Treasure Islands - Nicholas Shaxson [142]
5.This loose definition is the result of collegiate discussions among members of the Tax Justice Network and other contacts primarily in the United States. It is similar to a definition offered by Richard Murphy, of the tax consultancy and advocacy company Tax Research UK, who defines secrecy jurisdictions as “places that intentionally create regulation for the primary benefit and use of those not resident in their geographical domain. That regulation is designed to undermine the legislation or regulation of another jurisdiction. To facilitate its use secrecy jurisdictions also create a deliberate, legally backed veil of secrecy that ensures that those from outside the jurisdiction making use of its regulation cannot be identified to be doing so.”
6.See “The Cayman Islands as an Offshore Tax Haven,” http://www.cayman-information.com/cayman-islands_offshore_tax_haven.php.
7.See Jesse Drucker, “Google 2.4 percent Rate Shows How $60 Billion Lost to Tax Loopholes,” Bloomberg, October 21, 2010.
8.See Martin A. Sullivan, “Microsoft Moving Profits, Not Jobs, Out of the U.S.,” Tax Notes, October 18, 2010; and Martin A. Sullivan, “Cisco CEO Seeks Relief for Profits Shifted Overseas,” Tax Analysts, November 29, 2010.
9.John W. Diamond, “International Tax Avoidance and Evasion,” National Tax Journal, December 1, 2009.
10.Form 10-Q for Chiquita Brands International Inc., Quarterly Report, May 5, 2009, http://biz.yahoo.com/e/090505/cqb10-q.html.
11.See Senator Carl Levin news release, “Dorgan and Levin Release Study Showing Majority of Corporations Pay No Federal Income Tax,” August 12, 2008.
12.The problem is getting worse—it is estimated that by 2007 the United States was losing an additional $28 billion in annual revenue, over and above what it was already losing before 1999, due to the worsening offshore shenanigans by nonfinancial U.S. corporations. If you include financial corporations, the sum is far bigger. See Testimony of Martin A. Sullivan, contributing editor, Tax Analysts, Before the Committee on Ways and Means U.S. House of Representatives, July 22, 2010. As Sullivan reported, in 2007 a quarter of all foreign profits of U.S.-based multinationals outside the financial sector were realized in just five tax havens: Bermuda, Singapore, Ireland, Switzerland, and the Cayman Islands.
13.Media reports have claimed that Switzerland’s banking secrecy laws were the product of efforts to protect German Jews from the Nazis. This story originated from a November 1966 bulletin from the Schweizerische Kreditanstalt (today’s Credit Suisse), and it is false. See Bruno Gurtner, “Swiss Secrecy Had Nothing to Do with the Nazis,” Financial Times letters, March 26, 2009; and Sebastién Guex, “The Origins of the Swiss Banking Secrecy Law and Its Repercussions for Swiss Federal Policy,” Business History Review 74 (summer 2000): 237–266, http://www.jstor.org/pss/3116693. Note also that tiny Liechtenstein next door emerged as a kind of Swiss appendage after the First World War.
14.Luxembourg specializes in holding companies exempt from income taxes, introduced in 1929.
15.IMF data records Luxembourg’s investment liabilities at $2.5 trillion and its assets at only $1.5 trillion, a discrepancy of a trillion dollars. And these are just portfolio investments: add cash deposits, and the sums are bigger still. See “IMF Finds ‘Trillions’ in Undeclared Wealth,” Wealth Bulletin, March 15, 2010.
16.“Kim Jong-il Keeps $4bn ‘Emergency Fund’ in European Banks,” Daily Telegraph, March 14, 2010.
17.See, for example, Akin Gump Strauss Hauer & Feld LLP news release, “Halliburton Co., KBR, Inc. and KBR LLC Agree to Largest Combined Settlement of FCPA Charges by U.S. Companies,” February 13, 2009. Halliburton and KBR settled with the Department of Justice for $579 million in 2009.
18.It is no coincidence that London, the former capital of the greatest empire the world has known, is also the center of the most important part of the global offshore system. Until the early 1990s, economic historians had viewed the British empire in large part as a corollary