The Stop Tax Haven Abuse Act

by Arnie Webre, Jr.

The United States government has a right to tax its citizens and the income of its citizens.

In its current form, The Stop Tax Haven Abuse Act will prevent Wall Street, banks, hedge funds and other professionals who design and market questionable overseas tax shelters, from abusing secrecy jurisdictions, a.k.a. offshore tax havens. Ultimately, it stops high-earning Americans from dodging taxes, though not all high-earning Americans dodge taxes.

Why should we care about The Stop Tax Haven Abuse Act, which is currently working its way through Congress?

Well, in addition to doing some good for the United States, it is also an attempt to look for demons to blame for the current economic and political problems of the United States.

A March 2, 2009, press release from the office of Michigan Democratic Senator Carl Levin(1) outlines parts of the proposed legislation:

"In a tax proceeding, any amount or thing of value – a) transferred to a U.S. person (other than a publicly-traded corporation) directly or indirectly from an account or entity in an Offshore Secrecy Jurisdiction, or b) transferred from such a U.S. person directly or indirectly to an account or entity in an Offshore Secrecy Jurisdiction, will be presumed to represent previously unreported income to the U.S. person in the year of transfer."

"Offshore secrecy jurisdictions" refers to 34-countries that have been labeled as uncooperative in sharing financial information with the United States, such as Anguilla, Liechtenstein, Panama, Switzerland and Vanuatu(2).

Who thinks they can win going up against the U.S. government, even if they are allowed to present evidence to the contrary? How could we intimidate a citizen more? I thought we lived in a democracy.

I do not think that we should demonize law-abiding Americans.

The onus should be on the tax havens, not those who legally declared all of their overseas financial assets and accounts on U.S. Department of the Treasury Form 90-22.1 (Rev. 10-2008), a.k.a. TD Form 90-22.1 (Rev. 10-2008), and, also, paid all taxes owed to the IRS.

As a matter of fact, economically and historically, any country that has nothing but debt as far as the eye can see, has not had a true national economic surplus for 45-years, and has printed too much fiat money, always ends badly.

On the other hand, I did observe that President Obama has aggressively been pushing a renewable energy agenda that seems to anticipate technological advances that could help us out of our current problems. I hope he succeeds.

If we want to demonize anyone for the current economic and political problems of the United States, we have no further to look than the voters and politicians of the U.S., who have been milking the system for everything it was worth for the last 45-years. It has been that long since the United States had the last true, un-manipulated surplus.

Republican and Democratic administrations alike, as well as Congress, have routinely robbed the Social Security Trust Fund and manipulated [changed] the basket of commodities that our monthly and quarterly inflation figures are derived from. That enabled our government to report serious deficits as not so serious ones, and it magically turned some deficits into surpluses.

That being said, there is much that is good in The Stop Tax Haven Abuse Act.

On the other hand, in the final analysis, we do want Americans, who legally report all of their financial assets and accounts to the U.S. Department of the Treasury and who pay all taxes owed to the IRS, to have assets overseas.

Why?

A currency default, which amounts to a national bankruptcy (a redenomination of one's currency), like Argentina, China, France, Germany, Poland, Russia, Taiwan and many other nations suffered in the last century, is not pretty.

Since the year 2000, already there have been at least 11 currency redenominations, worldwide -- there are more waiting in the wings. Just one such example would be the year 2005, when 1 million old Turkish lira became one new [improved] Turkish lira(3).

If the worst should happen to America, there needs to be someone left who can re-liquify the American economy, other than just foreigners.

Let us think long-term of the consequences of our actions, not short-term. As a nation, we can work it out, for the good of our common wealth, if we are willing to put egos and party ideology aside for a sane compromise.

Let us redraft an honest version of The Stop Tax Haven Abuse Act, which does not demonize law-abiding Americans.


Notes:

1. "Summary of the Stop Tax Haven Abuse Act: Title I - Deterring the Use of Offshore Secrecy Jurisdictions for Tax Evasion."

2. "As of the time of publication of this article, some of the 34-countries on the secrecy jurisdiction list have agreed to share financial information with the United States."

3. "Since the year 2000, Azerbaijan, Belarus, Ghana, Mozambique, Romania, Turkey, Turkmenistan, Venezuela and Zimbabwe (3 times) have all redenominated their currencies."