“Because access to information from other countries is critically important to the full and fair enforcement of U.S. tax laws, information exchange is a top priority for the United States’ tax treaty programs.”
~Manal Corwin, the deputy assistant Treasury secretary
The Obama administration has been on a mission to prevent wealthy Americans and corporations from being able to evade their taxes thus pushing their tax burden onto middle class Americans by using complicated tax schemes using offshore tax havens to save billions. Senator Rand Paul (R-KY) has been blocking treaties with Luxembourg, Hungary and Switzerland – all known tax havens with poor transparency – because of concerns that these treaties “allow the government to obtain a wide array of records without evidence that people may be hiding money”. The problem of course is that these treaties provide evidence of illegal behavior otherwise the American government will have no evidence; additionally – this will only impact very wealthy people and corporations since your “average Joe” doesn’t have bank accounts in these countries.
A Senator has the ability to block any bill or treaty he wishes. This is completely unacceptable; these treaties will not affect the average American’s privacy as Senator Paul likes to claim. Many of these bank accounts in foreign countries require significant sums like a million balance and they have costly monthly maintenance fees in return for secrecy. Senator Paul is only protecting the rich here. This is what trading favors looks like. If a person has $1 million in an overseas bank account – they have to disclose that. As long as these treaties are not in effect … Americans can hide as much money as they want without any sharing of financial information between governments. The net net in all of this of course is that while people like Mitt Romney and his brethren execute complicated tax avoidance schemes to pay significantly less in taxes as a % of their income than you do – they push that burden on to you.
This deal simply allows the American government to catch the bad guys; meanwhile – Rand Paul is pushing for further cuts to Social Security and Medicare. Great priorities.
The Obama Treasury Department has been working on these deals all over the world. We wrote about the Cayman Islands finally bending on the issue of bank secrecy HERE; they will now disclose previously hidden corporations and their directors for increased transparency.
The Hill reports on Senator Rand Paul’s block HERE:
Sen. Rand Paul (R-Ky.) is holding up a trio of international tax treaties over concerns that the pacts give the federal government too much power to invade personal privacy.
The Obama administration says the three treaties — with Luxembourg, Hungary and Switzerland — will help the United States battle tax evasion by reining in the use of offshore accounts to hide assets from the IRS.
But a Senate aide said the libertarian-leaning Paul thinks the treaties go too far and has placed a hold on them to prevent floor votes.
Paul, an outspoken critic of the Patriot Act because of privacy concerns, thinks the agreements “allow the government to obtain a wide array of records without evidence that people may be hiding money,” the aide said.
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