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Just the FACTs: April 19, 2018

In January, we were optimistic that this would be the year anonymous companies would end.  Since then, the momentum for disclosure has only grown. Legal scholars and international affairs experts have recently called for action, a recent poll showed overwhelming support from small businesses, and a report from Fair Share reminded us that anonymous companies are continuing to fuel the opioid epidemic.  Between these and a recent investigation by Reuters that found Russians are using a web of anonymous companies to skirt U.S. sanctions and boost the government of Syria’s Bashar al-Assad, Iran’s Revolutionary Guard, and the Hezbollah militia, the arguments for secrecy are becoming more and more invalid.

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Just the FACTs: February 23, 2018

Movements to end anonymous shell companies exploded in 2017, already this year the momentum has ballooned.  With several committees in the House and Senate taking up the issue and a broad-based, bipartisan coalition calling for action, the previously elusive transparency measure is no longer a long-shot.

Two recently released reports exemplify why the momentum needs to continue.  The 2018 Financial Secrecy Index provides insight into secrecy jurisdictions globally and the Polaris Project’s report, Human Trafficking in Illicit Massage Businesses, reveals (among other things) how the abhorrent industry of sex trafficking is shielded behind anonymously registered businesses.

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Just the FACTs: November 17, 2017

When the Panama Papers were released just a little over a year ago it sent shockwaves throughout the world.  The massive scale of the leak and the VIP’s that it implicated outraged a public that had already seen the wealthy and corporations as not paying their fair share.  Though, with all that the leak revealed, an important question was on everyone’s minds, where are the Americans?  This past week, it seems, we found them.

The Paradise Papers—a leak of 13 million documents from Appleby, a large offshore law firm—contains details on tax avoidance techniques of at least 31,000 U.S. citizens, residents and companies. This includes household names like Apple, Nike, and Uber.  While governments have moved to crack down on tax avoidance schemes, documents in the leak show how Apple and Nike were able to outrun regulators by exploiting gaps between differing tax codes.

Just a few days before the leak, House leaders released a tax plan that rewards companies for creating complicated tax avoidance structures like those found in the leak.  It is, in effect, a gift to the multinational companies that have dodged taxes for years by offshoring profits and jobs with an estimated $458 billion tax giveaway on the profits that are currently offshore.  In 2004, a similar measure was used in an effort to create jobs yet the multinationals who benefited most from the repatriation holiday slashed 20,000 U.S. jobs over the next two years.

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Just The FACTS: August 21, 2017

More corrupt officials face consequences as reverberations from the Panama Papers continue. Pakistan’s Supreme Court has indefinitely disqualified the prime minister, Nawaz Sharif, from public service after the prime minister and his children were implicated in dubious real estate transactions in London. A subsequent investigation showed his family owned luxury real estate properties through anonymous companies. Based on their income, it was unlikely they could afford the properties, suggesting they were potentially hiding stolen assets and engaging in illicit financial practices. In a blog responding to the action taken by the supreme court, Global Witness’ Naomi Hirst noted this as an example of how anonymous companies are used to embolden corrupt officials and called on leaders to fulfill their promises to eliminate them.

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Just the FACTS: July 27, 2017

Over the past several decades, anonymous shell companies have been at the heart of heinous crimes, including cases of grand corruption, human trafficking, and even the facilitation of the opioid epidemic. Didier Jacobs of Oxfam America highlighted some of the blights of anonymous companies in a recent blog. In it, he describes how drug lords, corrupt politicians, and human traffickers are able to perform illegal acts while hidden from justice by a veil of anonymity. With shielded identities, criminals can effectively function above the law.

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Just the FACTS: June 15, 2017

For the second time, Wells Fargo was found liable for a tax penalty in connection with an abusive tax shelter.  This points to a broader trend where companies’ abusive tax schemes are being exposed to increasing public discontent.  In the case of Wells Fargo, a jury in Minnesota had previously nixed $350 million in foreign tax credits finding that they “lacked both economic substance and a non-tax business purpose.” Now, a federal court has found them liable for a 20% negligence penalty from the IRS. The court’s decision is yet another example that the tax gimmicks employed by multinationals to inflate profits are becoming riskier.

In a blog, FACT’s Jacob Wills explained the current climate around tax fairness, “Scandals have shaken public confidence in the integrity and fairness of the tax system at a time when tightening budgets and increasing deficits are leading to calls for austerity and scaling back on long relied upon public services.”

It should be no surprise that tax avoidance schemes face increased scrutiny, a recent report suggests that the ultra-wealthy are dodging more in tax than many had previously estimated.   Economists Annette Alstadsæter, Niels Johannesen, and Gabriel Zucman took data from two tax haven leaks — the Panama Papers and Swiss leaks — in order to get more accurate estimates of tax evasion.  Their findings: the ultra-rich — on average — evade about 30% of their due taxes, compared to the average evasion rate of 2.9%.

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