Following Bailout Money To Tax Havens

(CBS)  They're exotic and faraway places known to tourists for coral reefs and sandy beaches.

But to the business world they're known as tax havens, with strict bank secrecy and privacy laws, where U.S. companies can pay fewer taxes and help wealthy customers avoid taxes, too. From the Caribbean and Europe - to Panama. CBS News Investigative Correspondent Sharyl Attkisson reports.

And guess who's turned up in a new government report about tax havens?

Eleven giant recipients of your bailout tax dollars - American Express, AIG, Bank of America, Citigroup, General Motors, GMAC, Goldman Sachs, JP Morgan Chase, Merrill Lynch, Morgan Stanley, and Wells Fargo. Together they've collected more than $227 billion.

Even as they benefit from tax money, they operate hundreds of subsidiaries in places widely known for helping people evade taxes.

Although proponents say most business in tax havens is perfectly legal and legitimate, it's estimated that tax havens cost U.S. taxpayers $100 billion a year in lost revenue.

The stakes are so high that one tax haven insider was put under witness protection after he exposed hundreds of tax dodgers, and testified to Congress about his job.

One favorite among the bailout companies is the Cayman Islands. There's no income tax, no corporate tax and no capital gains tax.

Goldman Sachs has 15 subsidiaries there. Bank of America: 59. Citigroup: 90.

But Morgan Stanley beats them all with at least 158 subsidiaries in the Cayman Islands - seven times the number of hotels.

When asked about how hard it is for the U.S. government to "get at" what is going on in some of these tax havens, Dean Zerbe, a former congressional tax investigator, said "it's incredibly hard."

Zerbe believes the Treasury Department should demand that bailed-out banks cough up details of their offshore interests.

"Here we are sending taxpayers' monies to you. Tell us, banks, what you're doing to ensure that you are not helping folks avoid taxes coming the other way," Zerbe said.

None of the bailout companies we contacted would talk about their subsidiaries in tax havens, except insurance giant AIG which told us their operations do not "exist solely for tax benefit."

So the next time you're reminded the U.S. economy is in shambles, remember - there are places where business is still booming.

Places where some bailed out companies are getting your tax dollars, and may be helping others pay less.

[southernsenior]

The bill itself should have taken care of this .
It should be illegal - Put their butts in jail

[starleo146]

report about tax havens?

Eleven giant recipients of your bailout tax dollars - American Express, AIG, Bank of America, Citigroup, General Motors, GMAC, Goldman Sachs, JP Morgan Chase, Merrill Lynch, Morgan Stanley, and Wells Fargo. Together they've collected more than $227 billion.

Even as they benefit from tax money, they operate hundreds of subsidiaries in places widely known for helping people evade taxes.

Why did the republican's send Martha Stewart to Prison?????Oh she was a democrat I forgot

[enriquecaliente]

The tax situation has gotten out of hand. Of course money is needed to build infrastructure and such, but what is really needed is that the people in so called public service pay for themselves.

I'm talking about out elected officials. They get benefits that come out of the tax dollars we pay.
Check out their health benefits, free hair cuts, they live high on the hog at our expense. All of this has to change and quick. Both parties are to blame, don't let neither of them fool you. They're in the game to make money, they don't really care about the people.

[StopBeingStupid]

The income tax is ILLEGAL according to the United States Constitution... our nation didn't even have it until 1913... and even then it was instituted illegally. The question here is not, "Why are these businesses going offshore" but rather, "Why does the United States government invoke illegal taxation upon its citizens?"

If you don't want the government taking 40% of your money every single year, then stop voting for Republicans and Democrats who are ever so determined to take it.

[one4gipper]

This article is just another example of the ignorance of our "journalists." I worked overseas for 10 years for one of the U.S. banks listed. The Bank did not help U.S. citizens hide income from the IRS. It did not even run retail banking or take deposits in the tax havens.

The Bank operated in over 50 countries world-wide. Now, here's a simple question. If your business is going to operate in Asia, would you choose Singapore with an income tax rate of around 26% or Hong Kong with a tax rate of around 17%.

If fact, all of the income earned by U.S. parent companies in foreign subsidiaries is subject to U.S. tax, either immediately under the Subpart F rules or later when the income is ultimately repatriated to the U.S. as dividends. When U.S. tax is paid, the foreign income taxes are creditable against the U.S. tax, reducing U.S. tax dollar for dollar. Consequently, it is to the benefit of the U.S. fisc that a global enterprize operate in as low a tax jurisdiction as possible.

Finally, every cent of the income earned by U.S. companies in foreign subsidiaries is reported each year on a Form 5471 and filed with the Federal income tax return of the U.S. parent. In may not be taxed in that year due to the possibility of tax deferral. However, with rare exception permanent tax avoidance is not possible.

Journalists who do not understand international finance should not attempt to write about it.

[truthspeake2]

I think its pass time for another Boston Tea Party...and this time, the Revolution WILL be televised!

Wake Up America...

[rudy6543]

Direct and firm action needs to be taken against all of these companies and their tax havens. Send the military in and destroy the blasted tax havens, then take the CEOs and put them to work in a rock quarry where they soon won't forget how they raped this country, if not the world.

[rudy6543]

Here is more of that trickle down urine that republicans love so much to spread.

[oldwhiteguy1]

Its fun to listen to the 'rich' complain about high taxes and even funnier to watch the Republicans demand the rich get MORE tax breaks...
If those ba$tards would actually pay their taxes America wouldn't be in this mess.
The rich have sent so many US dollars to foreign 'havens' that there are no dollars left HERE! Instead of paying millions, to folks who rape America, lets start bring the jobs and the MONEY back home...

[blackbayan]

Thanks Katie and Sheryl for this timely update. 100B
for corporate ????? Please share your findings with CNBC.