I am writing to you in relation to the recent release of IRS tax information on America’s wealthiest billionaires by ProPublica. While unpacking 15 years of tax data on 1000s of people takes time, there are a number of observations to be made already:
1. The low effective tax rates achieved by the wealthiest Americans are achieved through legal means, not through illegal offshoring to tax havens
2. The US tax burden falls disproportionately on the middle and working class
3. This leak, though clearly in the public’s interest, indicates severe lapses of security within the Internal Revenue Service & the Treasury.
The ProPublica report clearly points out America’s leading role as both a domestic and international tax haven. Before pointing the finger abroad, the United States must take a sober look at its domestic tax problems, enabled entirely within its shores. Only after cleaning house can the United States credibly engage in negotiations with other countries on the topic of individual tax reform.
Despite extensive anti-offshoring efforts and coercive data gathering via FATCA aimed at US citizens, the United States Congress has not authorised the reciprocal data sharing agreed to in its numerous Inter-Governmental Agreements (IGAs), nor has it agreed to participate in the Common Reporting Standard (CRS). It is an open secret that if you live in Europe and want to hide from the local tax authorities, you put your money in the US.
The United States continues to demand information and taxes from residents of other countries while facilitating the evasion of foreign taxes. Other countries are waking up this reality & are starting to ask when the US will address its own internal problems before creating new ones.
The lapses in security also call into question the Treasury’s ability to implement the proposed expansion of Foreign Financial Institution information reporting via the FATCA mechanism. Prior to the confirmation that the IRS is insecure as suspected, tax data exchanges with the United States were under heavy legal scrutiny over concerns that the United States was not compliant with privacy and confidentiality standards necessary for the functioning of the FATCA IGAs.
Given the shaky ground that FATCA currently stands on, we must seriously question whether other countries will agree to implement the expanded reporting proposed in the Biden Families Tax Compliance plan.
The default reaction from Congress after this leak will likely be to decry the illegality of the information source, and to continue scapegoating offshore tax havens & the non-resident citizen diaspora instead of addressing tax shelters within US borders.
Please show a moment of open-mindedness & consider listening to our calls for necessary reforms relating to international taxation. We want to see the richest Americans pay their fair share, but as we can now see, efforts to do so are missing them and are aimed squarely at the working and middle class.
