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Global Financial Integrity (GFI) has urged the Republican National Committee (RNC) to reject a proposed resolution calling for the repeal of the Foreign Account Tax Compliance Act (FATCA), which GFI characterized as “the cornerstone of the U.S. effort to fight offshore tax evasion.” The law, which was passed in 2010 as part of the Hiring Incentives to Restore Employment (HIRE) Act, requires foreign banks to report deposit information on their U.S. accountholders for U.S. tax compliance, as is required of domestic U.S. banks.
GFI, a non-partisan research and advocacy organization that seeks to curtail “illicit financial flows,” noted that repealing FATCA would deepen the U.S. budget deficit by billions of dollars. GFI said that, according to the Internal Revenue Service, the ongoing crackdown on offshore tax evasion—of which FATCA is “an essential part”—has yielded over $5 billion in new tax revenue, with at least another $5 billion expected to come.
“It is mind-boggling that a major political party would even consider endorsing a resolution to facilitate tax evasion,” said Heather Lowe, Legal Counsel and Director of Government Affairs at Global Financial Integrity. “Tax haven secrecy is estimated to cost U.S. taxpayers $150 billion per year. Naturally, we urge all members of the Republican National Committee to reject this resolution. Tax evasion and illegality do not belong in the official platform of any political party.”
The RNC is expected to vote on the proposed resolution Friday, January 24th at its 2014 Winter Meetings in Washington, D.C.
FATCA also has drawn praise from world leaders, and has served as an important model for new international tax agreements. Last year, the United Kingdom joined with France, Germany, Italy, and Spain to create a multilateral system to prevent cross-border tax evasion modeled on FATCA. In September, the G20 largest economies in the world announced that they would begin sharing tax information automatically by the end of 2015 in an effort to crackdown on tax evasion, and they agreed to expand the automatic exchange of tax information program to include developing countries.
Ms. Lowe said, “FATCA is the most important reason why you can’t just park your money in a Swiss bank and stop paying taxes anymore. Repealing the law would cripple the U.S. and global efforts to fight offshore tax evasion. Foreign financial institutions should not be able to harbor the illicit assets of U.S. tax evaders.”
GFI asserted that Republican Senator Rand Paul has been blocking treaties that are necessary for the proper functioning of the FATCA law for years, and has called on Senator Paul to drop his holds on the treaties. The National Foreign Trade Council and Organization for International Investment—which represent many major U.S. corporations, including the “Big Four” accounting firms, as well as ExxonMobil, General Electric, and Microsoft—have also called upon Paul to drop his holds and allow the implementation of the law.
“Ratification of the agreements has widespread support. Sen. Paul should allow an up-or-down vote on the treaties,” stated Ms. Lowe.
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