Robert Reich: What to Do About America’s Rich Who Use Offshore Tax Havens

[babylonsister]

http://www.commondreams.org/archive/2007/05/23/1401/

What to Do About America’s Rich Who Use Offshore Tax Havens
by Robert Reich

After suggesting a couple of weeks ago that the stratospheric earnings of equity-fund managers ought to be considered income rather than capital gains and therefore taxed at 35 percent rather than 15 percent, I was deluged with emails telling me the plan wouldn’t work. It would just drive fund managers into offshore tax havens. No less than Jon Corzine, the former chief executive of Goldman Sachs, now governor of New Jersey, admitted recently in a television interview that many fund managers would take their money out of the country before they’d pay the 35 percent rate.

Corzine and my other critics may have a point. Congress’s Joint Committee on Taxation recently estimated that America’s super-rich already sock away more than $100 billion a year in offshore tax havens. So any attempt to get them to pay what they owe is doomed, right?

Maybe. But I’ve been thinking a lot about the immigration bill now pending before Congress – especially the conditions undocumented workers will have to meet if they want to become American citizens. One of them is to pay all the taxes they owe.

The new immigration bill may not make it through Congress, but that provision about paying taxes that are owed in order to be a citizen serves as a reminder that paying taxes is one of the major obligations of citizenship. After all, if we didn’t pay the taxes we owe, we wouldn’t have public schools, police and fire protection, national defense, homeland security, roads and bridges, Medicare and Social Security, and other things we need.

So when the super-rich use offshore tax havens to avoid paying what they owe in taxes, they’re reneging on their duties as citizens. It seems only fair to me that the consequence of that kind of tax avoidance ought to be loss of citizenship. If it’s more important to someone to avoid paying what they owe in taxes than to continue being an American, then let them keep their money. They can become a citizen of the Cayman Islands or Bermuda or wherever else they store their wealth, and come here on a visitor’s visa – if they can get one.

[gaspee]

1. I traded

For a hedge fund in the 90's. About 1998, all monetary aspects of the fund moved to the caymans. With a nice office suite of about ten square feet to make it all official. Of course all of the "contractors (read employees)" were based in the states and all the trading was done and cleared in the states. Only the money moved to the Caymans.

[LiberalArkie]

2. AMEN!!!

[yurbud]

3. I was hoping for a "Just War" argument. Invade the Caymans, and take the checks out of the PO boxes

[yurbud]

4. will they get cavity searches when they try to re-enter the country?