The favorable tax rates encourage corporations to avoid paying American taxes by structuring complicated international transactions, like Apple’s “Double Irish With a Dutch Sandwich,” recently described by The New York Times. But it’s not just the low tax rates that make these jurisdictions attractive to those following the rules. The secrecy of offshore jurisdictions allows some individuals and corporations to engage in outright tax fraud, costing America at least $40 billion each year. And that secrecy makes offshore tax fraud almost impossible for law enforcement to detect. When I was the Manhattan district attorney, we learned of offshore accounts only through whistle-blowers, cooperators and serendipity. Legislation shaped by Senators Carl Levin, Kent Conrad and Sheldon Whitehouse that would curb some of these tax abuses by giving the Treasury Department the muscle to respond when foreign governments hampered our tax enforcement was recently passed by the Senate, but awaits House action. Those reforms are long overdue but do not fully address the larger problem: financial secrecy laws in offshore jurisdictions. The secrecy laws in these tax havens are at the root of serious crimes: fraud, money laundering and international terrorism.
Thursday, July 12, 2012
The Evil of Offshore Tax Havens
Robert Morganthau in the NYTimes: