Levinism: The Truth Behind the Obvious Lies
"Tax havens are engaged in economic warfare against the United States and honest, hardworking American taxpayers." Economic warfare? Oh please. That's the Big Lie U.S. Sen. Carl Levin, (D-Mich) mouthed to the press last week. You may know Senator Levin from his past anti-tax haven diatribes. But what many don't know is Levin's histrionic performance is more than a little ironic.For starters, he chairs the same notorious Senate subcommittee that the late Senator Joseph R. McCarthy (R-Wisc) headed up over a half century ago. McCarthy became this subcommittee's chairman in 1953. It was McCarthy's allegedly reckless use of this subcommittee in pursuing Communists in the U.S. government that gave rise to the term "McCarthyism."To this day, McCarthyism is still defined as "the practice of making unfair allegations or using unfair investigative techniques, in many instances unsupported by proof or based on slight, doubtful, or irrelevant evidence." (Random House Unabridged Dictionary, 2006)
Levinism — The New McCarthyism
Let me suggest a new odious term to describe the phony attacks on the world's legitimate tax havens: "Levinism." For an exact definition, especially as it pertains to tax havens, see McCarthyism above.Last week Levinism, with all its bombastic hyperbole, was on display under the approving gaze of the Senator's carefully courted media attention. Once again, he chose targets that were straw men of his own creation: Those so-called unjust tax havens.
Same Argument, Different Day
This Levinism hearing is only one in a series that dates back several years. All of these hearings adhere to the same theatrical theme of wild accusations based on little proof. Basically: Levin likes to say that the IRS supposedly loses US$100 billion a year because thousands of American tax payers use offshore tax havens and banks to hide their income and evade taxes. (That mythical US$100 billion figure has never been proven, in spite of a four inch long footnote #1 in the subcommittees latest "report" that accompanied the hearing.)Levin's star witness against tax havens surely lacks credibility. In fact, he didn't even show up at the hearing. Instead, Levin provided a videotaped testimony by Heinrich Kieber. The videotape showed him as a silhouette against a white screen, as a shadowy crook with eyeglasses and a balding head. Kieber is said to be living under a new name in an undisclosed "witness protection program." He's wanted by Interpol and Liechtenstein police for grand theft and violation of bank secrecy laws. The German secret police agency, the Federal Intelligence Service (BND), (equivalent of the U.S. Central Intelligence Agency), paid an illegal €5 million ($ 7.3 mil) bribe to Keiber, a disgruntled employee of LGT Bank in Liechtenstein. And this is what Levinism passes off as a credible witness.
The Other "Star Witness" Is None Other Than UBS
The other star witness actually showed up — Mark Branson, chief financial officer of UBS's global wealth management. He surprised the hearing by saying UBS, allegedly having been caught assisting tax evasion, regrets "any compliance failures that may have occurred." UBS's solution: They will no longer provide banking services to U.S. citizens. He said the bank is also working to sell out its estimated 19,000 American clients to the IRS. The bank wants to help identify those involved in U.S. "tax fraud" — although under Swiss law failing to pay your taxes is not a crime. Also, UBS probably will be violating Swiss law if they rat on the clients they allegedly helped avoid taxes.
This Outlandish Statement Is Patently Absurd
But let's go back to Senator Levin's McCarthyite statement that "tax havens are engaged in economic warfare against the United States and honest, hardworking American taxpayers."This is a patent and absurd lie. It's typical of Levinism at its demagogic worst.Daniel J. Mitchell, senior Cato Institute fellow specializing in tax issues, has pointed out that competition from tax havens has reduced taxes worldwide and that the leading tax havens (for non-citizens) in the world are the United States and the United Kingdom.
A Moral Case for Tax Havens
Mitchell adds: "Finally, there is even a moral case for tax havens: They play a critical role in protecting people who are subject to religious, ethnic, sexual, political, or racial persecution. Most of the world's population lives in regimes that have inadequate human-rights protections, and people with assets often are targets of oppressive governments.""The ability to put money in a tax haven offers important protections for these potential victims. Even the United Nations, in a 1998 report attacking tax havens, felt compelled to admit that, "For much of the twentieth century, governments around the world spied on their citizens to maintain political control. Political freedom can depend on the ability to hide purely personal information from a government."Tax havens are free and independent jurisdictions in most cases. These countries are freely making their successful way in this world of global economics by offering low or no taxes on foreigners who do business there. Unlike the United States, where Levinism has made certain financial privacy dead and gone, tax havens guarantee financial privacy by law. Unfortunately, money grubbing crooks such as Levin's darling witness, Herr Heinrich Kieber, sometimes violate those laws.As a matter of fact, tax havens and global tax competition are positive goods that should not be curtailed, but rather expanded. I say that if individual Americans are violating tax laws let the IRS prosecute them as they have thousands before.But let us put an end to reckless Levinism that spreads outright lies about tax havens. Group guilt is not only illogical prejudice, but in America it has always been unconstitutional