Turncoats in Bermuda shorts

Offshore tax havens continue to bilk America -- even as their supporters drape themselves in the flag.

Published March 12, 2003 6:20PM (EST)

As President Bush's vaunted "coalition of the willing" continues to shrivel -- who's left, Bulgaria, Latvia and Tony Blair? -- the coalition of those Americans willing to challenge his obsession with invading Iraq continues to grow.

Galvanized by this growing army for peace, many of the leaders of the antiwar movement are now searching for ways to build on the renewed commitment to dissent and direct the newly mobilized energy toward protesting the president's equally misguided policies here at home.

And no issue is more emblematic of this administration's perverted domestic priorities than its scandalous refusal, in a time of soaring deficits, to stop corporations and wealthy individuals from cheating the public out of billions of dollars a year by either reincorporating offshore or simply hiding their profits in offshore subsidiaries. While our young men and women are ready to lay down their lives on the sands of Iraq, these companies are allowed to avoid paying their fair share by hightailing it to the sands of Bermuda.

"We get e-mails all the time," Wes Boyd, cofounder of MoveOn.org, told me, "from MoveOn members who rightly worry about the special interests lining up at the trough while we're not looking. And they're very ready to take them on. Nothing makes people angrier than the sense that some morality-impaired businesses are buying favors from Congress and the White House, while the rest of us are being asked to sacrifice."

Boyd's group has been at the heart of the antiwar movement. With more than 1.2 million members, MoveOn.org has become the Internet hub for political activists all across the country. It was responsible for, among many other things, the hugely successful "virtual march" on Washington, a lot of the newspaper and TV antiwar advertising, and a petition with a million signatures collected within five days and delivered to the U.N. Security Council.

"Offshore tax havens," says Boyd, "are the financial equivalent of desertion under fire. And these corporate deserters are protected by politicians in Washington ostensibly elected to serve the public interest. This really gets people steamed."

This accounting sleight-of-hand is no small matter: It's depriving the U.S. Treasury of around $70 billion a year. Even more galling, these companies are being rewarded for ripping off taxpayers with massive federal contracts. Scandal-tainted Tyco, for instance, pocketed $1 billion in public money in 2001 while evading $400 million in taxes by opening up a P.O. box in sunny Bermuda.

And it's not like we can't use the money.

In Oregon, dead-broke public schools are being forced to shut down a month early; in Illinois, child care for welfare families is being cut in half; and nationwide, over a million poor Americans are facing the loss of their publicly funded medical benefits. Even the president's signature No Child Left Behind Act has been slashed -- his new budget allocates it $6.2 billion less than was originally called for, transforming it into the "A Few Million Children But Hopefully Not Yours Left Behind Act."

Every populist movement needs a catalytic issue and a crystallizing response that come to symbolize the greater struggle at hand. Think of Rosa Parks refusing to move to the back of the bus or the Greensboro Four taking a seat at that whites-only Woolworth's lunch counter.

The revolt against antipatriotic tax havens may be the spark that ignites a far-ranging movement for basic fairness and economic justice. What could be more unfair, after all, than asking hard-working Americans to dig deeper into their wallets, retirement funds and savings accounts so corporate execs wallowing in tax-free profits won't have to?

It should be a political no-brainer, an issue that transcends right-left divisions. And, indeed, politicians from both parties -- including Sens. Evan Bayh, Charles Grassley, Max Baucus, Harry Reid and Carl Levin, and Rep. Richard Neal -- have introduced or are preparing to introduce legislation that would crack down on offshore tax evaders. Even President Bush is on record saying: "We ought to look at people who are trying to avoid U.S. taxes as a problem. American companies ought to pay taxes and be good citizens." Yes, gee, they ought to. If only there was some public body that could, say, pass a law and force them to do it.

Yet for all the public posturing, behind closed doors our leaders continue to protect their corporate sponsors, allowing profits to trump patriotism -- even in this time of war.

"I now have 120 co-sponsors for my bill," Rep. Neal, author of the Corporate Patriot Enforcement Act, told me, "and I know that I would have at least 300 members supporting it if only we could bring it to the House floor for a vote. But the Republican leadership won't even let it out of committee."

The main roadblock to Neal's bill is House Majority Leader Tom DeLay, a politician who never hesitates to drape himself in the flag, but who is now actively protecting companies and tycoons that are selling their countries short in a time of war.

Demanding that DeLay bring Neal's bill to a vote would be a good first step for the anti-tax haven movement. It would take only one phone call from the president, which he's, apparently, unwilling to make. So concerned citizens should do it for him and inundate DeLay's office with phone calls, faxes and e-mails. And if that doesn't work, then the same people who filled the streets of cities all across America to protest the war might want to see if they can squeeze into the majority leader's office.

Meanwhile, in the Senate, Democrats should attach an anti-corporate tax cheat rider to every single piece of legislation and force Republicans to vote on it ad nauseam until the House leadership relents.

As for the White House, Bush, and especially Vice President Cheney -- who was CEO when Halliburton increased its offshore subsidiaries from nine to 44 -- are a lost cause. Their conversion will only come about at the deathbed of the tax shelters.

For a case study in how our leaders manage to get away with allowing the public interest to be shipped offshore, look no further than an amendment initially introduced by the late Sen. Paul Wellstone and now championed by his fellow Minnesotan Sen. Mark Dayton.

Twice the measure -- a red, white and blue slam-dunk banning government contracts for corporate expatriates -- was resoundingly approved in public. And twice the measure was gutted in the shadowy realm of behind-the-scenes conference committee negotiations.

The reason for this legislative skulduggery is obvious: No one wants to publicly defend the indefensible. Those daring to try risk looking as moronic as former congressman-turned-corporate-flack Bob Livingston did when claiming that his client, Accenture, didn't move offshore to avoid taxes, but only because the company's American and European partners couldn't agree on where to set up shop. "So they picked a nice island, Bermuda," asserted lobbyist Livingston while miraculously resisting the urge to burst out laughing.

Of course, this lame "we didn't do it for the money" explanation is the same one the White House offered up last August when it came to light that companies connected to President Bush and Vice President Cheney had created shell companies in offshore tax havens. The truth is, when corporations move offshore, the biggest beneficiaries are almost always the companies' CEOs, whose pay is tied to profits. Think of them as turncoat Robin Hoods in Bermuda shorts: They steal billions from the rest of us, then keep the lion's share for themselves. Chew on that while you're cutting the IRS that check next month.

Reeling from the most severe state fiscal crisis since the Great Depression -- it's a tossup whether 47 states will be able to balance their books next year -- state officials across America are also taking up the anti-tax haven charge. North Carolina has already passed legislation banning government contracts for expatriated companies. Similar bills are currently pending in Massachusetts, Pennsylvania and California -- where treasurer Phil Angelides is refusing to invest any of the state's money in companies incorporated in tax havens.

Now it's up to us.

With our national April 15 date with the taxman fast approaching, the time is ripe for a popular uprising that will hold our representatives accountable for their refusal to pull the plug on offshore tax cheats. We need to force them to come out of the shadows and go on record one way or another. As the president likes to say about the U.N., "It's time for people to show their cards, let the world know where they stand."

Let's have a straight up or down vote: Are you in favor of allowing corporations to continue bilking American taxpayers -- even while we are facing severe budget cuts and our soldiers are ready to make the ultimate sacrifice in Iraq?

To paraphrase a certain wartime president: When it comes to everyone paying his fair share, you're either with us or you're against us.

By Arianna Huffington

Arianna Huffington is a nationally syndicated columnist, the co-host of the National Public Radio program "Left, Right, and Center," and the author of 10 books. Her latest is "Fanatics and Fools: The Game Plan for Winning Back America."

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Iraq Middle East Tom Delay