April 12, 2009
Tom Cardamone
This article was originally published in The Washington Post.
Just before tax day, here is a depressing number: $356 billion. That is the Congressional Budget Office’s new calculation for how much the financial bailout will cost taxpayers, nearly twice the prior estimate.
Who won’t be helping foot the TARP bill? Tax evaders – but they might not get away with it for long.
At the recent G20 summit in London, amid pledges to reject protectionism and rebuild trust in the global financial system, the winner of the sound-bite competition was the discussion of tax havens, those key destinations around the world that are low on regulation and high on bank secrecy. The world’s largest economies agreed to “take action against non-cooperative jurisdictions” such as tax havens, promising that “the era of banking secrecy is over.”
So far, progress on limiting U.S.-owned assets in tax shelters has been ineffective. The totals, shown below, keep rising. But Congress is trying to do its part. Last month, Sen. Carl M. Levin (D-Mich.) introduced legislation seeking to close loopholes used to avoid an estimated $100 billion in taxes each year.
Current laws are catching up to tax evaders as well. In February, Swiss banking giant UBS copped to helping Americans evade taxes through various schemes, including smuggling diamonds in toothpaste tubes. The Justice Department said earlier this month that it has opened about 100 criminal investigations of American clients of the Swiss bank, though UBS itself is still refusing to turn over roughly 52,000 client names.
Such efforts indicate that a major shift is underway. The current crisis has shown that financial secrecy hurts poor and rich nations alike. It won’t make that $356 billion easier to swallow – but it’s progress.
– Tom Cardamone, managing director of Global Financial Integrity
This article was originally published in The Washington Post.