US small businesses petition against tax havens
(CNS): Cayman is at the centre of another surge of criticism of so called tax havens this time from the small business community in the US which has launched an on-line petition. Organisers have called on the US president and congress to end what they call tax dodging by enacting legislation stopping tax haven abuses. The website for the campaign features a picture of Maples and Calder’s head office, Ugland House in George Town (left) and accuses US companies of using the Cayman Islands and other offshore centres to avoid paying tax. “Offshore tax havens reward tax evaders, rob public coffers of needed revenue and offload taxes to responsible businesses and households,” the Business and Investors Against Tax Haven Abuse state.
The petition is supported by a collection of groups including the American Sustainable Business Council, Wealth for the Common Good and Business for shared prosperity as well as Senator Carl Levin, Democrat of Michigan who has been an outspoken critic of offshore centres. The petitioners say that everyone needs to pay their fair share of taxes to keep America moving forward.
“Tax dodging deprives our nation of revenue needed to maintain and modernize the infrastructure and services underpinning a strong economy. An estimated $100 billion or more in tax revenue is lost every year to tax havens. Our economic progress is undermined when companies are rewarded for financial manipulation rather than innovation and productive investment,” the organiser state on the website.
They accuse offshore tax havens as providing cover for banks, hedge funds and corporations to shift taxable income from the United States for the sole purpose of escaping taxation.
“Tax haven secrecy allows wealthy Americans to hide assets, helps companies manipulate their finances, and fosters the casino economy. McClatchy News reported, for example, how working through Cayman Island subsidiaries, Goldman Sachs “peddled billions of dollars in shaky securities tied to subprime mortgages on unsuspecting pension funds, insurance companies and other investors when it concluded that the housing bubble would burst,” organisers say on the site.
The petition comes at the same time as the publication of another report which comes down hard on offshore tax havens and hundred U.S. multinational banks and corporations utilize tax havens to reduce or eliminate their taxes and shift tax responsibilities.
“We conservatively estimate that U.S. multinational corporations areusing tax havens to avoid $37 billion in U.S. taxes per year. This $37 billion could be used to fund initiatives to support America’s small businesses – the nation’s biggest job creators — by increasing their access to capital, increasing their opportunities to invest, and rewarding entrepreneurship,” the report states.
It also reveals how corporate America’s share of income taxes has declined over the last fifty years from 23.2% to just 7.2% with large corporations contributing less than one-sixth as much as small business and individual taxpayers to the Federal Treasury. “One significant reason for this shift is large corporations’ ability to shift domestic income to offshore subsidiaries in tax havens,” the authors say.
They also stated that Offshore tax havens have enabled Wall Street to evade taxes, freeing more money for speculation and to take more extreme risks off their balance sheets. “Not only does this promote a culture of risky gambling and fraud, it encourages firms to structure shadowy, complex deals to peddle toxic assets globally, and build up leverage and risk more widely across the global financial system — leading to much more widespread, severe economic crises.”
The grassroots small business campaigners say they support a number of key initiatives and call on the president to end the tax dodging that occurs when a business incorporates in a tax haven, pretending to be a foreign corporation for US tax purposes while, they say, in reality, being managed and controlled from the United States, and taking advantage of all the commercial, educational and other infrastructure financed by U.S. taxpayers.
They also call for an end to “financial gimmickry that allows hedge funds to engage in transactions designed for the sole purpose of avoiding taxes,” and ask for restrictions “that are of primary money laundering concern or that impede U.S. tax enforcement.”
The website went public last Tuesday and organizers said that over 400 business executives, investors and representatives of businesses had already signed before the site went public. (CNS Has contacted organisers to request how many signatures it now has and is awaiting a response.)
The Centre for Freedom and Prosperity’s (CF&P) has criticized the latest attack on tax havens and President, Andrew Quinlan denounced Levin’s plan and accused him of being "tone deaf when it comes to the problems facing average Americans," and his move would make the US less competitive.
“At a time when capital is increasingly mobile, and in order to remain internationally competitive, the US should reject expanding the tentacles of the IRS and instead adhere to the common-sense principle of territorial taxation. Only income earned within the territory of the United States should be subject to US tax law,” he argued.
Category: Business
Small businesses in the U.S……all businesses in the U.S…. are suffering not because of offshore tax havens but more so because the largest export in the U.S. for the past two decades has been jobs. Simply put, the "free trade" agenda pushed by American corporations to previous administrations (good ‘ol Ronnie Reagan) has turned around and bit them in the a$$. They increased profits at the expense of American workers. Also, the cost of the wars and stomping around the globe looking for boogeymen although good for business (Haliburton, Blackwater, etc.) and the ransacking of the U.S.Treasury by Wall Street has depleted the U.S. economy to the point where it will soon be a third world country. It’s always someone else. Wake up America! Your government has been subverted, bought and sold by lobbyists and the military-industrial complex. Ike was right. The message really is We have seen the enemy and the enemy is us. Hurts, huh?
Protectionism always ends up harming an economy by preventing the market drive towards efficiencies. The jobs freed up by companies moving operations to other countries (by being more efficient at what they are doing their), allows that part of the labor market to be allocated to tasks which can be better performed in the original market.
The US is gifted for making enemies with the world, and they wonder why everyone hates them!
How in the world can tax havens be responsible for FREETRADE passed by A UNITED STATES PRESIDENT HIMSELF!
These people have a real problem, they are
1st their own enemy
then everyone else’s
These stupid US small business owners most likely were manipulated by other sources to do this. Its unheard of!
So what are we to do? Bow to them?
Obama and his administration need to get a life.
Guess my 5 year plan should become a 3 year plan . . .
It looks like 25 petition signers including a dissatisfied comic book store owner. Sales for him must be way down due to all of the illegal comic book stores in Ugland House.
http://businessagainsttaxhavens.org/signers/
Seriously CNS, why do you give these people a second thought, let alone a podium for rallying against Cayman?
CNS: Many news outlets, including the New York Times, ran this story. So, do you think the people of the Cayman Islands benefit from not knowing about this?
One would hope that a new online petition from 25(?) people out of 307,006,550 would be statistically immaterial to both the NYT and CNS, esp on this story from 2007? http://www.uglandhouse.ky
And what if large numbers of wealthy Americans and corporations decide to re-domicile rather than pay the extra tax?
Even with the current tax breaks, you are seeing a small trickle in places like Hong Kong and Singapore (where there are 12 month waiting lists for Americans to renounce their citizenship).
Ending the current, limited tax breaks could turn the trickle into a flood.
Not to mention that having a U.S. passport can be a threat to your safety when traveling abroad – think Mumbai terrorist attacks where they were looking for Americans to kill.
There’s a 30% excise tax on the assets of individual US citizens who redomicile abroad and renounce citizenship. If you don’t do both, you’re still subject to US income tax. The excise tax can of course be evaded but most people are a little leery of engaging in full fledged criminal tax fraud. So don’t expect an avalanche of wealthy expats. And don’t expect them in Cayman, it’s too close, too little and the weather is a tad on the hot side. Think Switzerland or Monaco for those who are determined.
Agreed, Cayman is way too small for corporations and many wealthy Americans looking for a new place to live.
Beneficiaries would be Swiss, Monaco, Bahamas, HK, Singapore, and maybe China/UAE (although that is questionable for Americans).
I disagree on the excise tax being a significant deterrant as there are expemptions and thresholds – thus you can get out of much of it. However, a lot of people (myself included) would just feel "icky" renouncing and won’t do it out of a sense of patriotism.
For those that don’t care about that stuff, you will see more and more of it. LIke I said, there are already long waiting lists at some U.S. consolates to renounce.
http://www.nytimes.com/2010/04/26/us/26expat.html?_r=1
This is just an excuse for the obama Administration to redirect the people attention from his Broken Immigration system. The pressure is on. His Democratic political strategists and analysts are generating this hype, pay no attention to it!
Here we go again, it’s not the eradication of tax havens that will aid the USA economic recovery, it’s their failure to revitalize their manufacturing. Stop outsourcing your manufacturing jobs; reduce your warring campaigns and taxation to fund them.
XXXX
CNS: You’ve listed your choice of potential candidates several times now. Can you just stick to comments from now on, please?
CNS Huh!! choice of candidates and tax havens where is the relation?.
I do find it strange that there is no mention of ‘ On shore tax havens’. I suppose the small businesses in Delaware will support any motion to close down Cayman and the other Offshore tax havens. Will the US never get the message that Cayman is a ‘Financial Centre’.
The US is not receiving your messages and never will. It doesn’t CARE what Cayman is or what it thinks. Cayman is but a tick on the US financial elephant. You’ve managed to make yourselves the synonym for tax evasion and now have to suffer the fools in Congress. A positive note is that this particular venture is not representative of US small business, and the left wing, tax loving majority in Congress is about to disappear.