While the two chambers of Congress work to reconcile the differences between their respective transportation bills, CF&P continues to monitor an unrelated tax provision known as the “Stop Tax Haven Abuse Act” that was slipped into the Senate version by Sen. Carl Levin, a frequent source of anti-tax haven demagoguery. The Act would grant the Treasury Department new powers under the Patriot Act to compel foreign banks to perform the duties of the IRS by enforcing US tax law, while punishing those who do not sufficiently satisfy Treasury’s demands to enforce America’s counter-product worldwide tax system.
By empowering tax bureaucrats with the authority to determine if a jurisdiction is guilty of the vague crime of “significantly impeding United States tax enforcement,” and also granting them authority to impose punitive measures, the legislation compounds the regulatory and economic mess created by Senator Levin’s last anti-tax haven measure, the Foreign Account Tax Compliance Act (FATCA). At a time when the costs of FATCA to the U.S. economy are still being tallied, it is particularly foolish to double down on fiscal imperialism with yet more legislation that will encourage further disinvestment from the US economy, thus limiting the availability of capital and reducing economic growth.
Yesterday, Rep. Doggett offered a non-binding motion to instruct the House conferees to accept the Senate’s anti- tax haven language. As part of our ongoing mission to promote tax competition and defend financial privacy, CF&P last month educated members on the likely consequences of enacting Levin’s legislation, and provided this information again this week. Apparently the lessons took, as the motion was defeated 192-226.
