The FACT Coalition sent this memo to offer detailed responses to several common concerns raised by opponents of the discussion draft of the Counter Terrorism and Illicit Finance Act and to inform the debate moving forward.
There is widespread agreement, across the political spectrum, that the gaming of the tax code by multinational corporations is a problem. When profits and jobs are shipped offshore, we not only harm the U.S. economy, we fuel a tax haven industry that drains wealth around the world.
The tax system under the Tax Cuts and Jobs Act includes loopholes and incentives to shift money and jobs overseas.
The Panama Papers leak of eleven million documents in April 2016 revealed that former Iraqi Prime Minister Ayad Allawi, the brother-in-law of Chinese President Xi Jinping, longtime friends of Russian President Vladimir Putin, drug kingpins, and even a soccer megastar had something in common: they all channeled money through anonymous shell companies. Anonymous shell companies are entities that usually employ few or no workers, do not conduct any substantive business, and allow their owners to store or route money while hiding their identities.
Questions & Answers about the Foreign Account Tax Compliance Act (FATCA)
FATCA is the Foreign Account Tax Compliance Act, which was adopted in 2010 to help pay for the HIRE (Hiring Incentives to Restore Employment) Act. FATCA requires foreign financial institutions (FFIs) to determine if accounts they have opened are held, directly or indirectly, by Americans and, if so, disclose them to the Internal Revenue Service (IRS). Any FFI that refuses to provide this information to the United States is subject to a 30% withholding tax on the FFI’s U.S. source income.
Important Steps to Fix the Gaming of the Corporate Tax System
A common theme from both Democrats and Republicans in the recent election was the increasing problem that multinational companies are moving money and jobs offshore. These practices are encouraged by loopholes in the tax code, which encourage companies to move. These loopholes should be closed.
The FACT Coalition sent this memo to the Trump-Pence Presidential Transition Team regarding actions to combat terror financing; criminal money laundering; and waste, fraud, and abuse in government contracting.
