June 21, 2021
“Just the FACTs” is a round-up of news stories and information regarding efforts to combat corrupt financial practices, including offshore tax haven abuses, corporate secrecy, and the laundering of money through the financial system.
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Here’s the State of Play:
Tax Transparency and Tax Loopholes
Tax Transparency Back in the Spotlight
The FACT-endorsed legislation now moves to the Senate where, if passed and signed into law by President Biden, it could mark a new era of U.S. leadership on corporate accountability. House action has sent a strong signal to the Securities and Exchange Commission (SEC), which is already considering similar disclosures on climate. As FACT has stated in our own comment to the SEC, tax transparency and climate disclosures go hand-in-hand. FACT played a key role in garnering support for the legislation from representatives of small businesses, nearly one hundred civil society organizations, and scores of investors representing a whopping $2.9 trillion dollars of assets under management. For these efforts, Financial Services Chairwoman Maxine Waters highlighted the impact of FACT, among others, in advocating for the legislation.
Meanwhile in Europe, the Principles for Responsible Investment and investors representing an eye-popping $5.6 trillion dollars of assets under management penned a letter urging Europe to take the lead on public country-by-country reporting ahead of the European Union’s final decision on corporate transparency. Ultimately, while the E.U. stopped short of endorsing global disclosures, it nonetheless is one of the first prominent jurisdictions to require public reporting on tax and other financial information, setting up future tax transparency wins to come.
Global Minimum Tax Offers Promise but Concerns Remain
Five major finance ministers, including Secretary Yellen, have assured campaigners that they are “confident that the rate can ultimately be pushed higher than 15 percent.” An outcome may be fast approaching, with some reports that a complete agreement could be reached as soon as the end of June.
Back in Washington, infrastructure negotiations have kept many public international tax debates on pause, but action continues behind the scenes. At the end of May, the Treasury Department released its Green Book, explaining the revenue impact of specific policy proposals. The FACT-supported proposals included in the document are expected to raise at least $1 trillion over the next ten years. Jared Bernstein, a member of the US Council of Economic Advisors, underscored the Administration's commitment to international tax reform at a recent Urban-Brookings Tax Policy Center panel when he declared that the incentives for offshoring created by the Tax Cuts and Jobs Act “antithetical to President Biden’s agenda to shift investment, production, and jobs back to our shores.” Congress should consider additional ways to help President Biden follow through on these beliefs by ensuring full GILTI rate equalization is included in the final legislative package for the American Jobs Plan.
Fighting Illicit Financial Flows
The Global Fight Against Kleptocracy is Heating Up
Progress does not stop at the White House, or even in Washington. Just over two weeks ago, the 187 countries party to the United Nations Convention against Corruption adopted their 2021 political declaration at the UN General Assembly Special Session Against Corruption, reaffirming their commitment to crushing corruption. Among its many recommendations, the political declaration included an endorsement of the “reliable and timely” beneficial ownership databases like those that FACT has championed.
Bipartisan Consensus Builds with New Anti-Kleptocracy Caucus
In addition to giving the Administration new tools to fight foreign kleptocracy, the Caucus must also ensure that the White House uses the tools it already has. Reports continue to emerge about how the corrupt global elite have stashed billions of dollars in opaque U.S. real estate and private equity markets – crowding out Main Street, worsening the housing crisis, and muddying the waters of otherwise legitimate institutional investments. Expanding the scope of geographic targeting orders (GTOs), one tool to introduce transparency in property transactions, is one recommendation that has already gotten attention. Lakshmi Kumar of Global Financial Integrity, a FACT Coalition member, recently stated in a House Financial Services Committee hearing on sanctions evasion that half of all real estate transactions with money laundering risks were taking place outside of areas subject to geographic targeting orders. By cutting off these wealth storage tools, the Administration could dramatically reduce the U.S.’s role in illicit financial flows.
Latest From FACT
FACT in the News
Recent and Upcoming Events
Social Media Shoutouts
@ChrisVanHollen, It’s past time big multinational corporations paid their fair share in taxes. This is an important step towards making that happen. Next step: fixing the damage from the 2017 GOP Tax Scam here at home.
@SenFeinstein, The G7 members’ decision to move toward mandatory, more standardized disclosure of financial institutions’ climate-related risks is a welcome development. Climate change is already causing and exacerbating natural disasters that have a profound effect on our financial system.
@RepJudyChu, Global tax havens undercut our ability to invest in our communities. Imagine how many bridges or schools we could build with the billions lost through these havens? I’m glad to see @POTUS pushing for a global minimum tax to end these unfair practices.
@RepLloydDoggett, Yet more evidence justifying the President’s effort seeking equity as well as revenue. The ultrarich who pay little or nothing (just like the multinational corporations hiding their income abroad) exploit loopholes Congress has shamefully refused to close.
@RepDarrenSoto, @POTUS Biden counteroffers 15% min corp tax to fund #AmericanJobsPlan. 55 Fortune 500 companies paid ZERO dollars in fed corp tax in 2020. Let’s see if @SenateGOP is #ForThePeople or multinational tax avoiding companies. Time to #BuildBackBetter!
About the FACT Coalition
The Financial Accountability and Corporate Transparency (FACT) Coalition is a non-partisan coalition of more than 100 state, national, and international organizations working toward a fair and honest tax system that addresses the challenges of a global economy and promotes policies to combat the harmful impacts of corrupt financial practices.
For more information, visit www.thefactcoalition.org.
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