The U.S. is on its way to becoming one of the world’s best places to hide money from the tax collector, only seven years after the country led an effort to address this exact problem worldwide. Every year, people manage to avoid paying an estimated $2.5 trillion in income tax. This money could fight poverty, update infrastructure, or lower tax rates for law-abiding citizens. In 2010, the U.S. passed the Foreign Account Tax Compliance Act, which required foreign financial institutions to report the identities and assets of potential U.S. taxpayers to the Internal Revenue Service. In return, the U.S. was supposed to share data on the accounts of foreign taxpayers with their respective governments. But Congress rejected the Obama administration’s repeated requests to make the necessary changes to the tax code. Because of this, the Treasury cannot compel U.S. banks to reveal information such as account balances and names of beneficial owners. The U.S. also decided not to adopt the “Common Reporting Standard,” which is a global agreement under which more than 100 countries will automatically provide each other with more data that FATCA requires. This means that financial institutions that cater to the global elite are moving accounts from offshore havens into Nevada, Wyoming, and South Dakota. New York lawyers are actively marketing the country as a place to park assets. Bloomberg editor write that shutting down foreign tax havens and stealing their business is not a good idea, and it in fact, undermines America’s standards in many areas.
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