Nothing is sweeter than the cry “Fight!” on a warm day in grade school. As summer temperatures tug at lawmakers in Washington, a fight has broken out between Sen. Byron L. Dorgan, a North Dakota democrat, and Anthony Travers, chairman of Cayman Finance, voice of the Cayman Islands’ financial services industry.
Dorgan has been picking on the Cayman Islands for years and Chairman Travers just could not take it anymore. The senator, author of the book Take This Job and Ship It: How Corporate Greed and Brain-Dead Politics Are Selling Out America, insists that the Caribbean nation helps U.S. multinationals to legally avoid billions in tax payments to the U.S. government.
“These businesses don’t say the Pledge of Allegiance anymore; they don’t consider themselves American. Their goal is to produce in China, sell in America, and run the income through the Cayman Islands to avoid paying taxes,” he said in an interview with BuzzFlash shortly after his book was published in 2006.
According to Cayman News Service, Travers has vowed to “seek out and correct every public statement by influential people that he believes is false where Cayman is concerned.” When Dorgan lashed out against the Cayman Islands on the senate floor earlier in the current session of Congress, it was the last straw. On June 7, Travers sent an open letter to Dorgan to set the record straight. “During the recent debate over financial regulatory reform,” the letter read, “you perpetuated the myth that the Cayman Islands is a ‘tax secrecy jurisdiction’ with ‘unbelievably ridiculous loopholes.’ Neither of those claims is true.
The Cayman Islands has full tax transparency with the United States and with 27 members of the European Union. The U.S. Department of Justice has had complete authority to access needed records in the Cayman Islands since 1990. Profits and capital gains made in the United States by Cayman Islands investment vehicles are fully taxable under United States law. The anti-money laundering legislation of the Cayman Islands has been evaluated by the International Monetary Fund and by the Financial Action Task Force and is found to be superior to that of the United States and most EU jurisdictions. As a member of the International Organization of Securities Commissions (IOSCO), the Cayman Islands have full ‘regulator-to-regulator’ disclosure with all other IOSCO regulators. Moreover, the financial services sector in the Cayman Islands is enormously important to the economic growth of the United States: the preponderant flow of capital is from the Cayman Islands into, not out of, the United States.
Most of what Americans think they know about the Cayman Islands is wrong. It’s time to learn how our financial services industry is working to promote economic growth in the United States and around the world.”
The senator responded two days later, on the senate floor while addressing the question of tax loopholes: “They’ve got 18,000 companies that claim to be there —that’s pretty crowded, right? Eighteen thousand companies claim to have crowded into this little five-story white stucco building but they are just there to claim a mailbox. Perhaps they all use the same mailbox to avoid their obligations to other countries, especially including our country. And so Mr. Travers has an apoplectic seizure because I suggest that the Cayman Islands is a place where there’s tax secrecy and he writes a letter to set the record straight. He does no such thing. He doesn’t have the foggiest idea what he’s talking about.”
Go, guys, go!