They’re Not Tax Havens … They’re Secrecy Havens
Citing a GAO report I linked to in January, Joe Conason had a much noted article on "tax shelters" this week. He argues we should focus on finding all the unpaid taxes in the tax shelters these companies are using, rather than focusing on AIG’s measly bonuses.
In the article, Conason asks "what other reason" businesses would have for using the tax shelters, concluding that it must be the taxes.
According to the Government Accountability Office, nearly all of America’s top 100 corporations maintain subsidiaries in countries identified as tax havens. As the GAO notes, there could be reasons other than avoiding the IRS to set up branches in places such as Singapore, Luxembourg and Switzerland, where taxes are light or nonexistent and keeping clients’ illicit secrets is considered a matter of national pride.
But what reason other than evasion could there be for Goldman Sachs Group to set up three subsidiaries in Bermuda, five in Mauritius, and 15 in the Cayman Islands? Why did Countrywide Financial need two subsidiaries in Guernsey? Why did Wachovia need 18 subsidiaries in Bermuda, three in the British Virgin Islands, and 16 in the Caymans? Why did Lehman Brothers need 31 subsidiaries in the Caymans? What do Bank of America’s 59 subsidiaries in the Caymans actually do? Why does Citigroup need 427 separate subsidiaries in tax havens, including 12 in the Channel Islands, 21 in Jersey, 91 in Luxembourg, 19 in Bermuda and 90 in the Caymans? What exactly is going on at Morgan Stanley’s 19 subs in Jersey, 29 subs in Luxembourg, 14 subs in the Marshall Islands, and its amazing 158 subs in the Caymans? And speaking of AIG, why does it have 18 subs in tax-haven countries? (Don’t expect to find out from Fox News Channel or the New York Post, because News Corp. has its own constellation of strange subsidiaries, including 33 in the Caymans alone.)
I pointed out in my January post the other point of these tax havens:
What Levin didn’t say, of course, is that these tax havens allow them to avoid financial oversight, too.
And wrote another post giving a scary example of what those other reasons might include.
Masaccio pointed me to these two passages in AIG’s 10K, which sound like they may describe what Gober is talking about:
Various AIG profit centers, including DBG, AIU, AIG Reinsurance Advisors, Inc. and AIG Risk Finance, as well as certain Foreign Life subsidiaries, Read more →