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What Should Be the Response to the Panama Papers? NOTHING – the Use or Publication of the materials Potentially VIOLATES the Attorney-Client Privilege!

There is a fascinating article in the Orange County (CA) Register written by James Poulos about:

What GOP should do about Panama Papers

I have a modest proposal about that:  Nothing.  The Panana Papers are a gross violation of the most important legal privileges in existence – one that in most states does not end with the death of the client (see the litigation over the late DC Madam and her legal papers for example) in most states in the USA.

The attorney-client privilege is designed to ensure that the right to counsel is not a hollow promise.  No court can demand (subject to carefully crafted exceptions such as helping the client commit a present or future crime or defraud someone or knowing perjury) the attorney to “rat out” his client.  Even if the client admitted to a past crime.  Even willful murder.  Even where a body being found would provide closure to a grieving family.  The privilege wins.  Even if the client is deceased in most states.   You might as well repeal the Sixth Amendment right to counsel if there is no privilege.  The attorney must go to jail before disclosing privileged information.  The privilege is essential to a legal system consistent with due process.

BUT isn’t that what these off-shore accounts designed to do?  Evade taxes?  Maybe money laundering?  Not necessarily.  From the Orange County Register article:

In an unparalleled release of documents and data, the so-called Panama Papers have thrown open for public scrutiny the secretive world of offshore accounting – used in many instances by business interests with legitimate aims and traditional practices, but also by corrupt figures in public and private life trying to hide dirty money, launder cash, mask ill-gotten gains and often to evade various forms of taxation.  (emphasis added by me)

The leaker (even if the law firm did it) and/or the investigative reporters are not a court or other authority that can demand the law firm reveal illegality under the strict exceptions to the privilege.  No due process or privacy considerations for these clients.  Their private financial transactions are now public knowledge.

Instead those involved are at best purveyors of stolen and illegal information.  I am not even sure to what extent an attorney in the US could legally use this situation over the protests of the original client.  I wouldn’t touch it.  I would not use this information or any facts derived from anything found in the Panama Papers and the reporters, if they had any integrity would decline to do so as well.

But to the extent we as conservative/libertarians should comment on it, here’s what we must say:  Tax avoidance, as long as it is legal, is not tax evasion.  The President and the leading Democrat candidate for the White House both say some scary things:

Which brings us to the United States of America, where, so far, the Panama Papers have not made as big of a splash as abroad. But Democrats have seized on the opportunity to mount a relatively more populist case for tightening the screws on taxes. “There is no doubt that the problem of global tax avoidance generally is a huge problem,” said president Obama. “The problem is that a lot of this stuff is legal, not illegal.” He went so far as to say it shouldn’t be legal “to engage in transactions just to avoid taxes,” appealing to “the basic principle of making sure everyone pays their fair share.”

Hillary Clinton has mounted a similar response, vowing to ensure that nobody would be permitted to make off with the people’s money in her own administration. But this is a difficult development for her.  (Emphasis added by me, again!)

So we should not try to pay the least in taxes?  Isn’t it vaguely unpatriotic?  Seems ironic to say in early April of any year!  Compare and contrast President Obama with who might be the most scholarly (I would say learned but that would be a bad pun!) jurists never to sit on the United States Supreme Court:  Judge Billings Learned Hand of the Second Circuit Court of Appeals in the early part of the last century.  Here’s what Judge Hand said in judicial opinions about paying taxes:

#4  Any one may so arrange his affairs that his taxes shall be as low as possible; he is not bound to choose that pattern which will best pay the Treasury; there is not even a patriotic duty to increase one’s taxes.

Gregory v. Helvering, 69 F.2d 809, 810 (2d Cir. 1934)

#5  Over and over again courts have said that there is nothing sinister in so arranging one’s affairs as to keep taxes as low as possible. Everybody does so, rich or poor; and all do right, for nobody owes any public duty to pay more than the law demands: taxes are enforced exactions, not voluntary contributions. To demand more in the name of morals is mere cant.Commissioner v. Newman, 159 F.2d 848, 851 (2d Cir. 1947) – dissenting opinion

The tax lawyer I got these quotes from [Andrew Mitchel] thanked Frank Santoro.  I thank both of them!

So our goal should be:  Let’s stand for financial liberty and privacy and to pay as little in taxes as legally possible!  And take my advice:  Protect the Attorney-Client Privilege!  Boycott the Panama Papers.  If there is no market for dubious goods, there will be fewer leaks.

About Elwood Sanders

Elwood "Sandy" Sanders is a Hanover attorney who is an Appellate Procedure Consultant for Lantagne Legal Printing and has written ten scholarly legal articles. Sandy was also Virginia's first Appellate Defender and also helped bring curling in VA! (None of these titles imply any endorsement of Sanders’ views)

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Tom White Says:

Nothing is more conservative than a republican wanting to get their majority back. And nothing is more liberal than a republican WITH a majority.

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