They're Such Children...

Enter Richard Murphy - Europe's Big White Daddy Who's Gonna Save Poor Misguided Black Africa From Itself (They're Such Children, After All) - Stage Right...

Under the impressive (if awkwardly written) heading of Is there no depth to which Barclays will not sink?, Murphy repeats this shocking (if badly written) bit of financial news from the London Observer:

Barclays bank is playing a lead role in the establishment of a tax haven in Ghana, in a move that could see huge mineral wealth in west Africa vanish into it from poverty-stricken countries’ coffers, the Observer can reveal.

The controversial British lender has for the last four years worked closely with the Ghanian government to start an International Financial Services Centre offering low taxes and minimal financial disclosure.

Development charities fear that the establishment of a fully operating tax haven so close to oil- and mineral-rich countries such as Nigeria, Sierra Leone and Equatorial Guinea will encourage a rapid increase in tax and capital flight.

Murphy is, of course, outraged by Barclays actions:

We have proven time and again that tax havens cost lives. [Actually, he has done no such thing, but that's another post for another time - DtP] It is beyond doubt that they facilitate corruption, crime and tax evasion thought the secrecy they supply.

And yet here is Barclays trying to develop another one.

Goes Barclays have any moral compass of any sort at all?

And if not, shouldn’t one be imposed upon it?

Imposed by whom? I draw your attention to the following fact disclosed in the Observer's article and repeated in Murphy's post:

Barclays "...has for the last four years worked closely with the Ghanian government to start an International Financial Services Centre offering low taxes and minimal financial disclosure".

In other words, Barclays is providing a perfectly legal service to a client, which happens to be the government of a sovereign nation, and Richard Murphy seems to think Barclays is doing something objectionable...

Evidently, Richard can't stand seeing The Negroes making up their own minds. So, rather than mentioning that they require Big White Daddy to steer them down the Right Path (which would be in bad taste, after all), Murphy decides to blame it all on Barclays... 

Nothing like a bit of leftist imperialism masquerading as "tax justice", eh?

Richard Murphy convinces the Ghanian government to do tax policy his way.

Comments

[Allen]

I seem to remember colonial Europe making quite a bit of loot out of the massive transfer of mineral wealth out of Africa. Near as I can tell you have black African nations transferring wealth to another black African nation.

Maybe he's pissed off because there isn't a white man involved anymore.

[just passin by]

I used to carpool with a liberal lady. 40 minutes one way. we discussed politics but kept it pretty civil. I only saw her get mad once, when I mentioned the inroads Republicans were making in the African-American vote (this was circa 2003); I made the comment that Democrats thought they owned the blacks (in a wiseass plantation owner accent). Her reply was very pissed off "we do!"
I just let that conversation drop, and we held off talking politics for a couple of days, lol.

[Simon]

'We have proven time and again that tax havens cost lives'

Of course they do, in just the same way as financial derivatives are a major factor in causing sexual assaults.

[richard mcenroe]

Just Passin By -- get her a DVD of "Birth of a Nation" for Xmas.

[markg8]

I guess you guys haven't seen that Obama intends to crack down on tax havens. In fact he already has Phil Gramm's Swiss UBS by the short hairs. They want to give up a few of their customers (Cheney?) but Obama wants the complete list. Do you really think Barclays hasn't explained to Ghanan politicians how they work, and what the pay off is?

[just passin by]

LOL Richard...either that or a white hood. But that would have gone over her head.

We can get one for Dickie as well.

[Dennis the Peasant]

Mark-

I doubt Barclays had to explain much of anything to the Ghanian government as far as how tax havens work and what their advantages are.

[Simon]

Getting in the car with that liberal lady might be a bit like being in a comments thread with Marky, who cries 'Gotcha' with irrelevant facts and attributes the longstanding actions of US courts and congressional committees to acts of Obama.

As UBS' first agreement to give up some of their clients was given way before Obambi took over, doesn't George Bush get all the credit?

[richard mcenroe]

just passin by ... well, yes, but what else would she do with it?

[markg8]

Let's see, Dennis writes a post about Murphy being angry at Barclays for setting up a tax haven in Ghana "in a move that could see huge mineral wealth in west Africa vanish into it from poverty-stricken countries’ coffers" and I write about Obama's intent to crack down on tax havens and that's "just irrelevant facts" to Simon.

George Bush had 8 years to do something about this kind of dishonorable unpatriotic crap and what did he do? Not much as far as I can see. On a related note:

"A new report by the General Accounting Office, the watchdog agency of Congress, found that of the 100 largest U.S. corporations, 83 have subsidiaries in tax havens."

"Obama said the loophole "let subsidiaries of some of our largest companies tell the IRS that they are paying taxes abroad, tell foreign governments that they are paying taxes elsewhere, and avoid paying taxes anywhere.

In 2004, the last year for which data are available, U.S. multinational corporations paid about $16 billion of U.S. tax on approximately $700 billion of foreign active earnings -- an effective tax rate of about 2.3%."

[Dennis the Peasant]

Mark-

It should be noted that legal tax avoidance is just that... legal! When you say multinationals are only paying 2% on foreign earnings, my response is simple: What's your point? Multinationals do not write tax code... Congress and the President does.

The duty of any management of any company is to minimize costs (which includes the costs of taxation) in order to maximize returns to the company and its ownership (in the case of the 100 largest, that would be the general public, pension funds, etc.). As long as what is being done is legal, then all the huffing and puffing about taxes paid or not paid is just that - huffing and puffing.

If President Obama wishes to raise corporate taxes by closing "loopholes" as they relate to tax havens, that's fine. If he really thinks hiking tax rates on corporations is going to stem the exodus of jobs from the USA, that's fine too. I think however, you will find that a number of congressional Democrats will be hard pressed to follow Obama's lead on this one... They have businesses in their districts whose interests they will attempt to protect.

[Dennis the Peasant]

markg8 has been having trouble with Typepad (given my experiences with Typepad, all I can say is "What a surprise!"), so he emailed me this comment for posting:

From WSJ's Market Watch:
"A key initiative would narrow a provision that allowed U.S. companies to defer paying U.S. taxes on the profits they make on their overseas investments.
Another would eliminate a loophole that allowed companies to make foreign subsidiaries disappear for tax purposes."

"A new report by the General Accounting Office, the watchdog agency of Congress, found that of the 100 largest U.S. corporations, 83 have subsidiaries in tax havens." (My note: There's 18,000 corporate mail drop boxes in one building in the Caymans alone)

"Obama said the loophole "let subsidiaries of some of our largest companies tell the IRS that they are paying taxes abroad, tell foreign governments that they are paying taxes elsewhere, and avoid paying taxes anywhere.""

I don't doubt it'll be a hard fight to change the tax code Dennis but as regards tax loopholes that encourage US companies to offshore profits and jobs that's exactly what Obama intends to do. It was a campaign issue he ran on in 2008 just as Kerry did in 2004. But according to a radio report I heard yesterday it's only expected to raise that 2.3% tax rate to 3.7%. Something to keep in mind when the right starts screaming bloody murder and predicting doom.

As for illegal tax evasion by individuals it's pretty clear that many Americans in the top 1% and especially in the top 1/10th% have engaged in it for years with the assistance of banks in the Caymans, Switzerland and elsewhere. UBS has a particularly bad exposure in the US. As of last fall 28,000 of the firm’s 81,000 employees worldwide were in this country. Judging by that number evidently a huge chunk of the their overall biz is here. Carl Levin has been making threats since last summer about yanking their US banking license if they don't fully cooperate. Yesterday Obama said, "If financial institutions won't cooperate with us, we will assume that they are sheltering money in tax havens and act accordingly,". In short if they want to do business in the US then they have to obey US law.

[Dennis the Peasant]

Mark-

I'd suggest you look at the tax code on this one. The profits Obama is proposing to tax are untaxed because they are undistributed. This means they were earned in the foreign country and retained there for use by the corporation. In other words, the are untaxed because they have not been returned to the USA.

The harsh reality of this particular bit of tax code has absolutely nothing to do with shipping jobs overseas. And has nothing to do with multinationals dodging taxes. This is all about Obama coming up with some sort of pseudo-justification for a tax increase. We hear a variation on this particular theme every time a tax increase is contemplated... There are (evil) corporations/rich people/etc. out there that are not PAYING THEIR FAIR SHARE. It's standard political bullshit, and I can't say I'm either surprised or angered by the fact that Obama is playing that hand. All I'm saying is this: It's a bit more complicated than you imagine.