You’re probably a rank and file tax-paying sucker, like me, who didn’t know to park your income in offshore bank accounts and shell companies through Panama, to dodge a chunk of your income taxes. So the “Panama Papers” really were breaking news to you and me, if old news for some of the super-wealthy and a boat load of corporations, who apparently already knew what a handy little tax haven Panama had become.
The “Panama Papers,” 11.5 million documents recently leaked out of the Panama-based law firm Mossack Fonseca, have revealed a shadowy world of offshore shell companies and bank accounts set up through Panama, where the rich hide their assets and evade their tax obligations, as the Gazette reported April 4. Mossack Fonseca operates “in a shadow economy, largely free from the ‘know-your-customer’ rules imposed on U.S. banks . . . . The corrupt know they can park their cash here with few questions asked,” noted the Miami Herald, in reporting on the Papers.
A handy haven indeed.
And it got a lot a handier, when the U.S. passed the Panama Free Trade Agreement back in 2011. Among other things, the agreement has a whole chapter on financial services, including provisions generally making it a violation for the U.S. or Panama to restrict the types of legal entities through which financial institutions may supply services, or to limit the dollar value of financial transactions that can occur.
Back then, when the Panama Free Trade Agreement was being debated in the U.S., a number of critics saw this coming and tried hard to warn the American people. One of those critics was Sen. Bernie Sanders.
Bernie showed his usual foresight and good judgment when he denounced the proposed Panama Free Trade Agreement from the floor of the Senate, saying:
“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 offshore tax havens. The Panama Free Trade Agreement will make this bad situation much worse.
Each and every year, the wealthiest people in our country and the largest corporations evade about $100 billion in U.S. taxes through abusive and illegal offshore tax havens in Panama and other countries.” (Want to read more, check the Congressional Record for Oct. 12, 2011.)
But the critics of this free trade deal couldn’t prevail against President Obama and Secretary of State Hillary Clinton, who were pushing the Panama Free Trade Agreement.
As the New York Times reported back then, Secretary of State Clinton “hailed the [Panama Free Trade Agreement] . . . as an important victory for American foreign policy.”
In a statement issued the very evening the Panama Free Trade Agreement and two other free trade agreements were passed, Secretary Clinton said: “With the passage of these agreements, America has delivered for our friends and allies. . . . But our work is not yet done. We will not be content until these agreements are fully implemented . . . .”
And the critics couldn’t prevail against the unholy alliance of nearly all the Republicans in the House and a third of the Democrats there, and all the Republican Senators (except Oklahoma’s Tom Coburn who didn’t vote) and the majority of the Democrats in the Senate, who all voted for the agreement, which was signed into law by President Obama.
Only 21 Democratic Senators voted against the Panama Free Trade Agreement, along with one independent from Vermont, Senator Bernie Sanders. A large majority of Democrats in the House also voted against the agreement.
It’s not yet clear how many Americans have taken advantage of this Panamanian connection to hide income from the IRS.
But it seems likely to be more than just a few bad actors. McClatchy reported April 4 that in the Panama Papers database, there are “about 3,500 shareholders of offshore companies who list U.S. addresses. And almost 3,100 companies are tied to offshore professionals based in Miami, New York, and other parts of the United States.”
So when you’re paying your taxes this week, picking up part of the tab for the wealthy tax dodgers down Panama way, be sure to send a special word of thanks to the Republicans and the free-trader wing of the Democratic Party for sticking us with the bill. And while you’re at it, why don’t you send a real note of thanks, too, to Sen. Bernie Sanders, who spoke up for the rank and file American taxpayer, and tried to block yet another costly “free” trade deal.
Rudy Perkins, a regular Opinion page contributor, lives in Amherst.
