They do agree on something! Bipartisan crackdown on US ‘tax havens’ pops up in Congress
Normally bitterly opposed Democrats and Republicans have joined forces to support bills cracking down on shell companies and internal tax havens such as Delaware, dubbed the “Switzerland of the US.”
Two Republicans and two Democrats on the Senate Committee on Banking, Housing, and Urban Affairs joined forces on Tuesday to introduce ILLICIT CASH Act, a clever acronym for “Improving Laundering Laws and Increasing Comprehensive Information Tracking of Criminal Activity in Shell Holdings”.
It aims to end the incorporation of shell companies in the US and aid in the fight against money laundering. The co-sponsors are Senators Mark Warner (D-Virginia), Doug Jones (D-Alabama), Tom Cotton (R-Arkansas), and Mike Rounds (R-South Dakota).
Shell companies and their facilitation of secrecy and money laundering is often most closely associated with offshore tax havens such as the Cayman Islands and the UK’s Crown Dependencies. But the problem is hardly confined to overseas jurisdictions. Within the US itself, the state of Delaware has come under criticism for its lax rules on “shell companies,” which led to the US being dubbed “the easiest place in the world” to set one up.
Experts have estimated that the federal and state governments across the US lose billions of dollars in tax revenues as a result of internal tax havens like Delaware. Last year, however, following pressure from Washington, Delaware announced that it was willing to get on board with ending the shady practices.
The four senators said that their bill is intended to promote corporate transparency and strengthen the ability of law enforcement to pursue terrorists, drug traffickers and other criminal groups who are involved in shady financial activity.
A similar proposal, dubbed the Corporate Transparency Act of 2019, was introduced in the House of Representatives last month. It is co-sponsored by five Democrats and one Republican.Also on rt.com Switzerland & United States are the world’s most corrupt nations – report
If enacted, this law would force companies to disclose their true owner – called the “beneficiary” – upon incorporation and update the information if changed. This would prevent the establishment of shell companies, which currently can be set up anonymously to hide the identity of the actual owner. The senate bill contains similar clauses, such as the proposed creation of a “comprehensive federal database” that would provide information to investigators. The proposed reforms effectively fulfill the long-standing demand of tax justice and financial transparency activists.
“Given that the US has the largest number of anonymous shells in the world we are most susceptible to the problems they create,” Tom Cardamone, president of transparency watchdog Global Financial Integrity, said in praise of the Senate proposal. “There is no legitimate reason for someone to have an anonymous shell company and this legislation addresses the risks inherent in allowing those entities to operate on US soil.”Also on rt.com Google routed $23bn to Bermuda in 'legal' tax avoidance scheme
Gary Kalman of the Financial Accountability and Corporate Transparency (FACT) Coalition likewise praised the Senate bill, saying it would “rein in abuses associated with anonymous shell companies” and close “gaping loopholes in US safeguards against money laundering.”
During his last year in office, former president Barack Obama described tax avoidance as “a big, global problem” and criticized current statutes dealing with the issue, describing them as “so poorly designed” that they allow companies to use loopholes to get around rules that apply to everyone else.
His administration’s efforts on the subject, however, only amounted to pushing for greater enforcement of the Foreign Corrupt Practices Act (FCPA).Also on rt.com Companies that have more money than entire countries
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