Monday, April 06, 2009

The McIntyres give evidence

Two leading US tax experts, the brothers Bob McIntyre (Director of Citizens for Tax Justice) and Michael J. McIntyre (a professor of law at Wayne State University in Detroit, who recently wrote for TJN) have recently given evidence to the US House Committee on Ways and Means, looking at ways that the U.S. can reduce international tax evasion by wealthy Americans.

They focus on three main areas:
  • Transferring assets to offshore tax havens that maintain secrecy to avoid IRS detection.
  • Fraudulently taking advantage of an exemption for portfolio interest paid to foreign persons.
  • Posing as foreign persons and taking advantage of U.S. income tax treaties
These are relevant to recent debates we've been having about the OECD and standards for exchanging information. Read the full document to see the details, but a few things are worth noting:

based on current international arrangements, such as information exchange on request, "the Internal Revenue Service is being asked to locate the proverbial needle in the haystack.

On tax information exchange agreements (TIEAs), which we've been discussing a lot recently, the McIntyres said:

"they have not provided a systemic solution to international tax evasion and cannot be expected to do so."

And something that may be of more interest, and worth following up on:

"The U.S. experience with TIEAs is highly secret. No reports on the use of those agreements are provided to the public. Our general impression, nevertheless, is that the TIEAs have been ineffective in curtailing tax evasion. Some commentators have suggested that they may have a negative value in some cases by giving the appearance of propriety to a government that is fully engaged in the business of attracting and protecting tax cheats."

Well said. They offer a number of solutions - read the nine-page testimony to see more details - but we'll focus on this one, which needs a constant reminder: a measure that will help with our long-term project to change the global agenda and will provide a tool against which we can hold governments, a UN Code of Conduct

". . . that would charge participating governments with a moral obligation to take various steps to curtail international tax evasion and abusive tax avoidance. The code, as revised, is expected to be ratified by the committee by June of this year. The code codifies an emerging international standard on transparency and cooperation. One objective of the code is to put moral pressure on rogue governments that refuse to provide information exchange or that actively promote tax evasion by allowing the owners of legal entities to remain anonymous."

Mike McIntyre wrote us a long article on this, here.


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