Tuesday, July 19, 2011

10 years ago today: Paul O'Neill finds offshore tax cheating "amusing"

Ten years ago today, the New York Times reported this, about U.S. Treasury Secretary Paul O'Neill, who:
"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.''
And 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, the mood in the United States has improved beyond recognition.

Imagine a U.S. Treasury Secretary, of all people, saying such an 'I-find-it-amusing' thing today.

We now have the U.S. authorities pursuing Swiss banks which 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 root of the improvements - it's hard to imagine a Treasury Secretary Secretary saying such a thing today - 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. With the help of groups such as TJN-USA, the FACT coalition, Citizens for Tax Justice, Business and Investors against Tax Haven Abuse, US Uncut, and a growing army of others, we expect tremendous progress in the years to come.


Blogger Dev Kar said...

It is not amusing now for sure when the Federal government is seriously considering cutting Medicare and Medicaid from the old, the infirm, and the poor. I think Senator Levin has the moral upper hand in this debate. For the former Treasury Secretary to dismiss the findings of the Levin report out of hand is not only callous but politically damaging. I think the American people would have to call into question their notion of fairness and equity in the upcoming elections in 2012. I hope that the electorate will answer that such ethical gaps in our global financial system is not amusing at all.

6:26 am  

Post a Comment

<< Home