​

In a bid to stop the unfettered abuse of tax law, a new agreement between the United States and the Cayman Islands will force the Caribbean tax shelter to abide by rules laid out under the Foreign Account Tax Compliance Act (FACTA). The law is designed to increase punishment for companies and individuals who use these shelters to evade paying taxes.

Says Reuters:

The Cayman Islands is one of the world's most popular destinations for investment funds to organize for tax purposes. The island nation of 53,000 people has no income tax and is frequently labeled a tax haven by critics.

The law affects any bank accounts over $50,000.

Tax evasion is incredibly detrimental to the US, denying the Treasury untold millions. These are millions the country could be using for infrastructure, investment, or God forbid, healthcare.

The Administration hopes that bringing the Caymans into compliance will entice other low- or no-tax countries to do the same. The legislation comes with a pretty big stick:

Banks, funds and other financial institutions that fail to comply with FATCA face a 30-percent withholding tax on their U.S. source income, a penalty that could effectively freeze them out of U.S. financial markets.

A welcome step forward in the effort to have the wealthy and the corporations they run pay their fair share.