The International Consortium of Investigative Journalists (ICIJ) recently published a massive leak of documents from the Panama law firm Mossack Fonseca, which according to ICIJ reports “helped establish secret shell companies and offshore accounts for global power players” (CNN). On April 7, 2016, UW Political Science Professor Christopher Adolph joined Bill Wixey, anchor of Q13 Fox Seattle’s This Morning, on the news show to discuss the political and economic implications of the so-called “Panama Papers.”
So far the passports of about 200 Americans have shown up in the documents including that of a man from Bellevue, the Seattle Times reported. Considering this relatively low number, Wixey asked: “Why should we care about this?” In his response, Prof. Adolph pointed out that “a great deal of money from the United States and other countries is being squirreled away in offshore accounts and shell corporations.” Specifically, he noted:
The IRS estimates that the U.S. government loses out on $100 million in tax revenue per year. To put that into context that is almost three times the size of the Washington state budget. If we wanted to expand education spending, we could almost double it. If we wanted to give every household in America a $700 rebate on their taxes, we could if we had that money back.
When Wixey asked why so few Americans were implicated by the Panama Papers, Adolph argued that “this is just one window into a much broader problem.” After all, the documents are from only one firm and there are many more like it. Furthermore, he pointed out, if it would have been the Cayman Island Papers, instead of the Panama Papers, a lot more Americans would be sweating because “this is a much bigger problem.” Also, a lot more information is bound to come out since there are at least 3500 American residents named in these papers, Adolph noted.
In addition, Wixey and Adolph discussed the difficulty of enforcing laws pertaining to tax evasion and money laundering when offshore accounts are involved, the consequences that the international political figures who are implicated in these documents will face, as well as what we can do to prevent this from happening in the future. Regarding the latter, Prof. Adolph argued that the EU and the US need to collaborate on this and blacklist countries that allow secretive accounts. In conclusion, he maintained, “the key next step is to make this an issue on the public agenda.” And this, Adolph pointed out, is already happening in this year’s presidential primaries as Democratic candidate Bernie Sanders has been emphasizing that he “opposed a free trade agreement with Panama on the grounds that it would increase the scope of foreign tax evasion.” And “if this [issue] becomes something that voters monitor […], then this can change.”