Contact Information:

Center for
Freedom and Prosperity
 P.O. Box 10882
Alexandria, Virginia 22310-9998
Phone: 202-285-0244
Fax: 208-728-9639
                                            

United States Senator Orrin Hatch

[PDF Version]

November 19, 2002

The Honorable Paul H. O'Neill
Secretary of the Treasury
Washington, DC 20220

Dear Mr. Secretary:

I am writing to express my deep concern with the Internal Revenue Service's decision to move forward with regulations that would drive much-needed investment funds out of our economy. In particular, I am referring to proposed regulation 133254-02, which would mandate the U.S. offices of certain financial institutions report to the IRS the interest payments they make to nonresident aliens.

My concern is that these regulations appear to impose large, visible costs on our economy with no corresponding benefits. If finalized and enforced, these proposed regulations could drive the savings of foreigners out of bank accounts in the United States and into bank accounts in other nations that better protect financial privacy.  Such an exodus of savings would almost certainly lead to higher interest rates and lower availability of bank loans for Americans. Startup businesses, mortgages borrowers, college students, and other who depend on bank lending would all be hurt.

The current scaled-back proposed regulations, which apply only to nonresident aliens in fifteen European countries, would be somewhat less damaging to our economy than the original proposal. But even this could cause serious damage to our economy with little or no apparent benefit.

I would be happy to discuss this matter in further detail with you.  In particular, if there are benefits to this proposal that are not readily apparent, I would welcome any information you could provide that would document them.

Sincerely,

Orrin G. Hatch
United States Senate


OGH:gjj

 

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