Global Financial Integrity

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Civil Society Groups Show Support for Congressional Action on Tax Havens

Monique Perry Danziger, +1 202 293 0740 ext. 222

WASHINGTON, DC – Global Financial Integrity (GFI) sent Congressional leadership a letter today signed by nearly 30 public interest groups affirming support for legislation that would combat offshore secrecy jurisdictions (Stop Tax Haven Abuse Act) and applauding Congressional action on the problem of tax haven abuse.   Called the “Stop Tax Haven Abuse Act” the Levin bill would, among other benefits, give the Treasury Department “authority to take special measures against foreign jurisdictions and financial institutions that impede U.S. tax enforcement.”  An estimated $100 billion in US taxes are lost each year due to the abuse of tax havens.

The advocacy groups which signed the letter include the 10 million-member AFL-CIO, the 30-year old tax fairness group Citizens for Tax Justice, the government accountability organization OMB Watch and the federation of state Public Interest Research Groups (PIRGs); The letter was organized by Global Financial Integrity, a Washington-based research organization that focuses on transparency in the global financial system.

The letter states: “This is a critical time in global finance. The G-20 has issued strong words of intent to address the economic crisis when it convenes in April. Addressing transparency, especially as it pertains to tax havens and secrecy jurisdictions, is clearly needed. Calls to confront tax havens have come from several quarters, including the IMF, the Vatican and various governments. We are pleased to note that the Obama administration fully supports the Levin bill.”

The bill also would: (1) treat foreign corporations managed and controlled in the United States as domestic corporations for income tax purposes; (2) close an offshore tax dividend loophole that enables offshore hedge funds and others to dodge payment of U.S. taxes on U.S. stock dividends; and (3) expand the tax return reporting requirements for passive foreign investment corporations (PFICs) to include U.S. persons who don’t own a PFIC, but have formed, sent assets to, received assets from, or benefitted from a PFIC.

“This is a systemic problem that goes beyond one or two financial jurisdictions or dishonest individuals,” said GFI director, Raymond Baker.  “Last December the Government Accountability Office (GAO) released a report showing that 83 of the 100 largest, publicly-traded U.S. companies and contractors have subsidiaries in tax havens.  Furthermore, four of those 83 companies are banks which received $127 billion in TARP bailout funds.  In the midst of historic economic crisis the U.S. cannot afford to be complicit of these illicit financial practices which cost the U.S. hundreds of billions of dollars every year.”