Rendering unto Caesar
By Timothy Rollins
In a modern-day version of treasure hunting, the Internal Revenue Service has set its sights on the Caribbean Islands that they believe are hiding some of the assets and a lot of unreported income of U.S. Citizens. It seems that some of our more well-heeled taxpayers do not believe in rendering unto Caesar (Washington) any more than they already are, more than likely because they are paying through the nose as it is, what with Clinton's record tax increases since he took office nearly eight years ago. This is probably especially true of married people who are paying even more in some instances on account of the marriage penalty that no one in Congress seems to have the guts to abolish.
Granted, tax havens tend to be for the rich, but I also believe that more likely than not, these people earned every penny of that money. Whether they are bankers, doctors, lawyers or international executives, these men and women seem to have found a way to hide the money offshore. With the help of banks in the Caribbean tax havens of Antigua and Barbuda, the Bahamas and the Cayman Islands, Americans with funds in offshore banks in these places have found a way to access the funds in a manner that allows them to live a more comfortable lifestyle than if they relied solely on their assets in the U.S. After all, what good are assets if they cannot be used for either sharing or for personal betterment?
While Americans may legally move their assets offshore, they have to notify the IRS of said moves, and unlike Canadians who pay Canadian taxes only if they live in Canada during the year, American Citizens are required to pay U.S. taxes on all their income worldwide. The thing here is that these tax havens tend to be far less than cooperative with the IRS when they are asked about their clients' records. Unlike the Swiss who spill their guts whenever they see a piece of paper resembling a court order, these boys in the Caribbean are very good at what they do, because they are skilled at it, and even better at keeping their mouths shut. After all, they do not want to bite the hand that feeds them. Come to think of it, neither would I.
Well, the IRS has applied to a federal judge in Miami to issue summonses' for two years worth of records of MasterCard and American Express transactions that were done in the United States but were billed to banks in these tax havens. The thing here to remember is that dummies do not run these banks in the tax havens. What they do (among other things) is set up a prepaid Gold or Platinum account in MasterCard, Visa or American Express Cards. Their American customers then use these cards to draw cash and purchase goods. The banks then draw the money due them for the purchases from their clients' island accounts to pay off the balance in full each month. The Americans save by paying no interest other than a cash advance handling fee, and the bank makes a killing in the process. So what we have here is a case where everyone wins all around except the IRS, of course. In some instances, the credit cards form these places have in effect a $1 million monthly prepaid line of credit.
While MasterCard has said they will cooperate with the IRS, they aren't sure whether they have the records Uncle Sam is looking for. MasterCard spokeswoman Sharon Gamsin said that they not only have to weigh the interests of customer privacy in this issue, but also to see if any of their member banks in these countries have violated the law. Well, the fact is that it is not a violation of the law in these countries to help an American citizen evade U.S. taxes. Gamsin also stated that to her recollection, no member bank had ever been dropped for assisting tax evaders. While Visa was mentioned in the papers filed before the court, the IRS is not going after its records at least not yet anyway.
Do not get me wrong. I do not believe in, nor do I condone tax evasion in any form. What I do condemn is a tax system that penalizes many Americans for their hard work and for their inability to pass on to their families that which they have spent a whole life building. Income tax is only one facet of the American tax system that is in bad need of fixing. The death, inheritance and estate taxes need to go as well, in order that the government may learn to live on less and not on the backs of the people, both living and dead.
While I do not have a whole lot of confidence in our elected officials at this time, perhaps the time will come when a meaningful restructuring of the Internal Revenue Code will allow some of those well-heeled Americans to bring their money back home and to invest it for the growth and good of the country.
© 2000 Timothy Rollins. With files from the New York Times.
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