The so-called “Panama Papers” — a massive leak of 11.5 million files that show how the world’s ultra-rich and powerful hide their fortunes in offshore accounts — shows the results of a broken global problem, President Barack Obama told reporters today.
“In the news over the last couple of days we’ve had another reminder in this big dump of data coming out of Panama that tax avoidance is a big, global problem,” Obama said. “It’s not unique to other countries, because, frankly, there are folks here in America who are taking advantage of the same stuff. A lot of it’s legal but that’s exactly the problem.”
The president also talked about the Treasury Department’s efforts on Monday to regulate “tax inversions” that allow corporations to move their addresses into offshore accounts in locales that are tax havens with very low or no taxes.
In broad strokes, much of what Obama said about the world’s biggest corporations avoiding taxes could be applied to the behavior of the world’s most rich and powerful, including heads of state and professional athletes, and those connected to them, including Russian president Vladimir Putin; Argentina’s president Mauricio Macri; the world’s greatest soccer player Lionel Messi; Ian Cameron, the late father of British Prime Minister David Cameron; and Sigmundur David Gunnlaugsson, who resigned today as Prime Minister of Iceland over the matter. In all, more than 140 politician and officials have been implicated.
“It’s not that they are breaking the law, it’s that the laws are so poorly designed that they allow people — if they’ve got enough lawyers and enough accountants — to wiggle out of responsibilities that ordinary citizens are having to abide by,” Obama said. “Here in the United States, there are loopholes that only wealthy individuals and powerful corporations have access to — they have access to offshore accounts and they are gaming the system.”
When asked if he thought the federal government — the IRS and the Treasury Department — had enough resources to track the movement of money into offshore bank accounts, Obama hit on his argument that “poorly designed” tax laws engender a system where people can just not pay taxes.
“One of the big problems that we have is that a lot of this stuff is legal, not illegal. And unless the United States and other countries lead by example in closing some of these loopholes and provisions, then in many cases you can trace what’s taking place but you can’t stop it,” Obama said. “There’s always going to be some illicit movement of funds around the world but we shouldnt make it easy. We shouldn’’t make it legal to engage in transactions just to avoid taxes.”