The Raging 2020's: Companies, Countries, People, and the Fight For Our Future by Alec Ross

Author:Alec Ross [Ross, Alec]
Language: eng
Format: epub
ISBN: 9781250848529
Barnesnoble:

UNITED STATES

The United States loses at least $225 billion every year due to tax avoidance and evasion. You would think that this would provide enough of an incentive for the nation to use its muscle to crack down on tax haven abuse. While there are plenty of voices in the States who would like to do just that, a haphazard policy has emerged instead. The ultimate result is that the US has taken half measures against other tax havens while quietly sprinting ahead in the race to the bottom. In many ways, it is now one of the world’s leading tax havens.

In its 2020 financial secrecy index, the Tax Justice Network named the United States the world’s second-most secretive jurisdiction, outdone only by the Cayman Islands. At the federal level, the country is unwilling to share information on foreign companies and individuals who transfer money into the US. And because states like Delaware, Nevada, and Wyoming grant corporations and their owners extensive anonymity, foreigners find the US to be an extremely attractive destination for ill-gotten funds.

After the Second World War, as the UK was laying the foundation for the offshore system, the US government remained staunchly opposed to tax havens. In 1961, President John F. Kennedy called for legislation that would “[eliminate] the ‘tax haven’ device anywhere in the world.” But as the expanding offshore markets and escalating war in Vietnam drew more US money abroad, the government chickened out. It needed a way to bring more capital into the country and keep the dollar strong, so it joined right in. The US started adopting the lax regulations that banks enjoyed in London in an effort to corner a piece of the global financial market. It made an even bigger shift in the arena of financial secrecy. In the 1960s, non-Americans could already invest in the US without fear that banks would share information with their home governments. In the decades that followed, federal and state lawmakers enacted policies to give foreign investors greater secrecy and more tax exemptions. Money began to pour into the country, much of it from corrupt officials and criminal organizations in Latin America.

“Anonymous companies … can be formed in any state in the United States. That allows wealthy individuals, corrupt officials, money launderers, etc., to set up companies to stash wealth … completely anonymously and without any accountability whatsoever,” said Clark Gascoigne of the FACT Coalition, a nonpartisan alliance of more than a hundred state, national, and international organizations working toward a fair tax system that addresses the challenges of a global economy. “That’s a very real policy choice that we have made in the United States, to allow these entities to exist.”

As it expanded secrecy for foreign investors, the US government pushed for laws and tax treaties that forced foreign jurisdictions to share more information about American investors abroad. In 2010, the US passed the Foreign Account Tax Compliance Act (FATCA), a law that required foreign financial institutions to automatically share information on American clients with the IRS.

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