It's so easy for U.S. corporations to set up an offshore tax haven in Panama, an intern could do it. Really! To make this point, Public Citizen's Global Trade Watch division had one of its interns call up some Panamanian law firms for advice on starting up a shell company.
"Panamanian corporations basically pay no taxes on foreign-derived income," one man explained to the intern, Jessica. Another said: "You're protected by the strictest banking secrecy laws in the world," thereby "totally removing you from the legal trail."
In a video on Public Citizen's website, Jessica is told that all she needs to do is provide a passport photocopy, a bank reference letter, some info on her professional activities, and her plans for the company -- all of which could be sent by email.
Public Citizen produced the video as a serious debate over the pending Panama free trade agreement begins to heat up in Congress. Rep. Bruce Braley (D-Iowa) is leading a coalition of House Democrats in an effort to slow the Obama administration in case it plans to move forward on the agreement.
"We have an expectation that trade agreements are going to have basic standards to protect labor rights, environmental standards, food safety regulations, financial regulations and taxation transparency," Braley told the National Journal's Peter Cohn on Wednesday. "And that's why this particular trade agreement creates such concern, is because of Panama's tax haven status."
The Senate Finance Committee is set to hold a hearing on May 21.
Public Citizen opposes the agreement, calling it "the wrong handout for the wrong interests."