A Lot of Our Money Is Buried in the Cayman Islands -- Let's Get It Back

By David Cay Johnston, The Nation. Posted May 16, 2009.

President Obama estimates that his proposals for ending tax haven abuses will raise $101 billion over a decade. The Senate Permanent Investigations subcommittee puts the annual tax loss at $100 billion; Treasury sets the figure at $123 billion. Collecting those lost billions could mean that Americans could pay no withholding tax from November 15 to December 31; it could pay for healthcare for about 20 million of the roughly 50 million Americans without health insurance.

Because we are civilized, we should make the Caymans invasion the last resort in an escalating series of steps designed to persuade the islands to stop undermining US national security. For starters, as I proposed in Tax Notes magazine, Congress should pass a law funding pursuit of every major tax cheat, just as we pursue every killer, rapist and drug dealer. Using offshore accounts to cheat the government out of $50,000 or more for two or more years should be made a felony per se. Then let's provide an escape hatch, which would spare prosecution of anyone who fesses up and fully pays taxes, penalties and interest. The same law should make public the name and details of every person or company that skips the opportunity to make things right.

Next, Congress should require that the Caymans and fellow tax resorts end their secrecy retroactively. To encourage cooperation it could ban US financial transactions and bar Americans from going there on vacation--measures we have imposed on Cuba for almost fifty years.

Congress is likely to do much less. The multinationals with tax havens have much more sway than John or Jane Q. Citizen. The reliably corporate-leaning journalists are openly expressing doubt that our senators and representatives will go after even a dime on the dollar from rich tax cheats to ease our burdens. Reform begins with your demanding it.

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