Or mostly a hijacking. Possibly related to the SS debate as it impacts the argument that we can't possibly expect to repay the money borrowed from the SS trust fund. And possibly related to the WaPo in that they should hire the reporter who wrote these articles. Excerpts below, starting with the excellent backgrounder on "discrete" banking.

The money involved is monumental. Secrecy havens have 1.2 percent of the world's population and hold 26 percent of the world's wealth, including 31 percent of the net profits of U.S. multinationals. According to Merrill Lynch & Gemini Consulting's “World Wealth Report” for 2000, one third of the wealth of the world's “high net-worth individuals” (as banks like to call them), nearly $6 trillion out of $17.5 trillion, may now be held offshore. Some $3 trillion is in deposits in tax haven banks and the rest is in securities held by IBCs and trusts. Experts believe that as much as half the world's capital flows through offshore centers. The International Monetary Fund (IMF) said that between $600 billion and $1.5 trillion of illicit money is laundered annually, equal to 2 percent to 5 percent of global economic output.

Today, offshore is where most of the world's drug money is laundered, estimated at up to $500 billion a year, more than the total income of the world's poorest 20 percent. Add the proceeds of tax evasion and the figure skyrockets to $1 trillion. Another few hundred billion come from fraud and corruption. ... The IRS estimates that taxpayers fail to pay in excess of $100 billion in taxes annually due on income from legal sources. The General Accounting Office said that American wage-earners report 97 percent of their wages, while self-employed persons report just 11 percent of theirs. Each year between 1989 and 1995, a majority of corporations, both foreign- and U.S.-controlled, paid no U.S. income tax. European governments are fighting the same problem. The situation is even worse in developing countries.

This is a major criticism of global capitalism, which we could eliminate. Alternately, we can legitimize this behaviour and eventually remove our own banking laws to "stay competitive". Perhaps we should ask ourselves "What would Adam Smith do?"

Joseph Stiglitz, the 2001 Nobel laureate for economics, told me, “You ask why, if there's an important role for a regulated banking system, do you allow a non-regulated banking system to continue? It's in the interests of some of the moneyed interests to allow this to occur. It's not an accident; it could have been shut down at any time. If you said the U.S., the UK, the major G-7 banks will not deal with offshore bank centers that don't comply with G-7 bank regulations, these banks could not exist. They only exist because they can engage in transactions with standard banks.”

At the state level, only one of the 55 (and increasing) "offshore" countries is in a position to prevent reform - the UK. That assumes the other G8 countries want reform, however - a dubious assumption (at least for the leadership). This article, by the same author, includes an amusing exchange with Commerce Secretary Don Evans:

Komisar: What about tax shelters? You’re talking about nickel-and-dime, the big money is in the tax shelters, in offshore secret banks accounts. Evans was aghast: No, no, no! Offshore secret bank accounts! I don’t know what you’re talking about, offshore secret bank accounts! There are ways within our tax code legally and within the spirit of America and making this a better country, there are ways that our Congress has voted into law, signed by the President, that allow for them to have deductions that could possibly lower their effective tax rate. But even those are captured by the alternative minimum tax.

Related: Warren Buffet's 2003 Berkshire shareholders' letter:

Taxes On May 20, 2003, The Washington Post ran an op-ed piece by me that was critical of the Bush tax proposals. Thirteen days later, Pamela Olson, Assistant Secretary for Tax Policy at the U.S. Treasury, delivered a speech about the new tax legislation saying, “That means a certain midwestern oracle, who, it must be noted, has played the tax code like a fiddle, is still safe retaining all his earnings.” I think she was talking about me. Alas, my “fiddle playing” will not get me to Carnegie Hall – or even to a high school recital. Berkshire, on your behalf and mine, will send the Treasury $3.3 billion for tax on its 2003 income, a sum equaling 2½% of the total income tax paid by all U.S. corporations in fiscal 2003. (In contrast, Berkshire’s market valuation is about 1% of the value of all American corporations.) Our payment will almost certainly place us among our country’s top ten taxpayers. Indeed, if only 540 taxpayers paid the amount Berkshire will pay, no other individual or corporation would have to pay anything to Uncle Sam. ... I can understand why the Treasury is now frustrated with Corporate America and prone to outbursts. But it should look to Congress and the Administration for redress, not to Berkshire. Corporate income taxes in fiscal 2003 accounted for 7.4% of all federal tax receipts, down from a post-war peak of 32% in 1952. With one exception (1983), last year’s percentage is the lowest recorded since data was first published in 1934. Even so, tax breaks for corporations (and their investors, particularly large ones) were a major part of the Administration’s 2002 and 2003 initiatives. If class warfare is being waged in America, my class is clearly winning. Today, many large corporations – run by CEOs whose fiddle-playing talents make your Chairman look like he is all thumbs – pay nothing close to the stated federal tax rate of 35%. In 1985, Berkshire paid $132 million in federal income taxes, and all corporations paid $61 billion. The comparable amounts in 1995 were $286 million and $157 billion respectively. And, as mentioned, we will pay about $3.3 billion for 2003, a year when all corporations paid $132 billion. We hope our taxes continue to rise in the future – it will mean we are prospering – but we also hope that the rest of Corporate America antes up along with us. This might be a project for Ms. Olson to work on.