Americans For Tax Reform
Grover G. Norquist
1920 L Street NW, Suite 200
Washington DC 20036
March 3, 2003
The Honorable John Snow
Secretary of the Treasury
Department of Treasury
1500 Pennsylvania Avenue, NW
Washington, DC 20220
Dear Secretary Snow,
Congratulations on your overwhelming confirmation vote. Like many other conservatives, I am very happy to see new leadership at the Treasury Department. I hope we can work together closely to promote
the President's pro-growth, market-based agenda.
I especially hope you will withdraw an IRS regulation (REG-133254-02) that would require banks to report the deposit interest they pay to nonresident aliens.
This regulation originally was proposed on January 17, 2001, as part of the previous Administration's last-ditch effort to impose its ideological agenda. Unfortunately, your predecessor' did not exercise appropriate
supervision on this issue and the regulation has never been withdrawn. Indeed, some Treasury Department staff in the Office of Tax Policy continue to push this Clinton-era initiative even though it would undermine
President Bush's economic policy. In urging the permanent withdrawal of this regulation, I want to highlight three points.
* The regulation is not needed to enforce our tax law. Indeed, the IRS openly admits
that it has proposed this regulation to help foreign governments tax income earned inside America.
* The regulation undermines the role of law by seeking to overturn legislative intent. For more than 80
years, Congress has sought to boost our economy by attracting global capital to the U.S. banking system by not taxing and not requiring the reporting of bank deposit interest paid to nonresident aliens. It is not
the job of the IRS to change - unilaterally and arbitrarily - government policy.
* The regulation will drive capital from our economy. If the regulation is finalized, it will cause investors to shift money
out of the U.S. and into other jurisdictions like Hong Kong, Zurich, and London. Indeed, it is worth noting that $40 billion of savings deposits left our banking system in the first quarter of 2001, right after the
regulation was first announced.
This regulation should be withdrawn. The IRS is interfering with the prerogative of the legislative branch to determine tax law. More importantly, this regulation will hurt
our economy and make it harder for Americans to access affordable credit. This is a very important issue for the conservative movement. I urge you to closely monitor this issue to ensure that the Office of Tax
Policy does not undermine the President.
Grover G. Norquist
Americans for Tax Reform
Cc: Vice President Richard Cheney
CEA Chairman Glenn Hubbard
NEC Chairman Steve Friedman
Deputy Chief of Staff Josh Bolten