Coalition For Tax Competition Renews Assault On Deposit Interest Reporting Plans

by Mike Godfrey, Tax-News.com, Washington

23 March 2005

In a letter sent to John Snow, the Coalition for Tax Competition, which comprises more than forty free-market organisations, urged the US Treasury Secretary to "permanently withdraw a proposed Internal Revenue Service (IRS) regulation (Reg 133254-02) that would force U.S. banks to report deposit interest paid to nonresident aliens".

The Coalition, which numbers the Center for Freedom and Prosperity (CFP), the Heritage Foundation, and the American Enterprise Institute amongst its members, stated that:

"This initiative is inconsistent with current law and it will undermine our economy's performance by causing capital to flee the American banking system. The regulation was misguided when issued in the final days of the Clinton Administration, and the cosmetic changes the IRS put forth in 2002 do not address the proposed regulation's fundamental shortcomings."

The letter continued:

"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."

CFP President, Andrew Quinlan supported this on Monday, observing that:

"Since January 2001, this proposed regulation has undermined U.S. banks as they compete for global capital. In the last 51 months, not one Member of Congress has endorsed the proposed rule. In fact, 18 Senators and more than 90 House Members have asked for its withdrawal."

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