Malta Treaty May Provide Model for Combating Tax Havens

Congressional Quarterly (subscription required) relayed an interesting story [1] yesterday about how a little-known tax treaty negotiated under the George W. Bush administration may become the model for lawmakers in Washington looking to crack down on tax havens.

It seems that the tiny Mediterranean island of Malta – once a popular hiding place of rich people's assets – has decided to reform its wayward behavior and has agreed to a new tax information-sharing scheme with the U.S. Treasury Department. The new agreement will allow Treasury to assess the proper amount of taxes on U.S. citizens that had been shirking their duties by concealing assets on the island, and will prevent future attempts at tax evasion there.

If the Senate ratifies the treaty, it could provide lawmakers with a model to follow in designing new tax treaties with other countries that act as tax havens. It's interesting to note how an otherwise-unremarkable treaty has gained new prominence in Congress as Democrats and President Obama have made tax enforcement, both domestically [3] and internationally [4], a top priority of their financial agendas.

Image by Flickr user eurodrifter [5] used under a Creative Commons license.