Sen. Max Baucus (D-MT) and Ways and Means Committee Chairman Charles Rangel (D-N.Y.) have filed new legislation to crack down on offshore tax evasion, and unlike an earlier bill, their version won't include a so-called blacklist of countries that are considered tax havens.
Sen. Carl Levin (D-Mich.) and Rep. Lloyd Doggett (D-TX) had filed the Stop Tax Haven Abuse Act, which would have created a list of foreign tax havens and given the U.S. Treasury Department new tools to impose sanctions on them. That bill set off a lobbying push by countries that didn't want to be included in the legislation. The National Law Journal wrote about the issue in June.
The countries on the list include Malta, which has hired Sonnenschein Nath & Rosenthal to help gain ratification of a tax treaty that calls for more transparency and reporting of financial transactions. Also on the list: British islands Jersey, Guernsey and the Isle of Man, which hired partner Linda Carlisle of White & Case, and the Cayman Islands. Cayman Finance, formerly the Cayman Islands Financial Services Association, has retained Quinn Gillespie & Associates. The countries have spent more than $800,000 collectively on lobbying.
The countries have been blunt about their preference for an earlier draft of the Baucus legislation. "Malta has no concerns about the Rangel-Baucus proposal," Ron Platt, a senior managing director at Sonnenschein who lobbies for Malta on the tax treaty, wrote in an e-mail Tuesday. In a statement released through Quinn Gillespie Wednesday, Cayman Finance Chairman Anthony Travers said he "commends Chairman Baucus and Chairman Rangel for developing legislation that concretely addresses the important issues of US tax avoidance while rejecting damaging 'list' approaches included in competing legislation."
Cayman Finance has paid Quinn Gillespie $290,000 since hiring them in April, lobbying disclosure reports show.
That proposal seems to be the one with momentum and support from the administration. "This legislation fits well into the Administration’s dual-track strategy of improving our domestic tax laws while increasing global cooperation on tax information exchange to help narrow the tax gap and create the fairer tax system we need," Treasury Secretary Timothy Geithner said in a statement. "We have had great success recently in working with countries around the world to increase tax information exchange as part of the global effort to end offshore tax evasion." Geithner, who had previously praised the Levin-Doggett bill, went on to acknowledge their work "in support of a strong international tax enforcement agenda.” President Obama, too, issued a statement saying the Rangel-Baucus bill would meet his goal of cracking down on offshore tax evasion.
As for Levin, he issued a statement describing the Rangel-Baucus bill as "strong," but added that "When their committees move to markup, I hope to work with my colleagues to strengthen the Baucus-Rangel bill by adding some of the measures from the offshore tax bill I’ve introduced."