Tax Havens, Trump’s Cabinet and Russia

Sorry, I’ve got no room for mindfulness in this body. You’ll just have to talk to my attorney.

I got trolled by a Trump supporter on Twitter today. I’m getting kind of used it. The topic was about how Trump lies about property values to different agencies, and even that value changes when the context changes. I was met by a response that said that property is valued differently depending on the context. This is normal. Really? So Trump is totally truthful about reporting assets? He hasn’t been terribly truthful about his loyalties to his former wives in the past. I wonder why his tax returns would be any different.

Happily, I turned to one source of information that is without political bias, the International Consortium of Investigative Journalists. I just ran a search for that organization and added the word “Trump” to the query. And I got this:

Trump’s inner circle is packed with heavy hitters in the Paradise Papers. Like the Panama Papers before it, the Paradise Papers show where many of the very wealthy keep their money. Trump sure seems to like those people. Curiously, the article above didn’t link Trump directly to huge tax avoidance scams. But his cabinet is lined with people who like to run companies in post office boxes strategically located in places like Barbados and the Cayman Islands. Or, maybe that’s just a coincidence.

Oddly, the same day that I was researching this article, I ran across an article below that was published by the Washington Examiner, that great big bastion of truthful conservative news. I thought it was rather ironic how Trump talks about bringing jobs home, and that his tax cuts appear to be reducing taxes to the point where paying taxes is less expensive than setting up shell corporations. Yet his friends in high places can’t resist the allure of a tax haven.

And of course, the Washington Examiner likes to use inflammatory language to “trigger” their audience. Liberals hate Trump’s tax reform huh? Doing any mind-reading lately?

A bit further into my research for this article, I came across another article published by Bloomberg, “Trump Promised to Bring Back $4 Trillion in Offshore Cash. He Missed by $3.3 Trillion”. Promises, promises. $4 trillion would really juice the economy now, wouldn’t it? So Trump was off by 90%. Supporters will tell us that we’re still waiting for the tax cuts to kick in. Sure, that article was from 2019. Two years isn’t enough time for those corporations in a mailbox to figure out their accountants and tax attorneys have been disintermediated by Trump’s Tax Cuts?

Oh, wait. I found another one from the LA Times, a notoriously negative news outlet for Trump:

They say that as of December last year, $1 trillion in tax money has been sent home. That’s very nice, but still very far short of the $4 trillion promised by Trump. Maybe they’ll pick up the pace once they are assured that Trump could win the next election without a civil war.

Few people really understand just how rigged the economy is in favor of the wealthy. I mean, they can buy the politicians that write the laws. Wealthy people understand the meaning of the phrase, “Skinner Box” and they know how to keep most members of Congress in one. They are probably aware that their Skinner Box is way better than mine. Better buttons, higher capacity, nicer view, right? I bet the luxury Skinner Box comes with Alexa.

But there is at least one economist who has this stuff figured out so that tax avoidance becomes mostly a thing of the past. He also called the collapse of the housing bubble long before that happened. His name is Dean Baker and he’s with the Center for Economic and Policy Research. Here is his proposal for an alternative corporate tax that wipes out a good chunk of the tax avoidance industry, from the New York Times, December 19th, 2019:

Suppose that, instead of taxing corporate profits, we required companies to turn over an amount of stock, in the form of nonvoting shares, to the government. We can fight over the percentage later (we’d want to match what we ideally get from corporate income taxes now, so presumably between 17 and 35 percent). But first we can focus on the principle.

The shares would be nontransferable, except in the case of mergers or buyouts, but they otherwise would be treated just like any other shares. If the company paid a dividend to its other stockholders, then it would pay the same per-share dividend to the government. If it bought back 10 percent of its shares, then it would buy back 10 percent of the government’s shares at the same price. In the event of a takeover, the buyer would have to pay the same per-share price to the government as it did to the holders of other shares.

That is a very elegant solution to corporate taxation, one that no corporation would be able to escape. The best part is that no matter what they do, they do it with the government, too. Mind you, we’re talking about non-voting shares, so the government would have little power over the company. But the company would have to treat the government like a shareholder, a partner, which it is. And there would be no way to game the system without gaming the other shareholders.

There would be no need for an army of tax lawyers negotiating for secret determination letters from the IRS that lend an exclusive tax advantage only to people who can pay for it. There would be no need for an army of accounts in the government and outside the government playing cat and mouse. The rules would be explicit.

In the current environment, we can count on Trump’s IRS to look the other way or to hand out sweet deals to Trump’s wealthy friends and donors in much the same way that Trump is egging on the Department of Justice to tilt the scales for one of his rich friends, Larry Ellison. And don’t forget how he pardons white-collar criminals and leaned on the DOJ to go lenient on Roger Stone. If the rules of the tax system are explicit, then lending a politically motivated helping hand becomes transparent.

Trump’s tax reform sided in a big way with the top 1%. Real tax reform would be simplified, explicit, and provide no means of escape for the wealthiest corporations or the smallest. It would be easy for everyone to follow.

If corporate tax rules in America and other countries were as explicit as the system suggested by Dean Baker, there would be no Panama or Paradise Papers. Why? Because an honest and simple tax system allows very little room if any for gaming the system.

Write on.

Get the Medium app

A button that says 'Download on the App Store', and if clicked it will lead you to the iOS App store
A button that says 'Get it on, Google Play', and if clicked it will lead you to the Google Play store