For the world’s tax havens, the United States takes a backseat to no one.
Over the last couple of decades, both Democratic and Republican administrations have used America’s superpower status to impose its will on the global financial industry.
Using the OECD, IMF, United Nations, and World Bank, and other allegedly nongovernmental institutions, Congress and whatever president then in office has pursued an ever increasing policy of purportedly dealing with tax evasion and money-laundering.
As Islamic terrorism impacted countries other than Israel, the U.S. added it to the shortlist of purposes justifying the attack on offshore tax haven jurisdictions.
Some in Congress questioned the validity of imposing coordination and control of the global economies right from the start. They realized that attacking the small offshore jurisdiction that no good would come from it.
Capital flows should be allocated by the free market and not socialist political policy.
Besides the effort to curb “harmful tax competition” (an oxymoron if there ever was one), the U.S. was to promote “information exchange.” The grand idea was to have various governmental tax authorities and other agencies gather and share private financial information on everybody with any sort of money.
Congressman Phil Crane (R-Ill.), the vice-chairman of the House Ways and Means Committee, pointed out that this attack undermines the right of sovereign nations to set their own tax and privacy laws.
Trying to eliminate tax competition for whatever reason was at odds with the needs of the United States to attract capital as “the world’s biggest beneficiary of tax competition.”
The object of this whole effort was to force more overseas money to be repatriated to the United States. While the other major economies of the global financial system foolishly made themselves hostile to capital investors, the United States maintained its dominance.
When push came to shove, the United States refused to fully join with the other countries and kept its status as the world’s largest tax haven jurisdiction for capital investment.
There are some that are just now realizing they have been duped. The Green/EFA Group in the EU Parliament is pushing for the United States to be included in the European Union’s new blacklist of tax havens.
The United States hasn’t fulfilled its obligations under the FATCA Intergovernmental Agreements and has refused to sign the Common Reporting Standards.
The Green/EFA Group noted in their report: The role of the U.S. as a tax have implications for Europe, that the US holds nearly 20 percent of the global market share of financial services for nonresidents.
“However, its transparency legal framework is not consistent with the responsibility involved in being a major financial hub.”
It means that while the United States makes the rules, it doesn’t play by them.
The end of this international compliance fiasco may draw to a close.
The new administration coming in to govern the United States on January 20, 2017, has promised to repeal its part in this fool-hardy socialist experiment.
For the world’s financial markets, that will be a very good thing.