Recently, the International Consortium of Investigative Journalists released a preliminary report on the results of a 15-month study of the “offshore banking” industry. The report promises to be a much bigger earthquake or source of embarrassment and further investigation, perhaps even criminal proceedings, than the so-called “Wikileaks” release. It involves the investigation of nearly 120,000 accounts held by persons, many of them prominent in politics or in just about every sort of business that one might imagine, from just about every country around the world. The results of this investigation are truly astounding, indicating that somewhere between 21 to 30 trillion dollars, amounting to about one-third of the world’s cash, has been stashed away in this manner, much of it with the help of what have been, at least up to now, respected banking institutions.
Already, the discloser almost brought down the administration of France’s President Francois Hollande after it was revealed that his budget minister, Jerome Cahuzac, has been stashing away millions of Euros in banks in Asia and repeatedly lying about it, even while his boss, having been voted in on the Socialist Party agenda, was promising to solve France’s monetary problems by soaking the rich! And no doubt, when the full report, which includes the names of about 4,000 U.S. citizens, is released, there will be plenty of embarrassment here at home to go around.
So why do people take the risk stashing away their money this way? Well, for some at least, it appears that they believe that they live in countries where the economy or even the government is so unstable that they feel it is safer to put their cash in some foreign bank account. Indeed, we have long been familiar with the stories of dictators and other unsavory politicians stashing huge amounts in Swiss banks –- although it is hard to figure why so many Russian oligarchs figured their money would be safer in Cyprus when the Cypriot banks had jeopardized themselves with massive holdings in Greece!
But the major reason for all this off-shore banking, it seems, is that so many of these foreign banks provide shelters from the taxes that would be otherwise levied on the money held or by the income earned by a citizen at home. In other words, offshore banking provides an easy, and highly popular -- like “Everybody does it!” -- way to cheat. In fact, the IRS estimates that the US Treasury is being bilked at least 70 billion dollars a year by tax evading US citizens.
Now, of course, at least under U.S. tax law, it is not illegal to bank “off-shore” or to invest overseas. But what is illegal, however, is to hide that fact from the IRS. Thus, much of this offshore banking activity presents us with a moral or ethical problem, although many people seem to think that it doesn’t, at least if they can get away with it. Their reasoning is something like thinking that it is OK to cheat on your wife or husband as long as she or he doesn’t find out about it. Their fidelity as a spouse, or their obligations as a citizen, never seems to cross their mind.
Of course, if one is honorable, at least in the first case, I suppose that one might confess and beg for God's forgiveness -- and hope that one’s spouse will have them back. But in the second case, justice would seem to demand that they pay what they owe, or even a hefty fine as well, or else, if they insist on freeloading their way through life, be afforded an extended vacation in a federal penitentiary. But again, unfortunately, even that is at the honest taxpayer’s expense.
R W Kropf 5/2/2013 OffshoreCheating.doc 13-05-02.html