This morning I was reading Bernie’s latests attack on Hillary (saying she’s not qualified) and thought something was odd about what he saying:
"I don't think you are qualified if you've supported the Panama free trade agreement, something I very strongly opposed and, which as all of you know, has allowed corporations and wealthy all over the world people to avoid paying their taxes to their countries."
I thought, WTF does the an agreement between the US and Panama have to do with the rest of the world? Why would a trade agreement between the US and Panama help Putin hide his billions? And if it was so horrible, why aren’t there any big name Americans involved? I mean Bernie has even put out a press release tying Hillary to the Panama Papers scandal. berniesanders.com/… But where’s the scandal with respect to American interests?
I did some research and found that not only did the US Panama Free Trade Agreement not “allow corporations and wealthy all over the world people to avoid paying their taxes to their countries" (as Bernie claimed), but it didn’t help American corporations and the American wealthy to avoid paying their taxes to the US (as Bernie also claimed). In fact I found that a major reason US interests are not involved to any great degree in the scandal is because of the taxation clause of the US Panama Free Trade Agreement.
You see, when Bernie gave his speech on the Senate floor in 2011 warning that Panama was a tax haven and that the trade pact would make it worse, he was half-right. Panama was and continued to be a tax haven for the rest of the world but not for the US. One year prior to that speech, the taxation clause went into effect and helped to shut down to the American wealthy Panama’s tax haven virtues.
I ran across two articles by Eoin Higgins who is a writer and historian from upstate New York. He writes for the Huffingtonpost as well as his own blog eoinhiggins.com.
Higgins, on his blog, wondered, like so many of us, why aren’t there any big American names included in he Panama Papers data leak.
But one country has been absent from the discussion: the United States of America. No American politicians have been named (yet) in the leak. Is this because, to paraphrase media critic Adam Johnson, American politicians are “pure and good and incorruptible?”
So he looked into he history of the law firm from which his leak occurred:
Mossack Fonseca was formed in 1977 by Jurgen Mossack and Ramon Fonseca. The two Panamanians formed the company as a provider of shell corporations to the rich and powerful around the world.
1977 was also the year that the US and Panama signed the Torrijos–Carter Treaties, which provided for the transfer of the Panama Canal from US sovereignty to Panamanian. The treaty was decried in some right wing circles of the US as an abdication of US territory and the treaty’s actual purpose was murky at best.
In other words, 1977 was not the peak of good US-Panamanian relations. It is doubtful that anyone wanting to shield their finances from the IRS would have chosen a country under intense scrutiny from elements within the US government. eoinhiggins.com/...
From 1977 until 1989, a military dictatorship controlled Panama until 1989 when he US invaded Panama and deposed Noriega.
In 1989, the US invaded Panama to depose former CIA asset Manuel Noriega, who had ceased to be useful for his patrons in Washington. Storing cash, data, and legal information in a country that could easily become the target of a US intervention was not a prudent move.
So there isn’t a history of Americans using Panama as a tax haven. And even after Noriega was deposed, American wealth didn’t need Panama as a tax haven. As the Guardian pointed out, The US is a tax haven:
The anomaly may be because it’s so easy to create a vehicle to hide your money and your identity in the US that there’s no need to mess with Panama, according to Shruti Shah, vice-president of programs and operations at Transparency International, an anti-corruption organization.
“You don’t really have to go to Panama or other tax havens. They are not the only ones making it possible for corrupt officials and other criminals to launder their money. You can do it in every state in the US,” explained Shah. www.theguardian.com/...
And here is where Bernie is wrong. The trade agreement actually makes it more difficult for Panama to be a tax haven for the US:
Making matters worse for Americans wanting to store their ill-gotten gains offshore, the 2010 United States—Panama Trade Promotion Agreement included a taxation clause that effectively shut down any chance of the rich in the US using Panama as a shelter.
The Tax Information Exchange Agreement includes a clause, Article 5, that specifies the terms of information sharing between the two countries on tax related matters:
The competent authority of the requested Party shall provide upon request by the competent authority of the requesting Party information for the purposes referred to in Article 1 of this Agreement. Such information shall be exchanged without regard to whether the requested Party needs such information for its own tax purposes or the conduct being investigated would constitute a crime under the laws of the requested Party if it had occurred in the territory of the requested Party.
The Article goes on to make clear that Mossack Fonseca’s type of services would particularly be included in the information request:
Each Party shall ensure that it has the authority, for the purposes referred to in Article 1 of this Agreement and subject to Article 2 of this Agreement, to obtain and provide, through its competent authority and upon request:
(a) information held by banks, other financial institutions, and any person, including nominees and trustees, acting in an agency or fiduciary capacity; and
(b) information regarding the ownership of companies, partnerships, trusts, foundations, and other persons, including…. ownership information on all such persons in an ownership chain; in the case of trusts, information on settlors, trustees and beneficiaries; and in the case of foundations, information on founders, members of the foundation council and beneficiaries.
If Panama had ever been an attractive destination for American offshore storage of funds, this agreement shut the door on that possibility.
Wait what? Say that again: ”If Panama had ever been an attractive destination for American offshore storage of funds, this agreement shut the door on that possibility.”
Since Higgins wrote this piece, Bernie has been patting himself on the back because he called it and Hillary didn’t! So Higgins wrote another article looking into theses claims.
There’s a viral video being spread by Bernie Sanders supporters from a speech he gave on the Senate floor in 2011 about the US- Panama Trade Promotion Agreement. In it, Sanders correctly identifies Panama’s attractiveness as a tax haven. His supporters claim this as proof of the Independent Senator from Vermont’s prescience about the current situation unfolding in the international media about corruption, money laundering, and offshore accounts. -Sanders pointed out the obvious about Panama, but failed to stick the landing in his prediction for the future.
This is not to say that Sanders was wrong about Panama’s status as a tax haven in 2011- far from it. He was completely right. He pointed out an obvious truth.
But this isn’t a case of Sanders proving himself to be an all knowing sage with a clear and powerful grasp on the issues, despite his supporters’ insistence that it does:
“Panama is a world leader when it comes to allowing wealthy Americans and large corporations to evade US 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 this country and the largest corporations evade about $100 billion in taxes through abusive and illegal offshore tax havens in Panama and in other countries.” Bernie Sanders’ Statement October 12, 2011
There’s nothing in Sanders’ statement here that has been proven by the leaks. If it had, these questions would be answered:
Moreover, the Tax Information Exchange Agreement, which was part of the US Panama trade agreement was actually passed and went into effect a year before Bernie gave his speech in 2011:
The Tax Information Exchange Agreement, as I reported earlier, makes it far more difficult for Americans to hide their money in a law firm based in Panama. In theory. The agreement provides for open transparency between the two countries, although the email above indicates that the timeline didn’t match up to the TPA.
However, the tax agreement was in effect by the time Sanders gave his speech. In 2010, Panama passed Law 33 to facilitate information sharing between the two countries. Despite the timeline, the legislative machinery was moving forward.
Because of this agreement, Americans actually stopped using the now infamous Mossack Fonseca law firm:
Additionally, most Americans named in the reporting thus far stopped using Mossack Fonseca by 2011- the year the TPA went into effect and Sanders delivered his speech. In other words, the Vermont Senator was pointing out a problem while assailing the bill that apparently went a long way towards ending that problem in respect to American dollars.
So Bernie gave a speech criticizing the trade agreement claiming it would allow Panama to be an easier tax haven when article 5 of the tax agreement of that trade pact ended the problem one year before Bernie warned us about it. In other words, he was criticizing an agreement which actually helped prevent Panama from being a major American!
Sanders deserves credit for acknowledging an issue that most politicians in 2011 wouldn’t touch. He deserves credit for raising the alarm over an institutional problem that he feared would be made worse by a free trade agreement between the US and Panama.
What he doesn’t deserve is the credit his supporters are giving him for somehow predicting the scope of the problem five years ago. Sanders’ speech is clearly referring to American dollars being stored in Panama. His speech is clearly warning that the TPA would make this situation worse for American dollars. And that’s simply not what happened.
The stifled political discourse in America has made Sanders a folk hero and made his candidacy a political movement. But all he’s been doing is pointing out the obvious. He’s no Cassandra.
- See more at eoinhiggins.com/...
So as the press hails Bernie’s over, and over and over again and as Bernie tries to link Hillary to the scandal, both the press and Bernie are wrong. While his Senate floor speech in 2011 correctly identified Panama’s attractiveness as a tax haven, and it continued being a tax haven for the rest of the world, article 5 of the 2010 taxation clause of the United States—Panama Trade Promotion Agreement effectively shut down any chance of the rich in the US using Panama as a shelter.
Bernie claims Hillary is not qualified to be president because she helped push this trade agreement for the Obama administration when that agreement actually put a halt to what Bernie accurately called back then the tax haven of Panama.