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EU Threatens United States With Blacklisting

EU Threatens United States With Blacklisting
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By    |   Monday, 23 April 2018 08:51 PM

The United States is the world’s gold standard for financial safety and security.

There are predominately two reasons for its preeminent status.

It’s the biggest global economy and the largest international tax haven.

While the U.S. Congress doesn’t recognize for federal income tax the legitimacy of aggressive tax planning or that it has the substantial economic effect the US is in hot tax competition to attract investment capital.

The recently enacted tax reform act made the US even more attractive for foreign investors and retaining US corporate capital by lowering corporate tax rates from 35 percent to 21 percent.

Seemingly, this is the straw that broke the camel’s back as for the European Union.

The EU is ruled by bureaucrats in Brussels who exercise power as if an authoritarian power.

It has been pummeling countries like Switzerland, Lichtenstein, Ireland, Luxembourg, and others into submission by labeling them as engaging in unfair tax competition with their low tax rates.

The bureaucrats from Brussels, led by German and France, demand that the world raise taxes so the money can be redistributed from the producers in the economy to the voting masses of takers.

The US administration, unlike previous recent administrations, sees tax competition as beneficial to the United States.

The current administration understands that to productively expand the US economy, create new jobs, and enlarge its industries must attract a lot of investment capital.

The EU doesn’t like it and is threatening to use the same intimidation blacklisting tactics that work so well on the smaller competing financial centers it demeaningly called tax havens.

It’s undeniable that the United States and the EU, using the OECD and other international organizations as stalking horses, have run roughshod over these powerless jurisdictions.

Starting primarily in the 1990s, the OECD countries, including the United States, declared these effectively helpless nations were engaging in unfair tax competition.

All while the US and the EU were engaged in rampant tax competition.

To force more US money held abroad, Congress passed draconian legislation in 2010 called the Foreign Account Tax Compliance Act (FATCA).

The European powers followed leading to the imposition on the world of the Common Reporting Standards.

The United States wisely refused to sign on-board.

The EU felt the rejection. In a knee-jerk reaction, they sent a signal to the US by blacklisting as tax havens the US possessions of American Samoa, Guam, the Marshall Islands, and the U.S. Virgin Islands.

The US refused to capitulate resulting in the EU requesting that the OECD analyze whether the United States should be blacklisted as a tax haven.

The irony of it all has not gone unnoticed by the offshore financial centers pummeled and punished unmercifully as tax havens by the hypocritical United States.

What will happen from here?

It’s anyone guess.

But it seems reasonable to say that the whole idea of unfair tax competition and harmful tax haven status is a sham and lose its legitimacy as an authoritarian economic tool.

Good riddance.

Denis Kleinfeld is known as a strategic tax and wealth protection lawyer, widely published author and creative teacher.

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The recently enacted tax reform act made the US even more attractive for foreign investors and retaining US corporate capital by lowering corporate tax rates from 35 percent to 21 percent.
eu, united states, blacklisting
Monday, 23 April 2018 08:51 PM
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