In view of my recent comment on Delaware LLCs the following, issued yesterday, is significant:
Today Senator Carl Levin (D-Mich.), Senator Norm Coleman (R-Minn.), and Senator Barack Obama (D-Ill.), Chairman, Ranking Minority Member, and Member of the U.S. Senate Permanent Subcommittee on Investigations, introduced the Incorporation Transparency and Law Enforcement Assistance Act to help law enforcement stop the misuse of U.S. corporations.
Currently, nearly two million corporations and limited liability companies (LLCs) are formed within the United States each year. The States generally form these corporations without asking for the identity of the corporation's beneficial owners, and numerous law enforcement problems have resulted when some of these corporations have become involved with money laundering, tax evasion, or other misconduct. The bill being introduced would require the States to obtain beneficial ownership information for the corporations formed under their laws and to provide access to this information to law enforcement upon receipt of a subpoena or summons.
As the press release notes:
Criminals are hiding behind U.S. corporations while committing all sorts of crimes - from terrorism to money laundering, fraud, and tax evasion.
As Carl Levin said:
The bill we are introducing today will strike a blow against corporate secrecy, strengthen law enforcement, and curb the misuse of U.S. corporations
That's great.
But there's still a problem. Why is a subpoena needed? Society grants limited liability. Shouldn't society be protected from its abuse by requiring those to whom the benefit has been granted to acknowledge the fact on public record? After all, I know of no human right that says you can abuse your creditors, but that's exactly what limited liability lets people do. That's why we say this is essential.
So, full marks for trying. But only 7/10 overall for failing to finish the task.
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Right, and now back to the real world–
What about all the frivolous lawsuits aimed directly at separating a company’s owner with his hard-earned money?
Tax records are already on file. The IRS can probe the owners of any person it believes is connected with the company, or anything of the company itself. Why should that information now be in the public domain?
Some people establish LLCs simply so they can be afforded asset protection from a greedy public.
Lets say you have a Real Estate holding company in Delaware. The company owns a $5 million property in California, which it rents out to a wealthy business. What benefit is there announcing to the world that the owner – a Richard Murphy – has $5m up for grabs for anyone who can convince a jury of any wrongdoing?
Maybe you’ve never lived in the US, but there are ‘victims’ being awarded millions of dollars for accidents. A business owners’ 40 years work can be wiped out by a sympathetic jury, a bloody-thirsty lawyer, a former spouse, etc.
Are you saying that business should become an easy target? And for what purpose, exactly? To catch maybe one or two ‘real’ criminals each year, whilst millions of dollars of innocent money is turned over to greedy litigators?
The joys of socialism.
Mr Knight
You might say my motivation is the curtailment of all the abuses of society at large you appear to promote
It’s not socialist though
It’s about ensuring fair markets for the benefit of all survive – something the actions you promote ensure cannot happen
Richard