10 years ago today: US Treasury Secretary finds offshore tax cheating amusing
July 19th, 2011
July 19th, 2011
Ten years ago today, the New York Times reported the words of U.S. Treasury Secretary Paul O’Neill who, in testimony:
“dismissed as meaningless a document, based on government data, presented by the senator, Carl Levin, a Michigan Democrat, indicating that fewer than 6,000 of more than 1.1 million offshore accounts and businesses were properly disclosed and therefore legal. Pressed by Senator Levin about whether the disparity between reported offshore accounts and their actual numbers was significant, Mr. O’Neill replied: ”I find it amusing.”
The scale of it was startling, even then:
“His testimony, to the Senate Permanent Subcommittee on Investigations, came before Robert M. Morgenthau, the district attorney in Manhattan, described a scale of bank deposits in tax havens far greater than most experts suspected. Citing previously secret Federal Reserve Bank data, Mr. Morgenthau said that more than $800 billion of American money is on deposit in just one tax haven, the Cayman Islands.
That sum, equal to one-fifth of all the bank deposits in the United States, he said, is so large that it cannot be solely, or even primarily, the fruits of criminal activity like drug dealing. Rather, Mr. Morgenthau said, these funds must be the product of huge and growing tax evasion by wealthy Americans who have little, if any, fear of prosecution.
He said his office’s efforts to pursue tax cheats had often been stymied not just by foreign governments, but by the federal government, especially the Justice and State Departments and the intelligence agencies.”
In light of that appalling and then-pervasive attitude, there is no doubt that even though things remain very far from rosy, and the offshore system in very rude health indeed, the mood in the United States has improved significantly.
Among other things we now have the U.S. authorities aggressively pursuing Swiss banks that have been helping U.S. tax cheats; we have the Foreign Account Tax Compliance Act (FATCA) and we now have Senator Levin’s reinvigorated Stop Tax Haven Abuse Act, tightening up FATCA and introducing new penalties and tools for fighting the offshore criminal scourge.
At the very root of all the improvements is a change in the public tolerance of these activities.
There’s still a very, very long way to go – but the tide is shifting. Who could imagine a U.S. Treasury Secretary, of all people, saying such an ‘I-find-it-amusing’ thing today. With the help of groups such as TJN-USA, the FACT coalition, Citizens for Tax Justice, Business and Investors against Tax Haven Abuse, Raymond Baker and Global Financial Integrity, US Uncut, and a growing army of others, we expect tremendous progress in the years to come.
(From the Tax Justice blog, with permission.)