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SURREY'S
SILENCE:
SUBPART
F
AND
THE
SWISS
SUBSIDIARY TAX
THAT
NEVER
WAS
STEVEN
A.
DEAN*
I
INTRODUCTION
Today, tax
law
has
a
Liberia
problem.'
In
2000,
the Organization
for
Economic
Cooperation
and
Development
(OCED)
published
a
list
of
jurisdictions
it
had
identified
as
key
threats
to
the
welfare of
its
wealthy
member
states.
2
The
list
overwhelmingly
featured
Black
and
brown
jurisdictions.
Liberia,
a
state
then
lost
in
civil
war,
should
not
have
been-but
was-among
those
states
targeted
by
the
OECD.
3
Only
an
eleventh
hour
intervention
by
a
majority
of
the
U.S.
Congressional
Black Caucus
spared Liberia
and
the
others from
the
OECD's
threat
of
sanctions.
4
In
2021,
the
OECD
featured
a
racist
meme
in
support
of
policies
that
prominent
Black
states
refuse to embrace.
5
Race
continues
to
play
a
pernicious
role
in
shaping
international
tax
policy
each
time
policymakers,
scholars,
or others
strategically
accuse
Black states
of
misdeeds.
6
Copyright
©
2023
by
Steven
A.
Dean.
This
Article
is
also
available online at
http://lcp.law.duke.edu/.
*
Professor of
Law,
Brooklyn
Law
School.
This
article
benefitted
from helpful
comments
from Ajay
Mehrotra,
Larry
Zelenak
and
the
editors
of
this
journal.
It
also
benefitted
from excellent
research
assistance from
Shivani
Patel.
1.
Steven
A.
Dean
&
Attiya
Waris,
Ten
Truths
About
Tax
Havens:
Inclusion
and
the
"Liberia"
Problem,
70
EMORY
L.J.
1659,
1663
(2021)
("Stubborn
facts
of
inequality,
racism,
and
privilege
have
kept
outdated
perceptions
alive,
stifling
efforts
to address
persistent
problems of
inequality,
racism,
and
privilege.").
2.
OECD,
TOWARDS
GLOBAL TAX
CO-OPERATION:
REPORT
TO
THE
2000
MINISTERIAL
COUNCIL
MEETING
AND
RECOMMENDATIONS
BY
THE
COMMITTEE
ON
FISCAL
AFFAIRS
17
(2000),
https://www.oecd.org/tax/harmful/2090192.pdf
[https://perma.cc/RZL2-TRE7].
3.
Id.
4.
Most
of the members of the
Congressional
Black
Caucus signed
a
letter
to
the
U.S.
Treasury
Secretary
excoriating
the
OECD
effort,
and
the United
States withdrew
its
support
just
two
months
later.
Steven
A.
Dean,
Inclusive
International
Tax
Policymaking:
FATCA,
the
U.S.
Congressional
Black
Caucus,
and
the
OECD
Blacklist,
99
TAX NOTES
INT'L
83
(2020).
5.
See
OECD,
OECD/G20
BASE EROSION
AND
PROFIT
SHIFTING
PROJECT:
TWO-PILLAR
SOLUTION
TO
ADDRESS
THE
TAX
CHALLENGES
ARISING
FROM
THE
DIGITALISATION
OF
THE
ECONOMY
15
(2021),
https://www.oecd.org/tax/beps/brochure-two-pillar-solution-to-address-the-tax-
challenges-arising-from-the-digitalisation-of-the-economy-october-2021.pdf
[https://perma.cc/8S2D-
3SQT].
After
I
published
an
article
criticizing
the brochure's
racism,
the
OECD
edited
the
image.
The
current
version
of
the
brochure
replaced
the
original
sun-drenched,
palm-tree bedecked
island with
a
city
skyline.
Original
version: [https://perma.cc/68NS-R3N7].
Edited
version:
https://www.oecd.org/tax/beps/brochure-two-pillar-solution-to-address-the-tax-challenges-arising-from-
the-digitalisation-of-the-economy-october-2021.pdf/
[https://perma.cc/2NF8-MDEC].
6.
This
is
the
loud
aspect
of the
Liberia
problem.
The
OECD's
use
of
racist
imagery
and
the
LAW
AND
CONTEMPORARY PROBLEMS
Sixty
years
ago,
as
this
article details,
the
United
States
had
a
Swiss
tax
haven
problem. The
policy
response
highlights
an aspect
of
the
Liberia
problem.
A
reluctance
to name
and
shame
Switzerland
(despite
feverish
behind-the-scenes
efforts
to
contain
the profound
threat
U.S.
experts perceived
in
the
rise
of
Swiss
subsidiaries
of
leading
U.S.
multinationals)
exemplifies
the quiet
aspect
of
the
Liberia
problem.
Stanley
Surrey,
the
man
many
consider
to
be
the
greatest
U.S.
tax
scholar,
7
had
an
opportunity
to
tell an
indelible
story
of
Switzerland's role in
facilitating
corporate
tax avoidance.
Instead, Surrey
chose
to
remain
largely
silent.
The
Stanley
S.
Surrey
Papers housed
in
Harvard
Law
School's
Historical
&
Special
Collections
reveal
that
Surrey's Subpart
F
addressed
a
very
specific
challenge.
8
But
for
the
public,
thanks
to
Surrey's
uncharacteristic
reticence,
that
would
be
impossible
to
know.
As
detailed
below, in
their
internal
correspondence,
Surrey
and
his
team
focused
explicitly
and
exclusively
on
an
urgent
threat
posed
by
Switzerland.
The
notorious
complexity
of
international
tax
law
ordinarily
ensures
the
absence
of
both
heroes
and
villains
in
the narratives
that
animate
it.
9
However,
in
this
instance,
Surrey's
team
left
no
doubt about
"the
importance
we
attach
to
solving
the
Swiss
tax
haven
problem."'
0
The
Surrey
Papers
reveal
a
series
of
events
not
out
of
place
in
a
spy
thriller.
Part
II
describes
the
quiet
aspect
of
the
Liberia problem,
explaining how
strategic
silence
on
the
part
of tax
experts and
officials
leaves
space
for
the public
to
conjure
a
vision
of
the
international
tax
landscape consistent
with
anti-Black
racism
and
other
biases.
Part
III
describes
the
impact
of
the
loud aspect
of
the
President
Biden
incident described
below
offer two examples
of
policymakers' exploitation of
bias.
Scholarship
in
prestigious
journals
exploits
racial
bias
in
much
the
same
way.
See,
e.g.,
Vanessa
Ogle,
Archipelago
Capitalism:
Tax
Havens,
Offshore
Money,
and
the
State,
1950s-1970s,
122
AM.
HIST.
REV.
1431
(2017)
(using
a
suggestive
archipelago
metaphor
to
describe
a
system of
tax
abuses
that
encompasses
jurisdictions
like
Delaware
as
well
as
tropical
islands).
Even pollsters
exploit racial
bias
when they
survey
individuals
about their
views
on
corporate
tax
avoidance.
See
Vanessa
Williamson,
How
Americans
Think
About
Taxes,
Address
(Jan.
20,
2017)
(citing
Greenberg
Quinlan
Rosner
Research
(June
17-22,
2003)
which
asked
the
following
suggestive
question about
corporate
tax
abuse:
"We should
close
the
tax
loophole
that
allows
corporations to create
tax
havens
in
countries
such
as
Bermuda.").
7.
Robert
Goulder,
Stanley
S.
Surrey-The
Greatest
U.S.
Tax
Scholar?,
FORBES
(June
8,
2022),
https://www.forbes.com/sites/taxnotes/2022/06/08/stanley-s-surrey--the-greatest-us-tax-
scholar/?sh=21b58b28c598
[https://perma.cc/FS4W-G7AC]
(quoting
Professor
Lawrence
A.
Zelenak
as
saying
"I
think
that's
absolutely right
that
he
is
the greatest
tax scholar
in
the
history
of the
United
States.
Certainly
in
the
history
of
the
U.S.
income
tax.").
8.
Harvard
Law
School
Library,
Historical
&
Special
Collections,
https://hollisarchives.lib.harvard.edu/repositories/5/resources/7491/collection
organization
[https://perma.cc/T9P9-DLXE].
9.
The
challenges
faced
by
the
international
tax
system
at
the
time
the OECD
published
its
blacklist
were
longstanding,
complex,
and
systemic.
See
Michael
J.
Graetz,
Taxing
International
Income:
Inadequate
Principles,
Outdated
Concepts,
and
Unsatisfactory
Policies,
26
BROOK.
J.
INT'L
L.
1357,
1359
(2001)
("[N]ot
only
the
fundamental structure
of
the
system
for taxing
international
income
today,
but
also
many
of the
core concepts used
to
implement
that
structure-concepts
such
as
permanent
establishment,
corporate
residence, and
arm's
length
pricing-date
from
a
time when airplanes were
first
becoming
a
regular means
of
travel
....
").
10.
Memorandum
from
Nathan
N.
Gordon,
U.S.
Dep't
of
the
Treasury,
to
Stanley
S.
Surrey
(Dec.
7,
1961)
(on
file
with
author).
74
[Vol.
86:
73
SURREY'S
SILENCE
Liberia problem
on
international
tax
policy,
highlighting
the
anti-Black
racism
at
the
heart
of
the
OECD's
2000
attack
on
tax
havens.
Part
IV
offers
startling
insights
into the
origins
of
Subpart
F
from
the
Surrey
Papers,
unearthing
a
furious
effort
by
Surrey
and
his
colleagues
to
document
and
contain
an
urgent
threat
posed
by
the
formation
of
Swiss
Subsidiaries
by
leading
US
multinationals.
Part
V
explores
the
continuing role
of
the
quiet
aspect
of
the
Liberia
problem
in
the
work
of
leading policymakers and
scholars,
revealing
the
ongoing
impact
of
Surrey's
remarkable
silence.
II
THE
SURREY
PAPERS
The
quiet
aspect
of
the Liberia
problem-as
revealed
by
the
Surrey
Papers-
tells
a
story
of
a
profound
disconnect
between the
private
motivation
and
the
public
perception
of
the
Kennedy
administration's
efforts.
Surrey
allowed
that
divide
to
grow
by
confining
blunt
talk
about
Switzerland
to
internal
correspondence.
He
allowed
the
public's
ire
to
focus
on
native
women
under
gaily
painted
parasols."
For
more
than
half
a
century,
Subpart
F
has
been
one
of
the
most
important
features
of
the
international
tax
policy
landscape.
For
Surrey's
team,
Subpart
F
served
as
a
tax on
Swiss
subsidiaries
of
U.S.
corporations,
a
bold
strike against
a
hardened
target. The
Surrey
Papers make
that
apparent,
detailing
how
they
risked
the
threat
of
criminal
prosecution
by
Swiss
authorities
to
carefully
count
those
Swiss
subsidiaries
before
and-with
satisfaction-after
Subpart
F's
introduction.
Had
Surrey and
his
team revealed the
high
drama
of
espionage and
diplomacy
that
marked the
birth
of
Subpart
F-or
had
they
simply
ensured
that
Subpart
F's
inscrutable name
was
less
so-the
international
tax
policy
landscape
might
look
very
different
today.
Instead,
Surrey
exploited
the
quiet
aspect of
the
Liberia
problem.
That
choice
helped
pave
the
way
for
its
loud
aspect,
evident
in
the
racially
inflected
narrative
of
tax
havens
the
OECD
and
others
exploit.
In
the
early
days
of
the
Kennedy administration,
high
ranking
U.S.
Treasury
officials
shared
intelligence
marked
"CONFIDENTIAL"
showing
that
leading
U.S.
corporations
had begun
to
form subsidiaries
in
Switzerland
to
shield
their
global
profits
from
taxation.'
2
That
triggered
a
flurry
of
activity
that
culminated
in
a
threat
of
Swiss
prosecution
for
espionage.1
3
The
Surrey
Papers
"tax
haven"
files
document
one
of
the
most
remarkable
episodes
in
the
long
arc
of
taxation,
until
now lost
to
history.
To
be
sure,
Surrey
made
no
secret
of
Switzerland's
role
in
corporate
tax
avoidance.
With Surrey
serving
as
his
chief
tax
policy
advisor,
Switzerland
found
11.
See
infra
note
15
and
accompanying
text.
12.
Memorandum
from
Nathan
N.
Gordon,
U.S.
Dep't
of the
Treasury,
to
Stanley
S.
Surrey
(Mar.
1,
1961)
(on
file
with
author).
13.
Memorandum
from
Nathan
N.
Gordon,
U.S.
Dep't
of
the
Treasury,
to
Stanley
S.
Surrey
(undated)
(on
file
with
author).
No.
2
2023]
75
LAW
AND
CONTEMPORARY PROBLEMS
itself
in
the
crosshairs
of
Kennedy's
opening
salvo
against
tax
abuses
by
multinational corporations.
4
Somehow,
Surrey's
silence
about
Switzerland
grew
as
the pursuit
of
a
legislative
solution
to
the
Swiss
tax
haven
problem
intensified.
In
victory,
Surrey's
silence
became
an
enduring
fixture
of
the
international
tax
policy
landscape.
Surrey's
lasting tax
haven
compromise
would come
to
be
known
not
as
the
Swiss
subsidiary tax
it
was
crafted
to
be,
but
by
the
nondescript
label
Subpart
F.
Surrey's
embrace
of
silence
suggests
his
growing
understanding
of
the
power
of
a
quiet
aspect
of
the
Liberia
problem.
By
declining
to
name-and-shame
Switzerland,
Surrey
allowed
others to
substitute
explanations
for
his
actions
that
suited
their
worldviews."
Alongside
confidential
diplomatic
briefings on
Switzerland,
the
Surrey
Papers contain
a
telling
Wall
Street
Journal
article
from
early
1962.16
It
suggests
that
Surrey knew the
public
preferred
to
imagine
another-more
colorful-target
for
Subpart
F.
With
a
dateline
of
Nassau,
Bahamas, the
article carefully
sets
the
scene:
"On
picturesque
Rawson
Square
here
native
women
sit
under
gaily
colored
parasols
plaiting
and
selling
handbags,
hats and
other
accessories."
"
The
OECD
has
never
offered an
explanation
for
its
blacklist.
It
has
never
withdrawn
it
nor
acknowledged
the
bias
that
shaped
it.1
8
Others
have
embraced
14.
See
Text
of
Special
Message
on
Taxes
Submitted
by
President
Kennedy
to
Congress,
N.Y.
TIMES,
Apr.
21, 1961,
at
18-19 (recognizing
an
unfairness
in
the
tax
advantages
that
U.S.
firms
"operating
through
foreign subsidiaries"
get
as
opposed
to
those
firms
that
operate
in
the
U.S.,
and
proposing
changes
to
U.S.
tax
law
to
remedy
this).
15.
A
newspaper
article
nestled
in
the
Surrey
Papers
among
the
memorandums
described
here
suggests
the
associations
the
public
would draw from
the
application
of
the
term
tax
haven
to
jurisdictions
in
which
multinational corporations
formed
subsidiaries
to
engage
in
tax
avoidance.
Rather
than
Switzerland,
it
focused on
the
Bahamas,
then
a
British
colony
known
as
a
place individuals could
avoid
taxation.
See
Lee
Silberman,
Fading
Tax
Haven?
Proposal
in
Congress
Could
Hobble
American
Ventures
in
Bahamas,
WALL
ST.
J.,
Mar.
29,
1962
(describing
what
would
become Subpart F
as
a
threat
to
the
Bahamas).
16.
Id.
17.
Id.
18.
In
the
absence
of
any
such
acknowledgement,
the
OECD's
2000
blacklist
remains
influential,
a
fact
highlighted
by
the
proliferation
of-
and
the
inclusion
of
Liberia
on-subsequent
lists
of
tax
havens.
See,
e.g.,
JANE
GRAVELLE,
CONG.
RSCH. SERV.,
R40623,
TAX
HAVENS:
INTERNATIONAL
TAX
AVOIDANCE
AND
EVASION
4
(Jan.
6,
2022)
(noting
that
"[t]he
OECD
created
an
initial
list
of
tax havens
in
2000"
and
including
Liberia
in
a
table
titled
"Countries
Listed on
Various
Tax
Haven
Lists");
James
R.
Hines
Jr.,
Treasure
Islands,
24 J.
ECON.
PERSPECTIVES
103, 104
(2010)
(a
peer-reviewed
scholarly
article
including
Liberia
on
a
list
of
tax havens).
When
the
EU
released
its
initial
blacklist
in
2015,
Liberia
was
included.
EU
Releases
World
Tax
Havens
Blacklist,
EU
BUS.
(Jun.
18,
2015),
https://www.eubusiness.com/news-eu/economy-politics.120n
[https://perma.cc/3DDR-PYFE].
The
EU
explained
that
its
list
was
created
by
identifying
jurisdictions
"that
feature
on
at least
10
member
states'
blacklists." Id.
Sharman described
the
proliferation
of
obviously flawed
tax
haven
blacklists.
J.C.
Sharman,
Dysfunctional
Policy
Transfer
in
National
Tax
Blacklists,
23
GOVERNANCE
623,
624
(2010)
(describing
the "often
arbitrary
and
inaccurate
nature
of
such
lists").
Of
course,
not
all
references
to
the
OECD's
blacklist
were
uncritical.
See,
e.g.,
Jahanzeb
Akhtar
&
Veronica
Grondona,
Tax
Haven Listing
in
Multiple Hues:
Blind,
Winking
or
Conniving?
6
(S.
Ctr.,
Research
Paper
No.
94,
2019)
(acknowledging
"serious
questions
on
the
OECD's
objectivity
of
application
of
its
criteria and
the motivation
behind
the
deliberately
weak criteria
used
by
it").
76
[Vol.
86:
73
SURREY'S
SILENCE
its
blacklist
approach,1
9
fueling
the
racist
falsehood
that
equates
corporate
tax
avoidance with
white
sand
beaches.
Even President
Biden
sought
political
advantage
in
naming and
shaming Black
states
as
tax
havens,
while
ignoring
the
white
states
his
experts
carefully
build
the
case
against.
20
Examining
the
Surrey
Papers
suggests
that
the
source
of
so
much
of
the
good
in
U.S.
twentieth
century
tax
policy
deserves
a
share
of
the
blame
for
allowing
today's
Liberia
problem
to
flourish.
The
enduring
impact
of
his
silence
can be
seen
as
Black
states
face
harsh
punishments-punctuated
by
threats
of
violence-for
crimes
committed
with
impunity
by
white states.
White states
remain
in
the
crosshairs
of
experts
but
receive very
different
treatment
from
policymakers.
In
the
same
year
the
OECD's
brochure
used
the
palm
tree
meme,
U.S.
Treasury
Secretary
Janet
Yellen plied
Ireland
with
pastries.
2
1
The Surrey
Papers reveal
that-despite
being
aware
of
the
threat-Surrey
and
his
team
of
experts
left
the
door open
to
the
misinformation
that
fuels
the
Liberia
problem
today.
All
they
did
was
speak
more
plainly
in
private
than
they
did
in
public.
But
that
would
prove
to
be
enough.
From
the
start,
Surrey
and
his
team
of
experts
focused
on
Switzerland.
Had
they
been
as
outspoken
about
Switzerland
publicly
as
the
Surrey
Papers reveal
they
remained behind
closed doors,
the
OECD
might
not
have
had
the
opportunity to
leapfrog from
misinformation
to
a
meme.
By
challenging
the
public
perception
that
native
women
under
parasols
could
symbolize
the
failures
of
an
international
tax
system
that
he
would
help
to
shape,
Surrey
might have
ensured
that
there
would
be
no
Liberia
problem.
Instead,
he
remained
silent.
III
GANGSTERS
Beginning
in
2000,
tax
scholars
began
to
confront
a
daunting
reality.
Despite
a
flourishing
network
of
bilateral treaties
long
overseen
by
the
OECD
and hailed
as
a
"flawed
miracle"
2 2
and
"a
triumph
of
international
law,"
23
the
world's
tax
19.
See
EU
List
of
Non-cooperative
Jurisdictions
for
Tax
Purposes,
EUR.
COUNCIL,
https://www.consilium.europa.eu/en/policies/eu-list-of-non-cooperative-jurisdictions/
[https://perma.cc/BMF7-DE2G]
(listing
non-cooperative
tax
jurisdictions).
20.
Steven
A.
Dean,
A Plea
to
President
Biden
to
Stop
Perpetuating
Racist
Tax
Policy,
NATION
(Apr.
13,
2021),
https://www.thenation.com/article/economy/biden-tax-policy/
[https://perma.cc/XL3Y-
LMBG].
21.
Alan Rappeport,
Pastries
and
Persuasion:
How
a
Global
Tax
Deal
Got
Done,
N.Y.
TIMES,
Oct.
28,
2021,
at
B1
("Over
a
two-hour
breakfast
of
tea
and
pastries
at
the
Hotel
Amigo
in
Brussels
in
July,
Treasury
Secretary
Janet
L.
Yellen
tried to persuade
Paschal
Donohoe,
the
Irish
finance
minister,
to
abandon
Ireland's
rock
bottom corporate
tax
rate
and
join the
global deal
the Biden
administration
was
racing
to
clinch.").
22.
See
Reuven
S.
Avi-Yonah,
The
Structure
of
International
Taxation:
A
Proposal
for
Simplification,
74
TEX.
L.
REV.
1301,
1303
(1996).
23.
H.
David Rosenbloom,
International
Tax
Arbitrage
and
the
"International
Tax
System",
53 TAX
L.
REV.
137, 164
(2000)
(identifying
the
"network
of
international
tax
conventions
...
that
represents,
cumulatively,
a
triumph of
international
law
in
the
field
of
taxation").
No.
2
2023]
77
LAW
AND
CONTEMPORARY PROBLEMS
system
was
failing.
24
Although
the
consequences
of
that
failure
would
inevitably
be
felt
more
keenly
by
poor
states,
it
became
clear
that
no
amount
of
wealth
or
privilege
would shield
states
from
its
flaws.
Experts
warned
that
"[t]ax
competition
.
. .
threatens
to
undermine the
individual
and
corporate
income
taxes,
which
traditionally
have
generated
the
largest
share
of
revenue
for
modern
welfare
states."
25
Faced
with
that
stark
truth,
the
OECD
responded
with
a
lie.
At
the
time,
the
OECD
was
already
well
on
its
way
to
becoming
a
de
facto World
Tax
Organization,
with
an
influence far
outstripping
its
official
status.
26
In
2000,
the
OECD
might have
admitted
that
the
system
it
had
been
tasked
with
bringing to
life
and
sustained
for
four
decades
had
entrenched
"inadequate
principles,
outdated
concepts,
and
unsatisfactory
policies"
that
threatened
even
the
wealthiest countries
in
the
world with
austerity.
Instead,
it
chose
to
round
up
and
punish
a
group
of
predominantly
Black
and
brown
states.
2 8
Both
in
deference to
its
role
as
an
informal
World
Tax
Organization, and
an
apparent
predisposition
to
believe
lawlessness
ascribed
to
Black
and
brown
states,
the
world
embraced
the
misinformation
that
would
eventually
be
reduced
to
a
meme
of
a
palm
tree. The
OECD's
triumph,
it
complained,
had
been
sullied
by
the
misdeeds
of
Black
states
like
Liberia.
The
claim
was
grotesque
given
that
civil
war
had
engulfed
Liberia
for
years,
but
it
was
widely
repeated
and
has
been
largely
unchallenged
since.
29
Since
2000,
the
world has
embraced
a
racialized
notion
of
tax
havens.
The role
of
predominantly
white
states
like
Switzerland-and
even
the
United
States
30
-
in
threatening
the
fiscal
health
of
both
rich
and
poor
states
remains
as
clear
to
Surrey's
heirs
as
it was
to
his
original
team,
and
just
as
hidden
from
everyone
else.
While
more
subtle
than
in
1962,
in
2000
the
racism
that
sustains
the
Liberia
problem
remained
easy
to
spot.
An
OECD
representative
speaking
with
a
New
24.
See
Reuven
S.
Avi-Yonah,
Globalization,
Tax
Competition,
and
the
Fiscal
Crisis
of
the
Welfare
State,
113
HARV.
L.
REV.
1573,
1576
(2000)
(observing
that
an
inability
to
tax
placed
the
welfare
states
of
wealthy
countries
in
jeopardy).
25.
Id.
26.
See
generally
Arthur
J.
Cockfield,
The
Rise
of
the
OECD
as
Informal
World
Tax
Organization
through
National
Responses
to
E-Commerce
Tax
Challenges,
8
YALE
J.L.
&
TECH.
136
(2006).
27.
Graetz,
supra
note
9,
at
1362
(2001)
("[W]e,
I
mean
the
professional
international
tax
community-lawyers,
accountants, and
economists,
in
the
universities,
private
practice, and
the
government....
[H]ave
been blinded
by
adherence
to
inadequate
principles and
remain
wedded
to
outdated
concepts.
As
a
result,
we
have
no sound
basis for
pronouncing
our international
tax policy
satisfactory
or
unsatisfactory.
Fashioning
proper
policy
requires
clear
and
appropriate
normative
bearings.").
28.
OECD,
supra
note
2.
29.
See
supra
note
18.
30.
See
Will
Fitzgibbon,
Debbie
Cenziper
&
Alice
Crites,
The
Gatekeepers
Who
Help
Open
America
to
Oligarchs
and
Scammers,
INT'L
CONSORTIUM
OF
INVESTIGATIVE
JOURNALISTS
(Apr.
5,
2022),
https://www.icij.org/investigations/pandora-papers/the-gatekeepers-who-help-open-america-to-
oligarchs-and-scammers/
[https://perma.cc/X29M-RVR8]
("Companies
established
in
Wyoming have
been
listed
in
overseas
lawsuits
alleging
medical
fraud
in
Russia,
tax dodging
in
Hungary
and
bank
theft
in
Zimbabwe,
foreign
court records
show.").
78
[Vol.
86:
73
SURREY'S
SILENCE
York
Times
reporter
described
the
mostly Black
and
brown states
it
had
singled
out
as
"behaving
like
gangsters."31
It
was
easier
for
a
casual
observer
of
international
tax
policy
to
picture Liberia
as
a
menacing
gangster
than
Switzerland,
and
indeed,
the former found
itself
undeservedly
included
on
the
OECD's
list
and
the
latter
omitted.
That
fanciful
claim
was
also
infinitely
easier
to
grasp
than
the
complex
dynamics
scholars
understood
to
be at
the
heart
of
the
threat
to
the
welfare
states
of
wealthy
countries.
3 2
The
OECD's
2000
effort
would
falter after
a
challenge
from
the
U.S.
Congressional
Black Caucus.
33
The Bush
administration
publicly
reversed
course
after
initially
continuing
the
Clinton
administration's
support. The
Black Caucus
easily
recognized
the
loud
aspect of
the
Liberia
problem.
As
a
result, the
OECD's
sanctions
would
be
deferred-all
because
one
member's
Congressional
district
appeared
on the
OECD
blacklist.
34
And
perhaps
because
another
member
of
the
Black Caucus
had
considerable
tax
expertise.
35
Together
with
a
majority
of
the
Caucus-and
the
most unlikely
of
allies
36
-
two Black
members
of
Congress
stopped the
would-be
World
Tax
Organization
in
its
tracks.
Their
intervention
ensured
that
Liberia
would
not
face
economic
sanctions from
the
world's wealthiest
nations
while
in
the
depths
of
a
bloody
civil
war.
But
saving
Liberia
did
little to
reduce
the
role
of
misinformation
in
international
tax
policy.
As
the
definitive
history
of
the
effort
put
it:
"[t]hanks
to
the
OECD's
campaign,
aided
by
.
..
related
initiatives,
'tax
haven'
has
become
a
pejorative
term
with
which
to
threaten
reputation
and
thus
the
viability
of
small
states'
financial
sectors."
37
The
Black Caucus
saved
Liberia,
but
it
could
not
save
the
world from
the
Liberia problem.
31.
See
Barry
James,
Tax
Havens
Face
OECD
Threat
of
Sanctions,
N.Y.
TIMES
(June
14,
2000),
https://www.nytimes.com/2000/06/14/news/tax-havens-face-oecd-threat-of-sanctions.html
[https://perma.cc/WK3H-M5ZE]
(quoting
an
OECD
spokesman
who
asked:
"Why
give
aid
to
people
who
are
behaving
like
gangsters?").
32.
See
supra
note
9.
33.
Cordia
Scott,
Black
Caucus
Says
OECD
Tax
Move Unfairly Blasts
Developing
Nations,
22
TAX
NOTES
INT'L
1600
(2001).
34.
Letter
from
Donna
M.
Christensen,
Delegate,
U.S.
House
of
Representatives, to
Hon. Paul
H.
O'Neill,
Sec'y, U.S.
Dep't
of Treasury
(Mar.
12,
2001).
35.
Dean,
supra
note
4
(describing
the
role
of
U.S.
Virgin
Islands
Delegate
Donna
Christensen
in
enlisting
Congressional
Black
Caucus
members
like
New
York's
Representative
Charles
Rangel-at
the
time
the
Ranking
Member
and eventually Chair
of the
House
Ways
and Means
Committee,
responsible
for
tax
legislation-into
the
fight
against
the
biased
OECD
effort).
36.
J.C.
SHARMAN,
HAVENS
IN
A STORM:
THE
STRUGGLE FOR
GLOBAL TAX REGULATION
67-68
(2006)
(noting the role
conservative groups played
in
alerting
the
Congressional
Black Caucus
to
the
OECD
effort).
37.
Id. at
106.
Sharman
focuses
on
the
"small"
size
and
geographic
location-in
the
Caribbean-of
the
states
the OECD targeted
rather
than their
racial
makeup.
It
should
be
noted
that
Liberia
has
roughly
the
same
population
as
Ireland
and
is
nearly
ten
times
the
size
of Luxembourg
and
not
much
closer
to
the
Caribbean than
either.
No.
2
2023]
79
LAW
AND
CONTEMPORARY PROBLEMS
IV
STANLEY
SURREY'S
SILENCE
Misinformation
in
international
tax
policy
neither
began
nor
ended
with
that
threat
of
OECD
sanctions.
3 8
More
than
a
decade later,
the
OECD
acknowledged
the
complexity
of
the
threat
to
its
international
tax
regime
with
its
Base
Erosion
and
Profit
Shifting
initiative.
Years
later
still,
the
OECD
responded
to
criticism
of
its
exclusive
membership-in
its
more
than
half-century
of
existence
it
has
never
had
a
majority
Black
member-by
forming an
Inclusive
Framework
to
seek
input
from outsiders.
But
the
OECD
has
never
acknowledged-much
less
made
amends
for-its
role
in
spawning
the
Liberia
problem.
For
good
or
ill,
the
OECD
need
not
shoulder
all
of
the
blame.
In
1961,
President
Kennedy
submitted
a
"Special
Message
to
the
Congress on
Taxation."
39
In
it,
he
decried
the
use
of
"the
tax
haven
'device"'
and
called
for
its
"elimination." He urged
the
end
of "tax
deferral
privileges
for
those
forms
of
activities,
such
as
trading,
licensing,
insurance
and others,
that
typically seek
out
tax
haven
methods
of
operation."4"
Kennedy's
only
example of
a
tax
haven
was
Switzerland.
The Surrey
Papers
reveal
that
Kennedy's reference
to
Switzerland
represented
only
the
tip
of
an iceberg.
Kennedy's
tax
experts
furiously
investigated Switzerland's
role
in
furthering
the
tax
avoidance
efforts
of
some
of
the
country's
largest
corporations.
4
'
Surrey
served
as
Kennedy's
Assistant
Secretary
for
Tax Policy
at
the
Treasury
Department,
his
chief
tax
policy
advisor.
Surrey's
correspondence
with
his
team
details
a
multi-year
attempt
to
plumb
the
depths
of
what they
described
in
internal memoranda
as
"the
Swiss
tax
haven
problem."
Less
than
a
month
after
Kennedy's
inauguration, the
U.S.
embassy
in Switzerland
delivered
a
bombshell:
a
report
highlighting
American
firms
in
Switzerland.
42
One
of
Surrey's
top
deputies shared
that
report
with
Surrey
with
a
note
describing
it
as
"an excellent
analysis
of
the
use
of Switzerland
as
a
tax haven."
43
By
the
fall
of
1961,
Surrey's
"Collection
of
Tax
Haven
Data
in
Switzerland"
ran
into
a
significant
obstacle.
44
In
their
zeal,
Surrey's
team
encountered
a
"problem
collecting
information
on
American
and
other
tax
haven
corporations
38.
The
European
Union
has
increasingly
taken
on
the
role
of
criticizing
countries
in
the Global
South
as
the OECD
has
grown
quieter.
Stefanie
Geringer,
Dissemination
of
Tax
Good
Governance
Standard
by the
EU
and
the
OECD:
A
Comparative Analysis
of
Changes
in
Treatment
and
Tone,
77
BULL.
INT.
TAX.
(forthcoming
2023)
("[T]he
European
Union
has
chosen
to
reproduce
outdated
and
biased
patterns
of
assessment
without
restriction,
especially
in
the
context of the
EU
blacklist.").
39.
Text
of
Special
Message
on
Taxes
Submitted
by
President
Kennedy
to
Congress,
supra
note
14,
at
18-19.
40.
Id.
at
18.
41.
In testimony
to
that
focus,
the
Surrey
Papers
include
an
organizational chart of Chrysler's
Swiss
operations.
See
Organizational Chart, Geneva
Offices,
Chrysler
International
S.A.
(on
file
with
author).
42.
See
supra
note
12.
The
report Gordon
shared
with Surrey
was
dated
February
14,
1961.
43.
Id.
44.
Memorandum
from
Nathan
N.
Gordon,
U.S.
Dep't
of
the
Treasury,
to
Stanley
S.
Surrey
(Oct.
4,
1961)
(on
file
with
author).
80
[Vol.
86:
73
SURREY'S
SILENCE
in
Switzerland."
45
Surrey
was
informed
that
"[i]t
is
almost
impossible
...
to
augment"
basic
published
information
on
corporate
registrations
"because
of
stiff
prohibitions
in
Swiss
law
against 'economic
espionage."'
46
An undated
draft
memo
to
Surrey details
the
full
history
of
a
deputy's
effort
to
collect
information
on
Swiss
subsidiaries
of
U.S.
corporations.
47
They
secured
funding
from
the
State
Department
to
finance
the
effort,
coordinated
with
Consular
and
IRS
officials,
and
attempted
to
hire
a
private
firm
in
Zurich
recommended
by
the
embassy.
4 8
Although
using
a
private
firm
had
been intended
to
avoid
antagonizing
Swiss
authorities,
when
the
IRS
informed
Swiss
tax
officials
of
their
plan-who
then
informed
the
Swiss
Foreign
Office-Swiss
objections
brought
the
contractor's
work
to
an
abrupt
halt.
49
After
failing
to
receive
the anticipated
approval from
the
Swiss
Foreign
Office,
the
Treasury
team
received
a
warning from
the
Swiss
tax
delegation
to
the
OECD
that
the
Swiss
Attorney
General
retained
"jurisdiction
over
matters
involving
economic
espionage" and
"had
the
case
under
advisement."
50
The
final
paragraph
of
the
draft
referred to
a
telegram
that
ominously
warned "the
contractor
could
not
proceed
with
the
compilation without
running
heavy
risks."
5
"
Ultimately,
to
avoid
the
threat
of
criminal
prosecution,
the
embassy
itself
was
tasked
with
the
responsibility
of compiling
the
information
on
Swiss
subsidiaries. Surrey received
it
in
January
of
1962
just
months before
the creation
of
Subpart
F.
52
The
"'tax haven'
compromise"
Congress
delivered
in
1962
ensured
that
"'tax
haven'
income
of
U.S.-controlled foreign
corporations"
would
be
"taxed
currently
to
substantial
U.S.
shareholders,
whether distributed
or
not"
and
has
now
done
so
for
six
decades.
5 3
The
remedy,
known
as
Subpart
F,
did
precisely
what
Surrey
hoped. His
team
carefully
documented
that
the
creation
of
new
Swiss
tax
haven
subsidiaries
plummeted
when
Subpart
F
arrived.
A
1963
memo to
Surrey
noted
that
"the number
of
Swiss
corporations
established
by
United
States
interests
dropped
sharply
from
1961
to
1962.""4
For
even
the
most
sophisticated
outside
observers,
that
focus
on
Switzerland
would
not
have
been
apparent.
For
example,
when
Surrey
sent
copies
of
the draft
45.
Id.
46.
Id.
47.
Memorandum
from
Nathan
N.
Gordon,
U.S.
Dep't
of
the
Treasury,
to
Stanley
S.
Surrey
(undated)
(on
file
with
author).
48.
Id.
49.
Id.
50.
Id.
51.
Id.
52.
See
Memorandum
from
Larry
Stone,
Assistant
Tax
Legis.
Couns.,
Dep't
of
the
Treasury,
to
Stanley
S.
Surrey
(Jan.
16,
1962)
(on
file
with
author)
(containing
the
compiled
data).
53.
David
R.
Tillinghast,
The
Contributions
of
Stanley
S.
Surrey
to
the
International
Aspects
of
Taxation,
38
NAT'L
TAX
J.
267,
269
(1985).
54.
Memorandum titled
"The
Estimated
Number
of
Corporations
Established
in Switzerland
by
United
States
Interests,
1958
to
1963"
(Aug.
8,
1963)
(on
file
with
author).
No.
2
2023]
81
LAW
AND
CONTEMPORARY
PROBLEMS
bill
to
executives
of
companies
like
Proctor
&
Gamble,
H.J.
Heinz,
and
Chrysler-which
had testified
in
Congress
on
the
issue-his
cover
letter
referred
only
to
"the
tax
treatment
of
'tax
haven' profits"
and
to
the
"tax
advantage
which
accrues
to
firms
operating
through
foreign
subsidiaries
under
some
circumstances
which
are
not
available
to
firms
producing
in
the
United
States
and
selling
their
products
to foreign markets."
5 5
There
was
no
reference
at
all
to
Switzerland
or
the
Swiss
Chrysler
subsidiary
whose
organizational chart
lies
in
the
Surrey
Papers.
That
public
silence
on
the
dramatic
Switzerland
investigation
stands
in
stark
contrast
to
Surrey's
reputation
for
brashness.
Surrey
was
"an
activist"
6
known
for
his
"crusading"
"
approach
to
international
tax
policy.
That
came
through
in
a
willingness
to
use
"combative, and
perhaps
to
some
offensive,
language"58
in
the pursuit
of
his
policy
objectives.
The
Swiss
episode
shows
that
Surrey
also
possessed
a
different-and
more
calculated-sort
of
ruthlessness.
Decades
later,
the
OECD
would
not
merely
sit
on
their
hands
while
others made
damning
accusations against
the
wrong
states.
They themselves
generated
misinformation
that
came
close
to
delivering
punishment
to
an
innocent
African
state
for
wholly
imagined
misdeeds.
Surrey
merely stood
by silently
while
journalists
and
others
drew
their
own
conclusions
about
what inspired
Subpart
F.
The
reference
to
Switzerland
in
Kennedy's
message
demonstrates
a
willingness
to
provoke the
Swiss.
The
Wall
Street
Journal
article in
the
Surrey
Papers
shows why
Surrey
may
have
chosen
not
to,
how
silence
could
prove
even
more
powerful.
If Surrey believed
that
keeping
the
public's
attention
focused
on
Switzerland
would have
helped
his
cause,
a
man
as
averse
to
"pussy-footing"
59
as
he
was
would
have
been
relentless
in
doing
so.
By simply
remaining
silent, he
allowed
the
public
imagination
to
supply
whatever
rationale
suited
it
best.
The
article's
racist and
misogynistic
language
seems
unlikely
to
have
persuaded
Surrey
that
the
Bahamas
posed
a
greater
threat
than
Switzerland.
But
if
it
would
win
over
the
Wall
Street
Journal's
readers
and
help
make
Subpart
F
a
reality,
Surrey
might
reasonably
have
chosen
not
to
interfere. He
may
personally
have
found
it
foolish
or
distasteful.
But
by
the
standards
of
the
time,
such
sentiments
may
have
been
no
different
than
referring
to
Black
and
brown
states
as
"gangsters"
in
2000.
It
remains
possible
that
Surrey's
worldview
was
tainted
by racial
bias.
He
owed
much
of
his success,
after
all,
to
his
work on
the
U.S.-Pakistan
Double
Tax
55.
See,
e.g.,
letter
from Stanley
S.
Surrey
to
H.J.
Heinz
II,
Chairman,
H.J.
Heinz
Co.
(Nov.
13, 1961)
(on
file
with
author)
(discussing only
the
mentioned
topics,
and
not,
for
example, Switzerland).
56.
Tillinghast,
supra
note
53,
at
267.
57.
Id.
at
268.
As
Tillinghast
details
in
his
essay,
Pakistan
did
not
prove
so
fortunate.
As he
"abhorred
preferences
anywhere
in
the
tax law,"
Surrey's
"crusading,"
"determined,
virtually
unassisted
and
eventually
successful
opposition to
the
'tax-sparing'
article
in
the
1959
tax
treaty
with
Pakistan"
all
but
assured
that
the
United
States
would
be
the
only
developed
country
to
oppose these
subsidies
to
developing countries.
Id.
58.
Id.
59.
Id.
82
[Vol.
86:
73
SURREY'S
SILENCE
Treaty.
His
ferocity
won him
the admiration
of
then-Senator
John
F.
Kennedy.
Had
he
not been
implacable
in
his
opposition
to
generosity
towards
Pakistan
he
might
never
have become one
of
the
tax
law's leading
policy
voices.
60
His
efforts
proved
noteworthy
for
one
achievement
in
particular.
Thanks
to
his
"determined,
virtually
unassisted
and eventually
successful
opposition,"
tax
sparing-a
provision
designed
to
be
as
generous
to
developing
countries
as
the
U.S.
tax
system
had
long
been
to
Europe-was
omitted
from
the
treaty.
6
1
Surrey
might have
fought
just
as
hard
against
tax
sparing
had
it
been
deployed
to
benefit
a
white
state.
But
the
1950s
were
a
long
time
ago.
The
ways
that
racial
bias
shaped
the
thinking
of
men
and women
of
the
era
can
be
difficult
for
us
to
understand.
The
tax
law
had
long
been
remarkably
generous
in
the
way
foreign
tax
credits
treated
capital-importing countries.
62
That
generosity
may
have
looked
different
to
Surrey when
directed
towards
Pakistan
than
a
postwar
Germany.
63
If
so,
he
may
have
found
criticizing
Switzerland
personally
distasteful
and
been
relieved to
find
a
Black
country
shouldering
the
blame.
Whatever
his
reasons,
Surrey's
strategic
silence
on
the
urgency
of
the
Swiss
tax
haven
problem
let
the
public
decide for itself what
inspired
Subpart
F.
If
the
influential
executives
he
wrote
to
chose
to
support the
bill
after
reading
the
Wall
Street
Journal
article
(and
without
the benefit
of
powerful
evidence
of
Swiss
recalcitrance
he
had
access
to)
so
be
it.
But
the
consequences
of
Subpart
F
not
being
branded
the
Swiss
subsidiary
tax
could
not
be
more
obvious.
It
would
have
been
more
difficult-perhaps
impossible-for
the
OECD
to
avoid
naming
Switzerland
in
2000.
The
Liberia problem
suggests
that
a
Swiss
subsidiary
tax might
have
proven
less
popular
and
enduring
than
Subpart
F.
And
its
author
may
not
have
enjoyed
quite
the
same
storied
career.
Even
today,
European
tax
havens
tend
to
get
the
carrot-or
pastry-with
the
stick
reserved for
others. According
to
a
contemporary,
Surrey
would
not
have
even
been
in
a
position
to
create
Subpart
F
had
he
been
generous
in
his
negotiations
with
Pakistan.
64
Legislators-and
the
60.
See
id.
at
269
("[0]n
the Pakistan
treaty,
Stanley
won
the
respect
of
then
Senator
John
F.
Kennedy
and,
through
a
series
of
events
more appropriately
recounted
elsewhere,
became the Assistant
Secretary
of
the
Treasury
for Tax
Policy
in 1961.").
61.
See
id.
at
268
(describing
Stanley's
deeply
held
conviction
that
"it
was
simply
unfair
for
American
companies
investing
abroad to bear
a
lesser tax
than
those
which
invested
at
home"
and
his
efforts
to
prevent
that
from
becoming
reality).
62.
See
EDWIN
R.A.
SELIGMAN,
DOUBLE
TAXATION
AND
INTERNATIONAL
FISCAL
COOPERATION
135
(1928)
(complaining
its
approach
"means
that
the
United
States
is
making
a
present
of the revenue
to
other
countries").
63.
See
IRA
KATZNELSON,
WHEN
AFFIRMATIVE
ACTION WAS
WHITE:
AN
UNTOLD
HISTORY
OF
RACIAL
INEQUALITY
IN
TWENTIETH-CENTURY
AMERICA
(2005)
(telling
the
story
of
generosity
turning
into
skepticism
when
the
color
of the
skin
of the
recipients
changes).
A
similar
story might
help
explain
why
generosity
towards
Europe
after
the
two
world
wars
in
the
form
of the
foreign
tax
credit
seemed
natural, but
generosity towards capital-importing
countries
in
the Global
South
proved
difficult
to
sustain
after
decolonization
changed
their hue.
64.
See
supra
note
60.
No.
2
2023]
83
LAW
AND
CONTEMPORARY PROBLEMS
public
they
serve-might
easily
have
balked
at
the prospect
of
a
Swiss
subsidiary
tax.
V
THE
LIBERIA
PROBLEM
The
ferocious
advocate
who
secured
a
leading
role in
the
Kennedy
administration
by
stripping
tax
sparing
from
the
U.S.-Pakistan
treaty
chose
silence
when
confronting
Switzerland.
When
trying
to
win
over
influential
executives,
he focused
not
on
Swiss
misdeeds
but
on
more
generic
notions
of
foreign
subsidiaries
and tax
havens.
65
The quiet
aspect
of
the
Liberia
problem
allowed
him
to
leave
space
for others to
provide
more
compelling
justifications
for
Subpart
F.
Today's
experts,
focused
on
the
continuing
threat
posed
by
Switzerland, find
the
quiet
aspect
of
the
Liberia
problem
just
as
useful.
They
explain
that
"[c]orporate
tax
revenues
are
low
despite
the
fact
that
U.S.
companies
produce
very
high
corporate
profits"
and
pin
the
blame
on
"foreign
tax
havens."
66
They
still
can-and
sometimes
do-identify
Switzerland at
the
heart
of
the
global
tax
system's
problems
but
still
favor
the
more
ambiguous
terminology
that
exploits
the
quiet
aspect
of
the
Liberia problem. The
ambiguity
allows
the
public
imagination
to
conjure
the
white sand
beaches
and
palm
trees
that
serve
as
today's
equivalent
of
native
women
sitting
under
gaily
colored
parasols
plaiting
and
selling
handbags.
Gabriel
Zucman's
book
"The
Hidden
Wealth
of Nations:
The
Scourge
of
Tax
Havens"
offers
an
instructive
example.
To
Zucman's
credit,
the
book's
cover
features
neither
a
beach
nor
a
palm
tree.
67
Yet
it could
easily
have
featured
a
Swiss
mountain
peak
and
been
titled
"The
Hidden
Wealth
of
Nations:
The
Scourge
of
Switzerland."
Just
a
few
pages
into
his
book,
Zucman
goes
so
far
as
to
suggest
sanctions against
Switzerland.
68
Zucman's
book
could have,
but
does
not,
begin
with "Switzerland
is
the
heart
of
financial,
budgetary,
and
democratic
crises."
69
Predictably,
the
introduction
begins
by
calling
out
"[t]ax
havens."
7 0
65.
See
supra
note
55
and
accompanying
text.
66.
Press
Release,
U.S.
Dep't
of the
Treasury,
Testimony
of
Kimberly
A.
Clausing,
Deputy
Assistant
Secretary,
Tax
Analysis,
Before
the
Senate
Committee
on
Finance
(Mar.
25,
2021),
https://home.treasury.gov/news/press-releases/jy0079
[https://perma.cc/E3E9-BDT6].
Clausing's press
release
uses
the
word "foreign"
or
a
variation
thereof
seventeen
times.
It
mentions
Switzerland
exactly
once,
in
the notes
to
a
chart
listing
the
"big
seven
havens"-a
majority
of
which
turn
out
to
be
European.
67.
See
generally
GABRIEL
ZUCMAN,
THE HIDDEN
WEALTH
OF
NATIONS:
THE
SCOURGE
OF
TAX
HAVENS
(2015).
In
fact,
the
book
features
no
images
at
all.
The
book's
text-only
cover
appears
to
have
been inspired
by
the
cover
of
Tomas
Piketty's
CAPITAL
IN
THE
TWENTY-FIRST CENTURY.
68.
Id. at
5
("The
calculations
presented
in
this
book
show
that
France,
Germany, and
Italy would
be
able
to
force
Switzerland
to
disclose
all
the
assets
held
there
by
their residents
by
jointly
imposing
customs
duties
of
30%
on
the
goods
that
they
import
from
Switzerland,
because
the
costs
for Switzerland
would
then
be
more
than
the
income
derived
from
its
banks
involved
in
tax
evasion.").
69.
The
book
actually starts:
"Tax
havens are
the heart
of
financial,
budgetary, and democratic
crises."
Id.
at
1.
70.
Id.
84
[Vol.
86:
73
SURREY'S
SILENCE
And that
matters.
Surrey's
choice
of
downplaying
Switzerland's
role,
like
Zucman's
choice
not
to
feature
Switzerland
on
his
cover,
exploits
the
quiet
aspect
of
the
Liberia
problem.
Experts
like
Surrey
and
Zucman
know
that
when
they
speak
of
the
tax
haven
problem, they
speak
of
Switzerland.
The public
often
does
not.
Hearing government
officials
and
highly
esteemed
experts
levying
such
damning
indictments
against
foreign
tax
havens,
the
public
might
be forgiven
for
wondering
why
measures
beyond
economic
ones
should
be
off
the
table.
If
experts
tell
us
that
democracy itself
may
be
at
stake, even
military
force could
be
justified.
In
2021,
President
Biden embraced
the
loud
aspect of
the
Liberia
problem.
He
targeted
two
majority
Black states,
the
Cayman
Islands
and
Bermuda,
to
rally
support
for
legislative
action
against
tax
havens.
7
"
His
experts
had,
of
course,
identified
Switzerland
and
other
European
states
as
key
problems
but
his
statement mentioned
the
only two
majority
Black
states
they
listed.
72
Inspired
by
President
Biden-and
perhaps
Zucman-the
Week
suggested
that
"the
U.S.
could apply
economic sanctions
to
tax
havens."?
3
Zucman had
suggested
sanctions
on
Switzerland.
74
But
the
Week
went
further,
imagining
that
the
United
States
might
"even
threaten
them
with
military
force."?
5
Experts
do
not,
of
course,
mean
to
suggest violence
against
Switzerland.
They
rarely
even
hint
at
the
possibility
of
military action
as
a
possible
response
to
tax
havens.
But
when they
do,
their
imagined
targets
remain
predictably
brown
and
Black.
In
the
wake
of
the
collapse
of
the
OECD's
initial effort
to
impose
sanctions
on
Liberia
and
others, one economist
mused
that
"larger
nations"
could
have
used
their
"militaries"
as
an
"effective
and
efficient"
solution.
76
Inevitably,
the illustration
in
the
Week
featured
blue
oceans
rather
than
white
mountain
peaks.
And
the
efficient
and
effective
military
operations
offered
as
templates
for
violence
against
tax
havens
targeted Grenada
and
Panama
rather
than
Switzerland
or
Ireland.??
The
Liberia problem
makes
it
easy
for
casual
observers
71.
Dean,
supra
note
20.
72.
See
Press
Release,
U.S.
Dep't
of
the
Treasury,
supra
note
66
(highlighting
"Bermuda,
the
Caymans,
Ireland,
Luxembourg,
the
Netherlands,
Singapore,
and
Switzerland");
Kimberly
A.
Clausing,
Profit
Shifting Before
and
After
the
Tax
Cuts
and Jobs
Act,
73
NAT'L
TAX
J. 1233, 1237
(2020)
(noting
that
"$2.8
trillion
is
located
in
just
9
havens
(Bermuda,
the
Caymans,
Ireland,
Jersey,
Luxembourg,
Netherlands,
Puerto
Rico,
Singapore,
and Switzerland)").
73.
Ryan
Cooper,
Janet
Yellen's
Proposal
to
Revolutionize
Corporate
Taxation,
WEEK
(Apr.
6,
2021),
https://theweek.com/articles/975735/janet-yellens-proposal-revolutionize-corporate-taxation
[https://perma.cc/P5XW-84RR]
(rather
than
an
image
of
one
of
the European
tax
havens
Zucman
focuses
on,
the
article
featured
a
map
of
Bermuda
and
a
photo
of Treasury
Secretary
Yellen).
74.
See
supra
note
68.
75.
Id.
76.
Martin
A.
Sullivan,
Lessons
from
the
Last
War on
Tax
Havens,
116 TAX
NOTES
FED.
327,
334
(2007)
("It
is
entertaining to
consider,
for
example,
why
the
larger
nations
did
not
use
their
militaries to
enforce
their
will
on smaller nations.
After
all,
the
U.S.
did
invade two
of the [OECD
2000]
blacklisted
nations
in
recent
times
-
Grenada
in
1983
and
Panama
in
1989.
And
there
is
no
doubt
military
action
would have
been
effective
and efficient.").
77.
Id.
No.
2
2023]
85
LAW
AND
CONTEMPORARY
PROBLEMS
to
forget
that
Switzerland-not
Panama-sits
at
the
heart
of
the
financial,
budgetary,
and
democratic
crises
Zucman
describes.
The
Liberia
problem
allows
experts
and
officials
to
benefit
from
that
confusion.
Surrey
need not
invoke native
women
under
gaily
colored
parasols.
President
Biden
need not
hint
at
violence.
But
for both,
obscuring
the
true nature
of
the
threat
posed
by
tax
havens
offered
an
opportunity
to
advance
a
legislative
agenda.
VI
CONCLUSION
So
much might be
different
had
Surrey
not
embraced
the quiet
aspect
of
the
Liberia problem
in
his
pursuit
of
Subpart
F.
Switzerland might
have
been
on
Zucman's
cover
and
in
his
title.
President
Biden
might
not
have
singled
out
the
only two
Black
jurisdictions
his
experts
identified
after
signing
an
executive
order
condemning
racism.
78
The
Week
might
not
have
inadvertently
suggested
violence
against
Switzerland.
But
a
different Surrey
may
have accomplished
none
of
those
things.
President
Biden
and
Zucman
may
have
discovered
the
Liberia
problem
on
their
own.
News
outlets
like
the
Guardian
might
still
illustrate
stories
about
the
Channel
Islands
being
targeted
as
tax havens with
images
of
beaches
far
from
the
English
Channel.
79
Stanley Surrey
may
have
been
the
first
to
exploit
the
quiet
aspect
of
the Liberia
problem,
but
he
was
far
from
the
last.
Was
Stanley
Surrey
racist?
Was
he
a
coward
for
not
speaking
as
plainly
about
the
Swiss
tax
haven
problem
in
public
as
the
Surrey
Papers
reveal
his
team
did
in
private? In
the
broad
sweep
of
history
Surrey's
silence
may
have
mattered
a
great
deal,
or
it
may
have
mattered
very
little.
The quiet
aspect
of
the
Liberia problem
that
it
highlights
undoubtedly
does
matter.
Exploiting
the public's
misunderstanding
of
the
term
tax
haven
as
Surrey
quickly
learned to
do
has
become
second
nature
to
scholars
and policymakers
alike.
No
less
powerful
than
the
loud
aspect of
the Liberia
problem,
the
dog
whistle
politics
80
it
embodies
demean
all
those
who
harness it
by
railing against
tax havens
just
as
it
does
those
who
decry "welfare
cheats
or
illegal
aliens."
8
1
78.
Exec.
Order
No.
13,985,
86
Fed.
Reg.
7009, 7009
(Jan.
20,
2021)
(deploring
the
"unbearable
human
costs
of
systemic
racism").
79.
Richard Partington,
MEPs
Vote to
Add
Channel
and
British
Virgin
Islands
to
Tax
Haven
Blacklist,
GUARDIAN
(Jan.
22,
2021),
https://www.theguardian.com/world/2021/jan/22/meps-vote-to-
add-channel-and-british-virgin-islands-to-tax-haven-blacklist
[https://perma.cc/J5H6-H2M7]
(using
an
image
of
palm trees,
white
sand
and
aquamarine
waters-identified
as
a
beach
in
the
British
Virgin
Islands-as
an
illustration). The
Guardian
would
presumably
never
have
illustrated
a
story
about
two
accused
criminals-one
Black and
one
white-with
only
a
photo
of the
Black suspect.
80.
IAN
HANEY-L6PEZ,
DOG
WHISTLE
POLITICS:
How
CODED RACIAL
APPEALS
HAVE
REINVENTED
RACISM
AND
WRECKED
THE
MIDDLE
CLASS
xii
(2014)
(explaining
"how
politicians
backed
by
concentrated
wealth
manipulate
racial
appeals to
win
elections
and
also
to
win
support
for
regressive
policies
that
help
corporations
and
the
super-rich,
and
in
the
process
wreck
the
middle
class").
81.
Id.
at
4.
86
[Vol.
86:
73
No.
2
2023]
SURREY'S
SILENCE
87
Banning
the
term
would
not
solve
the Liberia
problem,
but
everyone
who
uses it
must
be
aware of
the
risks
they
court
and
the
lasting
damage
they
cause
by
doing
so.
