08-10-2011, 10:03 AM
(This post was last modified: 08-10-2011, 10:13 AM by Leonard. Edited 1 time in total.)
During a Monday press conference addressing Standard & Poor's downgrade of U.S. debt, 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.
"What we need to do now is combine those spending cuts with two additional steps: tax reform that will ask those who can afford it to pay their fair share and modest adjustments to health care programs like Medicare," Obama said during the address, referring to steps the U.S. should take in addition the cuts agreed to to raise the federal debt ceiling.
Just two days before, during his Saturday radio address, Obama urged Congress approve three trade deals, including one with Panama that would permit Americans to easily stash assets in the Central American country, a notorious tax haven for the wealthy and American corporations.
"It’s time Congress finally passed a set of trade deals that would help displaced workers looking for new jobs," Obama said, "and that would allow our businesses to sell more products in countries in Asia and South America -- products stamped with three words: Made in America."
But Panama's entire annual economic output is around $26.7 billion a year, according to The World Bank -- only about two-tenths of one percent of the U.S. economy -- making the effect on jobs minuscule at best. Some economists expect other agreements with South Korea and Colombia to create net job losses in the U.S., as corporations ship American jobs overseas to take advantage of cheaper labor.
It may not have a large economy, but Panama does have some of the most stringent bank secrecy laws in the world, making it extremely easy and inexpensive for U.S. citizens to set up offshore corporations and bank accounts. Establishing the corporation and bank account costs less than $2,000, and any money that Americans stash in these entities is not taxed. Bank secrecy laws and extremely lax corporate registration standards make it very difficult for the Internal Revenue Service to track transactions transferring funds to these Panamanian destinations from the United States. Small surprise, then, that Panama is home to nearly 400,000 offshore corporations, more than any other nation except Hong Kong.
"A tax haven . . . has one of three characteristics: It has no income tax or a very low-rate income tax; it has bank secrecy laws; and it has a history of noncooperation with other countries on exchanging information about tax matters," said Rebecca Wilkins, senior counsel with Citizens for Tax Justice, a nonpartisan nonprofit dedicated to improving U.S. tax policy. "Panama has all three of those. ... They're probably the worst."
The trade agreement with Panama would effectively bar the U.S. from cracking down on this activity. The U.S. would not be allowed to treat Panamanian financial services transactions differently from transactions in nations that are not tax havens. It would also be unable to pursue some standard anti-money laundering techniques in Panama. Combating tax haven abuse in Panama would be a violation of the trade agreement, exposing the U.S. to fines from international authorities.
"It directly undermines Obama's putative domestic agenda of job creation, cracking down on tax havens and collecting revenue from tax-dodging corporations," said Lori Wallach, Director of Public Citizen's Global Trade Watch. "The [free trade agreement] would forbid future use of existing policy tools to combat financial crime."
More of article.....http://www.huffingtonpost.com/2011/08/09/panama-trade-deal_n_922398.html
"What we need to do now is combine those spending cuts with two additional steps: tax reform that will ask those who can afford it to pay their fair share and modest adjustments to health care programs like Medicare," Obama said during the address, referring to steps the U.S. should take in addition the cuts agreed to to raise the federal debt ceiling.
Just two days before, during his Saturday radio address, Obama urged Congress approve three trade deals, including one with Panama that would permit Americans to easily stash assets in the Central American country, a notorious tax haven for the wealthy and American corporations.
"It’s time Congress finally passed a set of trade deals that would help displaced workers looking for new jobs," Obama said, "and that would allow our businesses to sell more products in countries in Asia and South America -- products stamped with three words: Made in America."
But Panama's entire annual economic output is around $26.7 billion a year, according to The World Bank -- only about two-tenths of one percent of the U.S. economy -- making the effect on jobs minuscule at best. Some economists expect other agreements with South Korea and Colombia to create net job losses in the U.S., as corporations ship American jobs overseas to take advantage of cheaper labor.
It may not have a large economy, but Panama does have some of the most stringent bank secrecy laws in the world, making it extremely easy and inexpensive for U.S. citizens to set up offshore corporations and bank accounts. Establishing the corporation and bank account costs less than $2,000, and any money that Americans stash in these entities is not taxed. Bank secrecy laws and extremely lax corporate registration standards make it very difficult for the Internal Revenue Service to track transactions transferring funds to these Panamanian destinations from the United States. Small surprise, then, that Panama is home to nearly 400,000 offshore corporations, more than any other nation except Hong Kong.
"A tax haven . . . has one of three characteristics: It has no income tax or a very low-rate income tax; it has bank secrecy laws; and it has a history of noncooperation with other countries on exchanging information about tax matters," said Rebecca Wilkins, senior counsel with Citizens for Tax Justice, a nonpartisan nonprofit dedicated to improving U.S. tax policy. "Panama has all three of those. ... They're probably the worst."
The trade agreement with Panama would effectively bar the U.S. from cracking down on this activity. The U.S. would not be allowed to treat Panamanian financial services transactions differently from transactions in nations that are not tax havens. It would also be unable to pursue some standard anti-money laundering techniques in Panama. Combating tax haven abuse in Panama would be a violation of the trade agreement, exposing the U.S. to fines from international authorities.
"It directly undermines Obama's putative domestic agenda of job creation, cracking down on tax havens and collecting revenue from tax-dodging corporations," said Lori Wallach, Director of Public Citizen's Global Trade Watch. "The [free trade agreement] would forbid future use of existing policy tools to combat financial crime."
More of article.....http://www.huffingtonpost.com/2011/08/09/panama-trade-deal_n_922398.html