海角大神

Money may be the mother鈥檚 milk of politics, but the two don鈥檛 mix well when the money is channeled through a tax haven.

The leak of documents last year from a law firm in Panama, a tax haven, led to the departure of two prime ministers (Iceland鈥檚 and Pakistan鈥檚). Another leak of papers this past weekend from a law firm operating in the Cayman Islands has now embarrassed Britain鈥檚 Queen Elizabeth II and Jordan鈥檚 Queen Noor, billionaire and political donor George Soros, onetime presidential candidate Gen. Wesley Clark (ret.), singer and political activist Bono, and US Commerce Secretary Wilbur Ross.

For Mr. Ross, the revelations represent a kind of double whammy. The new leak of documents reveals his investment in an offshore shipping company that did big business with a Russian energy firm part-owned by the son-in-law of Russian President Vladimir Putin and a billionaire close to Mr. Putin. Also, as the GOP tries to push tax reform through Congress, a reform the commerce secretary has called 鈥渟imple and fair,鈥� he himself has used complicated and opaque methods to lower his own taxes on offshore profits to near-zero.

Such business practices, though often legal, look unsavory in the white-hot glare of the political limelight. So why do rich political figures risk it?

One reason is that tax havens can save them millions of dollars. Another is that these business practices are so common that, in some circles of the super-rich, they鈥檙e regarded as standard procedure, much as middle-class taxpayers might take out individual retirement accounts to lower their taxes. And thanks to the secrecy laws of the tax havens, these transactions have been kept hidden.

Until now.

Leaked documents last year from the Panama-based law firm Mossack Fonseca (the so-called Panama Papers) and last weekend鈥檚 leaked records from Cayman Islands-based law firm Appleby and corporate services provider Estera (the Paradise Papers) are shining new light on these enclaves and the people who use them. And they raise troubling ethical and moral questions that, according to some observers, are beginning to change attitudes among some of the wealthy people who use them.

鈥淚 didn鈥檛 speak to anyone who didn鈥檛 know at some level this was a violation of moral law,鈥� says Brooke Harrington, a sociologist at the Copenhagen Business School and author of the 2016 book, 鈥淐apital without Borders: Wealth Managers and the One Percent.鈥� 鈥淵ou have benefited from this [government support]. Now you want to skip out on the bill?鈥�

No one can say for sure how many tax havens exist, because definitions vary. Eight jurisdictions figure on just about everyone鈥檚 list: the Bahamas, Bermuda, the Cayman Islands, Guernsey, Jersey, Malta, and Panama. In 2009, the authors of 鈥淭ax Havens: How Globalization Really Works鈥� counted 56 nations that could be seriously considered tax havens, home to an estimated 2 million international companies, even though many of those are shell companies.

Estimates of how much money flows through these entities also varies greatly. At least 8 percent of global wealth resides in these offshore centers, costing the owners鈥� home nations at least $200 billion in annual tax revenue, according to Gabriel Zucman, a finance expert at the University of California at Berkeley. Much of that lost revenue would otherwise have gone to developed nations in Europe, North America, and Asia.

And it鈥檚 not just wealthy individuals. The Paradise Papers also reveal that Apple and Nike used tax havens to reduce their liabilities. Apple, for example, moved to Jersey after authorities pressured Ireland to close a loophole that had allowed Apple to pay far less than the 12.5 percent corporate tax rate. In 2014, the computer and electronics giant had paid only 0.005 percent.

The company says it informed authorities of the move, which did not trim its taxes, according to the International Consortium of Investigative Journalists, a global network of more than 200 investigative reporters, which received and reported on the leaked Panama and Paradise papers.

But the maneuver draws into question the assumption of GOP tax reformers, who claim that by slashing the US corporate tax rate from a nominal 35 percent to 20 percent, corporate money will come flooding back to the United States, creating new capital and jobs.

鈥淚 don鈥檛 think that鈥檚 going to happen,鈥� says H. David Rosenbloom, a former senior Treasury official and now international tax lawyer at Caplin & Drysdale in Washington. 鈥淚 have seen countless companies go through hoops to reduce their Irish taxes below 12 percent.鈥�

And that is the problem of tax havens, according to 鈥淭ax Havens.鈥� Far from being a dark little corner of finance, 鈥渢hey play an important role in the world economy,鈥� the authors write. 鈥淔irst, they undermine the regulatory and taxation processes of the mainstream states鈥�. Second, in doing so, they skew the distribution of costs and benefits of globalization in favor of a global elite and to the detriment of the vast majority of the population.鈥�

Defenders of the system point out that many tax haven maneuvers are legal and that what they鈥檙e doing is tax avoidance, not tax evasion.

鈥淭here is nothing wrong with it,鈥� Ross told the BBC, going on to say he disclosed his investments, including the shipping company partnering with the Putin-linked company, before his confirmation hearings for the Commerce post. 鈥淭he fact that it happens to be called a Russian company doesn鈥檛 mean there is any evil in it.鈥�

(Separately, Ross was dropped by Forbes in its ranking of the richest billionaires because, it says, he grossly inflated his net worth.)

Still, by using shell companies, secret tax records, and other tax-haven tools that criminals, dictators, and money launderers use to hide their money, the super-rich are courting embarrassment if their dealings are made public. And the ethical and moral questions aren鈥檛 going away.

鈥淢any people at the top and all over the place realize this isn鈥檛 just a technical issue, it鈥檚 an ethical question,鈥� says Gawain Kripke, director of policy and research at Oxfam, a global nonprofit that tracks tax havens. And there are signs of change, he adds.

The revelations of the Paradise and Panama papers are just part of the increasing data that鈥檚 coming out about tax havens. The European Union is proposing ownership registries that would show the real owners of companies and eliminate anonymous shell corporations. The Organization for Economic Co-operation and Development, which represents the developed nations, has brought together 100 nations to look at gaps and mismatches in tax rules that allow multinationals and wealthy individuals to avoid taxes.

鈥淭he fight against unfair financial practices is making great progress,鈥� Tom Cardamone, managing director of Global Financial Integrity, a Washington-based nonprofit research and advisory group, writes in an email. 鈥淭here [is] much more work to do of course, but I think we're at the end of the beginning on this.鈥�

Public attitudes may be changing, too. In 2015, a committee of Britain鈥檚 Parliament accused international accounting firm PricewaterhouseCoopers of promoting widespread tax avoidance. Last week, the company released an asset and wealth management report, which called into question the use of tax havens by companies and individuals.

鈥淚n an era of mistrust of financial services, especially among the millennial generation, tax will become important for the brand," it said. 鈥淏eing viewed as not paying a fair share of tax or using questionable tax havens will be unacceptable.鈥�