Steven A. Dean is a professor of tax law and faculty director of the graduate tax program at New York University Law School and a professor of law at Brooklyn Law School.
This article benefited from helpful input from Alice Abreu and Dorothy Brown and excellent research assistance from Kalina Georgieva.
A version of this article, to be published in 4 Revue Européenne et Internationale de Droit Fiscal (2020), was solicited in March, and this draft was submitted to the journal’s editors on May 18, a week before George Floyd’s brutal murder in Minneapolis. In recognition of the global Black Lives Matter protests that followed, it is printed in Tax Notes International with the generous permission of the Revue’s editor in chief.
In this article, the author examines the impact of racial diversity on U.S. international tax policy, focusing on the abandonment of OECD efforts to combat harmful tax competition under the George W. Bush administration and the passage of the Foreign Account Tax Compliance Act under the Obama administration.
It may no longer be fashionable to refer to the United States as a melting pot, but it remains an incredibly heterogenous country. Both in terms of the race of those born there and the national origin of its immigrants, the United States has long enjoyed the benefits and burdens that come with diversity.1 Its diversity can make even a seemingly simple story complicated, producing unexpected twists and surprise endings. This article tells a tale in which diversity helped change the face of international tax policy.2
The United States has long wielded great power in international taxation. From the controlled foreign corporation to the Foreign Account Tax Compliance Act, the United States has proven time and again that when it wants to it can fundamentally alter the rules of the international tax game. And from a distance that outsized influence suggests a monolith. But the view from up close reveals something quite different.
Over the last two decades, a pair of dramatic international tax policy shifts highlights how — and how much — race matters in the United States. At two pivotal moments in the last quarter-century of international tax policy, Black leaders in the United States did the unexpected. And the results both in the United States and around the world proved as powerful as they would ultimately be misunderstood.
The first episode took place 20 years ago, at the start of the George W. Bush administration. Famously, the United States suddenly distanced itself from an OECD effort that it had once supported. That defection has long been attributed to the transition from President Bill Clinton (a Democrat) to President George W. Bush (a Republican).3 Yet a look at the record reveals a more intricate chain of events in which the Congressional Black Caucus (CBC) played an unexpected, decisive, and largely unexamined role.4
Ten years later, the CBC would play a key role once again. The story of FATCA has not been told as a triumph of diversity, but it should be. Policymakers with different experiences, whether women or people of color, have access to information that others do not and reach better results by sharing that information.5 Research also shows that as with FATCA, diverse groups of decision-makers tend to find more successful and innovative solutions.6
The involvement of the CBC in FATCA’s birth offers only anecdotal confirmation of those empirical findings but provides a tantalizing glimpse of the power of inclusive tax policymaking. In 2009 one former and one current CBC member, President Barack Obama and Rep. Charles B. Rangel, D-N.Y., would collaborate with others to create FATCA,7 legislation that elicited a collective gasp from both the world’s taxpayers and tax authorities.8 It charted a very different and more productive course than efforts to impose economic sanctions on poor, predominantly Black countries painted as “gangsters” that the CBC derailed a decade before.9
Viewed through a lens of race, those two CBC interventions reveal an international tax landscape indelibly marked by internal U.S. politics. They also highlight the importance of diversity to innovation and decision-making even in the most esoteric policy contexts. Without the unexpected involvement of the CBC in 2001 and the unprecedented election of a Black U.S. president later that decade, today’s sweeping global efforts to prevent offshore tax evasion might never have evolved beyond the sanctions initially embraced by the OECD.
Race and Tax in the United States
Increasingly, immigration has transformed countries in Europe and elsewhere.10 In the United States, racial and ethnic diversity has been part of the nation’s fabric since the beginning.11 Despite that long experience, systemic discrimination remains a daily fact of life for many Americans. In recent days, those inequities have been evident in the disproportionate impact COVID-19 has had on Black and Latino Americans.12 Denied the ability to shelter in place by economic necessity, and without access to healthcare, those Americans have consistently suffered the most in places where the coronavirus has hit the United States hardest.13
Even after the election of its first Black president, race remains an ever-present factor in the United States. Yet the implications of diversity remain underappreciated in tax. Despite long-standing efforts, tax scholars have made only halting steps toward acknowledging the ways tax law and race in the United States intersect. Even the keenest observers tend to mistakenly assume, for example, that the earned income tax credit disproportionately favors Black taxpayers.14
Despite resistance, critical tax scholars have made progress toward creating a clearer picture of the ways in which race and tax law interact.15 They have shown, for example, that even apparently colorblind tax policies like those subsidizing private retirement savings disfavor Black and Latino taxpayers, even accounting for income levels.16 Great strides have been made in challenging tax policies that have disparate gender impacts. Around the world, so-called tampon taxes, or taxes imposed on feminine hygiene products but not masculine or gender-neutral counterparts, have been repealed.17 Diverse perspectives matter in tax just as they do elsewhere.
The OECD and the CBC
The story of President George W. Bush’s decision to abandon his administration’s initial support of OECD efforts to combat harmful tax competition has been widely told. The definitive account appears in Havens in a Storm: The Struggle for Global Tax Regulation,18 in which J.C. Sharman tells a “David and Goliath” story in which a handful of underresourced tax havens achieved a remarkable victory over one of the richest and most powerful organizations in the world.19
The story Sharman tells features rich detail, revealing surprising alliances and stark disappointments, yet he underplays one of its most compelling aspects. Compared with the nuanced portraits of many of the key players in this drama, Havens in a Storm offers a thin account of the role of the CBC.20
By the late 1990s, international tax planning had grown from a chronic problem to an acute threat. Reuven S. Avi-Yonah captured a growing fin de siècle anxiety that unless offshore tax evasion could be contained, life in wealthy states might be fundamentally altered.21 He concluded that tax competition threatens to “undermine the individual and corporate income taxes, which have traditionally generated the largest share of revenues for modern welfare states.”22
Avi-Yonah described mechanisms to combat the evasion threatening the personal income tax, easily the more important income tax in developed states. He recommended an inward-looking solution: reverse the “effective end of withholding taxation by developed countries” sparked by the 1984 U.S. decision to abolish its withholding tax on interest.23 He proposed a reinvigorated withholding regime coordinated among OECD members modeled on the EU savings directive. Avi-Yonah left no doubt that the origins of the problem could be traced to U.S. policy decisions and described a solution that required no cooperation from states outside the OECD. Even so, the highest-profile effort to preserve the individual income tax — and the welfare state it secured — focused outward.
The OECD’s harmful tax competition initiative became the primary response to the threat Avi-Yonah and others articulated.24 Taxpayers increasingly found it trivially easy to engage in offshore tax evasion.25 U.S. efforts focusing on financial institutions yielded notable successes, but returning to an era of universal withholding at source gained little traction.26 Rather than curbing demand for information from outside the OECD as Avi-Yonah suggested, the OECD focused on increasing the supply.
The OECD’s harmful tax competition effort culminated in the publication of a list of states identified as tax havens.27 The OECD warned that states on the list would be subject to economic sanctions if they failed to take corrective action. Termed “defensive measures” by the OECD, the precise nature of those sanctions remained unclear even after publication of the list.28 But given the stark imbalance between the OECD and the states on its list in terms of economic power, the OECD’s threat was not taken lightly.
Throughout its effort, the United States supported the OECD’s approach. To much of the world, that the Democratic Clinton administration supported the harmful tax competition initiative seemed unsurprising. Much more unexpected was that the new Bush administration continued that support.29 An administration that would soon come to be defined by tax cuts not only failed to make a campaign issue of what could, without hyperbole, be described as an international effort to preserve big government but also affirmatively supported the initiative well into Bush’s first year in office.
But in the United States, support for the OECD effort proved far from universal. As Sharman relates, conservative groups urged the Bush administration to end its support. The Heritage Foundation, a well-known right-leaning think tank, loomed large. As Sharman recounts, alongside the Center for Freedom and Prosperity, the foundation pressed its case with Treasury Secretary Paul O’Neill and others in the administration. The first indication that those efforts had borne fruit came in May 2001 when O’Neill publicly criticized the OECD effort.30 Sharman notes a little more than a month before O’Neill’s change of heart, the Heritage Foundation and its allies added a surprising member to its ranks. A March 2001 CBC letter urged O’Neill to distance the United States from what it saw as a misguided OECD effort.31
Formed in 1971, the CBC likes to think of itself as the “conscience of the Congress” and has a history of taking bold positions on foreign policy issues implicating race.32 In its early days, the CBC took the lead in U.S. efforts to end apartheid in South Africa. Inverting its prior stance, the CBC letter to O’Neill identifies its primary concern as wealthy states inflicting “serious economic harm on developing nations” by imposing sanctions.
Despite a history of principled stands, the CBC’s opposition to the OECD effort tended to be portrayed as something quite different. Sharman captures the prevailing view of the CBC as “open to suggestion as to where their interests lay in relation to this issue.”33 He notes that the CBC echoed the views of others when its letter criticized the harmful tax competition initiative as a “successful international media campaign, developed by the OECD, aimed at painting a picture of money laundering and unsound regulatory practices.”34 The CBC’s letter has come to be seen as the product of weakness, ignorance, or both.
That perspective, with CBC members dismissed as pawns duped into taking a politically costly position, has gone largely unchallenged. Yet it suffers from two striking defects. In terms of narrow political calculus, it ignores the possibility that CBC members writing to O’Neill might actually have advanced the interests of those they served by opposing the OECD’s effort. It also discounts the idea that CBC members might have opposed OECD sanctions on principle.
It would be wrong, of course, to suggest that the CBC had the ear of President Bush.35 But its March 2001 letter still raised the stakes for the new president. The Bush administration might not have worried about appearing to take a position to the political left of the Heritage Foundation by supporting the OECD initiative, but to find itself outflanked on the right by the CBC could prove problematic. Soon after the CBC sent its letter, the Bush administration signaled a weakening of its support for the OECD effort.
Despite its highly public nature, the CBC letter has been mired in confusion. Even its authorship has been mischaracterized. A majority — not all — of its members signed the CBC’s letter, but Rangel, a prominent lawmaker from New York, attracted most of the spotlight.36 Rangel was not the lead author. Two days before, the representative listed first among the letter’s signatories had already sent a separate letter to O’Neill.
In a March 12, 2001, letter, Del. Donna Christensen, D-V.I., urged O’Neill to “reject the OECD’s misguided initiative” to protect “our own interests and . . . the interests of less fortunate nations around the world.”37 Elected to Congress in 1996, Christensen served the U.S. Virgin Islands for almost 20 years. The reason Christensen would send two letters to O’Neill two days apart — persuading 25 other members of the CBC to join her in the second — should have presented no mystery. Her district appeared on the OECD’s 2000 list of jurisdictions potentially subject to sanctions.38
As a nonvoting congressional delegate from a U.S. territory, writing letters and encouraging others to join her in doing so to protect her constituents seems unremarkable. Of course, Christensen’s opposition to the OECD initiative was not so different from other causes she championed.39 Christensen’s concern that sanctions would “undermine the fragile economies of some of our closest neighbors and allies,” as well as her own congressional district,40 squared perfectly with both her objective interests and the principles she embraced in Congress.
Harlem, Rangel’s district, was not on the OECD’s 2000 list, but many of its residents were Caribbean immigrants with close ties to jurisdictions that were.41 More importantly, when he signed the letter to O’Neill, Rangel had served in Congress for more than a quarter-century. As the head of House Ways and Means Committee, he understood both tax and sanctions. Arrested in 1984 while protesting apartheid in front of South Africa’s New York consulate, in 1987 — with what became known as the Rangel amendment — he denied foreign tax credits to U.S. corporations operating in South Africa.42
It may be that the CBC was bullied or hoodwinked by the Heritage Foundation, but the Rangel amendment suggests otherwise. Rangel explained his opposition to the OECD effort by highlighting its economic impact on already poor countries.43 His support for increased trade with Africa — an issue that divided the CBC the year before — makes that claim credible.44 Whatever the reasons the 26 CBC members had for signing the letter to O’Neill, a look at its lead author and its highest-profile signatory dispels the misconception that their support represented an error in judgment.
FATCA
Had the story ended there, the CBC’s opposition to the OECD’s effort might have been only a historical curiosity precipitated by an ill-conceived threat against a U.S. congressional delegate’s district.45 But a decade later, Rangel and another former CBC member would help spur the evolution of international tax policy. As a senator and a presidential candidate, Obama focused on international tax planning. As president, he and his former CBC colleague would join forces on a law that would change the face of international tax.
In 2009 Rangel sponsored FATCA in the House, and Obama signed it. FATCA turned the earlier OECD effort on its head. It threatened punitive action, but financial institutions rather than states found themselves in the crosshairs. And rather than an unlucky few, FATCA targeted everyone. Every bank providing services to Americans — everywhere in the world — faced a new requirement to provide information to U.S. tax authorities or risk a significant haircut on every payment received from a U.S. person.
Innovation, Diversity, and Tax Policy
A decade after FATCA, the CBC’s role in the history of offshore tax evasion looks quite different than when Havens in a Storm offered the definitive history of the failure of the OECD effort. Rangel’s two collaborations with CBC members on offshore tax evasion, first with Christensen and later with Obama, describe a more complicated narrative than the one that emerged before FATCA.
Tax law tends not to be the most diverse of fields, and international tax often seems even less so.46 All the more remarkable then that two high-profile Black policymakers played marquee roles in FATCA’s creation.
On the one hand, that story appears to be a rather conventional one of greater diversity changing minds by sharing information.47 The OECD’s 2000 list — referred to universally, if not officially, as a blacklist — had at least one striking omission. To some, the United States itself deserved to be included. But looking back on the OECD effort, it is hard to dispute that Switzerland, a member of the OECD, should have been included.48 In 2001 one could still debate whether Switzerland belonged on the list, but more glaring than that exclusion was the inclusion of another state. Absurdly, Liberia, wracked by years of civil war, earned a spot. Liberia may have had few friends prepared to stare down the OECD, but Rangel happened to be one of them.49
But treating diversity as a built-in focus group is a mistake. To suggest that Obama, Rangel, or Christensen needed to be Black in order to both support FATCA and oppose the OECD would be disingenuous. Men can, and do, oppose tampon taxes despite their gender. Does being a woman make it easier to see the unfairness in tampon taxes, or does being Black make the injustice of threatening Liberia with economic sanctions for crimes committed by whiter, wealthier states seem more obvious? Undoubtedly.
FATCA suggests why having a more diverse group of decisionmakers really matters. As “decades of research from organizational scientists, psychologists, sociologists, economists and demographers” show, diverse groups devise better, more innovative solutions.50 Bringing together teams that differ along racial, political, and other lines helps them solve problems more effectively than groups of similar, like-minded individuals. “Diversity jolts us into cognitive action in ways that homogeneity simply does not.”51 FATCA powerfully illustrates that phenomenon.
Conclusion
A stark rejection of the prevailing tax-haven-focused approach, FATCA catalyzed profound change.52 Chance created a natural experiment with a remarkably diverse team of policymakers working to address a problem other more homogenous groups failed to solve. Its innovative approach turned a powerful opponent into a key supporter.
FATCA remains controversial — the United States remains largely an importer of information, to the detriment of other states — but the extent of its impact is evident. It illustrates not just that diversity can help solve seemingly intractable problems, but how. Bringing together not just more perspectives but decreasing errors while jolting decisionmakers into cognitive action, the incongruous cast of characters that gave life to FATCA shows why researchers find that groups with racial diversity significantly outperform groups without.53
FOOTNOTES
1 In 2018 the percentage of the population that was white and not Latino was just over 60 percent. U.S. Census Bureau, “Quick Facts.” That same year, New York City was “home to 3.1 million immigrants, the largest number in the city’s history.” New York City Mayor’s Office of Immigrant Affairs, “State of Our Immigrant City: Annual Report” (Mar. 2018). That diversity reveals itself not just in how the city looks, but how it sounds. See Endangered Language Alliance, “NYC Language Map” (“The New York metropolitan area is the most linguistically diverse urban center in the world, probably in the history of the world.”).
2 Research demonstrates that diversity can stimulate innovation, lighting the way toward new solutions. Katherine W. Phillips et al., “How Diversity Makes Us Smarter,” 311(4) Scientific American 42, at 44 (Oct. 1, 2014) (“The fact is that if you want to build teams or organizations capable of innovating, you need diversity. Diversity enhances creativity. It encourages the search for novel information and perspectives, leading to better decision making and problem solving.”).
3 Although the election occurred in 2000, the policy shift occurred in 2001, and that half-year gap undermines the prevailing view that the election was enough, without more, to explain the policy shift. See Sunita Jogarajan and Miranda Stewart, “Harmful Tax Competition: Defeat or Victory,” 22 Austl. Tax F. 13 (2007) (“It is important to acknowledge a simpler explanation for failure of the project — that it was caused by the withdrawal of support by the US government after the election of President George Bush in 2001 [sic].”).
4 The Congressional Black Caucus has a history that stretches back to the U.S. civil rights movement. U.S. House of Representatives History, Art & Archives, “Permanent Interests: The Expansion, Organization, and Rising Influence of African Americans in Congress, 1971-2019” (“13 African-American Members of the U.S. House of Representatives founded the Congressional Black Caucus,” which “developed an expansive legislative agenda that highlighted the common issues facing African Americans regardless of their congressional district. . . . on a diverse array of issues, from voting rights to foreign relations and economic policy.”).
5 Phillips, supra note 2, at 44 (“People who are different from one another in race, gender and other dimensions bring unique information and experiences to bear on the task at hand. A male and a female engineer might have perspectives as different from one another as an engineer and a physicist — and that is a good thing.”).
6 See, e.g., Samuel R. Sommers, “On Racial Diversity and Group Decision Making: Identifying Multiple Effects of Racial Composition on Jury Deliberations,” 90 J. Personality Soc. Psych. 610 (2006) (identifying “specific advantages of racial heterogeneity for group decision making” and highlighting “particular circumstances under which racial diversity is likely to lead to improved group performance” — in particular, that “the influence of racial diversity can be seen in the performance of White as well as Black group members”).
7 Rangel sponsored FATCA in the House and former Senator Obama signed it into law. See “Democrats Propose Bill to Thwart Overseas Tax Dodgers,” The New York Times, Oct. 27, 2009 (“‘This bill offers foreign banks a simple choice — if you wish to access our capital markets, you have to report on U.S. account holders,’ said Representative Charles B. Rangel, the New York Democrat who is chairman of the House Ways and Means Committee.”).
8 FATCA fulfilled an Obama campaign pledge while picking up where the CBC left off. A few months after taking office, Obama proposed “curbing offshore tax havens . . . to make good on his campaign promise to end tax breaks ‘for companies that ship jobs overseas.’” Jackie Calmes and Edmund L. Andrews, “Obama Calls for Curbs on Offshore Tax Havens,” The New York Times, May 4, 2009. See also Remarks by the President on International Tax Policy Reform, White House Archive, May 4, 2009 (“One of these measures would let the IRS know how much income Americans are generating in overseas accounts by requiring overseas banks to provide 1099s for their American clients, just like Americans have to do for their bank accounts here in this country. If financial institutions won’t cooperate with us, we will assume that they are sheltering money in tax havens, and act accordingly.”). FATCA responded to the “legal and practical limits on [state] power to compel foreign actors to provide them with . . . extraterritorial tax information.” Steven A. Dean, “The Incomplete Global Market for Tax Information,” 49 B.C.L. Rev. 607 (2008).
9 See Barry James, “Tax Havens Face OECD Threat of Sanctions,” The New York Times, June 14, 2000 (quoting an OECD spokesman asking “Why give aid to people who are behaving like gangsters?”). To critics, the OECD effort sounded both in the critiques of critical race theory and Third World approaches to international law (TWAIL). See James Gathii, “Writing Race and Identity in a Global Context: What CRT and TWAIL Can Learn From Each Other,” 67 UCLA L. Rev. __ (2020). (“Both share a common point of departure — deeply skeptical and critical of the mainstream position in their respective fields — that European modernity for TWAIL and whiteness for CRT are neutral, universal, and raceless baselines that blacks for CRT and non-Europeans for TWAIL fall short of.”).
10 See Eduardo Porter and Karl Russell, “Migrants Are on the Rise Around the World, and Myths About Them Are Shaping Attitudes,” The New York Times, June 20, 2018 (“Although immigration into the United States might have passed its high-water mark, other parts of the rich world — Europe, notably — are likely to experience more immigration than they have before.”). See also European Parliamentary Research Service, “Briefing re: Demographics in Europe: Demographic Trends in EU Regions,” at 7 (Jan. 2019) (“In recent years, the EU has witnessed increased levels of migration from outside its borders.”).
11 Anthony Daniel Perez and Charles Hirschman, “The Changing Racial and Ethnic Composition of the US Population: Emerging American Identities,” 35 Population & Dev. Rev. 25 (2009) (“African Americans have always had a significant demographic presence in the United States. Shortly after the founding of the nation, one-fifth of the nearly 4 million persons enumerated in the first census were of African origin.”).
12 Ibram X. Kendi, “What the Racial Data Show,” The Atlantic, Apr. 6, 2020 (observing that “the viral pandemic is hitting people of color the hardest” in part because homelessness, incarceration, and other long-standing problems disproportionately affect Blacks).
13 Beyond structural disadvantages that leave people of color more vulnerable to exposure, even in doctors’ offices and hospitals, Black and Latino Americans consistently receive inferior care, and are routinely denied tests and medications others receive. The explicit and implicit bias once responsible for differential treatment has even found its way into the digital realm. See Ruha Benjamin, “Assessing Risk, Automating Racism,” Science, Oct. 25, 2019 (“Whereas in a previous era, the intention to deepen racial inequities was more explicit, today coded inequity is perpetuated precisely because those who design and adopt such tools are not thinking carefully about systemic racism.”).
14 See Dorothy A. Brown, “Tales From a Tax Crit,” 10 Pitt. Tax Rev. 54 (2012) (noting that much to the surprise of most scholars, empirical research showed that the “greatest beneficiaries of the earned income tax credit were white”).
15 See, e.g., Dorothy A. Brown, “Race and Class Matters in Tax Policy,” 107 Colum. L. Rev. 790 (2007).
16 Jeremy Bearer-Friend, “Should the IRS Know Your Race? The Challenge of Color Blind Tax Data,” 73 Tax L. Rev. (forthcoming 2019) (surveying “empirical research on the disparate tax outcomes of eight distinct federal tax policies, including tax preferences for housing, tax preferences for retirement, tax preferences for certain family structure, and tax preferences for capital gains”).
17 See, e.g., Bridget J. Crawford and Emily Gold Waldman, “The Unconstitutional Tampon Tax,” 53 U. Rich. L. Rev. 450-451 (2019) (noting repeal of tampon taxes in U.S. states).
18 Martin A. Sullivan, “Lessons From the Last War on Tax Havens,” Tax Notes, July 30, 2007, p. 327 (J.C. Sharman is “an Australian political scientist with little prior knowledge of taxation, but he may have written one of the best books out there for tax experts trying to make sense of big countries’ policies toward tax havens”).
19 “My goal is to explain how the striking outcome (small states prevailing over powerful ones) came about as it did, and why the rhetorical struggle went in favor of the tax havens as opposed to the OECD.” Sharman, Havens in a Storm: The Struggle for Global Tax Regulation 8 (2006).
20 Id. at 68 (referring to the “‘failure’ of the Financial Times, and the Congressional Black Caucus, to adopt a position in line with their ‘objective’ interests”).
21 Reuven S. Avi-Yonah, “Globalization, Tax Competition, and the Fiscal Crisis of the Welfare State,” 113 Harv. L. Rev. 1573 (2000).
22 Id. at 1575-1576.
23 Id. at 1576.
24 Sharman, supra note 19, at 1 (“From the early 1990s, policy makers in the world’s richest and most powerful countries worried that changes in the international economy might severely undermine their ability to tax. Discussions about what could and should be done to address this new threat took place within several clubs of rich states: the Group of Seven nations (G7), the European Union (EU), and especially the Organisation for Economic Co-operation and Development (OECD), which was entrusted with formulating a response. The centerpiece of the strategy developed in 1996-98 was targeted at small states, labeled tax havens.”).
25 Joseph Guttentag and Avi-Yonah, “Closing the International Tax Gap,” in Bridging the Tax Gap: Addressing the Crisis in Federal Tax Administration 99-100 (2005) (describing a U.S. Justice Department investigation that revealed a Cayman bank that essentially encrypted U.S. investments by U.S. investors).
26 See, e.g., In re Tax Liabilities of John Does, 91 A.F.T.R.2d (RIA) 2003-433 (S.D. Ohio 2002) (foreshadowing FATCA, the U.S. Justice Department acquired information from MasterCard and Visa to identify tax cheats).
27 OECD, “Towards Global Tax Co-Operation: Report to the 2000 Ministerial Council Meeting and Recommendations by the Committee on Fiscal Affairs: Progress in Identifying and Eliminating Harmful Tax Practices,” at 17 (2000).
28 Id. at 26 (“The Committee also intends to continue to explore what other defensive measures can be taken, including non-tax measures.”).
29 Sharman, supra note 19, at 17 (“The members of the newly elected Bush administration, especially Treasury Secretary Paul O’Neill, were at first unsure whether or not to support the OECD, in contrast to the Clinton-era Lawrence Summers, who had been a driving force behind the ‘name and shame’ approach.”).
30 O’Neill, “Confronting OECD’s ‘Harmful’ Tax Approach,” The Washington Times, May 11, 2001.
31 CBC letter to O’Neill (Mar. 14, 2001) (“The primary concern that we wish to address in this letter . . . is that the [OECD] initiative will impose serious economic harm on developing nations — including many in our hemisphere who belong to, have an association with or have long-established friendly ties with the United States.”).
32 Open to African American members of the House and Senate, the CBC describes its current focus as “protecting and expanding voting rights, comprehensive criminal justice reform, building a more inclusive economy, ensuring access to quality and affordable healthcare and investing in education.” CBC, “Welcome From the Chair.”
33 Sharman, supra note 19, at 67. Sharman notes that “by working through Washington-based Caribbean representatives, the CFP [Center for Freedom and Prosperity] also gained the endorsement of all twenty-six members of the Congressional Black Caucus whose members, like the Commonwealth, were offended by the prospect of applying sanctions against small developing states.” As other scholars have noted, the letter was not actually unanimous, with a dozen members choosing not to sign it. See, e.g., Diane M. Ring, “Democracy, Sovereignty and Tax Competition: The Role of Tax Sovereignty in Shaping Tax Cooperation,” 9 Fla. Tax Rev. 580 (2009).
34 Supra note 19. Sharman inadvertently misidentifies the CBC as the “Black Congressional Caucus” and the “Democrat Black Congressional Caucus.”
35 George W. Bush did not receive substantial Black support, but “still paid some heed to the interests of black Americans.” Perry Bacon Jr., “Have Republicans Given Up on Winning Black Voters?” FiveThirtyEight, Dec. 11, 2018 (offering the example of Bush strongly criticizing then-Senate Majority Leader Trent Lott for favorable comments on racial segregationist Strom Thurmond).
36 J. Clifton Fleming Jr., Robert J. Peroni, and Stephen E. Shay, “Some Perspective From the United States on the Worldwide Taxation vs. Territorial Taxation Debate,” 3(2) J. Australasian Tax Tchrs. Ass’n 35 (2008) (identifying the March 14 letter as a “Letter from Congressman Charles Rangel and 25 others to Treasury Secretary Paul H. O’Neill”); and Cordia Scott and Adrion Howell, “Black Caucus Says OECD Tax Move Unfairly Blasts Developing Nations,” Tax Notes Int’l, Apr. 2, 2001, p. 1600 (“Perhaps the most eye-catching name on the letter belongs to Rangel.”).
37 Letter by Del. Donna M. Christensen, D-V.I., to Treasury Secretary Paul O’Neill in Opposition to Harmful Tax Competition Initiative by Organization for Economic Cooperation and Development (Mar. 12, 2001). According to Christensen, “In the case of the Virgin Islands, they were put on the list largely because of federal enabling legislation that was a requirement imposed by the Department of the Treasury.”
38 A physician by training, Christensen moved from the United States to the Virgin Islands, where her father had been a U.S. attorney and then chief judge of the U.S. district court.
39 A few months after sending her letter to O’Neill, Christensen cosponsored the Insular Areas Oversight Avoidance Act to “hold the federal government more accountable in the manner that federal policy is developed toward the insular areas, which include Guam, the Virgin Islands, the Commonwealth of Puerto Rico, American Samoa, and the Commonwealth of the Northern Mariana Islands.” 147 Cong. Rec. 12629, 2001.
40 Christensen letter, supra note 37.
41 See, e.g., Themis Chronopoulos, “Race, Class, and Gentrification in Harlem Since 1980,” in Race Capital 253 (2019) (noting that in the years leading up to the letters “the fastest-growing population group in Central Harlem was in fact Latinx”).
42 In his autobiography, Rangel proudly noted that the amendment was actually called the “bloody Rangel Amendment” in South Africa according to Nelson Mandela. Charles B. Rangel and Leon Wynter, And I Haven’t Had a Bad Day Since: From the Streets of Harlem to the Halls of Congress (2008).
43 Lee A. Sheppard, “It’s the Bank Secrecy, Stupid,” Tax Notes Int’l, Apr. 23, 2001, p. 2018.
44 Ryan McCormick, “The African Growth and Opportunity Act: The Perils of Pursuing African Development Through U.S. Trade Law,” 41 Tex. Int’l L.J. 339 (2006).
45 A more diverse group of decision-makers drafting the 2000 list might have dramatically altered the next two decades of international tax policy by simply striking the U.S. Virgin Islands and Liberia.
46 Alice G. Abreu and Richard K. Greenstein, “Rebranding Tax/Increasing Diversity,” 96 Denv. L. Rev. 7 (2018) (“using available data to show that the tax bar is very white . . . striking in comparison to the bars in other fields of law”).
47 Abreu and Greenstein suggest that greater diversity in tax policymaking would result in tax policies that “favor a more diverse population of taxpayers.” Id. at 3.
48 The 2008 scandal that would engulf Swiss bank UBS left little doubt that whatever countries might deserve to be called a tax haven, Switzerland should have been among them. The 1980s had Operation Tradewinds, an improbable sting operation conducted by U.S. tax authorities. Using seduction to gain access to secrets hidden in a briefcase revealing sordid details of tax evasion in the Caribbean left an indelible impression in the United States thanks in part to congressional hearings. Episodes such as one involving diamonds smuggled in toothpaste tubes for U.S. clients did the same for Switzerland, but only after the OECD’s effort foundered.
49 Karen B. Brown, “Missing Africa: Should U.S. International Tax Rules Accommodate Investment in Developing Countries?” 23 U. Pa. J. Int’l Econ. L. 47 (2002) (noting that the Trade and Development Act of 2000 “established the United States-sub-Saharan Africa Trade and Economic Cooperation Forum, liberalized import restrictions, and relaxed tariffs on textiles imported into the United States,” representing “years of efforts by Congressman Charles Rangel and others to highlight the need for development of enhanced commercial ties with sub-Saharan Africa”).
50 Phillips, supra note 2, at 44.
51 Id. at 46.
52 FATCA makes not a single mention of tax havens, instead focusing on financial institutions.
53 Phillips, supra note 2. A study of diversity and jury decision-making offers more detail. Sommers, supra note 6, at 608 (“Even though they deliberated longer and discussed more information, diverse groups made fewer factual errors than all-White groups. Moreover, inaccuracies were more likely to be corrected in diverse groups. These findings dispel any notion that the longer duration of heterogeneous deliberations was attributable to decreases in efficiency.”).
END FOOTNOTES