Today’s Editorial for June 4: A light goes on in US

Those special interests intent on bashing so-called offshore tax havens out of existence will likely little note nor long remember a story published in the New York Times on 29 May under the headline ‘Critics call Delaware a tax haven.’

But we at the Caymanian Compass were glad to see that one of America’s leading newspapers finally noticed what we’ve been writing about for going on two years now. Namely, that Delaware, the home state of US Vice President Joe Biden, has laws that allow businesses in some 30 American states to successfully avoid paying state and local taxes. You can read the article on page 12 of today’s Compass.

It would seem, at least from this NY Times article, that those who defend ‘mailbox subsidiaries’ for US companies think the arrangements are just fine. It’s not federal taxes these companies are avoiding paying, they say.

To which our response is: huh?

These supporters of tax minimisation schemes in Delaware seem not to remember that US President Barrack Obama recently backed a federal stimulus package to provide states economic incentives in these tough times.

So, let’s get this straight. The US government will not move to close down alleged ‘tax havens’ within its own borders that help companies avoid billions of dollars in state and local taxes each year.

At the same time, the country agrees on incentives to help those tax revenue-losing states through ‘tough times;’ lost tax revenues that, some state officials argue they should have been collecting for years.

And then, the feds turn around and blast ‘offshore tax havens’ for doing precisely the same thing…only this time its federal tax dollars, not those belonging to state and local governments. And by the good Lord, the US needs those federal tax dollars to bail out the states that are losing hundreds of millions in funding to ‘tax havens’ the federal government supports.

This would appear to be the height, nay, the very pinnacle on the mountain of political hypocrisy.

We would like to thank the NY Times for printing this article and doing what few mainstream US media outlets have managed to do in covering both sides of the story.

To be sure, the issues surrounding how any country pays for the services its citizens, residents and visitors require is a thorny one, filled with mind-boggling complexities and extremely tough political decisions.

But what the Delaware story published by a trusted source in the US media has accomplished is to take away the moral high ground the US, and in particular the Obama administration, has attempted to occupy during this debate.

One can hardly attempt to criticise the practises of an ‘offshore tax haven’ whilst allowing similar practices to exist within their own country.