The Truth About the Panama Trade Deal

Huffington Post reporter Zach Carter did a most unusual thing when reporting on Panama being a tax haven. He called up one of the many firms offering to help him hide his money from the IRS for $2,000 dollars and filmed it.

 

 

What is it about trade that silences cable news? Beyond silence, we see article after article pimp for these deals, quoting biased fictional lobbyist white papers, often spun out by the U.S. Chamber of Commerce.

It's astounding how most of the press ignores trade facts. What is it about the never ending trade deficit they don't understand?* Over and over statistics have proved trade deals are glorified offshore outsourcing agreements. Yet in spite of the results, the same incorrect math is routinely reported as fact, even when Panama's tax haven business is well known. Even the GAO has reports on Panama as a tax haven country:

A majority of the largest publicly-traded companies and federal contractors in the United States use multiple subsidiaries in offshore tax havens to conduct business. Dorgan and Levin, who have focused on combating offshore tax abuses causing an estimated $100 billion in lost U.S. tax revenues each year, point out that many of these companies are paid with taxpayer dollars and some have also received billions of dollars in taxpayer bailout funds.

This report shows that some of our countrys largest companies and federal contractors, many of which are household names, continue to use offshore tax havens to avoid paying their fair share of taxes to the U.S. And, some of those companies have even received emergency economic funds from the government, said Senator Dorgan. I think we should take action to shut down these tax dodgers and we will be introducing legislation to do just that.

Senator Levin said, We need to put an end to the use of offshore secrecy jurisdictions as tax havens. We must get to the bottom of activities such as the following: Citigroup has set up 427 tax haven subsidiaries to conduct its business, including 91 in Luxembourg, 90 in the Cayman Islands, and 35 in the British Virgin Islands. Hundreds more tax haven subsidiaries operate under strict secrecy laws in places like Switzerland, Hong Kong, Panama, and Mauritius.

Public Citizen as well as others have been sounding the alarm bells the Panama free trade deal will undermine U.S. Efforts to Stop Offshore Tax Haven Abuse and Regulate Risky Financial Conduct:

The FTA (free trade agreement) does not directly or indirectly remedy Panama’s problems with tax evasion and money laundering. There are no special requirements that take into consideration, much less try to counter, Panama’s banking secrecy rules, lax financial service regulations or designation as a venue for money laundering and tax evasion. In fact, if the Panama FTA were adopted, it would make these matters of bipartisan concern worse, by:

  1. Forbidding U.S. policies from treating Panama and Panamanian financial services and transactions differently than we treat those of non-tax- haven countries.
  2. Forbidding use of limits on financial transactions, except for very limited circumstances, which is a key tool in many anti-tax-haven and anti-money laundering policies.
  3. Locking in U.S. “market access” rights for banks and investors operating in Panama, regarding both cross-border services and establishment of U.S. facilities that would limit the U.S. government’s ability to fight tax-haven abuse and re-regulate financial service firms.
  4. Granting expansive new FTA foreign investor rights to Panamanian firms and the 350,000 subsidiaries of U.S., Chinese, and other multinational firms operating in Panama that will allow them to challenge U.S. government regulations in foreign tribunals – including policies that limit financial transactions from banks operating from Panama or owned by Panamanian investors.

Let's see, we just had a global financial crisis with round two turning into a global economic malaise and too low taxes creating deficits the size the world has never seen since WWII. The situation is so bad, billionaires still loyal to the nation are begging to be taxed.

Eliminating offshore tax loopholes could save U.S. taxpayers $210 billion over the coming decade, according to the Office of Management and Budget (OMB). Meanwhile, the Senate Homeland Security Committee estimates a savings five times as great. These funds would assist greatly in helping put people back to work amidst the deepest recession in the post-war period.

The Huffington Post reporters started their story out right in pointing out the absurdity of Obama claiming he wants to roll back Bush tax cuts to the wealthy. A great rhetorical on closing loopholes on tax incentives to offshore outsource your job echos the airwaves, all the while opening the back gate for corporations and the super rich to avoiding paying any taxes whatsoever and topping it off by closing any recourse the United States has to do anything about it.

President Barack Obama reaffirmed his commitment to raising taxes on the wealthy. But as he pushes to get the rich to pay more into federal coffers, Obama is also urging Congress to approve a trade agreement that would cement a key tax avoidance tactic deployed by some of the richest Americans.

*Dylan Ratigan exempted of course.

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Comments

Gordian Knot of market integration

What's happening this week so far on "Wall Street" (U.S. face of global capital)? That is, what is the context of today's disaster on the NYSE and DJIA? In general, the context appears to be a recommencing of the global liquidity crisis, with gold seeking new highs. Whether the gold market is a "true bubble" (Robert Oak), or not, I cannot say. IMO, the price of gold is an indicator of the liquidity crisis more than a matter of ordinary supply and demand based on diminishing resources. Silver price, on the other hand, I see more as an indicator of increasing social instability. There's also rising value of agricultural land to be considered, although that's a much more complex equation.

Excerpting from August 16 WSJ MarketBeat (Mark Gongloff) --

The broader market has given a big raspberry to the Merkel-Sarkozy Press Conference to Save the Universe, but stock-exchange operators are taking it particularly hard ...

This could also be part of what’s bothering bank stocks although they were falling before the Merkozy comments.

Excerpting from August 18 Reuters report 'NYSE Braces for Volatile Open' --

The New York Stock Exchange and NYSE Amex Cash Markets on Thursday invoked a rule to smooth trading at the market open ... Rule 48 allows the exchange to suspend price indications that help determine the floor price at the open [due to] "substantial activity in the futures market before the open."

U.S. stock index futures pointed to a sharply lower open as a report that regulators were intensifying their review of European banks' U.S. units shook up investors.

That's my citation to fact. And here's my spin, my 2¢ worth, although I cite sources as in support of my argument.

Let's grant that the "Merkozy comments" amount to a proposal "to Save the Universe" -- or anyway a proposal to save the old 'First World' part of the brave new WTO world system. Mere announcement of the possibility of a regulatory attempt at the control of global capital flows appears to be marked to play a major "fall guy" to be blamed for further flight from currency by global capital, that is, a further global liquidity crisis.

Sarkozy-Merkel announcement, however, is only one aspect of the total U.S. economic outlook within a global liquidity crisis. See, e.g., comment today by Robert Oak, let me fix your fallacy
Can it be that democratic governments are, or are rapidly becoming, powerless to intervene in what may well be the Second Great World Depression? If so, that will surely mean that democratic governments will inevitably become either radicalized in one direction or another and/or dysfunctional. In the U.S.A. in particular, trade and/or capital flow barriers will become as inevitable as strengthened barriers to the flow of labor already are.

(It's clear that strengthened barriers to labor inflows have become inevitable -- even though the Obama administration continues to oppose them and even though elimination of barriers of all kinds continues supported by national corporate media and by virtually all national political elites.)

An important factor in the trend toward strengthening barriers has been social instability correlating with advance of the internationalist agenda to eliminate national barriers. I hope no one will read me as using the word "internationalist" as meaning "evil" or whatever. When I use words like "internationalist" or "corporatist", I intend narrow and non-emotional interpretations. The bottom line is that the political situation today would be very different if the agenda implemented on behalf of global capital -- and designed according to pie-in-the-sky 'free' trade theories -- were a great success story for American working people or for other peoples globally.

The Gordian Knot that cannot be disentangled will by rent by a radical sword. This may, or may not, be a sword of peace. Hopefully, the sword used here in the U.S.A. will be the monetary/financial reform proposed by the American Monetary Institute, but that sword could be something much uglier and with much bloodier consequences.

Meanwhile, there do not appear to be any successful barriers to global social unrest unless those barriers include loss of our basic Constitutional liberty. (Guardian, Ted Trautman, photo by Jeff Chiu, AP, 18 August 2011). If this is radical talk, then many former Republicans, such as Paul Craig Roberts, have become radicalized recently.

Our effective political choice, if we have a choice beyond the media-managed presidential circus of 2012, may be between some version of a radical populist reform, including aspects of protectionism, and an increasingly repressive police state. The repressive police state option is well represented, but where are the populist leaders?

BTW: Don't miss great photo (by Jeff Chiu of AP) of recent BART protest! (I did not grab the photo and post it here only because of the copyright issue.)

 

Watch votes by your congress critturs on these FTAs! The people shall judge! Ye shall know the truth, and the truth shall make you free!

It's a Test for the Tea Party!

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