What if he becomes the next President of the U.S.?

We have seen the results in Iowa and New Hampshire: Barack Obama gained much attention and got many votes. So there is a (slight) chance that he might be the Democratic candidate in the U.S. Presidential race, although no one should underestimate Hillary Clinton. Obama might even win the race, although no one should underestimate John McCain either.

Theoretically, Barack Obama could be the next President and if so, for argument’s sake, how would that affect the Dutch Caribbean? In 2007, three U.S. Senators proposed a bill against tax havens and tax paradises. This is the so-called Levin-Coleman-Obama Stop Tax Haven Abuses Act. The democratic American presidential candidate Barack Obama is among the three senators that introduced the bill. Being mentioned on the list of 34 ‘offshore secrecy jurisdictions’, as the countries in the document are being described, can have an adverse effect on the financial sector.

The Netherlands Antilles is indeed mentioned on that list. Via diplomatic channels in Willemstad, The Hague, and Washington, the Dutch Antillean government is vigorously protesting against that. As a matter of fact, the Dutch Antilles have done everything possible lately to not be reputed as a tax haven. For example, with the New Fiscal Outline (NFR) the entire tax system – especially regarding international financial service – has been turned around. Meanwhile, the Antilles received the hallmark of the European Union (EU) and of the Organization for Economic Co-operation and Development (OECD). The Netherlands Antilles is not a tax haven!

I have no problem with the US enacting legislation to prevent tax abuse by US citizens and corporations. But there is no reason to attack fully legitimate jurisdictions like the Netherlands Antilles. By the way, the senators seem to forget that the USA itself is a tax haven – also by OECD standards (which helped attract more than $5 trillion in passive investment to the U.S. economy) – for many people and corporations (for an example click here or here).

Furthermore, according to a 2006 study, low-tax jurisdictions promote global economic growth. The study presents evidence that so-called tax havens provide a tax-efficient platform for cross-border investment, help boost capital formation, and also encourage pro-growth tax policies in non-tax haven countries – all of which boost economic performance. The paper also points out that the United States is the world’s largest beneficiary of tax havens and tax competition, both because the U.S. is a tax haven for foreigners and because tax havens facilitate the flow of capital to the American economy (for the paper click here).

I am not sure who I want to be the next President of the United States, though I do know that if Barack Obama would be elected, we will need some serious discussions on this with him.

Karel Frielink
Attorney (Lawyer) / Partner


29 November 2008: in addition to the above (which was published on 9 January 2008):

November 2007: Barack Obama pledged to accept public financing. Then he discovered the Art of Calculating… and ‘changed’ his mind. Change became his slogan during the campaign too!

November 2008: Barack Obama broke his promise earlier this year and raised well over US$600 million. And he keeps on calculating … like so many other politicians who seek to get and hold power.

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