After a long, hard battle, President Obama won a second term from voters last night. The media has pointed out he’s not taking much time to celebrate; it’s time to back to the long, hard work of governing. In that spirit, this is a good opportunity to check the pulse of several important transparency-enhancing legislative initiatives that are on the table in Congress right now. Over the next four years, the President and his administration will have opportunities to promote transparency in the financial system, fight corruption worldwide, and enhance tax fairness, both abroad and at home. In that spirit, here’s a list of what I’d like to see him support and, hopefully, accomplish in the next four years.
- Strengthen law enforcement and national security by signing the Incorporation Transparency and Law Enforcement Assistance Act in law. This bill would require companies to disclose the names of the beneficial owners of corporations and limited liability companies when formed. This would effectively put an end to “anonymous shell corporations,” closing a major loophole that criminals exploit to launder their funds within U.S. boarders. This bill would strengthen law enforcement officials’ ability to keep criminal and tax evading money out of the United States. As Joseph Kraus, Ph.D. and Stefanie Ostfeld pointed out on the Task Force blog recently, this “would increase our national security, lower the amount of money lost to tax evasion, and thwart the corruption that enables leaders to live extravagant lives to the detriment of their citizens.”
Likelihood of Obama’s support? Strong. President Obama was the lead sponsor of the bill when he was a U.S. Senator.
- Close corporate tax loopholes by signing the Cut Unjustified Tax Loopholes Act into law. This bill would help close corporate tax loopholes to align the effective corporate tax rate with the official rate. The bill would slice loopholes and, according to the Joint Committee on Taxation and the Office of Management and Budget, would reduce the deficit by at least $155 billion over the next decade.
Likelihood of Obama’s support? Strong. As a senator, Obama supported a similar measure.
- Defend against Congressional attempts to weaken the Foreign Corrupt Practices Act. Last year some members of Congress, including Rep. Jim Sensenbrenner, and the Chamber of Commerce brandished a crusade against the FCPA, hoping to weaken it with amendments. Rep. Sensenbrenner spent a great deal of valuable Judiciary Committee time last fall convincing other Congressmen to join him, rather than encouraging a thoughtful debate on the issue. Efforts to weaken the FCPA have been suspended pending the Department of Justice’s release of a guidance document clarifying some of the law’s provisions. Yet we should receive that guidance before the end of the year, at which time Congress may resume its attacks.
Likelihood of President Obama’s support? Good. In a speech to Transparency International USA, Secretary of State Hillary Clinton said the Obama Administration is “unequivocally opposed to weakening” the FCPA.
- Raise revenue and increase accountability by signing the Stop Tax Haven Abuse Act into law. This bill would permanently close offshore tax loopholes, which in turn would raise revenue and increase transparency and accountability for multinational businesses. The bill would also require annual country-by-country reporting by SEC-registered corporations related to their employees, sales, purchases, sales, financing arrangements, and taxes. Raymond Baker, director of Global Financial Integrity, has called it a “game changer.” Senator Carl Levin (D-MI), who introduced the bill, notes the bill contains an array of provisions that would ensure all Americans are paying what they owe while raising an estimated $100 billion in new revenue annually.
Likelihood of Obama’s support? Strong. President Obama co-sponsored the bill with Senator Levin when he was still in the Senate.
- Combat terrorism and drug trafficking by signing the Combating Money Laundering, Terrorist Financing, and Counterfeiting Act into law. This bill, proposed by Senators Chuck Grassley (R-IA) and Dianne Feinstein (D-CA), would make all felonies trigger crimes for a money laundering charge, no matter where in the world a person committed the crime. According to current U.S. anti-money laundering laws, there is a difference between what is criminalized if it occurs inside U.S. borders and what is criminalized if it occurs outside them. Which means that it is perfectly legal for U.S. banks to accept the profits from some crimes, provided the original crime occurred in another country, when it would be illegal to do so if the same crime was committed in the United States. The bill would close this large loophole.
Likelihood of Obama support? To the best of my knowledge, unclear.
You probably noticed President Obama already supports many of these initiatives and has for years. Legislative action is often slow going and we may not see movement on all of them, or even most of them over the next four years. Yet it is heartening that those of us who believe in transparency will continue to have support from the executive branch. I, for one, can’t help but be a bit optimistic.
Disclaimer: Unless specifically stated to be the views of the Task Force, the opinions expressed on this blog are solely the opinions of the individual blogger and are not necessarily those of the Task Force on Financial Integrity & Economic Development.