For Immediate Release
Friday, May 20, 2011
202-285-0244
www.freedomandprosperity.org
Coalition for Tax Competition Members Testify
Against Destructive Regulation at IRS Hearing
(Washington, D.C., Friday, May 20, 2011) Led by the Center for Freedom and Prosperity, members of the Coalition for Tax Competition (CTC) testified Wednesday, May 18, 2011, as part of a 10-year ongoing battle against a proposed IRS regulation to collect additional and unnecessary information from nonresident aliens who invest in the United States. Opponents greatly outnumbered supporters of the regulation at the hearing, as only two of the dozen there to speak took a position in favor of the rule. The rest of the speakers, which also included financial industry representatives and a Florida financial regulator, cited the economic damage, the lack of a cost-benefit analysis, and the human rights abuses that could materialize if the IRS adopts the proposed rule.
The hearing continues a trend of overwhelming opposition to the idea, which has been around in various forms since 2001. In an IRS hearing held after the regulation was first proposed in the waning days of the Clinton administration, one hundred percent of the speakers were opposed. There was unanimous opposition again when a similar hearing was held the next year. In addition, almost none of the public comments were in support of the IRS, a fact which remains true today, as only three of at least seventy-one public submissions commenting on the current proposal are identified as favorable.
“Now that the public comment period is closed and the hearing has been held,” observed Andrew Quinlan, who testified at the public hearing and is President of the Center for Freedom and Prosperity, “it is even more important for defenders of economic growth and financial privacy to remain aggressive.” He continued, “Regulators would love nothing more than for the current spotlight on them to dim, leaving them free to quietly pass this destructive and misguided rule.”
The following CTC members testified at the hearing: Andrew Quinlan, President, Center for Freedom and Prosperity; Brian Garst, Director of Government Affairs, Center for Freedom and Prosperity; Bradley Jansen Director, Center for Financial Privacy and Human Rights; John Berlau, Director of the Center for Investors and Entrepreneurs, Competitive Enterprise Institute; Karen Kerrigan, President & CEO, Small Business & Entrepreneurship Council; and Stephen Entin, President & Executive Director, Institution for Research on the Economics of Taxation.
The rule (REG-146097-09), proposed in January, would force U.S. banks to report deposit interest paid to nonresident aliens – even though Congress repeatedly has chosen not to tax that income as part of a strategy to attract capital to the U.S. economy. A similar rule was first proposed in 2001.
For more information on the proposed regulation:
http://freedomandprosperity.org/issues/irs-information-sharing-regulation/
Excerpts from the Testimony of CTC Members.
Andrew Quinlan, Center for Freedom and Prosperity:
“On several occasions, the U.S. Congress has examined the tax treatment of indirect foreign investment in the American economy. In every instance, the desire to attract capital has led lawmakers to decide not to tax bank deposit interest paid to nonresident aliens. Congress also has repeatedly decided not to require the reporting of this income. The proposed IRS regulation, however, seeks to overturn the outcome of this democratic process. This undermines the rule-of-law and makes a mockery of the President’s effort to rein in regulatory abuses.” (Link to testimony)
John Berlau, Competitive Enterprise Institute:
“These deposits enable banks and credit unions to make more loans to consumers, homeowners, and small businesses – generating economic activity that produces billions in state and federal tax revenues. But this rule threatens to bring much of this economic activity to a screeching halt, and may even take some financial institutions – particularly smaller one – under.” (Link to testimony)
Bradley Jansen, Center for Financial Privacy and Human Rights, on behalf of the 60 Plus Association
“Since seniors are more likely, relative to the general population, to hold accounts in multiple institutions (usually in an effort to conform to the FDIC insurance limitations on accounts), they would be the most adversely affected group along with racial and ethnic minorities (and other unbanked people here) that rely disproportionately on smaller institutions underserved by the larger money center banks.” (Link to testimony)
Stephen Entin, Institution for Research on the Economics of Taxation:
“The proposed regulation may be good for foreign governments, but would not be good for the U.S. economy. There would be no gain for U.S. tax enforcement. Weaker investment in the United States would reduce U.S. jobs and tax revenue beyond any possible reduction of tax evasion affecting money owed to the United States. The regulation also flies in the face of Congressional intent to exempt the earnings of such deposits from tax to attract the funds to the United States. My conclusion is that the proposed regulation would be harmful to the economy of the United States. It would provide no benefit to the U.S. Treasury, either in terms of administrative advantages or additional revenue. As such, it should not be adopted.” (Link to testimony)
Karen Kerrigan, Small Business & Entrepreneurship Council
“Access to operating and growth capital remains a priority issue for many entrepreneurs who are struggling under difficult economic conditions. This means U.S. policies must do more to encourage capital formation, and retain the resources that are already in our nation. The proposed regulation, however, will do just the opposite — it would drive capital from U.S. banks causing irreparable harm to the economy. Small and community banks that rely on these deposits to stay competitive and healthy will be undermined, and the small business owners who depend upon loans from these banks will suffer.” (Link to testimony)
Brian Garst, Center for Freedom and Prosperity:
“In many countries, governmental authorities are not just a source of frequent annoyance, they are also a threat to basic civil liberties. For those who live under rampant corruption, or must regularly face threats of extortion, blackmail or kidnapping, financial privacy becomes a matter of personal safety. While we can rest assured that individuals facing such threats will remove their funds from the U.S. if the proposed regulations are approved, and thus continue to protect themselves and their families from becoming easy targets, it will be at the expense of the U.S. economy and the citizens this office serves.” (Link to testimony)
All available hearing testimony:
http://freedomandprosperity.org/issues/irs-information-sharing-regulation/#hearing
For additional comments:
Andrew Quinlan can be reached at 202-285-0244, andy@freedomandprosperity.org
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