NEW YORK (
) -- There is a relatively easy answer to the financial troubles of Europe, America and Asia.
The answer lies in so-called "tax havens." A consensus is emerging among the world's major taxing powers that tax evasion may not be a good thing.
is being grilled over its avoidance of European taxes,
writes The Guardian
, and anger is sure to grow over a
Los Angeles Times
paid just 2% in taxes on its profits.
Tax evasion can be a simple matter of moving money around various tax havens around the world. They exist everywhere. The system's defenders insist it's all perfectly legal. Maybe it is, but laws can change.
In some ways, according to the
Financial Secrecy Index
, the U.S. is a tax haven.
Our treatment of assets held by foreigners and shell corporations, which actually became better for those foreign entities under George W. Bush, put us on the list. Bush himself was speaking in the Caymans a few days before the election. What he said isn't known, but
Fox News still noted it.
Jurisdictions specializing in the financial secrecy needed to avoid taxes exist in or near every major financial power. There's Switzerland in Europe, the Cayman Islands off the U.S., Hong Kong in China, Bahrain in the Middle East and Jersey between the U.K. and France. But none has the military force to maintain secrecy against concerted outside pressure.
The question has always been whether the pressure would be applied, and there is now some reason for hope. China and Russia seem upset with their oligarchs, while the U.S. and Europe have sound fiscal reasons for acting.
One thing we can do right away is make the U.S. less of a tax haven by passing the bipartisan
Stop Tax Haven Abuse Act of 2011.
But most of the heavy lifting has to be done by the State Department, the
and the Treasury. We need to negotiate the equivalent of a disarmament treaty among the major financial powers.
The good news of this year is that there may be consensus on that. The Cold War is over. China may beat Japan in the South China Sea through the simple expedient of its consumers preferring American over Chinese goods,
as Business Week reports.
Economic might can do what military might cannot.