Wednesday, April 18, 2012

Big win on transparency in the United States

From Bloomberg:
The [U.S.] Internal Revenue Service and the Treasury Department released final rules today requiring U.S. banks to report interest payments made to nonresident aliens. The regulations will apply to payments starting in 2013 and are part of the government’s efforts to work with other countries on tax evasion.
We have long criticised the United States for deliberately setting itself up as a secrecy jurisdiction for foreign (nonresident) hot money, declining to provide information. Wall Street loves the dirty money, of course, and has screamed about the regulations.

It complements recent FATCA legislation in 2010, which we have written a lot about, under which the U.S. requires foreign banks to track and report payments to U.S. account holders, who are liable for U.S. taxes on their worldwide income. FATCA has been criticised by some as being hypocritical: a case of the United States wanting transparency from others, while refusing to provide transparency itself.

This is a big win for the FACT coalition in the United States, of which TJN-USA is a leading member. See testimony from Rebecca Wilkins of Citizens for Tax Justice, here.
America should not be a tax haven for international tax evaders. . . . we should not make it easier for the laws of other countries to be broken. . . There is a growing global consensus that responsible governments must cooperate in exchanging tax information, in order to combat the rampatn tax evasion that is facilitated by offshore tax havens. And make no mistake: the US is a tax haven for citizens of other tax havens.
. .
only depositors who are tax evaders, money launderers, drug dealers, human traffickers or other criminals will have incentives to move their funds. Mr Sanchez (a lobbyist) said most of his depositors have their accounts in U.S. accounts in U.S. banks because they dont trust the banking system in their own country, and i fully understand that. If that is their reason then they have nothing to fear from these regulations.

Objections to these rules on humanitarian grounds are largely baseless.
These common objections are indeed almost entirely baseless. See further arguments on this here.

Predictably, the pushback has already begun, as Bloomberg continues:
"Representative Bill Posey and Senator Marco Rubio, Florida Republicans, introduced bills that would block the regulations."

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