Legislation Introduced Yesterday That Will Combat Tax Haven Abuse

[babylonsister]

Tuesday, March 3, 2009
Legislation Would Combat Tax Haven Abuse; Obama Supported Similar Bill In Senate


The introduction yesterday of legislation to "restrict the use of offshore tax havens and abusive tax shelters to inappropriately avoid Federal taxation" by Sen. Carl Levin (D-Mich.) represents a crucial step towards improving U.S. tax assessment and collection, and increasing transparency and accountability in the global financial system, according to an organization that supports the bill.

The Stop Tax Haven Abuse Act is similar to a previous bill, S. 681, introduced by Levin in 2007 and cosponsored by then-Sen. Barack Obama with three significant new additions that 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, according to a statement by the organization, Global Financial Integrity (GFI).

The Washington-based organization describes itself as promoting national and multilateral policies, safeguards, and agreements aimed at curtailing the cross-border flow of illegal money.

Offshore tax abuses cost the U.S. Treasury an estimated $100 billion each year in lost tax revenues, including $40 billion - $70 billion from individuals and $30 billion - $60 billion from corporations. Abusive domestic tax shelters cost tens of billions of dollars more, according to a statement from Levin's Senate office.

“Offshore tax haven and tax shelter abuses are undermining the integrity of our tax system and increasing the tax burden on middle income families,” says Levin, chairman of the Permanent Subcommittee on Investigations which has conducted numerous inquiries into offshore abuses. “We cannot tolerate $100 billion in offshore tax abuses burning a hole through our budget each year. We can fight back against secrecy jurisdictions and shut down offshore tax abuses if we have the political will. This bill provides a powerful set of new tools to clamp down on offshore tax and tax shelter abuses.”

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http://onthehillblog.blogspot.com/2009/03/new-legislation-would-combat-tax-haven.html