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Senior Member of Ways & Means Committee Urges Withdrawal of IRS's Interest Reporting Regulation Florida Congressman Clay Shaw, the third most senior Republican on the Committee on Ways and Means, and chairman of the Social Security Subcommittee, urges Treasury Secretary John Snow to withdraw an Internal Revenue Service proposed regulation that requires banks to report deposit interest paid to nonresident aliens. Excerpts from Chairman Shaw's letter: Contrary to America's National Interests This proposed rule is contrary to America's national interests and could lead to substantial capital flight from US banks. The Mercatus Center, for instance, estimates the regulation – if implemented – would cause $87 billion of capital to flee the US economy. Threatens America's Economic Recovery This is an unacceptable risk and could threaten the nation's economic recovery. My state of Florida would be particularly impacted, especially if the IRS follows through on its reported intention to apply the regulation to depositors from Latin America. Overturns 83 Years of Existing Law This regulation also should be withdrawn since it seeks to use regulatory decree to overturn 83 years of existing law. If the IRS truly believes that foreign governments should be able to double-tax income earned in America, it should submit legislation rather than pursue a policy change through the regulatory process. (Full text of letter below)
Link to Rep. Shaw's letter: PDF version of Shaw letter: More information on the regulation: Complete list of opposition to proposed regulation:
September 30, 2004 The Honorable John Snow Dear Secretary Snow, I encourage you to withdraw a proposed regulation (REG 133254-02) that would require banks to report deposit interest paid to nonresident aliens. This proposed rule is contrary to America's national interests and could lead to substantial capital flight from US banks. The Mercatus Center, for instance, estimates the regulation – if implemented – would cause $87 billion of capital to flee the US economy. This is an unacceptable risk and could threaten the nation's economic recovery. My state of Florida would be particularly impacted, especially if the IRS follows through on its reported intention to apply the regulation to depositors from Latin America. This regulation also should be withdrawn since it seeks to use regulatory decree to overturn 83 years of existing law. If the IRS truly believes that foreign governments should be able to double-tax income earned in America, it should submit legislation rather than pursue a policy change through the regulatory process. Thank you for your consideration of this important issue. Sincerely, E. Clay Shaw, Jr.
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