Center for Freedom and Prosperity

For Immediate Release
Thursday, November 14, 2002
202-285-0244
www.freedomandprosperity.org

Coalition Seeks "Immediate" Withdrawal of IRS Rule;
Interest Reporting Regulation Will Hurt U.S. Banks, Workers, Consumers, Homeowners, & Entrepreneurs

Washington, DC (November 14, 2002) -- The Center for Freedom and Prosperity, joined by more than 30 of the country's largest and most influential free-market groups, urged Treasury Secretary Paul O'Neill to "immediately" withdraw the proposed regulation to require the reporting of bank deposit interest paid to nonresident aliens (REG-133254-02). In the letter sent Wednesday to the Treasury Secretary, the members of the Coalition for Tax Competition stated, "This regulation is bad tax policy and bad regulatory policy. It is inconsistent with President Bush's tax reform agenda and it will hurt the U.S. economy by reducing the amount of capital for workers, consumers, homeowners, and entrepreneurs."

"The free-market groups represented on this letter are President Bush's strongest supporters," said Andrew F. Quinlan, president of the Center for Freedom and Prosperity. "It would be a major blunder if the Administration failed to withdraw this ideologically motivated IRS regulation – especially since a significant amount of capital investment will flee the U.S. economy if it is implemented," added Quinlan.

The Coalition letter listed ten reasons why the proposed regulation should be withdrawn (see attached letter for more details):

1. The IRS is abusing its regulatory authority.
    
2. The proposed regulation flouts existing law.
    
3. Capital will flee the U.S. economy if the regulation is implemented.
    
4. The regulation will make U.S. banks less competitive.
    
5. Banks will face a heavy paperwork burden.
    
6. The proposed regulation is bad tax policy.
    
7. The IRS failed to perform legally-required cost/benefit analysis.
    
8. The proposed regulation will undermine fiscal competition.
    
9. The IRS is playing the politics of divide-and-conquer with the regulation.
    
10. The regulation violates the Treasury Department's position on information-sharing.

Daniel Mitchell, Heritage Foundation Senior Fellow, commented, "The widespread opposition to the IRS regulation should be a wake-up call for Treasury. A Republican Administration should not be putting the demands of foreign tax collectors above the interests of the American people."

Veronique de Rugy of the Cato Institute warned that, "IRS and Treasury Department bureaucrats thought they could get away with issuing a regulation to overturn legislation approved by Congress and by not conducting a legally required cost-benefit analysis that would prove how damaging this regulation would be to this economy. One can only hope that the widespread opposition to the IRS regulation will act as an incentive for Treasury Secretary O'Neill to regain control over the bureaucrats at Treasury and the IRS."

Link to the full text of the Coalition for Tax Competition Letter:
http://www.freedomandprosperity.org/ltr/ctc5/ctc5.shtml

PDF Version of Coalition Letter:
http://www.freedomandprosperity.org/ltr/ctc5/ctc5.pdf

CFP's dedicated web page on withdrawing the proposed IRS regulation:
http://www.freedomandprosperity.org/update/irsreg/irsreg.shtml

Andrew F. Quinlan – President, Center for Freedom and Prosperity
Daniel Mitchell – Senior Fellow, The Heritage Foundation
Veronique de Rugy -- Fiscal Policy Analyst, The Cato Institute
David R. Burton – The Argus Group
Robert B. Carleson -- Senior Fellow, Free Congress Foundation for Education and Research
Bruce Chapman -- President, Discovery Institute
Carl D. DeMaio -- President, The Performance Institute
Stephen J. Entin -- President, Institute for Research on the Economics of Taxation
Tom Giovanetti -- President, Institute for Policy Innovation
John C. Goodman -- President, National Center for Policy Analysis
Jim Harper -- Editor, Privacilla.org
Kevin Hassett -- Resident Scholar, American Enterprise Institute
Lawrence Hunter -- Chief Economist, Empower America
Charles W. Jarvis -- Chairman, United Seniors Association
Gordon S. Jones -- President, Association of Concerned Taxpayers
David A. Keene -- Chairman, American Conservative Union
Karen Kerrigan -- Chairman, Small Business Survival Committee
Matt Kibbe -- Executive Vice President, Citizens for a Sound Economy
James L. Martin -- President, 60 Plus Association
Steve Moore -- President, The Club for Growth
Grover Glenn Norquist -- President, Americans for Tax Reform
Duane Parde -- Executive Director, American Legislative Exchange Council
Nancy M. Pfotenhauer -- President, Independent Women's Forum
George Pieler -- Former Tax Counsel, Senate Finance Committee
John Pugsley -- Chairman, The Sovereign Society
Don Racheter – President, Public Interest Institute
Gary Robbins -- President, Fiscal Associates
Terrence Scanlon -- President, Capital Research Center
Tom Schatz -- President, Council for Citizens Against Government Waste
Eric V. Schlecht -- Director of Congressional Relations, National Taxpayers Union
Solveig Singleton -- Senior Analyst, Competitive Enterprise Institute
Lewis K. Uhler -- President, National Tax Limitation Committee
Paul M. Weyrich -- National Chairman, Coalitions for America
Neal C. White -- President, National Retail Sales Tax Alliance, Inc.

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