Many Americans know the Cayman Islands, Bermuda, Barbados and St. Lucia as Caribbean playgrounds with warm weather, pristine beaches and those fancy umbrella drinks. But these mini-states are more than vacation spots, they are offshore financial centers, or as the Obama administration calls them tax avoidance havens.
For years major corporations have been transferring their profits to these offshore sites as a way of fattening their bottom line, while depriving the federal tax collector of the government’s due. The IRS estimates that each year as much as $ 70 billion in corporate taxes are lost to these tax havens.
American corporations are not the only clients of these Caribbean banks as many countries allow their businesses to transfer profits offshore. The result is that the Cayman Islands is now the fifth largest banking center in the world and Bermuda, a British protectorate, is the richest piece of property in the world.
President Obama with trillions in deficits over the next few years and an ambitious social agenda wants to get at these offshore tax dollars and so he is proposing significant changes in the tax code that ends this tax dodge. As can be expected, the corporate sector in this country and its lobbying groups like the American Chamber of Commerce are crying foul as they claim that ending the tax dodge would put them at a comparative disadvantage with European companies.
Obama is not buying any of these complaints saying that the offshoring of profits is part of a globalization regime that has not only deprived the government of billions in revenue, but also sent hundreds of thousands of jobs out of this country. This double whammy is not going to be tolerated, especially at a time of severe economic distress.
But there is also a larger issue of patriotism and civic responsibility. Too many of these captains of industry wave the American flag and proudly wear the lapel pin as evidence of their commitment to this country and its values and then proceed to do all they can to avoid taxes. Worse yet, these “patriotic Americans” ship jobs south of the border and to Asia. Doesn’t seem to be too patriotic to me or to most Americans who struggle to pay their taxes and fear the loss of their jobs overseas.
The battle over tax havens and tax dodgers will be quite interesting as the government plays the patriotism card in order to get corporations to be responsible citizens. To most Americans patriotism means more than visible displays of the flag; it means making sacrifices for the good of the country. Helping out the Cayman Islands by dodging tax payments to Uncle Sam does not qualify as patriotic.