Obama Joins in on Burdensome Transparency Act
Senator Obama has joined Senators Norm Coleman (R-
Neb Minn) and Carl Levin (D-Mich) to introduce the “Incorporation Transparency and Law Enforcement Assistance Act”.
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.
Stephen Bainbridge explains the problems with this bill, and the one that caught my eye was this:
2. It increases the paperwork burden on small businesses, as all corporations and limited liability companies – even very small mom and pop businesses that are only engaged in interstate commerce by virtue of the sweeping definition given that term in Wickard v. Filburn – are subject to a new annual reporting requirement. Although the bill apparently will exempt firms subject to SEC registration, there are a substantial number of firms with a large number of shareholders and a somewhat active market (such as those traded on the pink sheets). Their costs of keeping track of their beneficial owners will go up.
I’d encourage you to read all of Bainbridge’s commentary. The bottom line, though, is that this is a bill that is going to put even more burdens on small companies, barely affect large ones at all, and will do absolutely nothing to solve the problem for which it is ostensibly being introduced to solve. Ugh.
UPDATE: This is not my day for correctly identifying the parties and/or states of members of Congress. As Sam rightly points out in the comments, Norm Coleman is Senator of Minnesota, not Nebraska. I’ve corrected it above.