ESG Disclosure Simplification Act of 2021

Floor Speech

I rise in support of this amendment. This amendment proposes a technical change in title 5 of this bill, the Disclosure of Tax Havens and Offshoring Act, to simply clarify that a ``tax jurisdiction'' includes either a country or a jurisdiction that is not a country but has fiscal autonomy.

My concern, as the bill presently states, is that certain words used in that part of the bill will be highly problematic to U.S. territories, including my district, and our efforts to address very important tax policy issues that have arisen in the last few years.

My amendment seeks to correct the bill's definition of a tax jurisdiction by removing its words explicitly analyzing U.S. territories without the United States. While these specific words separating the territories from the rest of the United States would be removed, the rest of the language would be left as it currently exists in the bill: A ``tax jurisdiction'' would mean either a country or a jurisdiction that is not a country but that has fiscal autonomy.

My concern is with the language to explicitly distinguish U.S. territories from the sovereign United States in such a way.

First, it would be inconsistent with the current structure of the Securities Exchange Act of 1934, which this bill seeks to amend. Under that law, each of the U.S. territories are defined and treated as States.

Secondly, it would be contrary to the position that the United States has taken in its deliberations with the European Union and the OECD in response to blacklisting of U.S. territories in 2017 and 2018.

A letter from the Secretary of Treasury to the Council of the European Union addressing this issue reads: ``The United States disagrees with the Council's decision to consider U.S. territories separately from the United States.''

It would be more difficult for the United States to make this argument if legislation is adopted by Congress lending credence to the argument that U.S. territories should be treated as tax jurisdictions without the United States as a whole.

Importantly, treating the U.S. territories as separate tax jurisdictions distinct from the sovereign United States would also be inconsistent with efforts that U.S. territories have been making for relief from tax increases intended for foreign tax jurisdictions that were unfairly imposed on U.S. territories by the Tax Cuts and Jobs Act.

Lastly, I have concerns about the language at issue categorizing U.S. territories as fiscally autonomous. They are, in fact, legally possessions of the United States under the tax code to this day. One of the U.S. territories is currently in a state of bankruptcy. The U.S. Virgin Islands has no control over its income taxes and cannot sever itself from the mirror code tax system of the United States, and has extensive and longstanding written agreements in place with the IRS requiring exchange of tax information.

Thus, all I have requested with this technical amendment is that the bill language be slightly adjusted to remove words explicitly referencing U.S. territories as tax jurisdictions distinct from the sovereign United States. I believe this would be more fair to the sponsors of this measure because it would in no way impede the effect of its policy; the meaning of tax jurisdiction would remain as either a country or ``a jurisdiction that is not a country but has fiscal autonomy.''

Mr. Speaker, at this time I yield 1 minute to the gentlewoman from California (Ms. Waters), the chairwoman of the Financial Services Committee.

BREAK IN TRANSCRIPT

Ms. PLASKETT. Mr. Speaker, since I have assurances from both the chairwoman and the committee that they will continue to work with us to ensure that U.S. territories are not treated as tax havens but that we are, in fact, individuals who intend and continue to intend, through our governments, to pay our taxes to the Internal Revenue Service and continue to be treated equitably as part of the United States, at this time, I yield back the balance of my time and I withdraw my amendment.

BREAK IN TRANSCRIPT

Source