“Just the FACTs” is a round-up of news stories and information regarding efforts to combat corrupt financial practices, including offshore tax haven abuses, corporate secrecy, and the laundering of money through the financial system.
Also, FACT is hiring! See the listing for the Senior Policy Advisor for tax here or below.
Send feedback or items for future newsletters to Christopher Boose at [email protected].
Here’s the State of Play
Tax Loopholes and Tax Transparency
Corporate Tax Disclosure Bill Charges Forward
After months of anticipation, Rep. Cynthia Axne (D-IA) and Sen. Chris Van Hollen (D-MD) unveiled the Disclosure of Tax Havens and Offshoring Act last week to a chorus of civil society, small business, and investor support. The legislation, which was voted out of the House Financial Services Committee only a day after introduction, would require multinational corporations registered with the Securities and Exchange Commission (SEC) to disclose basic financial data – including profits, taxes paid, number of employees, and tangible assets – about their operations and subsidiaries overseas.
On the heels of new plans from the White House to reform multinational corporate tax rates, the introduction signals that Washington is serious about comprehensive reform to the global corporate tax framework. FACT Executive Director Ian Gary welcomed the move, calling the new bill “a much-needed spotlight on corporate profit shifting and tax avoidance strategies, both to protect investors and inform policymakers and the public.”
The FACT Coalition also led the push to support the bill, garnering the support of representatives of small businesses, nearly one hundred civil society organizations, and scores of investors representing a whopping $2.9 trillion dollars of assets under management. With a $2.1 trillion increase from a similar letter last year, investors are increasingly rallying around a message of tax transparency–and at the perfect time, too. As EU “trilateral” negotiations roll into a third month, momentum in Washington and among global investors makes clear that Europe needs to finalize a strong set of reporting standards that are global, public, and country-by-country.
IRS Enforcement Enters the Tax Loopholes Debate
Data from public country-by-country tax reporting would also be a boon for policy makers and legislators in Washington looking to understand how corporate tax regime changes affect corporate behavior. Congressional representatives discussed a range of tax issues in a spate of hearings over the last month, addressing the tax’s connection to the climate crisis, tax code fairness, and most recently, tax evasion and the tax gap.
At that hearing, Senator Whitehouse pointed out that “the line between legal avoidance and evasion may be paper thin,” seizing the opportunity to elevate the No Tax Breaks for Outsourcing Act (H.R. 1785 / S. 714), a key bill that would fulfill the Biden Administration’s mission of ending the global race to the bottom on corporate taxes.
Changing statutes only works when multinationals comply, however, underscoring the importance of tax transparency measures and IRS enforcement. The President’s plan, rolled out in late April, would invest $80 billion into the IRS, yielding a $700 billion return over the next decade. Experts have hailed the proposal, claiming that the returns could actually exceed $1 trillion over the next ten years. A team from Brookings included IRS enforcement, alongside corporate tax reform, as a key measure to “raise revenue efficiently and equitably.”
Ending Anonymous Shell Companies
FACT Submits 157-Page Blueprint for Corporate Transparency
The FACT Coalition followed through on months of advocacy around the Corporate Transparency Act with a 157-page blueprint on how to implement beneficial ownership legislation. FACT’s set of comprehensive comments, one of the only comments to address all of FinCEN’s questions, detailed dozens of recommendations. Among them, FACT laid out five key priorities for FinCEN’s implementation: barring reports without any listed owners, broadly interpreting definitions to include different kinds of entities, narrowing exemptions, ensuring access, and designing a high quality database.
Dozens of other organizations signed a joint letter to FinCEN, endorsing FACT’s blueprint for FinCEN, and experts such as Josh Rudolph with the Alliance for Securing Democracy reiterated how strong implementation is vital to our national security. Likewise, at a recent Senate budget hearing, Mandy Smithberger with the Project On Government Oversight testified that strong beneficial ownership could help put an end to corruption in Pentagon spending.
More Countries Move toward Ownership Transparency
Global corporate transparency advocates are catching their breath after a multi-month sprint, ending in Canada’s announcement of their own plan for a beneficial ownership registry last month. Bigger wins may be right around the corner, though, with the 2021 United Nations General Assembly special session against corruption in June. Just a week later, G7 countries will convene in the UK to discuss revitalizing democracy, securing the Covid recovery, and rising to the climate crisis. Corruption–a key thread through all of these issues–must be dealt with by G7 leaders at the G7 summit and beyond.
Job Openings with FACT
Senior Policy Advisor
The FACT Coalition seeks a full-time, dynamic, experienced, and proactive advocate to help the coalition achieve its policy objectives. The Senior Policy Advisor will contribute to achievement of the FACT Coalition’s 2021-22 strategic outcomes and reports to the Executive Director. The Senior Policy Advisor will be part of a small FACT secretariat team, reporting to the Executive Director and working in close collaboration with the Government Affairs Director. This position will also support the Tax Justice Network, a FACT Coalition member, in achieving its advocacy objectives in the U.S. See https://thefactcoalition.org/about-us/careers/ for more information on qualifications and how to apply.
Latest from FACT
|PRESS RELEASE: Congress Introduces Corporate Tax Transparency Legislation to Support Informed Investor Decisions|
May 11: The Financial Accountability and Corporate Transparency (FACT) Coalition today welcomed the reintroduction of the Disclosure of Tax Havens and Offshoring Act in the House and Senate (H.R. 3007, S. 1545).
|LEGISLATIVE LETTER: 96 Nonprofit Organizations Support the Disclosure of Tax Havens and Offshoring Act (H.R. 3007 / S. 1545)|
May 11: 96 Nonprofit Organizations Support the Disclosure of Tax Havens and Offshoring Act (H.R. 3007 / S. 1545)
|LEGISLATIVE LETTER: 64 Investors with Nearly $2.9 trillion in Assets Under Management Show Support for the Disclosure of Tax Havens and Offshoring Act|
May 11: 64 Investors with Nearly $2.9 Trillion in Assets Under Management Support the Disclosure of Tax Havens and Offshoring Act
|LEGISLATIVE LETTER: Small Businesses Seek Increased Competition with Disclosures of Tax Havens and Offshoring Act|
May 11: Small Businesses Seek Increased Competition with Disclosures of Tax Havens and Offshoring Act
|LEGISLATIVE LETTER: FACT Coalition Offers Blueprint to Biden Administration to Implement Landmark Anti-Money Laundering Reform|
May 5: The FACT Coalition offered a blueprint to the Biden Administration on how the Treasury Department should draft the rule for a landmark anti-corruption and anti-money laundering law, the Corporate Transparency Act, enacted by Congress in January.
FACT in the News
|OPINION: Fair Tax Systems are Vital for Strong Climate Action|
April 28: FACT Executive Director Ian Gary and WRI’s David Waskow collaborated on a recent Op-Ed in The Hill arguing that fair tax systems are needed to generate the revenues for green investments needed around the world.
|QUOTED IN: Democrats Reintroduce Corporate Tax Transparency Bill|
May 12: FACT Executive Director Ian Gary is quoted in Accounting Today discussing the benefits corporate transparency would bring to small businesses, investors, and the public.
|QUOTED IN: Regulating Beneficial Ownership for National Security|
April 29: FACT is quoted in Securing Democracy by Josh Rudolph in a new piece on the national security benefits of beneficial ownership.
Recent and Upcoming Events
|G7 Meetings in Cornwall, United Kingdom|
June 11th: This year’s G7 summit will take place in Cornwall, UK. Prime Minister Boris Johnson has said he will use the UK’s G7 Presidency to unite leading democracies to help the world fight the Covid-19 pandemic and then build back better to create a greener, more prosperous future. Unfortunately, the UK has also announced big cuts to aid for global anti-corruption programs and has seen its progress on anti-corruption measures wane, according to some observers.
|United Nations General Assembly Special Session on Corruption|
June 2nd: The special session of the General Assembly on challenges and measures to prevent and combat corruption and strengthen international cooperation will be held from 2 to 4 June 2021 at the United Nations Headquarters in New York, to provide an opportunity to galvanize the political will of governments and the international community as a whole in advancing the fight against corruption.
|High-Level Discussion on Beneficial Ownership Transparency in Africa|
May 19th: During Open Gov Week, Open Government Partnership (OGP) and the Extractives Industries Transparency Initiative (EITI) will convene leaders from government, civil society, public and private sectors for a high-level engagement on advancing beneficial ownership transparency in Africa.
|(RECENT) Tax (Fairness) Day Rally: Helping President Biden build an economy that works for all!|
May 17th: Americans for Tax Fairness, the Institute for Policy Studies, Citizens for Tax Justice, and Patriotic Millionaires hosted a discussion on building a fairer tax code with contributions from Speaker Nancy Pelosi, Sen. Ron Wyden, Rep. Lloyd Doggett, and many others.
|(RECENT) Closing the Tax Gap: Lost Revenue from Noncompliance and the Role of Offshore Tax Evasion|
May 11th: Senator Whitehouse led a recent hearing in Senate Finance’s Subcommittee on Taxation and IRS Oversight on Closing the Tax Gap.
|(RECENT) ECOSOC Special Meeting on “International Cooperation in Tax Matters.”|
April 29th: The 2021 ECOSOC Special Meeting convened to discuss how countries can use tax policy and administration in tackling social, economic, and environmental challenges.
Social Media Shoutouts
@RepCindyAxne, Transparency from our public corporations helps investors know the risks they face and the public know which companies are more interested in avoiding U.S. taxes & moving jobs overseas to squeeze out extra profits.
@CongBoyle, A lot of companies evade taxes through tax havens from Switzerland to Bermuda to the Cayman Islands. And they benefit from tax loopholes and deductions that allow for offshoring jobs and shifting profits overseas. #JointAddress
@RepJudyChu, The top 1% didn’t report ~25% of income, costing us ~$7 trillion that could’ve gone to childcare, paid leave, free college & more. That’s why I fought for more enforcement funding & urged the IRS to focus on auditing the wealthiest few, not poor families.
@SenWhitehouse, Typical taxpayers don’t hide money abroad, so the wealthy who cheat are worsening income & wealth inequality. One study estimates that the 1% of taxpayers hide 20% of their income. How did this happen? Republicans slashed the IRS budget, with enforcement hit especially hard.
About the FACT Coalition