WHICH TITLE SUITS THIS LUDLUM THRILER? THE CAYMAN INJUNCTION. THE CAYMAN RETRIEVAL. THE CAYMAN OBSESSION, THE CAYMAN INHERITANCE, THE CAYMAN PAPERS, The CAYMAN MANUSCRIPT? THE CAYMAN MANEUVER. The Cayman Identity, The Cayman Supremacy, or The Cayman Ultimatum—THE CYPRUS MANUEVER BACK AT YA!
Too bad Robert Ludlum died six months before 911, the greatest conspiracy freak missed the greatest conspiracy. And he missed the MELTDOWN. I say too bad as I can imagine this wonderful Robert Ludlum novel about a group of Justice guys and Federal S.E.C. investigators who go to the Cayman Islands in their summer weight white linen suits with briefcases and portable hard drives galore to retrieve some Bernie Madoff guy or some ENRON type corporation’s money, maybe a Wall Street LEHMAN Brothers secret slush fund or some big transnational CORP that had a rabbit warren of subsidiaries with trillions buried away from the taxing vexing light, -- oddly in the sunniest place in the world…The money fuzz stroll out onto a beach where the owner of the huge office building (seen here, as I imagine him as a Brit as this once was a British territory,) a man who somehow has 18,000 corporations listed as residing there --and he's drinking pina coladas with Bernie Madoff’s mistress, the girl with the numbered accounts memorized, and….well, you write the novel. I’m too busy wondering where all the world’s money went. I believe it is the Islands -- well known to those seeking sun, sand and sea--and for their hospitality to US corporations seeking to escape taxes, launder money and use other discreet financial services. The islands' tax dodgers help multinational corporations move jobs offshore; they also give aid and comfort to terrorists, drug dealers and divorcing spouses trying to hide money.
Honest taxpayers have to make up for the revenues lost through this offshore cheating in three ways: we pay more in taxes, we get fewer government services and we incur rising government debt. Interest on that debt, which doubled under the Bush administration, now equals all the individual income taxes paid from New Year's to around June 10. And that cost means less government investment in research, education and the infrastructure on which commerce depends. Untaxed money hiding in the Caymans and other tax havens means the rest of us pay a higher price for less civilization. In short, the Caymans, and other tax havens, are parasites that weaken the United States and other developed nations.
President Obama proposed on May 4 to crack down on offshore tax cheating; (And by AUGUST 09, he’d have wrangled an agreement with the Swiss to hand over 4400 records out of 32,000 records of tax cheats. They got a bone thrown them by Swiss but maybe enough to scare tax cheats.) But will it grab the big corporations? Probably these proposals do not go nearly far enough. Instead of settling for a dime on the dollar, as Obama's plan would do, let's get serious about offshore tax cheating, both legalized and criminal. Let's do what we did to halt the imagined threats of communists in Grenada, depose a drug-dealing president in Panama and find those imaginary weapons of mass destruction in Iraq. Let's invade the Caymans!
Here’s a MAP. GO FIND IT!
The islands, which belong to Britain, have no military and just 300 or so police. An invasion force composed of tax lawyers, forensic auditors and a handful of computer technicians could execute a hostile takeover without firing a shot.
The Caymans are not really a country; they are a law firm posing as one. More than 12,000 "companies" operate out of a single building known as Ugland House, home to the law firm Maples & Calder. As Obama put it, "Either this is the largest building in the world or the largest tax scam." Under Caymans law these companies are barred from doing any business in the Caymans except hiding assets and profits. That means shares of stock, bonds and cash may technically be owned in the Caymans--which claims to be the world's fifth-largest center of bank deposits--but are really housed in New York, Greenwich, Houston, San Francisco. There is $1.9 trillion in bank deposits in the Caymans--money actually invested in the United States and other countries but invisible to the IRS. (Read "THE FIRM" by John Grisham This whole place is a main character.)
The Clinton administration enabled this through a rule known as "check the box," which helped companies funnel profits into untaxed havens. US tax rules, liberally expanded by the Bush administration, enabled frauds like Enron to create hundreds of paper companies in the Caymans and other tax havens like Liechtenstein, Turks and Caicos, and the Isle of Man. Enron, as I revealed in a New York Times story in January 2002, paid no taxes because it had created hundreds of paper companies in these places. A subsequent investigation by the Congressional Joint Committee on Taxation uncovered internal documents describing Enron's tax department as a "profit center." Dick Cheney's Halliburton subsidiary, KBR--the old Kellogg Brown & Root construction company--has at least 21,000 employees paid via Caymans subsidiaries to escape taxes. KBR hired executives through these paper companies, enabling them to evade Social Security and Medicare taxes on their salaries and bonuses, much of which the taxpayers provided through Pentagon contracts.
This was Anita Sands Hernandez’s reworking of article By David Cay Johnston, The Nation who said” Obama and Congress must get tougher on offshore tax cheats-- prosecute them as criminals and require full payment. Well, that’s what happened in Cyprus. The IMF spotted all that RUSSIAN billionaire money offshore and clipppo!
BACK AT BEGINNING OF RECESSION OBAMA STARTED THE LEGAL PROCESS TO ERASE THESE DENS OF TAXLESSNESS, I found this online:
Barack Obama, Saturday, January 5th, 2008.
Ruling: Half-True | Details
The Ugland House looks like an upscale hotel, an angular, colorful building just blocks from the spectacular beaches of Grand Cayman.
But to Barack Obama, it is nothing more than a flophouse for thieves and cheats.
"You've got a building in the Cayman Islands that supposedly houses 12,000 corporations," he said during a Jan. 5, 2008, debate in Manchester, N.H. "That's either the biggest building or the biggest tax scam on record."
Thousands of subsidiaries, many from U.S. corporations, have indeed set up shop — or more precisely, hung a nameplate — at the five-story Ugland House and other financial centers in the Cayman Islands.
They include Coca-Cola, Procter & Gamble, General Motors, Intel, FedEx and Sprint.
But while Obama is right on the general point, calling the practice "the biggest tax scam on record" is questionable. From the quote itself, it's hard to tell if Obama is taking issue with the way companies use the Caymans as a tax shelter, or if he's objecting to the U.S. tax code that makes it possible.
"There's nothing better than to beat up on a tax haven on a beach," said Douglas Shackelford, a professor at the University of North Carolina's business school. "It sounds crooked, but if one really thinks about the facts, I don't see the grounding."
It's not the warm weather drawing corporations, of course. The Caymans do not have a corporate income tax. The United States taxes corporate income at 35 percent, higher than most countries.
As long as profits are not brought back to the United States, or "repatriated," no tax is due. Federal law allows the taxation of "passive income," meaning the interest earned on profits of those subsidiaries. But typically the companies reinvest the money elsewhere, Shackelford said.
Obama is the co-sponsor of legislation that would crack down on offshore activities by corporations and individuals. The Stop Tax Haven Abuse Act would target an estimated $100-billion annually, including $30-billion from corporations.
According to published financial reports, Coca-Cola alone saved $500-million in U.S. taxes in 2003 through foreign subsidiaries. Its Cayman company controls syrup-producing facilities in Ireland. The subsidiary pays taxes in Ireland at 12.5 percent, still far less than in the United States.
Corporations and some scholars argue foreign subsidiaries are necessary to remain competitive in an increasingly global market, and reflect the reality that U.S. taxes are too high.
"The U.S. is really out of step with the world with its tax policies," said Gary Hufbauer, a tax expert at the Institute for International Economics in Washington, D.C.
"It may very well be legal, but that's an argument for changing the law," countered Michael McIntyre, a law professor at Wayne State University in Michigan who has studied tax havens. "Income should be taxed where it's earned. It's good Obama is trying to fix that."
But even McIntyre finds Obama's rhetoric a bit much. "Scam has an implication of fraud, and if they are doing it in the Caymans, it's more avoidance than fraud."
There are more apparent violations, however.
Experts say some drug companies have used foreign subsidiaries to manufacture pills and sell them back to the main company at inflated prices, a practice known as transfer pricing. That keeps the profits in a foreign company and subject to less tax. And there is a growing practice of individuals using offshore accounts to avoid taxes.
Obama is not the first politician to focus on tax havens. In 2004, John Kerry took a similar approach. Hillary Rodham Clinton and John Edwards, Obama's chief rivals for the Democratic nomination, have also invoked the issue in the campaign.
But experts say any attempts at reform, while perhaps worthwhile, will not lead to a honeypot for domestic initiatives.
"There's absolutely no question that there's a lot of international tax avoidance," said Eric Toder, an expert with the nonpartisan Urban Institute in Washington, D.C. "But I would be skeptical of any politician who is promising to get a lot of revenue.
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