The Revelations of the Panama Papers

To the Editor:

The Panama Papers have exposed the sordid details of how the rich and powerful hide their wealth by using tax havens to avoid paying taxes. It’s by far the largest leak in journalism history. The Panama-based law firmMossack Fonseca set up a nefarious global scheme to serve its clients. On Sunday, journalists released 11.5 million secret files from Mossack Fonseca’s database.

Thus far, the revelations have implicated at least a dozen current and former heads of state, their family members or close associates. These include the leaders of Russia, Britain, Iceland, China, Pakistan and Ukraine. The prime minister of Iceland has already stepped aside, and more heads are sure to follow.

Panama’s “Snowden,” responsible for the leak, has not been identified and used an encrypted chat to communicate with the Munich-basedSüddeutsche Zeitung, the recipient of the leak.

The newspapers from many countries working with the International Consortium of Investigative Journalists set aside their usual competitive nature by printing their stories on the same day. This is journalism at its finest.

JAGJIT SINGH

Los Altos, Calif.

To the Editor:

Publication of the Panama Papers has understandably generated a blizzard of articles and commentary. Most has concentrated on the use of offshore companies and trusts as vehicles for hiding ill-gotten gains and/or the evasion of taxes. There are, however, other very good reasons that people use these structures.

The first reason arises from the unequal treatment of foreign people under United States estate and gift tax laws. If an American dies with property worth $5 million, the heirs pay no federal estate tax. If a foreigner dies with $5 million in American property, the heirs will pay a federal estate tax of 40 percent, or $2 million.

This creates a great incentive for foreigners to organize their American estates in a manner that reduces or eliminates this tax burden. The easiest way is to have one’s American assets held in the name of a foreign holding company.

The second reason is confidentiality. There are millions of people around the world who live in constant fear of political instability and rampant crime. If, through hard work, creativity or just good fortune, a person accumulates significant property, he or she can easily become a target for the unscrupulous.

Because the United States is a stable country of laws, these people want to invest here. Foreign investment by individuals is an important source of capital for American businesses. If, as has recently happened with the Panama Papers, the identities of these people are stolen, both their property and security may be seriously compromised.

While rooting out crime and corruption is an admirable goal, beware the law of unintended consequences. The misappropriation and publication of this confidential information may create problems.

D. ANTHONY GASTON

San Diego

The writer is a trusts and estates attorney.

To the Editor:

I’m taking a break from filing my taxes to read about how the über-rich avoid paying theirs. Outrageous. Seems to me there’s a candidate out there who’s been talking about the rigging of the economy by the billionaire class …

JOHN FREIDRICH

South Lake Tahoe, Calif.

To the Editor:

The founder of the Vanguard Group, John C. Bogle, told the following story in a 2007 commencement speech: “At a party given by a billionaire on Shelter Island, the late Kurt Vonnegut informs his pal, the author Joseph Heller, that their host, a hedge fund manager, had made more money in a single day than Heller had earned from his wildly popular novel ‘Catch-22over its whole history. Heller responds, ‘Yes, but I have something he will never have . . . Enough.’

The sooner our society recognizes sociopathic greed as the economically violent, destabilizing disorder it truly is, the better off and more stable the world will be.

GLEN HANDLER

Verona, N.J.

Fuente: Nytimes

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