For Immediate Release
Thursday, January 17, 2002
CFP Seeks Formal Withdrawal of Clinton-Era
IRS Regulation: One-Year Old Proposal Would
Undermine U.S. Banks, Drive Capital From America
Washington (January 17, 2002) – One year ago today, the Internal Revenue Service (IRS) proposed a regulation to require the reporting of bank deposit interest paid to nonresident aliens.
"Three days before he left office, President Clinton's IRS proposed a regulation that would chase hundreds of billions of dollars out of the U.S. economy.
The good news is that President Bush halted the regulation, but the President still needs to formally withdraw the regulation to eliminate uncertainty and help American banks compete," said Andrew Quinlan, President of the Center for Freedom and Prosperity.
This proposal (REG – 126100-00) would force U.S. banks to inform the IRS about any bank deposit interest paid to people from other countries. The IRS then would pass that information to the other countries' tax authorities so that they could impose tax on the interest paid to those accounts – even though the income was earned in America.
Daniel Mitchell, Heritage Foundation Senior Fellow, commented, "This regulation would be poison for the U.S. economy. About $1 trillion of foreign-owned bank deposits are in America, and owners of
these accounts will withdraw a substantial portion of this capital if the Clinton-era regulation is finalized. This would undermine U.S. banks and mean less money for Americans seeking loans and mortgages. This also
means less economic growth, which will reduce tax revenues and create additional demand for government programs."
Veronique de Rugy of the Cato Institute warned that, "This last-ditch effort by the Clinton administration to undermine tax competition would be comical if the resulting outcome did
not promise to damage the US economy. The time has come to withdraw this ill-advised regulation."
Quinlan concluded by saying, "The IRS proposal puts Europe's interests ahead of America's interests. The United States is a low-tax country compared to Europe's welfare states, and capital
inflows are the reward for this fiscally responsible stance. It would be foolish to undermine that advantage by giving other nations the right to tax the income generated by this capital."
The Center for Freedom and Prosperity is an Alexandria, Virginia-based, 501(c)(4) nonprofit, nonpartisan organization that lobbies Congress and the Administration on tax competition,
financial privacy and fiscal sovereignty.
For additional comments:
Andrew Quinlan, 202-285-0244, email@example.com
Dan Mitchell, 202-608-6224, firstname.lastname@example.org
Veronique de Rugy, 202-842-0200, email@example.com
For more information visit CFP's Dump the IRS Reg page: