Editorial: Taxholes

It’s appropriate, as the nation collectively ponies up its annual tribute to the Internal Revenue Service, to talk about the Panama Papers, which is shaping up to be one of the most potent leaks of the digital age.

The 11.5 million documents — 2.6 terabytes — compiled by a Panamanian law firm and anonymously leaked to the public by a whistleblower, is essentially a primer on how to hide money in offshore shell companies, with detailed, real-life examples that include several individuals from soccer’s governing body FIFA, the prime minister of Iceland and leaders from Saudi Arabia, the United Arab Emirates, the Sudan and the Ukraine. Owners of shell companies have ties to the Bill and Hillary Clinton and Russian President Vladimir Putin.

Remember, this is just the client list of a single law firm in a world full of them.

The United Nations estimates that 2.5 percent of the Global Domestic Product disappears every year, between $800 billion and $2 trillion, most of it laundered and neatly folded in offshore accounts of the kind that Mossack Fonesca, the Panamanian law firm with offices in Miami and Las Vegas, specialized in setting up.[pullquote]Offshore shell corporations like these allow a very small group of very wealthy humans to participate in a shadow economy where sanctions don’t exist, nothing is regulated and nobody pays taxes.[/pullquote]

Mossack Fonseca’s relatively meager contribution to the grift, estimated at $2 trillion going back to the 1970s, barely makes a dent in the fortunes that have been hidden away, considering their actions covered more than 40 years.

Offshore shell corporations like these allow a very small group of very wealthy humans to participate in a shadow economy where sanctions don’t exist, nothing is regulated and nobody pays taxes.

What some might find interesting is that, among the law firm’s clients outed in the leak, very few were from the United States.

But that’s because it’s not illegal for Americans to hold offshore accounts — or, at least, there is no significant downside. And because corporations are people, they get to do it too.

Somewhat less sensational than the Panama Papers was the release last week of the Oxfam Report, a compiling of the assets that US corporations have parked offshore. The Top 50 US corporations have removed nearly $1 trillion from the US economy and placed it out of the tax collector’s reach — and where none of the rest of us have a chance at getting to it, locked away like a Renoir in the attic with a sheet thrown over it.

Oxfam estimates that about $100 billion a year goes uncollected, shifting the burden to small businesses and individuals, which some would have you believe is the American way.

But in truth, real patriots pay taxes. Only bad guys take the money and run.