Blog | Page 21 | The FACT Coalition

Our Visit to a Little Known, but Highly Influential Body

March 23, 2017

Financial Accounting Standards Board Considers Shining a Light on Corporate Tax Practices
On March 17, Richard Phillips of the Institute on Taxation and Economic Policy (ITEP) and I traveled to Norwalk, Connecticut to participate in a roundtable discussion at the Financial Accounting Standards Board (FASB). This is a little-known, but highly influential body that sets the accounting standards for U.S. companies. The morning discussion focused on a proposal to increase disclosures on corporate financial statements, including new disclosures on revenues and taxes on a country-by-country level. This information is critically important if we are to tackle the problem of offshoring profits in tax havens.

We heard several participants assert that, before any new disclosures are required, board members must ensure they know why it is being required and for what the users of the information will use it. Fair questions.

Unfortunately, I am not sure the discussion on tax disclosures adequately answered them. The focus was more theoretical and principle-based with a heavy reliance on accountant-speak. I greatly appreciated the opportunity to participate, but I confess that I did not fully take the opportunity to offer an alternative perspective. Since hindsight is 20/20, here is what I should have said.

Debunking the 35 Percent Corporate Tax Myth

March 10, 2017

For years, the number one tax policy talking point from corporate lobbyists has been the claim that the United States has the highest corporate tax rate in the world. The story then goes that this high tax rate is driving away business and Congress should move to dramatically lower it.

A new study by the Institute on Taxation and Economic Policy (ITEP) reveals the reality that while corporations face a statutory tax rate of 35 percent, the tax code is so packed full of tax breaks that over eight years our nation’s largest and most profitable corporations paid an average effective tax rate of just 21.2 percent.

The US Government Has No Way of Telling Who is Behind the Companies it Does Business With, or What Risk They Pose to Our Security

March 7, 2017

The U.S. government goes to great lengths to protect our national security. And yet, our failure to manage company ownership in this country leaves us exposed to all sorts of risk. Put simply, it is way too easy for the criminal or corrupt to hide their ownership of U.S. property behind a fake company, or a series of companies in order to stash or move their dirty money without detection.

Let me give you an example. In 2013, a Global Witness undercover investigation exposed how the former Chief Minister of Sarawak in Malaysia, Abdul Taib Mahmud, and his family used their political status to buy land and forest concessions for way less than their commercial value. Swathes of the Sarawak rainforest were destroyed as a result of these schemes, as well as various abuses committed against the rightful land owners. The Chief Minister’s brother used his secretly owned Singaporean company to hide profits from those corrupt forest and land deals and so that he could avoid paying around $10 million in taxes.

The Border Adjustment Tax Creates More Problems Than It Solves

February 24, 2017

In recent weeks, the Republican congressional leadership’s effort to introduce a comprehensive tax reform bill has increasingly faced opposition from major business groups and skeptical lawmakers from across the aisle. The primary source of dissent thus far is that the most prominent tax framework, the House GOP’s “Better Way” tax blueprint, contains a radical provision to apply a border adjustment to pay for a cut in the rate from 35 to 20 percent.

A new report from the Institute on Taxation and Economic Policy (ITEP) released today finds that this border adjustment tax would be regressive and loophole-ridden and would likely violate international trade agreements.

Lawmakers Should Oppose Delaney’s Two Tax Giveaways

February 8, 2017

“Partnership to Build America Act” and the “Infrastructure 2.0 Act” Would Exacerbate Offshore Tax Haven Abuse
The FACT Coalition sent two letters up to House lawmakers this week opposing a couple of egregious tax giveaways that are expected to be re-introduced by Rep. John Delaney (D-MD) in the near future.

Titled the “Partnership to Build America Act” and the “Infrastructure 2.0 Act”, both measures seek to offer multinational tax avoiders a reward under the premise that the measures might raise some revenue for infrastructure funding. The question is: at what cost?

End the Travel Ban: An Alternative Proposal to Combating Terror

January 31, 2017

Ending Anonymously-Owned Companies Would Be Widely Seen as an Effective Strategy in Crippling Those Who Pose a Real Danger to the U.S.
The President’s executive order banning refugees and legal immigrants from seven Muslim-majority nations has led to large protests in the U.S. In a conversation yesterday with anti-corruption advocates based in Canada and Belgium, I listened as they discussed the outrage this order has generated around the globe. The action, it appears, only reinforces the worst fears they held about the new administration.

The order is unconscionable, likely unlawful and—according to a growing list of security experts— unhelpful in protecting the nation against acts of terror. Just a few days in and the stories of harm and disruption are piling up.