Faced with massive deficits and dwindling tax revenues, the U.S. government is "turning every rock it can over to find as much revenue as it can," says Ken Rubinstein, senior partner at Rubinstein & Rubinstein.
In addition to potential tax hikes, Rubinstein sees a wholesale change in how America treats foreign holdings of U.S. individuals and corporations, citing:
- Repatriation: The Obama administration has discussed raising taxes on profits earned overseas by U.S.-based corporations. "This will increase revenues but some companies may leave the country," Rubinstein says.
- Flexing Muscles: The U.S. government will ask all nations to sign a "tax information exchange agreement," says Rubinstein, citing unnamed foreign government officials. He declined to specify but the attorney has advised Caribbean banking centers in the past. Smaller nations will have no choice but to acquiesce, Rubinstein says.
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Crackdown on Havens: Beyond the government's ongoing case against UBS, pending legislation declares "anybody who sends money to a ‘tax haven country' will be presumed to be committing tax fraud," Rubinstein says. "The burden will be on the taxpayer to prove he didn't commit tax fraud. The judge, jury and prosecutor will be the IRS." This will make it increasingly difficult for U.S. citizens to shelter assets abroad - even for legitimate reasons.
The government is "doing as much possible to increase amount of taxes it receives," he says. "It will increase revenues, but the question is whether the government looks at things in the long-term or only in the short-term."
I think we all know the answer to that question.
