Transparency Measures Have Broad Support from Financial Institutions, Law Enforcement, and Anti-Corruption Advocates
WASHINGTON, D.C. – Bipartisan pieces of legislation introduced on June 28, 2017 aim to crack down on one of the prime enablers of criminal money laundering and terrorist financing — the abuse of anonymous shell companies.
Speaker Paul Ryan gave a speech on tax reform before the National Association of Manufacturers. In the speech, he restated his position that corporate tax cuts will create jobs and that the United States should move to a territorial tax system.
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%.
“U.S. Administration Chose to Double Down on Its Abdication of American Leadership.”
WASHINGTON, D.C. – Just one week after pulling out of the Paris Agreement to combat climate change, the U.S. administration has chosen to back away from yet another international convention — this one to combat abusive tax avoidance. Coincidentally, the tax agreement was also negotiated and signed in Paris — at the headquarters of the Organization for Economic Co-operation and Development (OECD).
Massive protests in Venezuela, Tunisia, Brazil, Morocco, and the Dominican Republic over the last few weeks have highlighted political graft around the globe, and the ensuing instability and violence that can result.
Profits booked offshore are growing at an even faster pace than previously predicted. Earlier this month, Apple made waves when it disclosed that of its more than $250 billion in cash worldwide, $239 billion is kept offshore. Some of the growth in cash booked offshore is likely due to the perception that Congress and the administration are inching ever closer to a deal that would allow these companies to return the money at a steep discount.
One plan presented by Democratic Representative John Delaney equates to a corporate hand-out of nearly $550 billion. In a recent blog, the Institute for Taxation and Economic Policy analyzes the plan disguised as a pay-for for infrastructure spending. There is no doubt with a backlog of $836 billion in much-needed repairs, investments in infrastructure need more funding. However, as ITEP argues, this plan will only make the problem of inadequate revenue worse.
