Now he isthe powerful chairman of the U.S. Senate Finance Committee with jurisdiction over legislation affecting offshore financial activity in general and tax havens in paricular.
I note this background because a private memorandum from one of the Senator's Finance Committee aides reveals what appears to be a split on"The Stop Tax Haven Abuse Act," S.681, introduced in 2007 and re-introduced this year.
The bill is a pet project of the notoriousanti-tax haven demagogue, Senator Carl Levin (D-MI). The billed is deceptively titled "A bill to restrict the use of offshore tax havensand abusive tax shelters to inappropriately avoid Federal taxation, and for other purposes."
Isolationist Thinking
As a Senator from Illinois, President Obama co-sponsored this
legislation that would allow the U.S. Treasury to control, and even ban, offshore private capital flows and investments by Americans. Thisnonsense comes at a time when the U.S. government desperately needs foreign capital and offshore investors to finance Obama's trillion dollar deficits.
But Senator Levin insists he will make this bill a legislative priority this year.
Among other enormities, the bill creates an unprecedented "blacklist"of 34 offshore jurisdictions (Switzerland included) that would bepresumed to be "tax evasion" sites. This presumption is based mainly onthe fact these jurisdictions have high degrees of financial secrecy guaranteed by law.
The bill also gives the U.S. Treasury secretary, the dynamic Tim Geithner, free reign "to take special measures against foreignjurisdictions and financial institutions that impede U.S. tax enforcement." It also requires all U.S. financial institutions to report to the IRS any offshore financial activity by clients and toimpose taxes on offshore trust income.
Difference of Opinion
But smooth sailing for Levin's radical proposal, even in a heavily Democrat controlled Congress,may have hit a major snag.
The legislation comes under the jurisdiction of the Senate Finance Committee and it appears that Chairman Baucus isn't all that happy about Levin's scatter gun approach attacking all tax havens.
Last week a left-wing blog revealed that a Finance Committee aide had released a memorandum stating Baucus position that differs with many aspects of Levin's blunt force approach. In fact, Baucus is working on his own bill to address offshore tax issues.
According to the statement, Baucus favors a more targeted approach that would give the IRS added power to detect individual American tax cheats, rather than condemning all offshore financial centers.
Senator Baucus and his staff reportedly are working with the Treasury and the IRS to impose additional reporting requirements that would determine when a U.S. taxpayer uses a tax haven and the identity of the user. (At present taxpayers are required to report the existence of offshore accounts and account activity over $10,000 each year).
Everyone a Tax Cheat?
The Baucus approach is consistent with more reasonable past IRS practice in which individual, named taxpayers are audited or investigated and proceeded against on a case by case basis. Levin's ham handed bill would condemn all users of tax havens and the havens themselves, creating a radical presumption that any American engaging in offshore financial activity is a tax cheat.
With President Obama repeatedly railing against jobs being shipped offshore and against greedy businessmen and bankers, some legislation may well be enacted this year. But it appears the Senator from Montana may inject some much needed common sense into the final product.
* While you can, there still are many legal ways to enjoy privacy, bank and save taxes offshore; Bob Bauman tells you Where To Stash Your Cash:/Click Here. And if you're interested in living offshore,The Passport Book> is just what you need.
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