Amendment to Obama’s tax break crackdown targets havens at home

President Barack Obama's plan to limit tax breaks for multinational companies will include an amendment that affects alleged tax havens at home, including Nevada and Delaware, a knowledgeable source in Washington, D.C., said.

Obama last week said he would pursue laws that would raise $210 billion over 10 years by eliminating offshore tax breaks that "let companies ship jobs and stash profits overseas."

The yet-to-be-announced amendment will make sure that U.S. states do not replace offshore countries like Switzerland, Luxembourg and the Cayman Islands as tax havens for wealthy individuals and businesses, the source explained.

To prevent the corporations from turning to the Silver State and others, the Treasury Department will propose a legislative requirement that state officials obtain the identity of corporate owners and their tax identification numbers of any company registering in their states. The documents would be available to the Internal Revenue Service but not to the public.

A spokeswoman for the Treasury Department did not respond to calls for comment. However, in May 2008, then-Sen. Obama joined two senators in sponsoring a bill that would require states to maintain ownership records on corporations and make them available to law enforcement through subpoena or summons.

Under current law, Nevada Secretary of State Ross Miller has the authority to demand a list of owners from any corporation within three days or Miller's office may suspend or revoke the corporation's state charter.

Critics, however, say that doing that would only drive corporations to incorporate elsewhere to avoid disclosing the identity of their owners.

In an e-mail, Miller on Tuesday said he is worried about the impact of federal legislation on commercial recordings, such as incorporation papers, at the state level and how it might affect revenues Nevada enjoys from out-of-state incorporators.

"In general, we are concerned that sweeping federal legislation aimed at commercial recordings practices may create barriers to commerce, create unfunded mandates or jeopardize a revenue stream that makes our office the third highest revenue-generating agency in the state," Miller said.

The secretary of state's office estimates it will receive $74 million in total fees for commercial recordings in the fiscal year ending July 1, a large sum given the difficulty the Legislature is having balancing the budget.

"Additionally, we recently enacted legislation which should address all of the transparency concerns," Miller said, referring to measures adopted in Nevada two years ago. "The model legislation gives law enforcement access to the information they need to carry out investigations," he said, "and therefore I believe sweeping federal legislation is unnecessary."

The debate over tax havens has started to rage around the world. Earlier this month, a professional journal called Tax Notes quoted a representative of the Cayman Islands criticizing the United States for attacking offshore tax havens.

Nevada, Delaware and Wyoming "are almost criminal in their (lack of) willingness to comply with global regulations on money laundering and tax evasion," said Eduardo D'Angelo Silva, vice chairman of the Cayman Islands Financial Services Association.

The Silver State "alone incorporates 80,000 new firms a year and now has more than 400,000 companies -- roughly one for every six people," Silva said during a seminar in Miami.

Silva's criticism followed similar comments by Luxembourg Prime Minister Jean-Claude Juncker last month.

Contact reporter John G. Edwards at jedwards@reviewjournal.com or 702-383-0420.