A top haven for tax cheats that may surprise you: the US

[webfact]

A top haven for tax cheats that may surprise you: the US
By PAUL WISEMAN and MARCY GORDON

WASHINGTON (AP) — The U.S. lambastes and strong-arms countries that help drug lords and millionaire investors hide their money from tax collectors. Critics say it should look closer to home.

America itself is emerging as a top tax haven alongside the likes of Switzerland, the Cayman Islands and Panama, those seeking reform of the international tax system say. And states such as Delaware, Nevada, South Dakota and Wyoming, in particular, are competing with each other to provide foreigners with the secrecy they crave.

"There's a big neon sign saying the U.S. is open to tax cheats," says John Christensen, executive director of the Tax Justice Network.

America's openness to foreign tax evaders is coming under new scrutiny after the leak this week of 11.5 million confidential documents from a Panamanian law firm. The Panama Papers show how some of the world's richest people hide assets in shell companies to avoid paying taxes.

Christensen's group, which campaigns for a global crackdown on tax evaders, says the United States ranks third in the world in financial secrecy, behind Switzerland and Hong Kong but ahead of notorious tax havens such as the Cayman Islands and Luxembourg.

Under a 2010 law, passed after it was learned that the Swiss bank UBS helped thousands of Americans evade U.S. taxes, the United States demands that banks and other financial institutions disclose information on Americans abroad to make sure they pay their U.S. taxes.

But the U.S. doesn't automatically return the favor.

More than 90 countries have signed on to a 2014 information-sharing agreement set up by the Organization for Economic Cooperation and Development; the U.S. is among the few that haven't joined. American banks don't even collect the kind of information foreign countries would need to identify tax dodgers.

"The banking lobby has resisted changes in the law that would allow more sharing of data," says Peter Cotorceanu, a Zurich-based lawyer who specializes in private banking.

In a report last year, the Tax Justice Network complained that "Washington's independent-minded approach risks tearing a giant hole in international efforts to crack down on tax evasion, money laundering and financial crime." It said foreign elites have "used the United States as a bolt-hole for looted wealth."

Pascal Saint-Amans, head of the OECD's Center for Tax Policy and Administration, says the U.S. often makes information available to other countries upon request. But that means countries can get details only on those they already suspect of tax evasion.

Christensen says Swiss banks report that "many of their tax-dodging clients are talking about moving to the U.S. You go to Switzerland, and that's all they're talking about."

Individual states, including Nevada, Wyoming and South Dakota, are making things worse, critics say.

They compete with each other to make it easier to set up corporations — few questions asked about who's behind the business. "We have states that set up corporations where there's no information about ownership," says Jack Blum, a Washington lawyer who specializes in financial crime. "The states make a lot of money doing that."

Nevada, for instance, makes it easy to incorporate secretly and charges a $500 annual business license fee for corporations and $200 for other businesses. Lawmakers granted business entities greater protection against lawsuits in 2001, hoping to attract more of them and use incorporation filing revenue to raise teacher salaries.

"Nevadans will continue to see nefarious business practices like those reported in the Panama Papers if state officials don't change the laws of incorporation," says Rep. Dina Titus, D-Nevada. "It is time for the state to tighten its disclosure and liability laws and remove the sign from our front yard that says: 'Sleazeballs and rip-off artists welcome.'"

Nevada's registered agent industry, which helps businesses incorporate in the state, supports about 1,000 jobs and pumps $110 million into the state economy every year, says the Nevada Registered Agents Association. The group opposed an effort last year to raise the business license fee.

"Nevada has promoted itself for decades as a 'business friendly' state, and that benefit is critical to keep new entities incorporating in Nevada," says Matthew Taylor, a former association president and current board member.

But doubts are rising, even in Nevada. Many of the businesses are mere shells, financial contrivances that don't employ people or make any investments.

"Historically, we have marketed ourselves as kind of a Wild West, frontier sort of place," says Pat Hickey, a Republican in the Nevada Assembly. Now, Hickey wonders, "Don't we want businesses that actually reside here, provide services or manufacture things? ... I don't know it's necessarily an industry that we need to bend over backward to keep."

South Dakota says its favorable trust laws provide an attractive place for families to park and grow their wealth, and it can all be done outside the public eye. The state imposes no tax on assets held in trust and allows the entire court file to be sealed permanently with a simple petition.

In 2014, a group of academics looked at tax havens for their book "Global Shell Games." Posing as investors who wanted to set up businesses in different places, they kept track of whether the consultants helping them incorporate asked for basic information such as photo IDs or other documents that proved who they were. In the United States, only 25 percent did; in Delaware, only 6 percent.

The U.S. Treasury Department says it plans to propose regulations requiring foreign-owned "limited liability companies" to get tax identification numbers disclosing the identities of their owners. Once the rules are in place, Treasury says in a statement, the Internal Revenue Service will be better equipped to respond to requests for help from foreign governments.

Still, Treasury says, Congress needs to come up with a broader, better solution. Lawyer Cotorceanu doubts that will ever happen.

American lawmakers "do not want to hurt the U.S.'s banking industry," he wrote last year in the journal Trusts & Trustees. "It is no secret that U.S. banks, particularly in Miami, are awash in undeclared Latin American money. ... How ironic — no, how perverse — that the USA, which has been so sanctimonious in its condemnation of Swiss banks, has become the banking secrecy jurisdiction du jour."

___

This story has been corrected to show that Matthew Taylor is the former, not the current, president of the Nevada Registered Agents Association.
___

Michelle Rindels in Las Vegas; Dirk Lammers in Sioux Falls, South Dakota; and Joshua Goodman in Bogota, Colombia, contributed to this story.


-- (c) Associated Press 2016-04-07

[otherstuff1957]

So, US bankers are corrupt hypocrites??

Not surprising at all.

[Misty]

Not to mention some US law firms, as this 60 minutes episode shows:

See what happens when hidden cameras capture New York lawyers being asked to move highly questionable funds into the U.S. Steve Kroft reports.

http://www.cbsnews.com/news/anonymous-inc-60-minutes-steve-kroft-investigation/

[godden]

Tax cheats, i see nothing wrong in not paying tax on your own monies if it's been made through honest hard work unlike most of the politicians hiding their corrupt fortunes.

[JulesMad]

Nothing surprises me anymore from the most hypocrite country in the world

[wabothai]

Anything at all for a buck.

[kamahele]

Do as we say, not as we do.....

[scotchonrocks]

In God we trust...

All others pay cash.

W.t F!

[mopar71]

Has anyone noticed that when the topic is about rich people hiding money in Panama it is the rich people under attack here.

When the topic is about rich people hiding money in the USA then most people attack the USA.

Not that I'm surprised, just pointing it out.

It's all you rich, cheating foreigners who are to blame.

Edited April 7, 2016 by mopar71

[GeorgesAbitbol]

Tax cheats, i see nothing wrong in not paying tax on your own monies if it's been made through honest hard work unlike most of the politicians hiding their corrupt fortunes.

I agree that politicans and fortune should pay more tax.

However I think you re happy to have roads, light in the streets, firefighters...guess how they can pay for that?

[Naam]

So, US bankers are corrupt hypocrites??

Not surprising at all.

who said US bankers are involved?

[ALLSEEINGEYE]

So, US bankers are corrupt hypocrites??

Not surprising at all.

who said US bankers are involved?

"The banking lobby has resisted changes in the law that would allow more sharing of data,"

It's right there if you care to read it

[Berkshire]

So, US bankers are corrupt hypocrites??

Not surprising at all.

who said US bankers are involved?

"The banking lobby has resisted changes in the law that would allow more sharing of data,"

It's right there if you care to read it

Yeap, freakin lobbyists. As an American, I can't for-the-life-of-me understand why a country as advanced as America still allow freakin lobbyists to dictate US policy. It's just unexplainable....unless you follow the money trail. And people complain about corruption in Thailand. They have no idea.

[NickJ]

This would be a good thread for my buddy who gets out of federal prison next year . After spending 11 years locked up for putting his cash in a shell company in Michigan.

[Linzz]

The whole issue is about government demanding payment for what they think they are owed but never do they address government squandering of that money

[Linzz]

Just curious if any of you Americans still owe Washington taxes of any description by merit of the fact you are US citizens having to pay "your fair share" even though you live outside the US and don't partake of any use of it's services? How far does the IRS arm reach and for what reasons?

[thaihome]

Just curious if any of you Americans still owe Washington taxes of any description by merit of the fact you are US citizens having to pay "your fair share" even though you live outside the US and don't partake of any use of it's services? How far does the IRS arm reach and for what reasons?

If you work in a country that has a higher tax rate then the US, and most do, you will not owe any US tax on foriegn income due to exclusions and credits. You do have to report it each year.

Starting January 1, this year, if you owe the IRS over $50k your passport renewal will be denied. They also check for delinquent child support.

TH

[Muzarella]

So, US bankers are corrupt hypocrites??

Not surprising at all.

who said US bankers are involved?

Well...In 2007, Bank of America was fined $30million by the Government for laundering money to the Mexican drug cartel.

Few months later the Government "bailed" Bank of America giving them $700million

Few years later, Bank of America reported $2 billion in profit.

US Bankers are not involved...They own the business of corruption, money laundering, and fraud..... The US Government and the US financial corporations are involved..

Edited April 7, 2016 by Muzarella

[Basil B]

So, US bankers are corrupt hypocrites??

Not surprising at all.

I think you will find it is American policy...

Turning a blind eye to American companies ripping off other countries, as long as they do not do it to Uncle Sam...

[alanrchase]

So, US bankers are corrupt hypocrites??

Not surprising at all.

I think you will find it is American policy...

Turning a blind eye to American companies ripping off other countries, as long as they do not do it to Uncle Sam...

It does seem that way. Prosecute and fine foreign companies for megabucks but small fines for US companies.

[spidermike007]

US bankers are some of the most corrupt, power hungry criminals on the planet. The big banks need to be broken up today. Not doing so is nothing but cowardice on the part of the Obama administration. It is long overdue. Their continued existence threatens the US and world economy. How many people know that they recently started selling toxic mortgage derivatives very much like the ones that brought down the economy in 2007? The big banks in the US are nothing but trouble. They have no ethics. They will do anything to earn a buck. Jamie Diamond should be serving a life sentence.

[thaihome]

Well...In 2007, Bank of America was fined $30million by the Government for laundering money to the Mexican drug cartel.

Few months later the Government "bailed" Bank of America giving them $700million

Few years later, Bank of America reported $2 billion in profit.

US Bankers are not involved...They own the business of corruption, money laundering, and fraud..... The US Government and the US financial corporations are involved..

I don't think BofA was fined for money laundering in 2007. It was named in an investigation in 2006 and 2013 but cooperated with investigation and was never fined. Several others, including HSBC and Wachovia were.

BofA used $45 billion in TARP funding in 2007. It was paid back in 2009. In 2014 BofA was fined 16 billion for actions leading up to the bailout.

BofA repoorted net income in 2013 of some $10 billion. In 2014 that was down to $3 billion due to the settlement with dept of justice.

It would appear not a single number you used was accurate.

Bet you got them from Fox news.

TH

[Linzz]

US bankers are some of the most corrupt, power hungry criminals on the planet. The big banks need to be broken up today. Not doing so is nothing but cowardice on the part of the Obama administration. It is long overdue. Their continued existence threatens the US and world economy. How many people know that they recently started selling toxic mortgage derivatives very much like the ones that brought down the economy in 2007? The big banks in the US are nothing but trouble. They have no ethics. They will do anything to earn a buck. Jamie Diamond should be serving a life sentence.

Too big to fail, too big to jail. The Clintons repealed Glass Steagal and Hillary still benefits from Wall Street. Welcome to President Goldman Sachs

"In 2011, Phil Angelides, chairman of the U.S. Financial Crisis Inquiry Commission, summarized the problem: “These banks are too big to fail. They’re too big to manage. They’re too big to regulate. They’re too complex to understand and they’re too risky to exist. And the bottom line is they offer very little benefit.”

President Obama’s theory is that Republican deregulation policies left Wall Street free to plunder the country, causing the crash.

Republican candidate Mitt Romney’s theory is that government interference in the market—forcing bankers to give mortgages to poor people—caused the crash

Neither party proposes that the too-big-to-fail banks be broken up or that some competition replace the oligopoly. Neither party proposes a reasonable plan to get rid of the national debt. The current system gives bankers incentives to take excessive risks, since profits are private and losses are socialized. Any reform has to start with changing those perverse incentives.

Underlying this election, largely unspoken, is the worry that the U.S. debt has become so large that the country’s future is endangered. The 2010 Simpson-Bowles report on fiscal reform predicts that if interest rates rise, which seems inevitable, our country’s annual interest payments could increase to $1 trillion, meaning our annual deficit will be $2 trillion. That will no doubt further lower the American standard of living and, according to the Congressional Budget Office, “weaken the United States’ international leadership.”

https://theamericanscholar.org/too-big-to-fail-and-too-risky-to-exist/#.Vv-93vl95Mw

[Rancid]

No one likes paying tax, it's just that some can afford to pay no tax.

[Ulic]

Has anyone noticed that when the topic is about rich people hiding money in Panama it is the rich people under attack here.

When the topic is about rich people hiding money in the USA then most people attack the USA.

Not that I'm surprised, just pointing it out.

It's all you rich, cheating foreigners who are to blame.

Yes but that is because it is the US that has the sanctimonious attitude that we are as pure

as the driven snow and all you guys are crooks or covering up for crooks. The US really is the

country that is "the pot that calls the kettle black". You guys are crooks we are the shining

city on the hill. Virtuous, honest, and all things good. Our farts smell like roses.

[boomerangutang]

Neither party proposes that the too-big-to-fail banks be broken up or that some competition replace the oligopoly.

Sanders does.