Today's comment is by Bob Bauman,
The Sovereign Society's Legal Counsel and a former Member of the United States House of Representatives from Maryland, (1973-1981).
I haven't studied Thucydides (471 BC - 400 BC) since my freshman year at Georgetown. But I remember this ancient Greek historian perfectly described the Athenian mood during the Peloponnesian war on the eve of the fateful decline of Athens' power. He said: "The ability to understand a question from all sides meant one was totally unfit for action. Fanatical enthusiasm was the mark of the real man."
Well in that sense, U.S. Senator Carl Levin (D-MI) is a "real man" because this politician is a certified fanatic when it comes to the subject of offshore tax havens. In the Athenian sense, Webster's definition of "fanatic" and "zealot" also describes Levin accurately. It says that "a fanatic and zealot both suggest excessive or overweening devotion to a cause or belief. Fanatic further implies unbalanced or obsessive behavior, as in 'a wild-eyed fanatic.' Zealot, only slightly less unfavorable in implication than fanatic, implies single-minded partisanship."
My less than flattering description of the owl-eyed Michigan senator is prompted by his introduction in the U.S. Senate of what he calls "The Stop Tax Haven Abuse Act," S.681. This billed is deceptively titled "A bill to restrict the use of offshore tax havens and abusive tax shelters to inappropriately avoid Federal taxation, and for other purposes." He is joined in this radical endeavor by the undistinguished Senator Norm Coleman (a sometime Republican from Minnesota) and the media darling presidential candidate of the moment, Senator Barack Obama (D-ILL). I say, shame on all of them, and may their ill-conceived bit of legislative trash swiftly receive the death it richly deserves.
Fear Not: This Bill Ain't Going Anywhere
Before I comment on the contents of this 68-page bill, let me offer an educated opinion about the chances of this monstrosity becoming law, based on more than 25 years on Capitol Hill (as both staff member and member of the House of Representatives).
Folks: this bill ain't going anywhere. With a narrow, one-vote Democrat margin in the Senate and President Bush's veto power, however shaky that may be, cooler heads are likely to prevail. Meanwhile, Levin and his Senate buddies can demagogue the issue and an ignorant, unquestioning media will report their blather as if it were truth.
Nothing fails like overreaching in politics. And the radical ideas embodied in this proposal amount to a legislative jihad against the free flow of international capital, expanding global investments, well established world banking practices and just plain common sense, economic and otherwise.
And that estimate does not even take into account the numerous inherent violations of legal and constitutional rights the bill embodies. That includes the provision which presumes all offshore financial activity equals tax evasion unless an individual can prove otherwise. This bill also effectively trashes the Fourth Amendment, which guarantees against illegal searches and seizures.
Legislative Monstrosities at Levin's Hand
But first a little background. Start with the fact that in 2001 Levin conned the gullible Bush White House into adopting some of the worst, post 9/11 parts of the PATRIOT Act. These Levin provisions helped destroy Americans' financial privacy and gave government police virtually unchecked power over U.S. financial and banking activity. Since then Levin, who clearly is the boss, and the supinely cooperative Coleman, jointly have used the U.S. Senate Permanent Subcommittee on Investigations, as a platform for their anti-tax haven jihad.
Last year the subcommittee conducted a Senate hearing circus that capped off a yearlong investigation that cost millions of taxpayer dollars. This so-called investigation produced a 401 page report that went so far as to advocate curtailing century old legal rights to create trusts, corporations and other entities to protect assets and advocated an end to all financial privacy.
"The Stop Tax Haven Abuse Act," S.681 builds on that trumped up hearing and report and goes over the edge in its zealous advocacy of destroying American freedoms, all under the ruse of collecting illegally unpaid taxes.
Millions of Americans enjoy the freedom of offshore financial activity. Nevertheless, but in their 2006 hearing based on only six cases, Levin and Coleman made the startling, illogical charge that US$40 to US$70 billion in U.S. taxes illegally was evaded each year by Americans' use of offshore financial activity. The Senators offered zero proof of such wild numbers, and even IRS Commissioner Mark Everson did not endorse these senatorial fantasies. In the latest propaganda barrage in support of their new bill, the supposed tax evasion amount has been magically boosted to US$100 million a year. Again, no proof offered.
Among other enormities in this legislation, the bill creates an unprecedented blacklist of 34 offshore jurisdictions presumed to be tax evasion sites. This presumption is based only on the fact they have high degrees of financial secrecy guaranteed by law. This legislation gives the U.S. Treasury free reign "to take special measures against foreign jurisdictions and financial institutions that impede U.S. tax enforcement." It also requires all U.S. financial institutions to report to the IRS any offshore financial activity by clients and impose taxes on offshore trust income used to buy real estate, artwork and jewelry for U.S. persons.
Anti-Offshore Garbage Aside, Here's What You Can Still Do Offshore
So not withstanding the slim chances that all this anti-offshore garbage will ever become law, please keep the following in mind...
It is legal to have and use an offshore bank account.
It is legal to create and donate assets to an offshore asset protection trust or family foundation.
It is legal to form and operate an international business corporation (IBC).
It is legal to acquire dual citizenship and a second passport.
It is legal voluntarily to end U.S. citizenship and thereby remove yourself from the U.S. tax system.
It is legal to purchase offshore life insurance and annuities that allowed deferred taxes.
It is legal to invest in offshore mutual and hedge funds, precious metals and real estate.
That's the way it looks from here,
BOB BAUMAN, Legal Counsel