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CF&P  Press Release, February 24, 2010

Center for Freedom and Prosperity Foundation

For Immediate Release
Wednesday, February 24, 2010
202-285-0244
www.freedomandprosperity.org

Coalition for Tax Competition Condemns Provisions
of the Reid Jobs Bill that Would Discourage
Foreign Investment in US Economy

 (Washington, D.C., Wednesday, February 24, 2010) The Center for Freedom and Prosperity Foundation, joined by many of the nation's most influential free-market and taxpayer groups, has sent to all members of Congress a letter warning about the adverse impact of anti-investment provisions in Senator Reid's "Jobs" Bill. 

The bill has passed in the Senate, but it is substantially different from the legislation approved by the House, so it is still possible that anti-growth provisions can be removed.

The Coalition for Tax Competition letter highlights the inclusion of provisions taken from the "Foreign Account Tax Compliance Act."  These provisions impose a stiff thirty percent withholding tax on the American investments of foreign financial institutions unless they agree to onerous and intrusive reporting requirements with the Treasury Department. 

Additionally, the letter points out that these provisions create significant threats to fiscal sovereignty and financial privacy. European governments and bureaucrats are increasingly meddling in the affairs of American companies, so setting a precedent for further interference seems particularly foolish.

"The Foreign Account Tax Compliance Act contained in Senator Reid's so-called jobs bill would result in the loss of jobs as investors would shift funds outside of the United States," said CF&P President Andrew Quinlan

"This bill is a threat to fiscal sovereignty, both in the United States and around the world" added Dan Mitchell of the Cato Institute. "Governments should have no right to impose laws and regulations outside their borders, and this effort to impose bad American policy on foreign banks will invite bad consequences and open the door for foreign governments to do the same to us."

Text of letter below:

February 23, 2010

Speaker of the House of Representatives Nancy Pelosi, House Minority Leader John Boehner, Senate Majority Leader Harry Reid, Senate Minority Leader Mitch McConnell
Members of the House of Representatives and Members of the United States Senate
   cc:  President Barack Obama

Dear Representatives and Senators,

We write today to warn you of anti-growth components to Senator Reid's newly proposed "jobs bill" (S.A. 3310 to H.R. 2847). Specifically, we are concerned that provisions lifted from the Foreign Account Tax Compliance Act of 2009 will discourage investment in the United States.

In brief, these provisions would impose a stiff thirty percent withholding tax on the investments of foreign financial institutions unless they agree to onerous and intrusive reporting agreements with the Treasury Department about their American accounts. 

These provisions will make it more expensive to invest and do business in the United States. Making it more expensive to invest in the United States will divert global capital to other nations. This will reduce growth and jobs creation in America.

Furthermore, the reporting requirements are a threat to fiscal sovereignty. By attempting to impose American laws on foreign companies acting outside of the United States, we open the door for similarly misguided efforts on the part of foreign governments and international bureaucracies. European bureaucrats already are interfering with mergers and acquisitions among and between U.S. companies, so it seems particularly foolish to create further precedent for this type of fiscal imperialism.

Finally, these anti-jobs provisions in a so-called jobs bill will not raise the funds that proponents claim.  Financial institutions and other international investors will simply shift funds out of the United States. The only effect of these provisions will be the movement of investments and jobs overseas.

Sincerely,

Andrew F. Quinlan ~ President, Center for Freedom and Prosperity Foundation
Grover Norquist ~ President, Americans for Tax Reform
Karen Kerrigan ~ President & CEO, Small Business and Entrepreneurship Council
David A. Keene ~ Chairman, American Conservative Union
Matt Kibbe ~ President, FreedomWorks
Tom Schatz ~ President, Council for Citizens Against Government Waste
Fred Smith ~ President, Competitive Enterprise Institute
Andrew Moylan ~ Director of Government Affairs, National Taxpayers Union
Phil Kerpen ~ Vice President for Policy, Americans for Prosperity
Lew Uhler ~ President, The National Tax Limitation Committee
Tom Giovanetti ~ President, Institute for Policy Innovation
Jim Martin ~ Chairman, 60 Plus Association
Karri Bragg ~ Executive Vice President, Citizen Outreach
Stephen J. Entin ~ President, Institute for Research on the Economics of Taxation

 

CF&P Videos on Tax Competition and Tax Havens:

The Economic Case for Tax Havens:
http://www.freedomandprosperity.org/videos/taxhavens1/taxhavens1.shtml

The Moral Case for Tax Havens: http://www.freedomandprosperity.org/videos/taxhavens2/taxhavens2.shtml

Tax Havens: Myth vs. Fact:
http://www.freedomandprosperity.org/videos/taxhavens3/taxhavens3.shtml

Tax Competition:
http://www.freedomandprosperity.org/videos/taxcomp/taxcomp.shtml

 

For additional comments:
Andrew Quinlan can be reached at 202-285-0244, andy@freedomandprosperity.org
Dan Mitchell can be reached at 202-218-4615, dmitchell@cato.org

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