy elite have up to $32 Trillion stashed away in offshore tax havens. This is twice the size of the U.S. economy, and remarkably, the James Henry Analysis excluded ownership of tangibles like RE, yachts, fancy cars, and entire islands (metaphorically speaking, those hidden assets comprise the largest economy in the world… a tax-free economy… a pure libertarian nation-state.)

The American Sustainable Business Council, Washington, D.C. claims: “Offshore tax havens provide cover for banks, hedge funds, and corporations to shift taxable income from the United States to tax havens for the sole purpose of escaping taxation. Tax haven secrecy allows wealthy Americans to hide assets, helps companies manipulate their finances, and fosters the casino economy.”

A U.S. Governmental Accounting Office study found that at least 83 of the top 100 publicly traded corporations use offshore tax havens, as directed by their public accounting firms.

The egregiousness of this massive fraud against governments is almost impossible to comprehend because the numbers involved are beyond the bounds of normal rational thinking. For example, similar to the enormous debt burdens of trillions-upon-trillions carried by many democratic capitalistic countries, the numbers involved in tax avoidance are so large as not to register within one’s consciousness, but to put it into some kind of perspective, consider this: One trillion seconds of ordinary clock time equals 31,546 years, and thirty thousand years ago there was an Ice Age, and it was then that Neanderthals ceased to exist (one school of thought claims Cro-Magnons exterminated the Neanderthals.) Extrapolating the numbers further: 32 Trillion, which is the amount stashed away in offshore accounts, takes us back one million years in clock time. The enormity of the crime of offshore tax avoidance takes us back to when humans first started using fire. Wow!

Isn’t it despicable that this crime of the century isn’t the ‘first order of business’ for governments around the world, but come to think about it, the U.S. Congress is filled with elite multimillionaires… So?

Speaking of which, America had no compunction whatsoever about sending U.S. Marines into Iraq based upon bogus WMDs. How about U.S. Marines raiding offshore banks to collect Wealth Taxes of 20% of total assets from FWMDs (Financial Weapons of Mass Destruction)? But… this time it’s not bogus! What’s more harmful to the integrity and security of American society:  Offshore terrorists or offshore bank accounts?  Maybe it’s deadlocked.

“The simple fact of the matter is this: tax breaks for Big Oil, corporate jets, and companies that send jobs overseas have the practical effect of raising taxes on everyone else. That’s not right. That’s not smart. That’s not fair. And it’s high time we do something about it,” according to Congressman Chris Van Hollen (D. MY) who is co-sponsor of legislation to close offshore tax loopholes: Stop Tax Haven Abuse Act (H.R. 2669), which bill, as of 3/21/2012, has been referred to 12 separate committees for consideration. Also, Senator Carl Levin (D. MI) is the sponsor of Cut Unjustified Tax Loopholes Act (S.2075), which was assigned to one committee Feb. 7, 2012; however, will the bills ever get out of committees?

“Taxes are not just numbers in spreadsheets,” says Joseph Rotella, owner of Spencer Organ Company in Waltham, Massachusetts, who spoke at a Public Interest Research Group (“PIRG”) forum: “Taxes provide the revenues that pay for roads, bridges, public safety, public schools, public transportation and other infrastructure and services my business and my customers count on. We need to stop the tax haven abuse that lets big corporations avoid paying their fair share and gives them an unfair advantage in the marketplace.”

According to Forbes Magazine: “For people who think that they can still zip off to Panama or Switzerland to avoid paying taxes, think again. Beverly Hills, Calif.-based international tax lawyer Gary S. Wolfe says that while countries such as the Caymans do not impose taxes, that does not apply to U.S. citizens or residents. ‘The mistake that Americans make is that they go offshore and think that they don’t have to pay any taxes,’ he says. ‘The reality is that U.S. citizens are taxable anywhere in the world.’”

In fact, taxes follow the passport of U.S. citizens even after expatriation because, assuming one gives up a U.S. passport, it can still take up to ten years before the U.S. no longer has jurisdiction over U.S. taxable income.

Nevertheless, a new breed of wealthy elite, the Transnational Class (reference: Towards A Global Ruling Class? Globalization and the Transnational Capitalist Class, William I. Robinson and Jerry Harris, Science and Society, Vol 64, No 1, Spring 2000.), who look down with disdain upon the masses, are not in the least concerned about the consequences of utilizing tax havens. Their haughtiness is expressed by a disregard for national borders and against the strictures of nation-states. They truly believe the world is their oyster and consider themselves exclusive members of a worldwide community of like-minded wealthy elites, not beholden to any sovereign, and because they express themselves in a worldly manner, their allegiance extends no further than to their rich compatriots. It is probable they do not view tax havens as anything other than a parking place for money or assets whilst they travel the globe, meeting their ilk at fancy restaurants, or sumptuous resorts, or a brunch with Bono at locations where price alone blocks out the rest of the world. Furthermore, assuming they are caught cheating, they’ll pay the fine, instructing their legion of accountants and attorneys to “settle” the issue.  This is reality in today’s world, leaving the middle/working classes to fend for themselves and for their slowly regressing respective governments, which are similar in many respects to the film Blade Runner’s tension between past, present, and future which is high-tech and gleaming (Tokyo) in some scenes but decayed (Detroit) and old  (Buffalo) elsewhere.

The very fact that such a huge amount of money is stashed offshore, and the whole world is fully aware sends a portentous message that the elites behind the offshore accounts control the message; they control who can or cannot do anything about the problem, and furthermore, they do not consider it a problem at all. Rather, it is a logical conclusion to their earned right for achievement in society. Their contempt for the masses of people comes from a belief that personal merit occasioned their rise to wealth and power, and this is true. Most of the new rich did not inherit their wealth. They earned it.  Meritocracy is their creed, not equality and fraternity. They have turned the national motto of the French Revolution liberté, égalité, and fraternité on its head. If you do not ‘achieve’ in life, then you do eat cake, but Queen Marie Antoinette did not say, “let them eat cake.” Radical agitators who were trying to turn the populace against her attributed the phrase to her in 1789, and their plan worked beautifully as she lost her head on the guillotine to the executioner Charles Henri Sanson at Place de la Révolution, where tens of thousands of citizens stood by quietly, until the blade dropped, and then, they cheered and danced.  Meanwhile, and while holding onto their heads, most of the aristocracy of Paris had already fled the city. Their overt pretensions of lifestyle finally did them in, and their families’ homes were looted, losing fortunes. They did not have offshore accounts to hide wealth… like today’s elite.  In this sense, things do change over time.

What may or may not change in November is the presidency of the United States, and millions of middle class Americans will cast votes for Mitt Romney, who is the Poster Boy for Offshore Bank Accounts and for the wealthy elites.  In this arena, Romney has Obama beaten hands down, but frankly, it is difficult to visualize average middle class families with Romney posters staked in the front yard. It seems so incongruous!

During the Republican presidential debates, Newt Gingrich remarked, “I don’t know of any American president who has had a Swiss bank account.” But, Mitt closed his Swiss bank account. However, he does have accounts in the prototypical tax havens of the Caymans, the Bahamas, and Luxemburg. Thus, it should come as no surprise that unlimited funds are readily available to finance his pathway to the White House.  The wealthy elite need somebody in charge who can veto H.R. 2669 and S. 2075 should the bills make it out of committee!

Robert Hunziker earned an MA in economic history at DePaul University. He lives in Los Angeles.