Posts Tagged ‘Panama’

U.S. has free trade pact with tax-haven Panama

April 5, 2016

Revised and updated.

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In the light of the Panama Papers leaks of a Panama law firm’s files on tax havens, it is interesting to note that the United States signed a free trade agreement with Panama in 2012.

According to Senator Bernie Sanders, the agreement restricted the right of the United States to crack down on abusive tax havens.

Sanders voted against the agreement.  Senator Hillary Clinton voted for it.  Ted Cruz wasn’t yet a member of the Senate at the time.

Tax havens were a serious concern even before the trade agreement was signed, and the concern went far beyond Panama.  Still, the agreement with Panama didn’t help.

As the chart above shows, the Panamanian law firm Mossack Fonseca registered most of its shell companies in countries other than Panama.  Keep in mind that Mossack Fonseca is not the only law firm that registers shell companies in tax havens.  It is not even the largest such firm in Panama.

Here is what Sanders said about the free trade agreement.

Panama’s entire annual economic output is only $26.7 billion a year, or about two-tenths of one percent of the U.S. economy.  No-one can legitimately make the claim that approving this free trade agreement will significantly increase American jobs.

Then, why would we be considering a stand-alone free trade agreement with this country?

Well, it turns out that Panama is a world leader when it comes to allowing wealthy Americans and large corporations to evade U.S. taxes by stashing their cash in off-shore tax havens.   And, the Panama Free Trade Agreement would make this bad situation much worse.

Each and every year, the wealthy and large corporations evade $100 billion in U.S. taxes through abusive and illegal offshore tax havens in Panama and other countries.

According to Citizens for Tax Justice, “A tax haven . . . has one of three characteristics: It has no income tax or a very low-rate income tax; it has bank secrecy laws; and it has a history of non-cooperation with other countries on exchanging information about tax matters.  Panama has all three of those. … They’re probably the worst.”

Mr. President, the trade agreement with Panama would effectively bar the U.S. from cracking down on illegal and abusive offshore tax havens in Panama.  In fact, combating tax haven abuse in Panama would be a violation of this free trade agreement, exposing the U.S. to fines from international authorities.

In 2008, the Government Accountability Office said that 17 of the 100 largest American companies were operating a total of 42 subsidiaries in Panama.  This free trade agreement would make it easier for the wealthy and large corporations to avoid paying U.S. taxes and it must be defeated.  At a time when we have a record-breaking $14.7 trillion national debt and an unsustainable federal deficit, the last thing that we should be doing is making it easier for the wealthiest people and most profitable corporations in this country to avoid paying their fair share in taxes by setting-up offshore tax havens in Panama.

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The passing scene: November 6, 2014

November 6, 2014

New Shipping Canal in Nicaragua Faces Questions and Opposition by Jens Gluesing for Der Spiegel.

Click to enlarge.

Click to enlarge.

Nicaragua is proceeding with plans for a new canal connecting the Atlantic and Pacific Oceans, which will be bigger than the Panama Canal.

The Nicaraguan Canal will be paid for and built by China, which will get a 50-year concession to operate the canal and an option for an additional 50 years.  It would give China a great foothold for expanding its economic influence in the Western Hemisphere.

The canal is scheduled for completion in just five years, although construction hasn’t started as yet.  Unlike the Panama Canal, it will be big enough to handle container ships.

Some Nicaraguans are opposed, because of the impact on Lake Nicaragua, source of most of the country’s drinking water, and because 30,000 Nicaraguans will be displaced from their homes to make way for the canal.  Others question whether the canal will be financially viable, since the Panama Canal is being expanded and other central American countries are building “dry canals”—railroads to transfer cargoes from one ocean to the other.

The New Loan Sharks by Susanne Soederberg for Jacobin magazine.

desperationnationStagnation of American wages and economic uncertainty have made payday loans a big business, because so many Americans are barely getting by and have no savings cushion for unexpected emergencies.

Payday loans are not a marginal part of the U.S. economy.  They are a big business financed by economic giants such as Wells Fargo, JP Morgan Chase and Bank of America, and by Advance America, which is owned by Mexican billionaire Ricardo Salinas Pilego.

The Red Cross’ Secret Disaster by Justin Elliott and Jesse Eisinger of ProPublica and Laura Sullivan of NPR.

The Red Cross is another charitable organization which has succumbed to the corporate model, which puts fund-raising and public relations ahead of doing its job.