The F Word: Eat the Rich?

Enough time has gone by that it’s worth following up on a question raised but then rapidly dropped this spring. Remember the Panama papers? That staggering dump of 11.5 million documents leaked on fourteen thousand clients of the law firm Mossack Fonseca in Panama. Mossack Fonseca offered legal assistance to people and businesses seeking to set up shop in tax havens around the world.

A couple of hundred US addresses showed up in the Panama Papers. Not all belonged to American citizens, but some did. The Obama-connected Pritzker family name appeared, as did others, like John Michael Crim, a convicted tax-evader, and Democratic donor / movie mogul David Geffen. Still, no big American banks, no huge Americans firms. As a result, no crowds massed demanding resignations, and unlike in Iceland, no political heads rolled. But maybe they should have.

Why so few Americans? Part of the explanation is probably media bias. You should never discount the deference in our media for those with money and influence, or the disdain they have for reporting that’s done mostly elsewhere. But the most important part of the answer is: Americans don’t need Fonseca. Plenty of US law firms manage offshore assets right here. They don’t need to go to Panama because they can find those firms in the US.

There’s nothing illegal after all, about setting up an offshore trust.  What’s illegal is hiding your assets to avoid paying debts or tax.  The US is a world-class tax-haven nation, because American laws on corporate structures are so flexible, the tax breaks we offer corporations are so big, and the tax we charge on capital gains is so extra-especially low. The fact is, it is hard to find a more attractive place to make a lot of money, than right here; and states like Nevada and Delaware offer virtual anonymity for corporate clients. Who needs Panama when we have the home state of Joe Biden? Come to think of it, maybe that’s why we’ve heard the White House say so little about Fonseca.  

Scandal? What scandal? Finding legal ways to dodge your debts to the nation is the good old American way of doing business.