The US and World Wide Tax Evasion

Although with the implementation of the Foreign Account Tax Compliance Act (FATCA), America has taken the lead in attacking US taxpayers who evade taxes by hiding assets offshore (held thru anonymous companies) in 2017 America has become the world’s biggest tax haven. In America, today 14 states allow US Companies to be formed without the need to disclose or identify the names of shareholders, directors or officers. At the same time, foreign investors hold nearly $17 Trillion ($16.75 Trillion as of 2013) in foreign owned assets held in the US with another $3 Trillion in foreign direct investment in the US.

While on the one hand combatting tax evasion, money laundering and foreign corrupt practices (e.g. bribery), America greatly profits from these tax and other crimes (which are serious felonies with jail time). According to the 3/17 Report from the European Parliament title “The Role of the US as a Tax Haven; Implications for Europe.” The US has built a huge cottage industry offering financial services to non-residents HNW global investors and maintains 20% of the global market for financial services.

The recent OECD/CRS rules take effect 9/17 and by 9/18 over 100+ countries worldwide will automatically and digitally share respective taxpayer bank account information for those accounts held outside their country of origin (or citizenship/residence). The US has declined to participate and is not a signatory to the CRS rules preferring that their 113 FATCA tax treaties remain their sole tax compliance method for undisclosed offshore assets and earnings from those assets.

Tax evasion bankrupts cities, states and countries (CA major cities have gone bankrupt, Detroit went bankrupt, the State of Illinois is insolvent, while internationally Greece imploded after 89% of their taxes assessed were never paid, while Spain, Italy and other countries face similar fates). With 2017 a new era has commenced where cross-border taxpayer information sharing will be the new “digital rule” which may be the final straw that destroys centuries of offshore tax evasion by the wealthiest taxpayers, who could well afford to contribute to their country revenues but chose to instead violate the tax laws. For many years, their risk of apprehension was slight which made their “bet worthwhile”.

Seems like that story has now changed for good with the exception of 14 US states including Delaware, Nevada, Wyoming, South Dakota who still are open for “business” for international tax cheats, money launderers and gangsters of all types who continue to cheat and get away with it while their facilitators (banks, professionals) get well paid. America must address this tax issue or they will continue to be part of the problem (and not the solution).

Comments are closed.