Socialist US Senator on ‘Tax Haven’ Bermuda

November 26, 2010

1SenSanderspromoThe only self-described socialist sitting in the United States Senate has renewed calls for Washington to crack down on US corporations which avoid American taxes by “stashing their money in places like Bermuda.”

Freshman Vermont Senator Bernie Sanders, who calls himself  a “democratic socialist”, said in a recent  Op-Ed piece it was “absurd” the American deficit continued to soar while prosperous American firms used “tax havens” like Bermuda to hide multi-billion dollar profits from the US Internal Revenue Service.

The outspoken Senator was commenting on how US economic policy might be impacted following significant Congressional gains made by Republicans in the mid-term US elections held earlier this month.

“It is absurd that large corporations and wealthy individuals are avoiding about $100 billion a year in taxes by stashing their money in tax havens in the Cayman Islands or Bermuda.  It is wrong that in 2005 one quarter of all large corporations, earning a trillion in revenue, paid nothing in taxes.  It is laughable that last year, while Exxon-Mobil, the most profitable corporation in history, made $19 billion in profits, they not only paid nothing in taxes –- they got a $156 million refund from the IRS. Further, we need to take a hard look at waste in all agencies of government –- including the Defense Department’s $700 billion budget.”

Mr. Sanders, a former Vermont Congressman,was elected to the US Senate in 2006 running as an independent. He won 65% of the vote, easily beating his Republican opponent, and lobbies with the Democrats in the Senate.

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Comments (5)

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  1. Googlybda says:

    But we are not a tax haven! Joking!
    OOPs! Bermuda government says we aren’t! So we are not! After all we all believe everything they tell us don’t we!

  2. Charlie says:

    Bernie Sanders is also an interested party: Vermont has been steadily been building itself as an onshore option for captive insurers.

    • observer says:

      That was my thought as well, and given Bermuda’s continuing status as the top destination for them…

  3. Googlybda says:

    But Captives in Bermuda generally have same tax status as Vermont Captives. They have elected to be taxed as US tax payers when domiciled in Bermuda. The advantage of captives is their status as insurance companies, which enables them to deffer tax. regarding incurred unreported tax losses (IBNR).
    But I do agree that Bermuda’s reputation as premier location for captives is jeopardised by other sectors of Bermuda financial centre being castigated on tax avoidance issues as well as tax evasion.
    Don’t confuse captives with offshore tax avoidance!

  4. Donald Martin says:

    Senator Sanders should be more honest and admit that most of the foreign policy and domestic policy, and then eventually the laws, rules and regulations promulgated thereunder are written under the direction of very powerful US and foreign lobby groups.Or at least no major legislation is passed without their review. These groups provide enormous financial support in the re-election of a very large number of Senators and House members, which may, or not, include also this particular Senator.
    If he really wants to attack the huge and presently uncontrollable series of escalating and disastrous budget deficits, he should open his eyes and push for passage of the Fair Tax Act. That piece of meaningful legislation would make US companies more competitive in the Global market, and persuade these huge companies to repatriate their offshore income and thereby do their part to re-vitalize the economy of the country. I ask the Senator, why should a large company with business interests overseas, that is treated with suspicion and while having to compete on the World market with their right hand tied behind their proverbial backside,and having to wade through the most confiscatory, as well as confusing tax system in the entire World (over 38,000 pages in the so-called Tax Simplification Act of 1986, and also its amendments), and then come back in with its profits only to pay 35+% in corporate income taxes? We give our companies no help whatsoever, whereas almost all of the rest of the world removes their sales taxes(actually VAT) on all exported goods, and have done so for over 50 years. Perhaps the Senator is unmindful of the unfair trade advantages foreign importers to the US enjoy? Does it even bother him in the least that a US exporter receives no such advantage? With this country (the USA) being burdened with such a huge and unmanageable trade deficit? Does he think, as a member of the US Senate (albeit a freshman), he should make all these pronouncements, while the lunacy of the present US income tax system continues to cripple us. If we were really honest and objective, perhaps we should first of all pay tribute to the US Businesses, who against many obstacles (not the least of which being the US Government and its many bureaucratic agencies such as the IRS,) are able to compete in the highly competitive World market. Doesn’t he think that just for once in the American governmental misguided thought process, we should abandon the sick doctrine of punishment and or the threat of it through idiotic taxation, roll up our sleeves, remove the power of the lobby groups,get realistic, abolish the present income tax laws, and enact the Fair Tax Act into law, as presently written? I would hope that he would receive a copy of my comment, but I realize that the Senators are so far removed from the voting public (unless of course we are substantial campaign fund contributors) that his small army of advisors will shield him from any form of criticism. In the meantime, I for one support the large US Corporations for not repatriating their profits. At least I am self-employed, a difficult status to maintain these days, and I am not now nor have I ever worked for a large company, foreign or domestic, and feel that I am objective with regard to my opinion on this issue.It is important for him not to confuse tax evasion with lawful tax avoidance. Attacking offshore jurisdictions, independent or otherwise is in my opinion inaccurate and inappropriate. Bermuda was forced by Uncle Sam and by the OECD into signing through the UK a Tax Information Exchange Treaty, which if he doesn’t already know is, as typical of all US Treaties or other types of legislation with smaller countries or Colonies, almost without exception, a one-side exchange of information. The US is the recipient of information that suits its interest, and literally gives no information in return. I am not a citizen or even resident of Bermuda, but I can assure the reader os of this comment that from my own experience, Bermuda has scrupulously followed its obligations under the Tax Information exchange Act. So please do not try to paint this small country with these accusatory remarks, either directly or by inference, and describing it as ‘Tax Haven’. It is not a haven for US tax evaders. Sometimes, Senator, we as ordinary citizens, get somewhat weary of listening to statements from our elected representatives who have presided over the worse breakdown of our entire economy (that in many ways eclipses the Great Depression in the 30′s of the last Century). I realize that this Senator may have not been in the Senate long enough to have painted himself with such a cloak of distaste as yet, but for goodness sake, I would hope that he would refrain from parroting the finger-pointing that seems too prevalent with some of the other US Senators, and House Members. The Senate recently voted another pay raise, one of many over the past few years. With official unemployment rates in excess of 10%, and over a million homes in mortgage foreclosure perhaps and mindful of the terrible economic plight that has occurred perhaps the Senator exercised his right to forgo the last several pay raises available to him, as did a minority of his colleagues.