How America became the leader in Tax Avoidance!

http://www.salon.com/2016/04/05/this_is_much_worse_than_the_panama_papers_how_america_became_a_world_leader_in_tax_avoidance/?utm_source=facebook&utm_medium=socialflow

Often when I’m sitting in bumper-to-bumper traffic on one of L.A.’s many freeways, my mind drifts to wondering if there’s some special autobahn above the horizon line reserved only for elite celebrities, so they don’t have to bother with the day-to-day inconveniences of the masses. That feeling returned when I read about the Panama Papers, a blockbuster release of 11 million documents from 40 years of work by one of the world’s leading specialists in tax avoidance.

The global law firm Mossack Fonseca creates untraceable shell companies for Mafia members, drug dealers, elites from sports and culture, and a host of corrupt politicians. You can come up with a couple legitimate reasons for creating a shell company: protecting trade secrets from rivals, for example. But most of Mossack Fonseca’s business involves people wanting to conceal their wealth: “Ninety-five percent of our work,” one memo reads, “coincidentally consists in selling vehicles to avoid taxes.” 214,000 of those vehicles, secured for 14,000 clients, are shown in the leaked documents.

While massive, the leak exposes only a small corner of the tax avoidance industry. Mossack Fonseca is just one of many firms in just one of dozens of international tax havens providing their services to the global elite. Back in 2012, British activists at the Tax Justice Network estimated between $21-$32 trillion sitting in offshore tax havens, of which the Panama Papers reveals only a piece. “This is the single biggest driver of global inequality in the world today,” said Clark Gascoigne of the Financial Accountability and Corporate Transparency (FACT) Coalition, an assembly of over 100 organizations dedicated to rooting out tax avoidance.

We’ve known about Mossack Fonseca’s creation of shell corporations since Ken Silverstein’s story about it in Vice well over a year ago. We’ve had similar leaks from tax havens in Switzerland and the British Virgin Islands dating back several years. Carl Levin made a cottage industry of producing damning reports about tax avoidance when he was in the Senate. Nobody should be surprised that rich people worldwide try to stash their money away or launder it through fake corporations.

That doesn’t mean this undertaking isn’t valuable. The trove of documents hasrevealed the participation of dozens of political leaders, their families, and associates. This includes several leaders in the Middle East, a significant percentage of the ruling party in China, and several personal friends of Russian president Vladimir Putin. The Icelandic Prime Minister could face snap elections because of his shell account in the British Virgin Islands, a known tax haven. The heads of state of Ukraine, Argentina, and a dozen countries in all are also implicated. Law enforcement investigations have begun, and we’ll probably be hearing about the fallout from this leak for months, if not years.

What we have not yet seen is any U.S. individual implicated in the leak, which seems unlikely given our stable of international wealth. The editor of Süddeutsche Zeitung, the German newspaper which first received the documents, promises there will be more to come. But one reason why Americans haven’t yet been implicated is that they already have a perfectly good place for their tax avoidance schemes: right here in the United States.

While several developed countries are already moving to reduce the anonymity behind shell companies, including a public registry of “beneficial ownership” information in the United Kingdom and a directive to collect similar information throughout the European Union, the United States has resisted such transparency. According to recent research, the United States is the second-easiest country in the world to obtain an anonymous shell corporation account. (The first is Kenya.) You can create one in Delaware for your cat.