Reed Backs Tax Code Modernization
Reed looks to Work with Administration on Financial Products
Following recent discussion during the confirmation hearings of President-Elect Donald Trump’s Treasury Secretary nominee Steven Mnuchin, Tom Reed pushed his continued commitment to clarify the financial services section of the tax code. “We care about bringing uniformity, clarity and certainty to our tax code, especially in the realm of financial products, for the sake of the job creators around the country and the world,” said Reed. “Mr. Mnuchin’s comments about offshore accounts in the Cayman Islands and Anguilla only highlight the need for these reforms. We remain committed to working with the Administration to address these issues both independently and within comprehensive tax reform through our role on the Ways and Means Committee.”
Reed has been reviewing this issue for several months in an effort to bring clarity to the financial products aspect of the tax code. His solution is to eliminate the regulatory hurdles for tax-exempt entities and pension funds to invest in U.S. assets, to address this realm of the tax code. Reed is gathering feedback from stakeholders and developing creative solutions to bring clarity in this often ambiguous and challenging area of the tax code. “We want to make sure we get this right and want to hear from those who will be impacted by changes in order to make the best possible policy and remove incentives for this offshore behavior.” Reed continued.
“I think it makes no sense that we would encourage hedge fund managers to set up entities in the Cayman Islands, Anguilla, or anywhere else,” said Mnuchin during his testimony before the Senate Finance Committee.
Mnuchin said that tax-exempt entities use offshore entities often so they have access to certain investments in U.S. assets. He said that by removing this added layer of complexity in the code it will “make the American public more money” and allow the IRS to allocate resources elsewhere. “It will create a lot less work for the tax accountants and lawyers,” he said.
The comments come after Mr. Mnuchin’s discussion with various senators during his confirmation hearing. Questions included scrutiny of some offshore accounts in the Cayman Islands and Anguilla, which allow non-profit entities and pension funds to invest in certain American assets and avoid taxation on certain types of gains. The Internal Revenue Service has, in practice, allowed this type of offshoring activity.
“I would work with the IRS and Congress,” Mnuchin said of eliminating the need for this complexity. “As I said, it makes no sense that we have all of these requirements to set up these offshore entities,” Mnuchin added.