September 30, 2004
The Honorable John Snow
Secretary of the Treasury
Department of Treasury
1500 Pennsylvania Avenue, NW
Washington, DC 20220
Dear Secretary Snow,
I encourage you to
withdraw a proposed regulation (REG 133254-02) that would require banks to report deposit interest paid to nonresident aliens. This proposed rule is contrary to America's national interests and could lead to
substantial capital flight from US banks. The Mercatus Center, for instance, estimates the regulation – if implemented – would cause $87 billion of capital to flee the US economy.
This is an unacceptable risk
and could threaten the nation's economic recovery. My state of Florida would be particularly impacted, especially if the IRS follows through on its reported intention to apply the regulation to depositors from Latin
This regulation also should be withdrawn since it seeks to use regulatory decree to overturn 83 years of existing law. If the IRS truly believes that foreign governments should be able to double-tax
income earned in America, it should submit legislation rather than pursue a policy change through the regulatory process.
Thank you for your consideration of this important issue.
E. Clay Shaw, Jr.
Member of Congress