Guest post by Chris Campbell.
In case you’re not caught up: 11 million documents have been leaked, via an anonymous source, out of the Panamanian law firm Mossack Fonseca.
These documents reveal nearly a half a century of offshore tax evasions committed by a den of capitalist thieves, out to rob the public of their “hard-earned” plunder.
Really, the shadiest of the revelations come from actors of the State, those who siphon off tax money and stuff it away in Central America — not “greedy capitalists” trying to “hoard all the milk” from the imaginary public teet. (Which, if taxed, would eventually end up in the hands of the politicians who, of course, would siphon it back to Panama. But that’s neither here nor there.)
The first to lay eyeballs on these leaks were reporters from Germany’s largest national newspaper Süddeutsche Zeitung.
Random fact: A few months after WWII, SZ was the first to receive a license for press from the U.S. military administration of Bavaria. Been running strong ever since.
“The Munich daily,” an article on Moon of Alabama reads, discussing the German rag, “is politically on the center right and staunchly pro NATO. It cooperates with the Guardian, the BBC, Le Monde, the International Consortium of Investigative Journalists and some other news organization who are all known supporters of the establishment.”
More on that factoid in a moment…
First, brass tacks: The simple truth is, based on what we’ve seen so far of the leaks (or, rather, what they’ve let us see), we’re underwhelmed. And we smell fish.
First, you’ve probably noticed, all the leaks, thus far, appear to be a tad too cherry-picked to maintain any semblance of balance. (David Cameron’s dad is a reasonable, but feather-fisted, counter to this statement.) And there’s nothing really incredibly explosive — “Whoa! Russian oligarchs use tax havens! What a revelation!” — not nearly as bombshell as you would expect from the “largest leak in history.”
“As usual,” Dan Mitchell wrote here at NOT PC when this broke,
the media outlets running these perennial ‘exposés,’ usually at the bidding of the OECD bureaucrats (who ironically get tax-free salaries) and government officials from high-tax nations, are barking up the wrong copse of trees.
What do you expect? The leak is being managed by the grandly but laughably named ‘International Consortium of Investigative Journalists’ (ICIJ), which is funded and organized entirely by the USA’s Center for Public Integrity. Their funders include:
Rockefeller Family Fund
W K Kellogg Foundation
Open Society Foundation (Soros)
… among many others.
It’s also funded, we add, by the United States Agency for International Development (USAID), a US government foreign aid agency. Which, on top of having a historical reputation for tossing money to international political and military partners, it, apparently, also has a warmed and well-worn mattress at the CIA. According to journalist William Blum, author of The CIA: A Forgotten History, in the ‘60s and ‘70s the USAID maintained a “close working relationship with the CIA, and Agency officers often operated abroad under USAID cover.”
What’s more, the Orwellian International Consortium of Journalists is the lone wolf in rounding up 400 hand-picked journalists, in over 80 countries, from 100 media organizations.
The Consortium, it should be of little surprise, is a nonprofit network of journalists based in Washington D.C.
This is the same ICIJ that, last year, revealed a list of 100,000 HSBC U.S. clients that had been avoiding paying taxes. In other words, it has an abnormal interest in the single-largest branch of the U.S. government. And that is, of course, that of OPM (Other People’s Money).
And in Europe, the media is just as stifled: “The corporate media — the Guardian and BBC in the UK — have exclusive access to the database that you and I cannot see. They are protecting themselves from even seeing western corporations’ sensitive information by only looking at those documents which are brought up by specific searches such as UN sanctions-busters. Never forget the Guardian smashed its copies of the Snowden files on the instruction of MI6.
What if they did Mossack Fonseca database searches on the owners of all the corporate media and their companies, and all the editors and senior corporate media journalists?
What if they did Mossack Fonseca searches on all the most senior people at the BBC?
What if they did Mossack Fonseca searches on every donor to the Center for Public Integrity and their companies?
What if they did Mossack Fonseca searches on every listed company in the western stock exchanges, and on every western millionaire they could trace?
Yes, there are plenty of “what ifs.”
But one thing we can be sure of is, at least for now, all we’re going to see is what they want us to see. And the rest of the files are simply potential blackmail material.
* * * *
So, what are the Panama Papers really going to prove? Who knows. It’s still early in the game.
But what Dan Mitchell recently wrote at his own blog sounds acceptable: “This is simply another chapter in the never-ending war by high-tax governments against tax competition, fiscal sovereignty, and financial privacy.”
And to dig deeper into that subject, here’s Mitchell on why the outrage over the Panama Papers has missed the plot entirely. And what you need to know about the fight for individual financial sovereignty.
Another Attack on Tax Competition: “Panama Papers” Is a Non-Controversy Controversy
Guest post by Dan Mitchell
Three years ago, thieves stole a bunch of information from “offshore” service providers in the Cook Islands and British Virgin Islands. This was supposed to be a ground-breaking exposé with huge ramifications, but it turned out to be a tempest in a teapot.
As I pointed out at the time, all that we really learned is that people who use offshore services are generally honest and law-abiding. And they definitely had far more integrity than the politicians who routinely attack the offshore world.
Well, here we go again. We’ve learned that thieves have now obtained client data from a global law firm based in Panama, and leftists once again are making this seem like a giant story.
Here’s some of what I wrote for Caribbean News on the issue, starting with the big picture.
Many nations in Western Europe can no longer afford their big welfare states. Countries such as Greece, Spain, and Italy already have needed bailouts, while it’s just a matter of time before several other European nations face a fiscal day of reckoning. …rather than fix their own fiscal problems, many of these nations are working through international bureaucracies such as the G-20 and the Organization for Economic Cooperation and Development to rewrite the rules and traditions of global commerce in an attempt to extract more tax revenue. This is why there’s been a major attack against so-called tax havens as part of a coordinated campaign to undermine fiscal sovereignty and restrict the human right of financial privacy.
And they’re more than happy to rely on stolen data.
One of the more bizarre chapters in this story is the way the pro-welfare state crowd is now trying to demonize financial service providers such as law firms that are hired to fill out paperwork by investors and entrepreneurs who are setting up trusts, companies, and other entities. Consider, for instance, the plight of Mossack Fonseca, a professional services firm based in Panama. …this collection of legal practitioners and egghead trust advisors is suddenly being portrayed as an international crime syndicate that’s corrupting Western civilization one business incorporation at a time.
But it makes no sense to attack service providers.
The controversy, in large part, derives from a basic and arguably willful misunderstanding of what firms like Mossack Fonseca do – and don’t do – for their clients. In basic terms, these firms help people create new businesses and trusts. …unlike banks, these law firms don’t take possession of their clients’ money. So the notion that they are involved in “money laundering” is laughable. Once incorporation papers are filed, the law firms don’t direct in any way the operation of the businesses.
Besides, the real target isn’t the Panamanian law firm. Activists on the left, working in concert with international bureaucracies and uncompetitive governments, want to create a global tax cartel (sort of an “OPEC for politicians“) in hopes of enabling higher tax burdens.
Firms like Mossack Fonseca are merely just the latest stand-ins and proxies for a much wider campaign being waged by left-wing governments and their various allies and interest groups. This campaign is built around aggressive attacks on anyone who, for any reason, seeks to legally protect their hard-earned assets from confiscatory tax policies. …a cabal of governments…has decided not to compete…instead simply seeking to malign and destroy any entity, individual or jurisdiction that exists that deprives them of tax revenue to which politicians greedily believe they are entitled. As usual, the media outlets running these perennial “exposés,” usually at the bidding of OECD bureaucrats (who ironically get tax-free salaries).
Let’s close with a couple of points about the broader issue.
- It is hardly a surprise that wealthy people with cross-border investments use instruments (such as foundations, trusts, and companies) designed for such purposes.
- Like everyone, wealthy people value privacy (even more so because they have to worry more about kidnapping and other crimes), so these structures are designed to protect their confidentiality.
- Some of these clients may not have complied with the tax laws of their countries. That is generally a function of excessive tax rates and home-country corruption.
- A few end-user clients may be unsavory (Putin’s cronies, for instance), but should businesses be prohibited from dealing with people who are viewed as sketchy (but otherwise are not under investigation and haven’t been convicted of crimes)?
- Cross-border economic activity and structures play a valuable role in the global economy and should not be demonized, just as GM shouldn’t be demonized if some crooks use a Chevy as their getaway vehicle.
- Low-tax jurisdictions have stronger laws against dirty money than high-tax nations.
So at the risk of stating the obvious, I’m on the side of low-tax jurisdictions and the service providers in those jurisdictions.
And I’ll defend them (here, here, here, here, and here) even if it means a bunch of international bureaucrats threaten to toss me in a Mexican jail or a Treasury Department official says I’m being disloyal to America.
Or, in this case, if it simply means I’m explaining why it’s a non-story that internationally active investors use international structures.
Senior Fellow at the Cato Institute
P.S. A left-wing newspaper in the U.K. wrote that I’m “a high priest of light tax, small state libertarianism.” I assume they meant it as an insult, but it’s the nicest thing anyone’s ever said about me. Except perhaps the time I was called the “Guardian Angel” of taxpayers.
This post first appeared at Laissez Faire Today.
- It's much bigger than just tax evasion. “Governments will seek to focus on general tax evasion charges to distract from evidence of corruption by public officials. .. Focus on the cronyism. Pull away the layers. This is much bigger than just rich, powerful people dumping their cash in the Caymans.”
Panama Papers Are About Government Corruption, Not 'Tax Evasion' – REASON
- “Firms like Mossack Fonseca are merely just the latest stand-ins and proxies for a much wider campaign being waged by left-wing governments and their various allies and interest groups. This campaign is built around aggressive attacks on anyone who, for any reason, seeks to legally protect their hard-earned assets from confiscatory tax policies.”
International Tax Police Find New Culprit to Target: Law Firms – Daniel Mitchell, NOT PC