Paradise Papers Expose Rich and Famous Using Tax Havens

By Robert W. Wood, Forbes

06 November 17

 

orget Panama. The newest big leak showing how the powerful and ultra-wealthy stash money and assets in offshore tax havens is the Paradise Papers. It will hardly be paradise to those whose names and details are being teased out of the morass. The leak contains a massive 13.4 million documents, mostly from a single offshore finance firm. As with the leak of the Panama Papers, the Paradise Papers come from the German newspaper Süddeutsche Zeitung. The paper called in the International Consortium of Investigative Journalists (ICIJ) to oversee the investigation. The Guardian is among nearly 100 media partners involved in investigating the treasure trove of documents.

There could be a feeding frenzy with all of this information, which will take time to unfold. So far, arguably the best summaries of the players and the stakes are on the ICIJ website about secrets of the global elite. Even so, there are going to be dry details of trusts, foundations and offshore companies, the vast majority of which may be perfectly legal. Key questions now will be about specific individual cases, and whether there is anything that is not. A number of politicians may be among the most compromised. They could include Wilbur Ross, President Trump’s Commerce Secretary, who is said to have  business links with the Putin family.

The timing couldn't be worse for Republicans, who already face criticism over whether the pending tax bill favors the wealthy. Americans for Tax Fairness has criticized the tax bill, calling out the Paradise Papers as "a window into the financial secrets of the world's biggest corporations and wealthiest individuals, including over a dozen members of Donald Trump's inner circle who have already been named in documents." As with the Panama Papers, one issue for those whose names may be compromised is whether they will now face tax compliance issues in their own countries. For Americans, the rules are very clear: disclose, disclose, disclose. You must file a tax return each year with the IRS, and the U.S. taxes all income wherever you earn it. Filing false returns is even worse than failing to file. Failing to file is a misdemeanor, while filing falsely is a felony. You have to file, but make your return is complete and accurate.

Hiding things nearly always looks bad. You might have good reasons to hide things from competitors, an ex-spouse, etc. But don’t hide from the government. The recent indictment of Paul Manafort and Richard Gates accuses them of secret deals and accounts. Not long ago, soccer stars Lionel Messi and Cristiano Ronaldo also faced criminal tax problems, in large part over secrecy and shell companies. Messi's name had also come up in the Panama Papers. In short, even if there is a good reason to hide ownership of a legal entity from the public, make sure the ownership is not hidden from the government. Americans face particularly unforgiving rules. If you have an interest in any foreign bank, securities, or other financial accounts, it is important. A signature power is enough, even if it is not your money. For all of these, you must file an annual FBAR if the aggregate value of the accounts at any point in the calendar year exceeds $10,000.

Penalties can be huge. Much of the Swiss bank controversy of the last 10 years came down to these important disclosure forms. The IRS has reported that the Swiss and offshore bank controversies have netted the U.S. government over $10 billion. FBAR penalties can swallow the entire balance in offshore accounts. Even criminal penalties are possible, and they can include up to 10 years in prison. The Paradise Papers, for Americans at least, should be yet another reminder that the IRS requires worldwide reporting and disclosure. The consequences of noncompliance can be severe, and the chances of squeaking by are winnowing. FATCA, the Foreign Account Tax Compliance Act, requires foreign banks to reveal American accounts holding over $50,000. Some asset disclosures may be duplicative with FBARs, but it is best to over-disclose. There is never a penalty for going overboard in disclosures. With a treasure trove of data, the IRS now has the ability to check. The resources of the U.S. government are vast, and using entities that look secret can make innocent activity willful.

On Turning Deplorables Into Persuadables

By Mort Rosenblum, MortRosenblume.net

05 November 17

 

HOENIX - Serpents can be sneaky, but Arizona’s rattlers usually look you in the eye and make noise before they strike. Thus alerted, you only have to whack them with a stick. It is the same with most Arizona’s Republicans.

This is not a partisan screed but rather a cry from the Cadillac desert. If we can’t chase off our snake-oily president and all those who slither in his tracks, our democracy is a sham. We need a stick, in Arizona and in every other state.

It was good to see Jeff Flake stand up in the Senate and say out loud what we all know about Donald Trump. A man of integrity who cares about his grandkids, he said, cannot stay silent. But then, he added, he was heading off into the sunset.

Republicans offered faint praise and then looked for a successor with fewer scruples. Flake voted with the party to stop people from suing banks. America went back to inside baseball and opining about events in an imaginary wider world.

Thus fortified, Trump doubled down on his mob-style extortion tactics. At home, this pushes our corrupted government deeper into authoritarian demagogy. In a real world on the boil, it is dangerous beyond description.

Now Trump is in Asia speaking way too loudly and wielding a pathetically small stick. Our vaunted power is based on a nuclear arsenal we can’t use without blowing a chunk out of our planet. Meantime, we’ve just killed 17 of our own crewmen in two guided missile ship blunders in Asian waters.

We can fix all this with a basic concept that we have yet to master: showing up at the polls. In functional democracies, voters examine facts, size up candidates in focused debate, and pick the better of two choices on the final ballot.

Only 60 percent of eligible Americans voted last November, and many squandered ballots on not-Hillary fringe candidates. The easily conned rallied behind an inept narcissist with a convincing line of bullshit. Now we face ecological calamity, economic folly, military quagmire and a High Noon nuclear standoff.

Firing Trump is paramount, by impeachment or a humiliating landslide in 2020. Mike Pence, a fundamentalist owned by big money, is no alternative. Our legislature is corrupt and dysfunctional. We need a peaceable sustained revolution.

Living in France, I’m an expatriate but hardly an ex-patriot. As a reporter, I have watched our nation rise to greatness and sink to ignominy during five decades in most every region of the world. I have never been so alarmed.

We’re no longer a laughingstock. Now we are seen mostly as deluded, arrogant about our ignorance, and blind to our impact on others. We can’t be “first.” Borders today are little more than lines on the map. No country can protect itself from weather patterns, trade imbalances, nuclear fallout – or human flow.

Reagan years were a turning point. Schools were dumbed down, unions withered and big money set a new course. The Iron Curtain crumbled from its own weight yet that military-industrial collusion Eisenhower warned us about saw little profit in peace.

Today, half a century after folly in Vietnam, we are at it again in Africa, still seeing illusory lights at the end of tunnels. There, as in the Middle East and South Asia, we will likely waste billions to create yet more bitter foes.

When I first went to Niger in 1968, covering West Africa for Associated Press, it was relaxed and friendly, with French restaurants, and beer-splashed bars where dance music throbbed all night. Imams hobnobbed with Christian missionaries and welcomed infidels in their mosques. Tuaregs in the desert served tea by their tents.

Wracked by drought and wretchedly poor, Niger needed help it did not get. Americans barely noticed it. Over the years, when infrequently mentioned on newscasts, its name was sometimes pronounced with an extra “g.” Its political turmoil escaped our attention.

Iraq War fallout changed that. Reports of U.S. troops’ torture hardened attitudes among Muslims from Africa to Southeast Asia. Terrorists fleeing Libya found eager recruits in Niger. Now Trump’s bombast swells their ranks and creates sympathizers.

America tuned in when four of our own were killed. Trump is right: in the military, risk is part of the deal. Yet, devoid of humanity, he did not apologize when he upset a widow by saying that. Instead, he picked a fight and touched off uproar.

John Kelly slandered a congresswoman, the widow’s friend. When reporters pushed, the White House briefer called it “highly inappropriate” to question a four-star general. That had a troubling whiff of military coup. Even on active duty, Kelly was only a public servant answering to the people who employed him.

For weeks, clueless commentators picked at every detail. Did villagers (who hate us) “betray” us? Would flak vests have saved lightly armed men ambushed by 60 guerrillas with rocket-propelled grenades? Where was the air cover?

We need to get real. Shadowy units move fast within a 2,000-mile stretch of sub-Saharan sand and mountains that nomadic tribes have roamed for millennia. It would take an awful lot of elite scouts in SUVs. Drone strikes tend to create more terrorists than they kill.

That is only West Africa. The farther out you zoom, the worse it gets: devastating civilian deaths in Yemen; unending war to no avail in Afghanistan; campaigns in Iraq that destroy entire cities to save them.

We need a commander-in-chief of sound mind to oversee a Department of Defense, not a Ministry of War. This is hardly just a military matter. Combatants we kill leave widows and mothers who grieve. Every infant and grandmother blown up as collateral damage creates spreading waves of visceral hatred.

That is only logical. When we shut our borders, slash foreign aid and strafe villages, we win neither hearts nor minds.

Beyond conflict, there is so much else. It all comes down to electing leaders with a conscience and a moral compass.

At home, Trump holds 800,000 “dreamers” hostage, demanding support for his idiotic Wall along with sweeping authority to seal off our symbiotic backyard. He condemns people to early death so he can boast that he brought down Obamacare.

Abroad, he disgusts and disheartens our oldest friends. Most nodded in rueful accord when Rex Tillerson described his boss as a “fucking moron.” They see a self-obsessed nation, arrogant in its ignorance, blind to its impact on others.

Statecraft is hard enough when a leader blatantly lies. It is impossible when his power to shape policy at home is in question. Adversaries prepare for the worst. Allies seek more reliable ways to protect their own interests.

Massive election turnouts would overwhelm “safe” districts, big money infusions, and the rest. Such a groundswell gave us an unknown Illinois upstart of the wrong color with a name only a consonant different from our worst enemy.

In the aftermath of Flake’s 17-minute Senate soliloquy, Paul Ryan all but snickered. People don’t care about all that, he said. Many don’t. Nearly a third of Americans will support Trump, no matter what. For some, it’s for personal gain. For others, it is simple stubbornness. And for too many, it is about race and gender.

We can’t counter growing domestic violence unless we understand it. We need better schools, safety nets for the poor, sick, mentally fragile. Simply put, socioeconomic justice. This is not about charity but rather survival as a society.

Islamist terrorists in America are a growing threat, but we cannot cede to fear or overreaction. Since 9/11, nearly all are homegrown citizens or once hopeful immigrants radicalized by what they see as exclusion. Such collective responses as blanket travel bans worsen the problem by geometric proportions.

Trump crows as the stock market defies gravity as he reaps rewards from Obama’s economic recovery and expected tax cuts. This obscures the fundamental point. We are a free, noble nation, not a business. Congress is not meant to be a corporate board.

As Robert Mueller’s bloodhounds close in, Trump counters with his Big Lie, stirring up his deplorable diehards in bigoted hyper-nationalist terms. That should scare the hell out of us. It is, as Bill Maher observed, a short distance from goose bumps to goose steps.

Trump is not Hitler. But as Charles Blow wrote in the New York Times piece, he weaponizes untruth with to assault and subdue, “doing to political ends what Hitler did to more brutal ends: using mass deception as masterful propaganda.”

George Orwell knew about dictators. Beyond his harrowing fictional fantasies of Big Brother and a pig-run society, he was a keen-eyed reporter who took up arms against Fascists in the Spanish Civil War.

“If you want a picture of the future,” he wrote, “imagine a boot stamping on a human face—for ever.”  This may well be hyperbole. But let’s not bet on it.