A Senate subcommittee plans to release another blockbuster report on the use of foreign tax havens after the first reports caused repercussions both here and abroad.
Last week, the Senate's Permanent Subcommittee on Investigations released a 402-page
The revelations caused embarrassment not only in the U.S., Switzerland and Liechtenstein, but also in other countries like Australia, the United Kingdom and Germany. One of the witnesses scheduled to testify at another hearing on Friday is Peter Lowy, whose family controls the Sydney-based Westfield Group, the largest owner of shopping malls in the world. He was originally scheduled to testify last week. According to another
About 300 wealthy individuals in the U.K. are also facing prosecution for hiding more than a billion pounds in Liechtenstein, according to the
Other companies and individuals in the U.S. and other countries are likely to be named in yet another upcoming report from the Government Accountability Office, which will explore tax havens set up in the Cayman Islands. It's due for release by the time the Senate Finance Committee holds its next hearing on Thursday. One site in the Caymans, the Ugland Building, reportedly serves as the address for over 18,000 companies. The report will also deal with hedge funds that have used the tax havens, according to the Australian newspaper
The ongoing revelations are proving to be a source of consternation for investment banks, wealthy individuals and businesses. They're also giving Congress additional ammunition as it tries to pass legislation to close up tax loopholes that encourage people and companies to hide assets in accounts abroad or set up entities where the assets can be transferred.
Despite all the hoopla, though, it seems that the use of tax shelters is on the wane in some quarters. One reason for this, beyond enforcement by the tax authorities, may well be the Bush tax cuts, which had the effect of lessening the need for wealthy individuals to hide their assets from the IRS in tax shelters. Still, despite the tax cuts, assets clearly are still being squirreled away in tax haven countries. A combination of embarrassment, enforcement and increasing cooperation by banks abroad are leading to a get-tough approach that's ultimately forcing more individuals and businesses to report their holdings and pay up at home.