Anti-Corruption
The problem
We are facing a crisis of democracy when it comes to confidence in our elected officials. Democrats, Republican, and independents consistently cite corruption as a serious problem in the United States. A majority of voters believe that political corruption is a full-blown crisis, while another 36% believe it is a significant problem. Polling shows that an astonishing 87% of voters nationwide believe corruption is widespread in the federal government.
Corruption in the United States takes many forms, from an electoral system that allows super PAC’s to flood our elections with corporate cash, to a system of tax evasion through untraceable offshore financial vehicles that hide ill-gotten wealth.
Global oligarchs have as much as $32 trillion of hidden financial assets in offshore tax havens, representing up to $280 billion in lost income tax revenues. These individuals use an elaborate infrastructure of tax havens and untraceable shell companies across the globe to hide their illicit funds and flood our political system with super PAC money that rewards politicians who maintain this opaque status quo. In turn, corrupt politicians erode our democratic form of government to ensure they perpetually stay in power.
This plan aims to dismantle this corrupt money-laundering infrastructure and implement pro-democracy reforms, to reclaim the illicit funds hidden by a discreet class of ultra high net-worth individuals, and break the grip that corrupt politicians have on our government.
Our Solution
The Anti-Panama Papers Act
The extremely wealthy have accumulated at least $21 trillion in secretive offshore accounts, a sum equal to the combined gross domestic products of the United States and Japan; and major global corruption scandals have embroiled G20 countries in recent years. In 2016, the Panama Papers provided an unprecedented look into the offshore links of some of the globe’s most prominent figures, and a law firm that helped them evade taxes and launder money for over forty years. In 2017, Brazilian engineering company Odebrecht received a $2.6 billion fine for bribery, and was charged with paying around $788 million in bribes, some of which flowed through United States banks to 12 countries between 2001 and 2016. In the Russian Laundromat, a group of individuals created shell companies, which then moved and laundered ill-gotten money out of the country through the Estonian Danske Bank, making more than 26,000 payments to 96 different countries including the United States. We increasingly see how anonymous companies that hide the identity of the person at the source of the funds have been used launder and transfer stolen money, or to operationalize corrupt deals, using the companies and offshore accounts to pay bribes or buy influence.
By establishing a central register of beneficial ownership information and making it publicly available in open data format, we can shed light in the darkest corners of our financial system. This includes a requirement that beneficial owner always be a natural (physical) persons and never another legal entity. As such, the identification and verification of beneficial owners should extend to legal entities that own other legal entities, identifying the beneficial owner is the person who ultimately exercises control through legal ownership or through other means.
We will establish 21st Century "Know Your Customer" protocols to ensure verification of beneficial ownership information takes place, including cross-checking the data against other government and tax databases, and required random inspections. Financial institutions and Designated Non-Financial Business and Professionals, such as accountants and lawyers would be prevented from proceeding with transactions where the beneficial owner of their customer cannot be identified.
Hector proposes the creation of a national money laundering risk assessment task force organized under the Treasury Department to analyze money laundering risk posed by domestic and foreign legal entities and arrangements. Key stakeholders, including obliged entities and civil society organizations will be consulted as part of the task force. The results of the assessment will be published online, and made available to the Treasury Department to enact recommendations.
Hector also proposes the abolishment of nominee shareholders globally. A nominee shareholder is an unrelated third party, who is officially registered as the holder of shares in an offshore company. The purpose of the nominee shareholder is to uphold client secrecy by shielding the actual owner of the company from being publicly associated with that particular offshore company.
Where nominee shareholders cannot be totally abolished, they should be required to disclose their status upon the registration of the company and registered as nominees and should be licensed and subjected to the strictest anti-money laundering due diligence standards through the creation of a new "Ultra-High Risk" assessment.
Enactment of a universal registration of both domestic and foreign trusts operating globally will prevent the next Mossack Fonseca from dealing with the shady characters uncovered through the Panama Papers. Information on all parties to the trust (trustee, settlor and beneficiaries), and the Ultimate Beneficial Owners behind them should be recorded and updated on a regular basis.
We will establish harsh criminal penalties against the Designated Non-Financial Business and Professional intermediaries who help tax evaders by officially making tax evasion a federal money-laundering offense.
Repatriate Trillions Hidden in Offshore Tax Havens
There is no statute of limitations for civil tax fraud, meaning that the IRS can look back as far as it wants for tax evasion. A significant portion of the money held in offshore tax havens is held for the purpose of evading legally required taxes, making nearly every single dollar held therein subject to a civil tax fraud suit.
We can offer the holders of these funds the opportunity to voluntarily repatriate money held in offshore tax havens, subject to a 65% marginal rate on all funds exceeding $10 million, or risk confiscation of the funds in whole as part of a global anti-money laundering task force.
To further the goal of Tax Justice, this plan proposes:
Establishment of a Unitary Global Tax reporting system. This would involve taxing multinational corporations according to the real economic substance of where they actually do business. Under a country by country reporting system, multinational corporations would have to break their information down by country of operation, including tax havens, so that citizens and authorities can see what corporations are doing in their countries. This ensures that developing and developed nations get the information they need to tax their wealthiest citizens properly.
Ending tax deferral so that large multinational corporations pay taxes on offshore income the year that income is earned, rather than indefinitely avoiding U.S. income taxes through deferral, and removing incentives to shift U.S. profits to tax havens, raising $600 billion in new revenues over 10 years.
Hector will reintroduce H.R.1554 the Stop Tax Haven Abuse Act, to close the most egregious tax loopholes, such as “check the box,” “transfer pricing,” the “active financing exception,” corporate “inversions,” and ending the loophole that lets firms deduct the cost of expenses from moving jobs and operations offshore if the profits earned from those activities remain offshore and untaxed by the U.S., saving $60 billion over 10 years and raising $220 billion in new revenue over 10 years.
Get Big Money Out Of Politics
In the 2010 Citizens United decision, the Supreme Court ruled that corporations are people and that money is their speech, establishing that dark money groups have a First Amendment right to raise and spend unlimited sums of money on elections. Since then, our elections have seen a surge in mega-donors and corrupt, undisclosed campaign donations. A small, discreet number of hyper-wealthy Americans now wield more political power than at any time since robber barons of the late nineteenth century, diluting the influence of ordinary people. While Citizens United opened the floodgates to unlimited independent spending, the Supreme Court has upheld limits on direct contributions.
We seek to reduce the influence of Super PACs and wealthy donors by:
Drastically reducing the individual contributor limit to $500.00 per election, and;
Banning all contributions from political action committees to any candidate. All PAC spending must be on issue-based initiatives.
Close the Revolving Door Between Government & Big Business
Lobbyists and special interests routinely offer public officials high-paying lobbying jobs once they leave office, in exchange for industry-friendly legislation. Politicians routinely move straight from government to these lucrative lobbying jobs, where they get paid to influence their former colleagues.
We will stop elected officials and their staff from selling out our government power for high-paying lobbying jobs by:
Prohibiting elected officials and members of their staff from negotiating jobs while in office, and;
Barring all such individuals from paid lobbying activity for ten years after they leave government.
21st Century Stop Trading on Congressional Knowledge (STOCK) Act
Members of Congress should not be using their confidential briefings to trade stocks for a profit. This law would update existing laws to prohibit the use of material non-public information for private profit, including insider trading by members of Congress and other government employees, and would subject all members of Congress to criminal liability under 10(b) of the Securities Exchange Act of 1934
Ban Lobbyist Bundling
Lobbyists regularly bundle together big contributions from their friends and colleagues and deliver them in one lump sum to politicians. This turns lobbyists into major fundraisers, giving politicians an incentive to keep them happy by working political favors. We will immediately prohibit all lobbyist bundling contributions.
Restoring Democracy
A thriving democracy requires the participation of its citizens. However, local political establishments, as well as big dollar donors, have taken an interest in ensuring that voter turnout is low, and that House districts are as un-competitive as possible. This plan aims to establish a series of reforms to our national political life aimed at boosting voter turnout, rewarding small dollar campaigns, and breaking the grip that local political machines have held onto since time immemorial. This is accomplished by reengaging our communities, and taking common-sense steps to make sure that every citizen, regardless of their economic status, feels that their vote matters, and that they have the power to affect the outcome of elections.
Establish Small-Donor Public Financing
A healthy democracy bolsters the voice of ordinary citizens. A comprehensive Small-Donor Public Financing election system would transform political fundraising.
We can amplify the impact of small donors through a public-matching program where qualified candidates receive $10 in public funds for each dollar raised in small donations of $200 or less from individuals within their state or Congressional District. Such a system keeps office-seekers focused on fundraising within the communities they represent. We should also provide tax credits or rebates to citizens who make such small contributions of $75 or less.
Abolish the Perpetual Election Cycle
Federal campaigns have turned into multi-year, multi-million dollar ordeals that put public office outside the reach of the average person, making an oligarchy of people who have the free time and financial resources the only ones capable of mounting a campaign for office. This also creates a culture of political punditry that is more interested in covering the financial horse race between candidates and measuring their viability based on their ability to run a multi-million dollar marathon, rather than on their ideas or the strength of their popular support. Many of our allies around the world have limitations and restrictions on when political candidates can mount campaigns.
Given that we do not want to infringe on anyone’s First Amendment right to speak on behalf of their candidacy, but looking to limit actual campaign activity, Hector proposes that all federal campaigns be prevented from making campaign-related expenditures and purchasing advertisements until 180 days prior to a federal election date.
End Gerrymandering
We can end gerrymandering by creating an independent, fully transparent redistricting commission that follows strict guidelines to ensure accurate representation for all voters, regardless of political party. Taking redistricting out of the hands of the political parties puts voters in control. Ending gerrymandering makes elections more competitive, making it easier for people to hold politicians accountable and vote incumbents out of office.
This plan proposes that we:
Take redistricting powers away from self-interested legislators and put it in the hands of capable commissioners who are openly vetted, act with complete transparency, come from across the political spectrum, and abide by strict criteria to ensure fair and accurate representation for all voters.
Ensure that districts are fair and don't artificially advantage any party or group by subjecting all newly drawn districts to strict scrutiny.
National Open Primaries
By controlling the primaries, the political machines control which candidates we can vote on. All candidates running for the same office should compete in a single, open primary controlled by voters, not the political establishment, giving voters control over our elections and providing more choices at the ballot.
Automatic Voter Registration
All American citizens will be automatically registered to vote at 18, with an opportunity to opt-out if they so choose.
Federal Election Holiday
Political machines benefit from low voter turnout. They know that most working-class people simply cannot afford to take a day off to get the the ballot box.
To maximize the ability of everyday citizens to participate in our democracy, Hector will introduce legislation to make every federal primary and general election a national holiday, giving working-class people the ability to make it to their polling site on election day.
Ranked-choice Voting
All voters should know that their votes matter. By implementing a system of ranked-choice voting, all voters can feel free to vote their conscience without the fear that their vote will help elect someone they do not ultimately agree with.
Ending Double Dipping
Double-dipping public positions and salaries is a New Jersey political pastime. Despite the 2006 law which restricts state and local officials from holding multiple elected offices, nothing stops them from drawing multiple public salaries from multiple public jobs. Rep. Sires’s district director, Richard Turner, is a prime example of this practice. Turner is Sires’s District Director, while also serving as the Mayor of Weehawken Township, Chairman of the North Hudson Regional Fire and Rescue, and frequently works as a consultant for the Town of West New York where Albio Sires used to be Mayor.
This practice is common in every county of our state. Hector proposes a ban on elected officials or members of their staff holding multiple positions of public confidence or drawing multiple public salaries.
Combating Political Corruption
Corruption is so endemic to New Jersey politics that it has become a running joke that we are the most corrupt state in the country. People have lost faith in the idea that their government works to help them. This corruption takes many forms but the two most widespread practices are patronage and extortion. Patronage often manifests as law firms and other businesses giving large campaign contributions to state and local candidates in exchange for lucrative state, county, and municipal contracts. As if it were not enough to have unethical money to spend on campaigns, local political bosses often extort public workers to give them money at fundraisers or spend their time canvassing for the machine’s preferred candidates under threat of termination from their jobs.
These immoral practices are allowed to flourish under a culture of secrecy and obstruction that keeps the worst of it away from the eyes of the public. The corrupt bosses and corporations count on the public being ignorant to the rot that exists at every level of their state and local government. Hector believes that sunshine is the best disinfectant and proposes a practice of “naming and shaming” these corrupt individuals and revealing the immoral behaviors of these bad actors in our local governments. This is a preferred tactic of combating corruption because corruption often crumbles under public scrutiny.
Hector will use his office to probe local governments and their officials for patronage and extortion by creating a yearly Local Political Corruption Report that names these officials and clearly indicates what they are doing and why it is wrong. Through oversight and vigilance, Hector will use the platform that is available to him as a United States Representative to either force these local officials to change their behavior or refer them to the Justice Department for criminal prosecution. Hector will advocate to increase funding to the Public Integrity Section of the Criminal Division of the Department of Justice to expand their operations and have the full weight of the federal government to fight corruption.
