Of course, 1504 attracted industrial vitriol from the usual suspects -- companies used to doing business behind a cloak of secrecy were not thrilled at the prospect of having to open their ledgers. Industry concerns aside, the provision enjoyed strong bipartisan support from legislators, including Sens. Richard Lugar (R-Ind.); Ben CardinBenjamin (Ben) Louis CardinOvernight Defense & National Security: War ends, but finger pointing continues Harris presides over Senate passage of bill assisting Americans fleeing Afghanistan Senate panel votes to repeal Iraq war authorizations MORE (D-Md.); Patrick LeahyPatrick Joseph LeahyPhotos of the Week: Renewable energy, gymnast testimonies and a Met Gala dress Senators denounce protest staged outside home of Justice Kavanaugh Al Franken on another Senate run: 'I'm keeping my options open' MORE (D-Vt.); and Congressman Barney Frank (D-Mass.).
Earlier in the season, ending tax breaks for oil companies was proposed as a means of raising revenue against looming budget deficits. The proposal was expected to raise $12 billion by eliminating a domestic manufacturing tax deduction for big oil companies such as BP, Exxon Mobil, Shell, Chevron and ConocoPhillips, and $6 billion by ending deductions for taxes paid to foreign governments. Proponents of the plan argued that oil companies are able to disguise foreign royalty payments as taxes, in order to reduce their tax liability.
Such disguises and obfuscations of operating payments, sales, profits and taxes owed and paid to foreign governments are a major part of the United States government's tax collection problem.
This week, Sen. Carl LevinCarl Milton LevinOvernight Defense: First group of Afghan evacuees arrives in Virginia | Biden signs Capitol security funding bill, reimbursing Guard | Pentagon raises health protection level weeks after lowering it Biden pays tribute to late Sen. Levin: 'Embodied the best of who we are' Former Colorado Gov. Richard Lamm dead at 85 MORE (D-Mich.) introduced his signature Stop Tax Haven Abuse Act, which seeks to take a bite out of the nation's estimated $100 billion annual loss in uncollected tax revenue through offshore tax haven abuse. The bill includes new language that would require SEC-
registered corporations to report on their employees, sales, purchases and financing arrangements on a country-by-country basis. The logic behind such measures being that greater transparency will enable both U.S. and foreign tax collection authorities to spot profit shifting shenanigans that companies engage in to avoid paying their fair share of taxes.
In addition to 1504 and the Levin bill measures, momentum on the financial transparency issue is growing: Hong Kong put its own version of 1504 into effect roughly this time last year, requiring any petroleum and mineral companies listing with the Hong Kong stock exchange for the first time to report significantly more details about operations including taxes, royalties and other payments made to governments on a country-by-country basis. The EU is working on its own version of a 1504-type bill.
It is increasingly obvious that letting multinational companies operate on an honor system is bad business. Instituting Section 1504 and passing the Stop Tax Haven Abuse Act would strengthen U.S. and foreign government tax collection, inform global investment strategies, and foster good governance in the developing world -- a key component in a stable global economic recovery.
No more waiting. The SEC should issue a formal rule for implementation of 1504, as it is required to do under the Dodd Frank bill, and get the ball rolling.
Monique Perry Danziger is the Communications Director for Global Financial Integrity.