Looking for a handy tax haven? Try Delaware.
Or maybe Nevada. How about Wyoming?
Those are the suggestions from Luxembourg's prime minister.
OK, he's kidding … sorta.
What he's really trying to do is take a stand for his country, which, along with several other European nations, has been under pressure from European Union partners to ease banking secrecy rules.
Those countries across the pond are being threatened with placement on a tax haven blacklist that will be part of the Group of 20, or G20, summit going on in London.
In advance of the meeting, Luxembourg PM Jean-Claude Juncker asked leaders of other
EU member states to challenge the United States for tolerating its own tax
havens of Delaware, Nevada and Wyoming.
Those states are popular locations for incorporating businesses, in large part because of their tax advantages. The U.S. Virgin Islands are also known for their tax benefits.
"I would like all the bold (leaders) in Europe who insisted that those three EU countries that practice banking secrecy drop it show the same courage towards the United States," Juncker said.
"The G20 has no credibility as an undertaking if Delaware, Wyoming or Nevada or far-flung islands from the United States are not on the blacklist," he told lawmakers at the European Parliament in Brussels.
"If there must be a blacklist then, America should have its place on it," Juncker continued. "By April 3, we'll know whether it has all been to impress the public or if it's been to find a real solution for a problem that exists, including in the United States."
Juncker is not the first to tell the U.S. to take care of its own tax avoidance issues before pointing fingers at other nations. Konrad Hummler, chair of the Swiss
Private Bankers Association, in February faulted the United States for
allowing the "financial swamp" of Delaware to operate in its backyard.
Back in the U.S.A.: Meanwhile, as Juncker was railing at U.S. tax havens, the House Ways and Means Committee's subcommittee on Select Revenue Measures was holding a hearing on banking secrecy practices and wealthy American taxpayers
According to the hearing notice, the subcommittee members want to focus on limitations of the withholding taxes imposed by the United States on U.S. source investment earnings received by foreign individuals.
There is concern that the Qualified Intermediary (QI) program, which was established by the IRS and authorizes foreign financial institutions to collect
withholding taxes on behalf of the U.S. government, as well as the limitations of tax treaties, might be contributors to noncompliance by U.S. taxpayers.
In the pre-hearing information, the UBS case is cited as an example of the problems in the existing tax reporting system.
You can get a taste of the hearing from the video below (hat tip to TaxProf) of testimony by Reuven S. Avi-Yonah, Irwin I. Cohn Professor of Law, University of Michigan Law School.
The video, however, indicates that Avi-Yonah didn't get much of a chance to elaborate on his written testimony. Rather, Ways and Means member Lloyd Doggett (D-Texas) took advantage of the hearing to recite some egregious tax avoidance schemes, as well as send some shout outs to his constituents here in Central Texas.
Maybe PM Juncker would like to get in on the next Congressional hearing. Or maybe not.
From the Commish: IRS Commissioner Doug Shulman also testified before the hearing.
And the week before the hearing, the IRS announced it is willing to cut a
break to income tax evaders with offshore accounts who come in
voluntarily now to settle up.
TaxProf has put together a nice collection of info on the IRS offshore haven clemency offer.
Related posts:
myjourney
The Diffference is that DE, NV, WY, and even alaska to a certain extent, and the tax havens discussed…the info isn’t purposefully hidden from the gov’t!