The United States has become a top tax haven for foreign companies, despite the Obama administration’s efforts to crack down on U.S. firms stashing money overseas.
The U.S. came in third place on the Tax Justice Network’s biannual Financial Secrecy Index, behind Hong Kong and Switzerland.
“An estimated $21 to $32 trillion of private financial wealth is located, untaxed or lightly taxed, in secrecy jurisdictions around the world,” the report says. “Secrecy jurisdictions,” it notes, are also known by the more common term “tax havens,” and are countries that “use secrecy to attract illicit and illegitimate or abusive financial flows.”
States like Delaware and Nevada have become tax havens, according to the report. They allow anonymous shell companies to operate within their borders, letting foreign companies funnel profits through the U.S. while largely avoiding taxes in their home nations. Economists argue that this type of activity widens the gap between the super-rich and the rest of the world.
TJN admits that the U.S. has been a “pioneer” in rewriting the rules for international secrecy jurisdictions — the Organization for Economic Cooperation and Development has emulatedU.S. policies — but “provides little information in return to other countries, making it a formidable, harmful and irresponsible secrecy jurisdiction.”
Obama has made various attempts throughout his presidency to tighten rules on offshore tax loopholes. Last year, his administration announced it would further limit corporate tax avoidance overseas.
Banks and other financial companies are also required by U.S. law to submit information about overseas assets belonging to American citizens.
source: huffingtonpost.com by Willa Frej