Fortune: It's Time for the U.S. to Deal With Tax Evaders
Column in Fortune by Scott Klinger and Clark Gascoigne.
America is the world’s newest tax haven.
If I asked you to name the world’s biggest tax haven, you might come up with the Cayman Islands, Bermuda, or Luxembourg. Those of you following the recent series of so-called “corporate tax inversions” might guess Ireland.
You probably wouldn’t think of the United States, but the latest edition of Bloomberg Businessweek points its finger squarely at Uncle Sam—and not without reason.
Indeed, the U.S. has passed the Caymans, Luxembourg, and Singapore on the list of the world’s leading secrecy jurisdictions, according to the Financial Secrecy Index, compiled by the Tax Justice Network. America now ranks third in the world, behind only Switzerland and Hong Kong, on the list of nation’s that promote and profit from secret accounts used by drug dealers, arms traders, tax evaders, and even terrorists to hide their money.
There is a sad irony here.
The United States has led the way in confronting other tax haven nations, by insisting that foreign countries that protect illicit assets with harmful secrecy laws share information with the U.S. Government on American citizens’ foreign assets. But when it comes to reciprocating by sharing information on the assets held in the U.S. by foreign nationals, the Obama Administration has been dragging its feet.
The U.S. signed a few reciprocity agreements with a small number of mostly rich, Western European countries, but the poorest countries in the world—where tax dodging has the biggest impact on the lives of people—have been left out in the cold. Even the few reciprocity agreements that exist with the U.S. can be skirted by opening bank accounts in the name of an anonymous shell company instead of the actual person.