“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 Policy Internship 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
Tax Transparency Back in the Spotlight
Once again, the momentum is building on tax transparency this month as both the United States and the E.U. make waves on corporate disclosures. Lawmakers on this side of the Atlantic took an important step toward true transparency. A month after Rep. Cindy Axne’s Disclosure of Tax Havens and Offshoring Act (H.R. 3007) rocketed from introduction to markup in just 24 hours, the bill passed the House of Representatives as part of a broader corporate disclosure package on environmental, social, and governance (ESG) reforms.
The FACT-endorsed legislation now moves to the Senate where, if passed and signed into law by President Biden, it could mark a new era of U.S. leadership on corporate accountability. House action has sent a strong signal to the Securities and Exchange Commission (SEC), which is already considering similar disclosures on climate. As FACT has stated in our own comment to the SEC, tax transparency and climate disclosures go hand-in-hand. FACT played a key role in garnering support for the legislation from 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. For these efforts, Financial Services Chairwoman Maxine Waters highlighted the impact of FACT, among others, in advocating for the legislation.
Meanwhile in Europe, the Principles for Responsible Investment and investors representing an eye-popping $5.6 trillion dollars of assets under management penned a letter urging Europe to take the lead on public country-by-country reporting ahead of the European Union’s final decision on corporate transparency. Ultimately, while the E.U. stopped short of endorsing global disclosures, it nonetheless is one of the first prominent jurisdictions to require public reporting on tax and other financial information, setting up future tax transparency wins to come.
Global Minimum Tax Offers Promise but Concerns Remain
This month has also brought historic changes to the international corporate tax landscape. Undoubtedly, the agreement reached by the G7 finance ministers to institute a global minimum corporate tax could permanently change the international tax landscape. Key stakeholders like FACT member Oxfam and the Tax Justice Network, however, have raised concerns that the agreed upon 15 percent is simply too low and that the majority of benefits would go to rich countries.
Five major finance ministers, including Secretary Yellen, have assured campaigners that they are “confident that the rate can ultimately be pushed higher than 15 percent.” An outcome may be fast approaching, with some reports that a complete agreement could be reached as soon as the end of June.
Back in Washington, infrastructure negotiations have kept many public international tax debates on pause, but action continues behind the scenes. At the end of May, the Treasury Department released its Green Book, explaining the revenue impact of specific policy proposals. The FACT-supported proposals included in the document are expected to raise at least $1 trillion over the next ten years. Jared Bernstein, a member of the US Council of Economic Advisors, underscored the Administration’s commitment to international tax reform at a recent Urban-Brookings Tax Policy Center panel when he declared that the incentives for offshoring created by the Tax Cuts and Jobs Act “antithetical to President Biden’s agenda to shift investment, production, and jobs back to our shores.” Congress should consider additional ways to help President Biden follow through on these beliefs by ensuring full GILTI rate equalization is included in the final legislative package for the American Jobs Plan.
Fighting Illicit Financial Flows
The Global Fight Against Kleptocracy is Heating Up
At long last, the global fight against kleptocracy is heating up. President Biden has finally put pen to paper on his long promised anti-corruption agenda with this month’s release of a National Security Study Memorandum targeting corruption’s “staggering” cost. Alongside a declaration from USAID chief Samantha Power of a new, $50 million global anti-corruption program, the Administration has clearly signaled a welcome, whole-of-government effort to root out corruption.
Progress does not stop at the White House, or even in Washington. Just over two weeks ago, the 187 countries party to the United Nations Convention against Corruption adopted their 2021 political declaration at the UN General Assembly Special Session Against Corruption, reaffirming their commitment to crushing corruption. Among its many recommendations, the political declaration included an endorsement of the “reliable and timely” beneficial ownership databases like those that FACT has championed.
Taking note, the G7 Secretaries of State commended the UN Special Session’s work and pledged to sustain the momentum in their ministers’ meeting this September. The letter also set the stage for the meeting of the G7 Heads of State in the UK this month, where global leaders joined in making a landmark declaration against illicit financial activities, the misuse of shell companies, and the hiding of ill-gotten wealth hidden in real estate.
Bipartisan Consensus Builds with New Anti-Kleptocracy Caucus
President Biden’s bold statements with other global leaders are a strong step in the right direction, but to fulfill these promises the Administration will first have to go further here at home. Thankfully, a rare bipartisan consensus has built in Washington to push the Administration on anti-kleptocracy reforms. The Caucus Against Foreign Corruption and Kleptocracy launched this month to the applause of FACT and other transparency advocates. Already, the bipartisan caucus has put forward several pieces of legislation as a part of their Counter-Kleptocracy Month, including the CROOK Act, which FACT supports.
In addition to giving the Administration new tools to fight foreign kleptocracy, the Caucus must also ensure that the White House uses the tools it already has. Reports continue to emerge about how the corrupt global elite have stashed billions of dollars in opaque U.S. real estate and private equity markets – crowding out Main Street, worsening the housing crisis, and muddying the waters of otherwise legitimate institutional investments. Expanding the scope of geographic targeting orders (GTOs), one tool to introduce transparency in property transactions, is one recommendation that has already gotten attention. Lakshmi Kumar of Global Financial Integrity, a FACT Coalition member, recently stated in a House Financial Services Committee hearing on sanctions evasion that half of all real estate transactions with money laundering risks were taking place outside of areas subject to geographic targeting orders. By cutting off these wealth storage tools, the Administration could dramatically reduce the U.S.’s role in illicit financial flows.
Job Openings with FACT
The FACT Coalition is looking for an intelligent, energetic, and resourceful Policy Intern to help with the Coalition’s communications, advocacy, outreach, and operations. The Policy Intern will assist in maintaining the Coalition’s daily communications and operations needs. This will include overseeing FACT’s public facing image across social media channels and the website. The Policy Intern will help facilitate the internal coordination of the Coalition — organizing the Coalition’s various working group meetings, planning and organizing public events, recruiting support for joint sign-on letters to various Administration officials and Members of Congress, and following up with Coalition members on various commitments. The Policy Intern will also support the Coalition’s logistical needs. Beyond these day-to-day responsibilities, the Policy Intern will have the opportunity to collaborate with the rest of the FACT staff on policy advocacy initiatives and will take on a long-term policy and research project co-designed with the FACT team.
See https://thefactcoalition.org/about-us/careers/ for more information on qualifications and how to apply.
Latest from FACT
|PRESS RELEASE: House Takes Historic Step in Advancing Corporate Tax Transparency|
June 16: The Financial Accountability and Corporate Transparency (FACT) Coalition hailed today’s passage of the Disclosure of Tax Havens and Offshoring Act in the House of Representatives.
|BLOG: To Follow Through on Anti-Corruption Ambitions Abroad, Washington Must First Take Action at Home|
June 16: FACT’s Christopher Boose urges Washington to take a firm stance against corruption at home to follow through on anti-corruption ambitions abroad.
|LEGISLATIVE LETTER: FACT Sends House Leadership Letter Endorsing Title V of Corporate Governance Improvement and Investor Protection Act (H.R. 1187)|
June 15: FACT sent a letter to House leadership in support of the Disclosure of Tax Havens and Offshoring Act, a portion of the Corporate Governance Improvement and Investor Protection Act.
|PRESS RELEASE: FACT Coalition Applauds Biden Administration Move to Establish the Fight Against Corruption as a “Core U.S. National Security Interest” |
June 3: The Financial Accountability and Corporate Transparency (FACT) Coalition today warmly welcomed the Biden Administration’s move establishing combating corruption at home and abroad as a core U.S. national security interest.
|PRESS RELEASE: FACT Welcomes U.S. Congressional Anti-Kleptocracy Caucus Committed to Financial Transparency and Rule of Law|
June 2: The U.S. Congress announced today the formation of the new, bipartisan Caucus Against Foreign Corruption and Kleptocracy. The caucus will be a forum to educate and mobilize Members of Congress on cross-cutting domestic and foreign policy reforms to tackle corruption.
|PRESS RELEASE: European Action on Multinational Tax Transparency Requirements Underscores Need for Strong U.S. Action|
June 2: The FACT Coalition today reiterated the need for quick movement on the Disclosure of Tax Havens and Offshoring Act, proposed U.S. legislation that would require multinational corporations to disclose their taxes paid and other key information publicly on a country-by-country basis, after negotiations in Europe resulted in a political agreement yesterday for limited public reporting of corporate taxes paid.
|BLOG: Biden’s Treasury Department has heard from the public. Now it must craft a strong rule to end anonymous U.S. companies|
May 25: After fielding more than 200 comments – from civil society, financial institutions, large and small businesses, real estate trade groups, law enforcement, secretaries of state, and yes, even the congressional authors of the CTA – FinCEN has been given the mandate and expert guidance needed to stand up beneficial ownership disclosure requirements.
FACT in the News
|QUOTED IN: FACT Coalition Notes Support for Disclosure of Tax Havens and Offshoring Act|
June 18: FACT is quoted in TaxNotes International News Roundup
|QUOTED IN: US House passes bill that could shine a ‘spotlight’ on corporate tax avoidance|
June 16: FACT Government Affairs Director Erica Hanichak is quoted by AppleInsider in its reporting of the passage of the Disclosure of Tax Havens and Offshoring Act.
|QUOTED IN: VAN HOLLEN APPLAUDS HOUSE PASSAGE OF LEGISLATION TO PROVIDE TRANSPARENCY ON CORPORATE USE OF TAX HAVENS, OFFSHORING OF JOBS|
June 16: FACT Executive Director Ian Gary is quoted by the office of Senator Chris Van Hollen in their press release around the passage of the Disclosure of Tax Havens and Offshoring Act.
|QUOTED IN: House Passes Two Axne Bills Aimed at Leveling Playing Field for Iowa Small Businesses and Investors|
June 16: FACT Executive Director Ian Gary is quoted by the office of Representative Cindy Axne in their press release around the passage of the Disclosure of Tax Havens and Offshoring Act.
|QUOTED IN: Biden Unveils Plan To Crack Down On Corruption, Tax Havens|
June 3: FACT is quoted in Law360’s reporting on Biden’s plans to crack down on corruption and tax havens.
|QUOTED IN: Finance chair investigating drugmaker AbbVie’s tax strategy|
June 2: FACT Executive Director Ian Gary is quoted as RollCall discusses Wyden’s investigation in AbbVie tax disclosures.
Recent and Upcoming Events
|Third G20 Finance Ministers Meeting|
July 9-10: The 2021 G20, under the Italian Presidency, will focus on three broad, interconnected pillars of action: People, Planet, Prosperity. Within these pillars, the G20 aims to take the lead in ensuring a swift international response to the COVID-19 pandemic – able to provide equitable, worldwide access to diagnostics, therapeutics and vaccines – while building up resilience to future health-related shocks.
|Tax Justice Network Annual Conference 2021|
July 6-9: This virtual conference is the latest in an annual series dating back to 2003. The events bring together researchers, academics, journalists, civil society organisations, consultants and professionals, along with elected politicians and their researchers, and officials from national governments and international organisations. This year’s conference will discuss human rights and the 4 ‘R’s of tax justice: Revenues, Redistribution, Repricing, and Representation
|KPMG: Understanding Tax Transparency|
June 24: Join tax professionals from globally recognized multinationals, as well as KPMG firms, as they discuss their own journeys and explore how to become more transparent in a way that supports broader business goals. Topics of discussion will include defining transparency, an overview of the EU’s proposal, a discussion about what investors want from tax transparency, and a deep dive into good transparency – learnings and what lies ahead
|Beneficial Ownership Transparency: A Cross Cutting, Cross Regional Need|
June 24: Join Global Finance Integrity and other transparency advocates for an important discussion in beneficial ownership, including recent developments, progress and challenges. Panelists will address why it is important to the real or “beneficial” owners of companies as a strategy for corporate transparency, social equity and economic development in Colombia, Latin America and the Caribbean. Appropriate translations provided.
|(RECENT) Schemes and Subversion: How Bad Actors and Foreign Governments Undermine and Evade Sanctions Regimes|
June 16: The Subcommittee on National Security, International Development and Monetary Policy held a briefing on how bad actors undermine our sanctions regime, featuring Lakshmi Kumar of FACT Member Global Financial Integrity as a witness.
Social Media Shoutouts
@ChrisVanHollen, It’s past time big multinational corporations paid their fair share in taxes. This is an important step towards making that happen. Next step: fixing the damage from the 2017 GOP Tax Scam here at home.
@SenFeinstein, The G7 members’ decision to move toward mandatory, more standardized disclosure of financial institutions’ climate-related risks is a welcome development. Climate change is already causing and exacerbating natural disasters that have a profound effect on our financial system.
@RepJudyChu, Global tax havens undercut our ability to invest in our communities. Imagine how many bridges or schools we could build with the billions lost through these havens? I’m glad to see @POTUS pushing for a global minimum tax to end these unfair practices.
@RepLloydDoggett, Yet more evidence justifying the President’s effort seeking equity as well as revenue. The ultrarich who pay little or nothing (just like the multinational corporations hiding their income abroad) exploit loopholes Congress has shamefully refused to close.
@RepDarrenSoto, @POTUS Biden counteroffers 15% min corp tax to fund #AmericanJobsPlan. 55 Fortune 500 companies paid ZERO dollars in fed corp tax in 2020. Let’s see if @SenateGOP is #ForThePeople or multinational tax avoiding companies. Time to #BuildBackBetter!
About the FACT Coalition