News
Obama administration takes step to curb offshore tax dodging
On Wednesday June 29, the Obama administration's Department of Treasury issued new rules which require large U.S. multinational companies to report profits and taxes on a country-by-country basis.
This is meaningful progress in Fair Share's ongoing work to end offshore tax dodging.
These new rules mean that the IRS will collect and exchange tax information on a country-by-country basis, and will show them tax multinationals paid overseas (for companies making more than $850 million per yer). The more interesting aspect of course, are the taxes they didn't pay. We know that some large multinationals cook the books, making it appear to each country in which they do business that their taxes belong elsewhere. Now we can begin to untangle these webs and hold bad actors accountable.
In a global world when everyone is interconnected, the only way to ensure everyone plays by the same rules is to open doors of communication and work together keep the large companies honest. It evens the playing field for companies that don't hide their profits in elaborate multinational schemes, but have compete against other companies that do.
There are further steps we can take to strengthen this ruling -- for example, making this tax information available to the public. We must continue our efforts, but these new rules bring us one step closer to ensuring that everyone gets and pays their fair share and plays by the same rules.
Our statement on Supreme Court blocking progress on immigration reform
WASHINGTON, DC -- Fair Share is deeply disappointed that the Supreme Court's decision today to block progress on immigration reform. This news further clarifies the need for Congress to act.
Our immigration system is broken, and that’s bad for our country and our economy. It’s long past time to bring undocumented workers out of the shadows and allow them to join the legal, regulated workforce, with a fair shot and fair wages and the same rules as everyone else. We can fix our immigration system with a common sense, comprehensive set of reforms that ensures everyone plays by the same rules. Not only will it be more fair, it will increase investment in our economy.
When the playing field is level, both American and immigrant workers can expect their wages to rise. Higher wages will mean more revenue for government, additional consumer spending, and more jobs -- to the tune, economists estimate, of an additional $1.5 trillion for our economy over 10 years.
Panama Papers and the Need for Tax Haven Reform
In the Panama Papers, the unprecedented release of 11 million documents from a law firm in Panama, we see in great detail how the secret accounts of the global elite launder money and hide corruption.
After initial coverage focused on international figures like Vladimir Putin and Lionel Messi and their connections to secretive accounts, a June 5 New York Times article shed yet more light on how individual U.S. citizens are among those hiding their millions abroad.
The Times showed that over the past decade, the now famous Mossack Fonseca had at least 2,400 U.S. based clients, some with criminal records, for whom they set up over 2,800 (shell) companies.
Among their findings:
- Mossack Fonseca helped the manager of one of the biggest hedge funds in the world hide $134 million in six countries, through seven banks. If one bank asked too many questions, they used another.
- The firm set up an offshore account called April Fool for the then chief of Citigroup. It was for his yacht.
- The firm helped the founder of Boston Capital Ventures falsely retain Guatemalan residency to evade U.S. taxes. The beneficial owners of all his accounts and trusts was his 100 year old mother.
There are many more examples.
As you look through the files, it is striking the plain language by which company executives discussed tax avoidance and evasion. In an email to clients, Ramsés Owens, a partner in Mossack Fonseca, laid out the process of evading U.S. taxes, step by step.
First, set up a private offshore company using nominee directors. Then open a bank account using the new company. Finally, deposit money in these bank accounts, which are now private and act as a ‘black hole’. Easy.
“You can take the money in cash, you can do a bad investment; you can purchase something and not receive anything (an expensive piano, an expensive software),” Mr. Owens wrote. “You can receive an invoice from Panama or any other location and that would justify some of the outgoing moneys. You can also declare everything to the tax administration.”
Despite all this, it seems unclear what laws, if any, Mossack Fonseca has broken.
The elaborate shell games which both individuals and large multinational companies use to avoid taxes and accountability are not limited to Panama.
In fact, it’s just as easy to set up an anonymous shell company in America as it is in Panama.
That anonymous company could win a state contract, buy a farm or rent a store without anyone knowing who is behind it.
Anonymous shell companies have been used to finance human trafficking rings, defraud local government, launder bribes, skirt international sanctions and fund Super PACs. Even if we know there are crimes being committed, law enforcement has trouble figuring out who to arrest, as the identities of the criminals are shielded by layer after layer of anonymous companies.
Earlier this year, Congress introduced bipartisan legislation to end anonymous shell companies, requiring that the actual owner of a company be listed somewhere available to law enforcement. Fair Share is working to support this reform, and you can join us here.
We’re also getting behind legislation to end the loopholes which allow companies to hide their profits in offshore tax havens like Panama and the Cayman Islands to avoid paying U.S. taxes. You can take action to support our campaign, here.
Hunger advocates oppose attempt to gut school lunch program
The House Child Nutrition Reauthorization (CNR) bill, H.R. 5003, was voted out of the House Education and the Workforce Committee on May 18. Among the provisions opposed by Fair Share (read our statement here), is a new plan to create a three-state block grant proposal for the school meal programs.
Fair Share has joined our national allies, including FRAC, to repsond to these attacks on school meals, and any effort that would lead students to be more likely to sitting in classes hungry. Block grants are especially problematic, because they cap spending, so in the case that the number of students who need to access free and reduced school lunch increases, there will not be additional resources to assist them.
House Speaker Paul Ryan pushed for more block granting of hunger programs in his policy agenda released on June 7, which lays out his plans to reform the safety net.
Fair Share will continue to push for real solutions to child hunger and show support for the things that are working, like an effective school lunch program. You can take action here.
Mass. Senate announces first draft budget
On Tuesday, the Massachusetts state Senate released their draft version of the FY17 budget. Next, senators will propose and debate amendments to this budget.
We are supporting three amendments as part of this process.
Early Education Rate Reserve Amendment, Sen. Michael Moore – Invests an additional $10 million early childhood education with a critical investment through the workforce (line item 1599-0042). We’re struggling to keep high-quality educators in the field, which has a 30% turnover rate. Massachusetts should lead on education, but we have a ways to go on early education.
Restore Kindergarten Expansion Funding, Sen. Brian Joyce – Restores some $16 million in cuts to kindergarten expansion grants.
Early Education Quality Improvement, Sen. Linda Dorcena – Invests $2 million in additional funds to help early education programs raise and maintain their level of quality, which is critical to meeting our standards for effective early learning programs (line item 3000-1020).
A step backward in the fight against child hunger
As it currently stands, the Child Nutrition Act reauthorization bill (HR 5003), significantly undermines progress in addressing the problem of childhood hunger in America.
When kids are hungry, they struggle to learn. When kids don't learn, they struggle in life. Still, 16 million American kids are at risk of going hungry every day. That’s 1 out of every 5 kids. We can and we must do better.
But the legislation the Education and Workforce advanced on May 18 will make the issue worse.
Among the provisions in the current bill that Fair Share opposes include:
- It makes it much harder for schools to join the popular and successful community eligibility program. Currently, if a school has enough children who are eligible for free or reduced school lunch, the whole school can opt in. This reduces the administrative burden of application and removes stigma from children who need food assistance as the food is made available to all. The current language dramatically reduces the number of schools that would qualify. Up to 3 million students could be affected.
- It puts up barriers for families trying to get access to lunch programs. The bill sets up a series of administration hurdles to make it much more of a hassle for children who need food assistance to actually receive it.
- It weakens the nutrition standards for school lunches, delaying science-based health standards around sodium and cutting back whole grain requirements.
- It lays the groundwork for turning the National School Lunch program into a block grant program, which could dramatically reduce its effectiveness.
Traditionally, the national child nutrition programs have enjoyed bipartisan support. But this bill, dividing sharply on party lines, breaks this tradition, and increases the likelihood that children will be struggling in class on an empty stomach.
Feeding kids is the right thing to do, period. It’s also the right thing to do for our economy. We know that it is impossible for children who are hungry to concentrate on learning or be healthy enough to regularly attend school. A critical piece of investing in our country’s future is to make sure that children and their families have enough to eat.
It costs more to ignore the problem than it does to solve it. According to a report by the Center for American Progress and Brandeis University, “hunger costs our nation at least $167.5 billion due to the combination of lost economic productivity per year, more expensive public education because of the rising costs of poor education outcomes, avoidable health care costs, and the cost of charity to keep families fed.”
We encourage the House to vote NO on H.R. 5003, and also hope the Senate can address the troubling aspects of this bill when they draft their version.
Law enforcement officials, faith leaders, small business owners and civic organizations call for Sen. Grassley's Leadership on Corporate Transparency
In light of the Panama Papers, a letter signed by 67 organizations and individuals calls for the Senator to renew his leadership on the Incorporation Transparency and Law Enforcement Assistance Act (S. 2489).
WASHINGTON, D.C. - A coalition of faith, small business, good government and law enforcement organizations delivered a letter to Sen. Chuck Grassley (IA) today, urging the senator's leadership for Incorporation Transparency and Law Enforcement Assistance Act (S. 2489). The bill, for which Sen. Grassley has served as a lead sponsor in the past, would end the ability to create anonymous shell companies in the U.S., commonly used in money laundering and at the heart of the corruption uncovered in the Panama Papers leak.
Increased corporate transparency would curb corruption, fraud and tax evasion; promote sound corporate governance and financial stability; enable individuals and companies to know with whom they are doing business; help ensure a level playing field for small- and medium-sized businesses; foster global development and enhance national security. ICAN and Iowa Fair Share organized the sign on effort.
"Anonymous shell companies have been used in a wide variety of crimes. Law enforcement has trouble pinning the criminal to the crime, as the identities of the criminals and their connection to dirty money are shielded by layer after layer of anonymous companies," said Story County Sheriff Paul Fitzgerald. "It’s time to require the true owner of a company's information be made available to law enforcement."
The coalition, which includes local members of the national Financial Accountability and Corporate Transparency (FACT) Coalition, has been working to highlight the local impacts of shell companies in Iowa and make the case for reform.
"Sen. Grassley has recently indicated his interest in stepping up and providing leadership on this bill, and as chair of the judiciary, his support is critical," said Sue Dinsdale of Iowa Citizen Action Network (ICAN). "We'd love to see his name on the dotted line soon."
"Anonymous shell companies are at the nexus of crime, poverty and our global financial system. As a person of faith, I know there is more that we can do to help people suffering because of this abuse," added Julia Rendon, pastor of Crossroads United Church of Christ in Indianola. "This bill is a good place to start."
The bill would require companies to disclose information about the real people who own or control them (often called the “beneficial owners”) at the time they are created. This legislation would enable law enforcement to more effectively and efficiently conduct investigations to combat terrorism and financial crime, as they would have access to important information about the ultimate owners of companies.
Approximately two million corporations are formed in the U.S. each year—which is more than the rest of the world combined. Criminals often layer anonymous corporations, with one owning another and so on, to make it even harder for law enforcement to “trace the money” to figure out who is directing the company’s activity—i.e. the identity of the real criminal. This has been the case in crimes in Iowa as well.
"It is exciting to see the growing efforts to curb the corruption and strike at the waste, fraud and abuse that flows through our financial system," said Gary Kalman, Executive Director of the FACT Coalition based in Washington, DC. "The bill would ensure everyone is playing by the same set of rules and Senator Grassley's early support for the bill will have an immediate and powerful impact."
The fulle letter, and list of signers is below:
Dear Senator Grassley,
We, the undersigned Iowa-based organizations and civic leaders, are writing to express our strong support for the Incorporation Transparency and Law Enforcement Assistance Act. This bill, S. 2489, would end the ability to incorporate anonymously in the U.S., which is crucial to stemming the flow of dirty money laundered through the U.S. financial system.
We understand this is an issue which you have supported in the past, and have indicated you will support again. We encourage you to actively champion this measure and press for its quick passage.
Increased corporate transparency would curb corruption, fraud and tax evasion; promote sound corporate governance and financial stability; increase transparency of campaign contributions; enable individuals and companies to know with whom they are doing business; help ensure a fair and level playing field for small- and medium-sized businesses; foster global development and enhance national security.
The bill would require companies to disclose information about the real people who own or control them (often called the “beneficial owners”) at the time they are created. This legislation would enable law enforcement to more effectively and efficiently conduct investigations to combat terrorism and financial crime, as they would have access to important information about the ultimate owners of companies.
As many studies—as well as the recent leak of documents known as the Panama Papers highlight—the U.S. is a favored place for incorporating shell companies used to hide stolen assets, dodge taxes, defraud Medicare, evade sanctions, launder drug money and sell illegal weapons around the world. In Iowa, you can form a company without revealing the identity of who ultimately owns or controls it.
Approximately two million corporations are formed in the U.S. each year—which is more than the rest of the world combined. Criminals often layer anonymous corporations, with one owning another and so on, to make it even harder for law enforcement to “trace the money” to figure out who is directing the company’s activity—i.e. the identity of the real criminal. This has been the case in crimes in Iowa as well.
Even if Iowa were to increase the requirements for incorporation, as long as other states allow anonymous companies to form, the problem will persist. We support a uniform, federal requirement that no corporation be anonymous as the only effective way to ensure a level playing field for states.
The increased accountability made possible by the bill would make it much harder for criminals to hide behind American shell companies to perpetrate schemes to defraud investors and other innocent Americans—or to defraud the public.
This bill would also provide law enforcement with a critical tool in the fight against financial crime and the financing of terrorism. The U.S. Department of Justice, U.S. Immigration and Customs Enforcement, the former District Attorney of New York and the Federal Law Enforcement Officers Association have all testified at Congressional hearings that the ability of criminals to wash their dirty money through anonymous U.S. shell corporations significantly impedes their efforts to fight terrorism and other serious crime in the U.S. and internationally.
We encourage you to take this commonsense step to make our corporate formation process transparent, which would make it harder for criminals to misuse American companies to facilitate illegal activities and stop the United States from being a dumping ground for dirty money.
Thank you for your commitment to this important issue.
Should you have additional questions about the legislation, we encourage you to reach out to Clark Gascoigne with the FACT Coalition.
Sincerely, the following Iowa law enforcement officials, faith leaders, small business owners and civic organizations,
• Paul H. Fitzgerald, Story County Sheriff, Nevada, Iowa
• Patrick B. Chambers, Hamilton County Attorney, Webster City, Iowa
• Rev. Julia Rendon, Crossroads United Church of Christ, Indianola, Iowa
• Rev. Chet Guinn, Methodist (Retired), Des Moines, Iowa
• Rev. Brian Carter, Methodist (Retired), Des Moines, Iowa
• Dr. William Klink, Professor Emeritus, University of Iowa, Iowa City, Iowa
• Dr. Darrell Wiens, Professor, University of Northern Iowa, Cedar Falls, Iowa
• Dr. Thomas Tritle, Professor, University of Northern Iowa, Cedar Falls, Iowa
• Dennis Bricker, Professor, University of Iowa, Iowa City, Iowa
• ReShonda Young, Owner, Popcorn Heaven, Iowa
• John Bartlett, Owner, I Work and Play, Iowa
• Ron Dinsdale, Owner, Midvale Pinacotheca Art Studio, Iowa
• Chris Petersen, Owner, Chris Petersen Family Farm, Iowa
• Linda Shepley, Co-Owner, Ritual Cafe, Iowa
• Denise Diaz, Co-Owner, Ritual Cafe, Iowa
• Joe Van Haalen, Owner, Smokin Joe's BBQ, Iowa
• Iowa Alliance for Retired Americans
• Iowa Main Street Alliance
• Iowa Fair Share
• Iowa Citizen Action Network (ICAN)
As well as the following concerned Iowa citizens:
• Jon Krieg 50312
• Barbara Dale 52101
• Jim Dale 52101
• Gaye Warner 52247
• Jason Badger 50211
• Natalie Terrones 50046
• Larry J. Bower 51108
• Doug Miller 50310
• Thomas J Persoon 52241
• Frank Belcastro 52001
• Thomas P. Gardner 52632
• Todd Lashway 52556
• Tony Jorgensen 50501
• Terry Lowman 50014
• Greta Anderson 50010
• Eloise Cranke 50317
• Melinda Arndt 52556
• Sandy Keller 52240
• Kent Wright 50702
• John R. Stone 50401
• Barbara Cunningham 51601
• Jeanne Stoakes 50702
• Bernardo Alayza Mujica
• Jon Hunstock 50010
• Audrey Hunstock 50010
• William Reedy 52210
• Susan E. Kolbe 50112
• Bob Jewett 50313
• R. Allen Hays 50613
• Stephen Tews 52577
• Jan Flora 50010
• Susan Benner 50010
• Ellen Roth 52556
• Margaret Weiner 50322
• Ryan Terrones 50046
• Francis Driscoll 50314
• Diane Pelz 50010
• Paul Jensen 50010
• Selden Spencer 50124
• Brenda Brink 50124
• John Cook
• Margaret Jaeckel 51503
• Kay Kopatich 50322
• Lloyd Matheson 52245
• Ellen Roth 52556
• Maria Dickmann 52806
• Patricia Nielsen 52402
House moves to gut school lunch program
There are already enough bullies in the lunchroom.
Now some members of the U.S. House are effectively trying to take our kids' lunch money -- by putting forward a bill that guts school lunch programs.
We're calling on Rep. John Kline, the chair of the Education and Workforce Committee, to clean up this bill and protect our kids before it hits the House floor for a vote.
Tell Rep. Kline: A hungry kid can't focus, and can't learn. Help put our kids on the path to success. Please don't cut school lunch programs.
The House Child Nutrition Reauthorization Bill includes sneaky provisions that would gut the school lunch program -- and would roll back years of progress.
If passed, more than 7,000 schools -- that serve more than 3 million kids -- would have their school lunch eligibility revoked.
Right now, there are kids in every single county nationwide who aren't sure where their next meal is coming from -- leaving them distracted by hunger instead of focused on the schooling that will give them a fair shot at a good life.
That's where programs like school lunch can make a huge difference.
Taking away kids' school lunches is being hailed as the fiscally responsible thing to do, even when we know the opposite is true. Making sure kids aren't hungry in class is a common-sense investment to get the most out of school.
And if enough of us speak up, we can help end childhood hunger and enable kids to stop thinking about filling their bellies, and instead focus on filling their hearts and minds.
Join the call: Tell Rep. Kline to support food lunch programs.
Pfizer Inversion Stalled By Treasury Action
Pfizer, the giant drug company, was on the verge of finishing a move that would allow it to dodge some $35 billion in taxes, known as an "inversion" ... but the U.S. Treasury issued a new rule which should halt the planned inversion.
After Fair Share, in coalition with groups across the country, called for new Treasury action, they responded this week by issuing the new rule. Fair Share members sent in thousands of comments in support, and Americans for Tax Fairness, a coalition of groups working to make the tax code more fair, together reached more than 120,000 comments.
This is a big victory in our work to stand up to corporate tax dodging.
Pfizer, one of the largest pharmaceutical companies in the world, was finalizing a plan to merge with a smaller Irish drug company called Allergan. The move would allow it to declare itself an Irish company for tax purposes.
If Pfizer was able to renounce its status as a U.S.-based company, it would be taxed at a much lower rate than American-based companies in a scheme that is referred to as "corporate inversion." The crazy thing is, Pfizer doesn't actually have to move its CEO or any of its central offices -- it can just claim on paper to be headquartered in Ireland, much in the way that Burger King is now, on paper, a Canadian company.
Not only would this give an unfair advantage to Pfizer against other companies, it would also allow them to forgo paying taxes for $148 billion they have stashed offshore.
We can't let some big corporations continue to dodge taxes with high-paid tax lawyers -- everyone should play by the same rules. How can we invest in education or roads, bridges and public transportation if large, profitable companies are scheming to avoid paying their fair share?
The Treasury rules are a step in the right direction and will save taxpayers $35 billion in lost taxes. But further action is needed from Congress to finish the job.