There might be a few legitimate reasons for someone to have a company based out of the British West Indies. Perhaps they happen to be one of the 57,000 people who live there. They could be such a genius that they want to make investments, and don’t want their investment managers to take time to give them information about their investments. Beyond that though the legitimacy of the reasoning becomes slightly more suspect. Other possible reasons may include: wanting to evade US taxes, wanting to “launder” the proceeds of criminal enterprises, hiding illegal payments or bribes, and trying to hide wealth from creditors or spouse.
Most of those more suspect reasons seem like they should be illegal under US law, but shockingly, most of have little to no repercussions under United States law.
Obviously hiding wealth in the Cayman Islands is not an avenue of legal tax evasion available to most average Americans, and it is representative of the inequality of application of American taxation.
Some of our elected officials agree that offshore tax haven abuse is wrong. Texas Representative Lloyd Doggett and Rhode Island Senator Sheldon Whitehouse first introduced the Stop Tax Haven Abuse act in 2015 with the simple goal of getting people to pay the taxes they owe in the place and at the rate they owe them. That law strengthens requirements for reporting income, particularly supposedly “offshore” income actually generated in the United States but being reported elsewhere.
In spite of the fact that this seems like a common-sense solution to a persistent problem in our tax codes, the bill has not gone anywhere in Congress. Why? Because according to current congressional leadership, cracking down on tax evasion that remains legal only through loopholes and near acrobatic levels of fiscal maneuvering is somehow anti-freedom.
It is astounding that simply enforcing the tax codes and asking people to pay into the government and infrastructure that they benefit from could be considered “anti-freedom.”
Our nation would work better if criminals and cheaters had a little less of this supposed “freedom” not granted to vast majority of hardworking Americans. That is why I support the Stop Tax Haven Abuse Act. The law does not actually forbid anyone from doing anything. It does not actually curtail any sorts of essential freedoms. What it does is strengthen requirements for reporting activities in foreign countries to the US treasury, and it says that certain corporations which are totally controlled by people in the United State will be considered US corporations for tax purposes.
This law is simply a common sense approach to enforcing the tax laws the same way for the rich as for the rest of us.