Chasing the Runaway Tax Slaves
Roberts, Paul Craig, The Washington Times (Washington, DC)
Byline: Paul Craig Roberts
In case you didn't know, the U.S. Senate has a Permanent Subcommittee on Investigations. Last week Michigan Democrat Carl Levin summoned Treasury Secretary Paul O'Neill to appear before the committee. Mr. Levin demanded that Mr. O'Neill explain himself for opposing the OECD's plan to capture runaway tax slaves.
The Organization for Economic Cooperation and Development (30 industrialized countries) has identified 36 "tax havens" (small countries mainly in the Caribbean) that provide financial privacy. Prosecutors maintain that these havens facilitate tax evasion and also enable criminals to launder their illicit profits.
Mr. Levin accused Mr. O'Neill of protecting tax evaders and criminals by opposing the OECD. Promptly put on the defensive, as Republicans always are when interrogated by Democrats, Mr. O'Neill promised to crack down on tax evasion. He would achieve this, he said, through tax treaties with offshore havens and not through OECD coercion.
Mr. O'Neill missed his chance to refocus the hearing from "tax cheats" to much more important issues: civil liberties, the right to privacy, and national sovereignty.
Mr. O'Neill could have begun by pointing out that "tax haven" is a loaded term designed to put financial privacy in a bad light. If critics of "tax havens" were forthright, they would use the term "privacy havens." Critics object to privacy, because they want the right to troll bank accounts and security holdings for large accounts that might reflect income from criminal activity such as narcotics.
No doubt privacy aids and abets criminals. But privacy has many positive functions as well, and these functions should not be abolished just in order to better chase after criminals. For example, financial privacy gives voice to many people who live in political jurisdictions where dissent is risky and where wealth is confiscated. (Asset forfeiture laws are making even the U.S. such a place.) Would political dissidents be as bold if the governments they oppose had a handle on the location of their financial assets?
In many countries (Columbia and Brazil, for example) financial privacy is necessary to protect people and family members from becoming targets for kidnappers. In countries with corrupt governments, low-paid government bureaucrats sell the identities of wealthy people to kidnappers. …