Credit Ken Stier of TIME for coming up with a unique take on the issue of international tax havens - that the United States treats Mexico the way Switzerland used to treat the U.S.
Ongoing investigations of where Americans stash income to hide it from the U.S. is well-trod territory but I haven't seen this analysis before.
But for all the bluster about cracking down on Americans who hide money overseas, the U.S. turns a virtual blind eye to foreign tax cheats who are parking money in the U.S. banking system. In particular, the U.S. effectively serves the role of Switzerland for Mexico, which suffers from rampant tax evasion — rates go as high as 70% among professionals and small businesses, and 40% among larger businesses. Much of the estimated $42 billion a year of illicit funds flowing out of Mexico each year (not including drug cartel money) ends up in U.S. banks, according to Global Financial Integrity, an advocacy group in Washington.
Kudos also for labeling the source of the story an advocacy group - it is a liberal pro-tax group in Washington.
Stier makes a strong point about U.S. hypocrisy on this issue - apparently only countries with tax rates lower than the perfect U.S. rates are tax havens.
The influential trade publication Tax Notes also provides this observation.
"Replace the nationalities mentioned in the letter, and you've replicated the UBS affair point for point," says Robert Goulder, international editor in chief at Tax Analysts, a nonprofit publisher about taxes worldwide, which first reported on the Carstens letter. "If you are a Mexican drug lord, you can put as much money as you want into U.S. banks. We ain't going to tax it, and the Mexicans can't tax it because they are never going to know about it. It's the financial equivalent of 'Don't ask, don't tell.' "
U.S. banks are understandably fighting reform, much in the way the Swiss having been fighting reform there for decades as well.
This was a great pitch by Global Financial Integrity to get their message out in a new way and make its audience think more broadly about what makes a tax haven.