Making Sense Of The Paradise Papers Dump And Its Ties To The Trump Administration
MICHEL MARTIN, HOST:
You might remember the Panama Papers. Millions of documents held by a Panamanian law firm made their way to journalists last year who exposed a system of offshore companies that allowed wealthy individuals to avoid taxes and, sometimes, criminal groups to evade detection. A new document leak shows again the lengths to which some will go to avoid taxes. It's called the Paradise Papers. Michael Montgomery is a reporter with "Reveal," the radio show and podcast from the Center for Investigative Reporting. He's one of hundreds of journalists around the world sifting through the new trove of information. And since investing in offshore entities generally isn't illegal, I began by asking him why these stories matter.
MICHAEL MONTGOMERY: I think one of the big issues here is secrecy. A lot of companies and individuals go to places like Bermuda and other locales to keep ownership structures secret and to keep the connections between who's doing business with whom secret. Again, not necessarily illegal but certainly of interest to the public when you have members of the Trump administration connected - or indirectly connected - to people very close to Vladimir Putin. Then the other issue is tax avoidance. We're talking about billions and billions of dollars parked offshore that would otherwise be taxed in the U.S. and other countries. And that - you know, that affects all of us.
MARTIN: I mean, if these loopholes exist, and if they are indeed legal, should anybody be surprised that people take advantage of them?
MONTGOMERY: Well, at one level, no. I mean, especially big companies with lots of lawyers. They're definitely going to take advantage of loopholes or put their money in places where it won't be subject to the kind of taxes it might be in the U.S. Keep in mind that the people interested in doing that also push and lobby very hard to keep those loopholes in place. And we're seeing a big battle right now obviously in Washington over tax reform. There - it may touch on some of this offshore issues.
But the other thing I would say, Michel, is these advantages are only available to the super rich - big corporations, the .1 percent. And it allows them to get richer arguably more quickly because their investments aren't taxed. So once again, it is legal. But the question is, is it right? And is it fair or does it deepen global inequality?
MARTIN: Next week, the House is going to vote on a Republican-drafted tax bill. And Senate Republicans have been working on their version of the bill. And so I think the question becomes are there specific strategies that were used by wealthy individuals that you uncovered in your reporting that are important for the public to know right now as this tax bill is being debated?
MONTGOMERY: There's a long-running debate about how to deal with multinational companies that have a lot of profits or assets offshore. I mean, that's a long-running debate. And President Trump has suggested, a, that we reduce the corporate tax in the U.S. from the official rate of 35 percent to 20 percent to bring more business here to the U.S. And secondly, to encourage companies to bring all that money back to the U.S., the idea is to lower the, quote, "repatriation tax" to 10 percent from 35 percent. There's a lot of questions about how effective that would be, and I don't think we have a clear picture where that's going to come out in terms of the overhaul.
MARTIN: That's Michael Montgomery. He's a reporter and producer at "Reveal," the radio show and podcast from the Center for Investigative Reporting. As we said, he's one of the hundreds of journalists around the world who have been sifting through another trove of previously confidential documents. He's joined us from Emeryville, Calif. Michael, thanks so much for speaking with us.
MONTGOMERY: Thanks for having me.
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