It is a common political catchphrase to demand to go after companies who store wealth off-shore in tax havens. To deal with falling government revenues, and a financial system completely detached from the realities of society, it is high time something is finally done about this.

According to The Guardian, one-third of the entire world’s wealth is held offshore, with 80 percent of international banking transactions occurring offshore, in order to avoid taxes and regulations. This is a gargantuan amount of wealth that is not being properly taxed, and is not under any form of regulation toward its use.

The implications are devastating for the economy and government. Governments are missing out on tax monies desperately needed to fund crucial operations. The financial crisis was partially spawned from the ‘shadow banking’ that goes on in these places. More than half the world’s stock finds its way offshore at one point or another.

In the U.S., foreigners are allowed to buy newly issued stock of American companies without registering it with the SEC. Foreigners do not have to pay taxes on interest earned in U.S. banks. Also, many prominent U.S. companies engage in complicated financial maneuvers to avoid taxes. Google avoids paying billions of dollars in taxes every year by sending money through Ireland to the Netherlands and then to Bermuda, according to BusinessWeek.

This is all proof that U.S. corporations could care less about U.S. citizens, and are only worried about their bottom lines. However, despite tough talk, a government cannot simply outlaw these financial centers and magically make them go away. Governments only have sovereignty within their own territory, and thus the U.S. must deal with the onshore end of these practices.

A simple solution would be to refuse to have any company onshore that engages in sending profits offshore. Any company that wants the benefit of selling to the world’s largest consumer market should have to endure the burdens of taxation, which are already lenient to corporations. Another idea would be to implement a value-added tax, which would lower tax rates for individuals and companies, as well as creating a tax that would be much more difficult to avoid.

No matter what, people suffering in this nation who regularly pay their fair share in taxes need more than political rhetoric. Concrete action must be taken and solutions must be implemented to curb this growing phenomenon.

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