Congress Shouldn’t Stimulate Tax Dodgers or Fraudsters

As Congress debates the next round of stimulus funding and the nation grapples with the COVID-19 pandemic, it is worth taking a brief moment to make sure we are thoughtful in our response. It is integral to the health and prosperity of the American people that the policies designed to respond to this extraordinary moment reach the wallets of the American people and honest small businesses — and are not siphoned off by fraudsters. The FACT Coalition has called on Congress to integrate four crucial measures of transparency and accountability into its next stimulus bill to stop aid from being siphoned off by those that would undermine or exploit these relief programs to ensure that the individuals and small businesses that truly need this assistance are able to secure it.

First, Congress must maintain safeguards in the packages against giving bailouts to corporations that register offshore or don’t pay US taxes. These companies have not contributed to the country’s ongoing fight to stem the tide of new cases. In a time where many Americans are struggling to pay rent, corporations who have chosen not to be American to avoid taxation should not be receiving taxpayer funded bailouts.

Second, lawmakers must not insert corporate tax giveaways into any relief package that would needlessly shrink public revenues in a time of crisis — especially if such giveaways further incentivize the outsourcing of jobs and investments.

Third, Congress must require public country-by-country reporting for any corporation receiving a bailout or tax breaks. If Americans are bailing out a company, they should know where that company is choosing to report their employees, revenues, and profits. Why should taxpayers bail out companies that, in order to avoid their share of taxes, have claimed not to be American or played deceptive accounting games

Finally, Congress must require that anyone receiving contracts, grants, or loans under the stimulus program disclose their beneficial ownership information. Anonymous shell companies have been used to defraud the government numerous times in the past. In the past, anonymous shell companies have been used to defraud the Department of Defense and other government agencies. In a case brought before the Southern District of New York in April 2019, 24 individuals were indicted for their roles in a $1.2 billion dollar scheme to defraud the Medicare system. Using anonymous shell companies allowed the defendants to launder their illicit proceeds and “purchase exotic automobiles, yachts and luxury real estate in the United States and abroad.” With $2 trillion on the line here, failing to enforce backstops like this could be a boon for the corrupt while failing to reach intended targets.

As Congress charts a course for the nation through this trying time, it is critical that our leaders do not mistake urgency for carelessness. The American government is entrusted with the health of its citizenry; it would be a grave miscarriage of that charge to carelessly waste the nation’s resources in this time of need. 

However, moving forward, this fiscal transparency should become the norm, not an anomaly born of a national crisis. In order to ensure that the United States is better prepared to prevent and/or weather the next crisis, policymakers should enact key structural reforms to increase transparency and accountability and strengthen the U.S. and global economies.  Combining several pieces of existing legislation could offer a roadmap:

Our current crisis demonstrates the need for greater transparency and accountability in the American economy, perhaps more clearly than ever.  It also highlights the need for critical public investments — investments that are funded by taxes.  Any successful policy response must address both of those needs.