Bill Thomas Warns O'Neill of EU's Tax Cartel;
Questions Wisdom of Clinton-Era IRS Reg
Bill Thomas, Chairman of the House of Representatives' Committee on Ways and Means, warned Treasury Secretary Paul O'Neill that the European Union's "savings tax directive" could drive capital out of the U.S.
Thomas also expressed doubts about a Clinton-era proposed IRS regulation which would require U.S. banks to report interest earned on savings by non-resident aliens to their home countries. Because of his concern, Chairman Thomas asked the Administration to clarify its official position on both initiatives and mentioned the possibility of holding hearings.
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Thomas on the European Union's "savings tax directive":
"The EU's 'savings tax directive', to which the United States must agree for it to be implemented, appears to be a clear attempt by the European Union to form a tax cartel whereby high tax rates can be more easily
maintained. Like the proposed IRS regulation, participation in this cartel could cause capital flight from the United States.
In addition, this initiative would appear to stifle the global competitive forces that have led to lower tax rates around the world."
Thomas on the proposed IRS regulation:
"As I expressed on the floor of the House of Representatives on July 25, 2001, I am concerned that the proposed regulation could cause significant flight of capital out of the United States. Furthermore, I am
concerned that this significant change in tax policy would hinder our efforts to reform the tax code to promote greater efficiency and growth.
Finally, there are questions as to whether this proposed regulation contradicts Congressional intent."
Thomas on possible Ways and Means hearings:
"The domestic economic impact of these policies may be difficult to estimate and I would be interested in your views on the matter.
I would also appreciate a better understanding of the Administration's policy intent in this important matter as I consider possible hearings in the Ways and Means Committee to further explore this issue."