Pondering the "Panama Papers"

Robert Reich

The law firm Mossack Fonseca, at the center of the “Panama Papers,” had at least 2,400 United States-based clients over the past decade, and set up at least 2,800 companies on their behalf in the British Virgin Islands, Panama, the Seychelles and other places that specialize in helping hide wealth, according to an investigation of the Panama papers by the Times.

Sanford I. Weill, then the chief of Citigroup, set up an offshore account called April Fool for his yacht, for example. Alfonso Soriano, a former Major League Baseball All-Star player with the Yankees and other teams, had a Panamanian corporation created for him. John E. Akridge III, a leading real estate developer in Washington, flew to Panama to meet with Mossack Fonseca lawyers, who in 2011 created the Cyclops Family Foundation in Panama, along with a related bank account.

Many of these transactions were legal. But their clear purpose was to evade U.S. tax authorities. The documents show the firm not only created offshore shell companies and accounts, but also offered guidance on how to hide it all from the U.S. government.

America’s rich are richer than they have ever been. They are now taking home a larger share of total income, and own a larger portion of total U.S. wealth, than at any time in the last century. And today's highest marginal tax rate is nearly as low it’s been since the start of World War II. So why must they evade U.S. taxes? Are they really that greedy? Do they really have such little regard for America?

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