Bill offered: End tax evasion by rich, penalize bank accomplices

A bill introduced in the U.S. Congress targets tax cheaters and the banks who help them. It is estimated that the U.S. loses $100 billion annually to offshore tax evasion. The bill, introduced and supported by Democrats, is not supported by Republicans.

Legislation introduced in the U.S. Congress on Tuesday would, according to Reuters, "stop rich Americans from hiding assets offshore to evade taxes by slapping penalties on individuals and foreign banks." The bill was introduced and supported by a number of Democrats including the chairmen of two key tax committees. Senate Finance Committee Chairman Max Baucus (D-Montana) and House Ways and Means Committee Chairman Charles Rangel (D-New York) introduced the legislation. The legislation has not received support from any Republicans. By collecting taxes on previously secret accounts, the bill would raise $8.5 billion over ten years. In response to the legislation, according to Reuters, President Obama said in a statement:

A small number of individuals and businesses hide their assets overseas solely in order to shirk their responsibilities, even as the vast majority of hard-working Americans honor the obligations of citizenship and fulfill their responsibilities.

This year the United States cracked down on individuals hiding income offshore and the banks who assisted them. Reuters notes that one estimate indicates that "the United States loses $100 billion to offshore tax evasion annually." One example is that of the U.S. lawsuit against UBS AG. UBS AG turned over the names of 4,450 U.S. account holders and agreed to pay $780 million to settle the criminal lawsuit. The legislation would force foreign banks to disclose information about American customers "or face a 30 percent tax on their income from U.S. financial assets" according to Reuters. Other provisions of the bill include: *Any American owning more than $50,000 in foreign assets would be required to declare accounts to the U.S. Treasury, failure to do so results in fines on those who failed to report and finanacial advisors who helped them *Forty percent penalty would be imposed on understatements of foreign assets by American taxpayers *Extention of statute of limitations from 3 to 6 years for major tax evasion cases pursued by U.S. Internal Revenue Service *Impose a 30 percent tax on dividend equivalent payments Monique Danzinger, a spokeswoman for Global Financial Integrity, which advocates more transparency in international capital flows, was quoted by Reuters as saying:

This is a great start. We're happy that he stepped up and introduced something and our hope would be to strengthen it.

The Hill, however, reports that the bill to stop tax cheats falls short of White House proposal. The bill, according to The Hill, "didn't include an Obama proposal to make it easier for prosecutors to go after individuals using offshore accounts to avoid taxes." A proposal "to treat offshore companies with U.S.-based executives as American companies for tax purposes" is not included in the bill, reports The Hill. One author of the proposal, Rep. Lloyd Doggett (D-Texas), was quoted as saying, ""U.S. corporations should not be able to dodge U.S. taxes simply by filing a piece of paper and renting a foreign mailbox."