Stop Tax Haven Abuse Act, 2013

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Stop Tax Haven Abuse Act, 2013

Over the years, I have always marveled at the nonchalance encountered in Luxembourg while bringing up five potential threats to the Luxembourg financial center. (or other tax havens for that matter). These are US initiated threats, that eventually will be adopted by other countries, such as at the recent G20.

Those threats were and still are in historic order:

1. Anti Money laundering, terrorist financing.
2. The Foreign Corrupt Practices Act
3. FATCA
4. The Stop Tax Haven Abuse Act
5. An emerging concept of combating regulatory and judicial havens.

While 1-3 are enacted, 4 has seen a new version of an old one being deposited by Senator Carl Levin, whose reputation of getting the financial systems in order doesn't need any advertising anymore. The Senator has also an impressive group of exceptional investigators at hand. I have met some. They are at the origin of detecting loop holes and recommending action.

These are some relevant quotes from Senator Levin's presentation of the new bill:

"The United States hemorrhages hundreds of billions of dollars in tax revenue each year to a relatively small group of multinational companies. These large, profitable companies are headquartered here, they do business here, and they benefit from the safety and stability of living and working in the United States. Yet they use an array of complex arrangements involving offshore tax loopholes to avoid paying their taxes. The Senate Permanent Subcommittee on Investigations, which I chair, has spent more than a decade examining these loopholes and the damage they do.

That’s why on Sept. 19 I introduced the Stop Tax Haven Abuse Act, a comprehensive effort to end these loopholes and gimmicks and bring more fairness to the tax code. This bill, cosponsored by Sens. Sheldon Whitehouse of Rhode Island, Mark Begich of Alaska and Jeanne Shaheen of New Hampshire, would tackle an array of offshore corporate tax abuses.

The provisions of our bill would, according to official estimates, reduce the deficit by about $220 billion. If we used that revenue as one part of a balanced deficit reduction plan, we could avoid six years or more of sequestration. And the public supports that plan: Last year, a poll showed that 75 percent of Americans support closing offshore tax loopholes to reduce the deficit."

This is another quote from the Senator's presentation at the Senate Floor on September 19:

"According to a Wall Street Journal article, over 20 percent of the corporations that made initial public offerings or IPOs in the United States in 2010, were incorporated in Bermuda or the Cayman Islands, but also described themselves to investors as based in another country, such as the United States.  The article also described how Samsonite, a Denver-based company, reincorporated in Luxembourg before going public.  Too many of these tax-haven incorporations appear to have no purpose other than having the advantage of operating in the United States while avoiding U.S. taxation and undercutting U.S. competitors who pay their taxes."