U.S. Ranks Third in the Global Tax Havens List
The United States is now third place in the list of top tax havens for foreign companies on the biannual Financial Secrecy Index by the Tax Justice Network, next to Switzerland and Hong Kong.
According to the Huffington Post, the Financial Secrecy Index report shows that there is an estimated $21 to $32 trillion privately owned financial wealth lightly taxed, or untaxed at all, in secrecy jurisdictions from all over the world. These locations are more popularly known as "tax havens," which are countries that use secrecy to bring in illegitimate financial flows. The report reveals that Delaware and Nevada are examples of states that have turned into tax havens by allowing anonymous shell companies to work in their locations.
Forbes reported that the Tax Justice Network accuses the IRS to be stingy when it comes to sharing its information. America's Foreign Account Tax Compliance Act (FATCA) gives the nation more data than any other country in the world. The IRS announced that it is sharing taxpayer's data reciprocally with other nations as long as they follow its stringent standards.
The International Business Times writes that the Tax Justice Network uses an automatic information exchange by the Organization for Economic Co-operation and Development as the only credible way to share data and handle tax evasion. The Tax Justice Network criticized the US for using a system that takes information from global banks, but gives little information of its own. This makes the nation a formidable and irresponsible secrecy jurisdiction. The report is also concerned with the huge size of the country's offshore sectors. The Tax Justice Network's report writes, "The United States' hypocritical stance of seeking to protect itself against foreign tax havens while preserving itself as a tax haven for residents of other countries needs to be countered."
President Barrack Obama has taken steps to strengthen the rules on offshore tax loopholes, with its latest move which is further limiting corporate tax avoidance overseas last year. US law also requires banks and other financial companies to submit information about American's assets abroad.