Video: IRS pressing for rule that would see capital flight from US

posted at 10:55 am on April 11, 2011 by Ed Morrissey

Cato’s Dan Mitchell shines a light on a new effort at the IRS to increase revenue, starting by reporting interest payments on foreign capital deposited and invested in the US with an eye towards later taxation [see update II below]. Congress passed a specific rule blocking that kind of taxation, but short-term thinking in the administration and at the IRS has the agency looking for any revenue it can find. The problem, as Mitchell points out for the Center for Freedom and Prosperity, is that the long-term effects would be disastrous for the American economy and could create a collapse in an industry we just finished bailing out:

We spent hundreds of billions of dollars in capital infusions for the banking and financial services industries in the wake of the 2008 collapse, narrowly averting a systemic calamity in the American monetary system.  Even if this was a good policy in the long term — which it isn’t, for reasons Mitchell explains rather clearly here — this is hardly the moment for the US to encourage foreign investors to look for friendlier shores.  Not all of the $10 trillion of foreign capital invested in the US would get withdrawn, but a significant amount of it certainly would disappear.  That kind of flight would make 2008′s crisis look like a mild day-trading loss in comparison, and it would bring any hope of economic recovery to a quick and painful halt.  If the capital exits quickly enough, it could start bank runs and utter ruin.

Who’s bright idea is this, anyway?  And who is pushing the IRS to defy clear Congressional intent and changing American tax policy?

Update: Commenters are calling this a new “Smoot-Hawley”, which is particularly apt.

Update II: A tax attorney corrects me in part on this by noting that the IRS wants to require reporting the income, not taxing it, which Congress would have to authorize.  I’ve changed the lead to reflect the important distinction, but it’s still a big problem.  The IRS would only want the reporting in order to argue for the taxation, ie, “Look how much revenue we’re letting slip through our fingers!”  Investors react to signals like this, and the application of the tax itself might be a moot point once the reporting requirement was in place.  I still should have been more accurate.

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Smoot Hawley… THis Administration IS truly a bunch of clowns…

Khun Joe on April 11, 2011 at 10:58 AM

And, with England about to introduce banking rules that will see major banks fleeing the country, we could see a depression by 2012.

OldEnglish on April 11, 2011 at 11:01 AM

Who’s bright idea is this, anyway?

I would bet some Obama czar.

PattyJ on April 11, 2011 at 11:01 AM

Who’s bright idea is this, anyway? And who is pushing the IRS to defy clear Congressional intent and changing American tax policy?

PBHO’s idea, at least until the public outrage and economic hits occur, then it will be the stupid idea of someone else.

Bishop on April 11, 2011 at 11:01 AM

It certainly is Obama’s MO. With so many departments and agencies circumventing congress, it can only come from the top.

cartooner on April 11, 2011 at 11:03 AM

Smoot Hawley… THis Administration IS truly a bunch of clowns…

Khun Joe

You are exactly right! This would be the equivilent of Smoot Hawley. There was a recent book done on this topic, arguing that Smoot Hawley resulted in bank failures in areas dependent on trade…

RedSoxNation on April 11, 2011 at 11:03 AM

The destruction of America proceeds apace.

sandspur on April 11, 2011 at 11:04 AM

Too many people in government at all levels spend too much of their day thinking of ways to confiscate other people’s money.

That’s why smart States like NH flood the legislature and makes them part time.

TheBigOldDog on April 11, 2011 at 11:05 AM

Who could possibly have doubted this creep would try this. He’s already granted super-legislative powers to the FCC and EPA. This is what he meant when he talked about “hand-to-hand combat” and broader and inventive uses of executive power after he lost congress.

Hey Boehner, is this “historic”?

rrpjr on April 11, 2011 at 11:07 AM

Who’s bright idea is this, anyway? And who is pushing the IRS to defy clear Congressional intent and changing American tax policy?

Do you really have to ask these questions!? The answer is simple: Obama.

This is reason # 4,098,981,001 why Obama has to go in 2012.

Conservative Samizdat on April 11, 2011 at 11:07 AM

And who is pushing the IRS to defy clear Congressional intent and changing American tax policy?

Like this is the first time the Obama administration has ignored the expressed intent of Congress, or a court order.

hawksruleva on April 11, 2011 at 11:08 AM

The sniper scope has the golden goose in its crosshairs.

fossten on April 11, 2011 at 11:12 AM

Killing investment with a machete rather than a scalpel and cutting spending with a scalpel rather than a machete. Yup, sounds about right.

a capella on April 11, 2011 at 11:12 AM

Cripe
Who is running the asylum?

cmsinaz on April 11, 2011 at 11:15 AM

The original collapse- for which TARP was hastily assembled to relieve- was caused when it was apparent that over $5 trillion in money was going to leave the market in under 3 hours. This would automatically trigger something equally calamitous.

michaelo on April 11, 2011 at 11:15 AM

The original collapse- for which TARP was hastily assembled to relieve- was caused when it was apparent that over $5 trillion in money was going to leave the market in under 3 hours. This would automatically trigger something equally calamitous.

michaelo on April 11, 2011 at 11:15 AM

No…it wouldn’t be equally calamitous. It would be worse. On a scale you can’t imagine.

Conservative Samizdat on April 11, 2011 at 11:19 AM

Do you really have to ask these questions!? The answer is simple: Obama.

This is reason # 4,098,981,001 why Obama has to go in 2012.

Conservative Samizdat on April 11, 2011 at 11:07 AM

I doubt the idea started with Dear Liar. More likely he’s getting his marching orders on his blackberry from his puppet master, George Soros. It’s clear The Whine doesn’t understand economics at all, while George does, and wants to cripple America.

rbj on April 11, 2011 at 11:24 AM

I wonder if Obama is secretly frustrated that no matter how many foundational pillars he knocks out, and attempts to, America is still standing. Sometimes it’s the only satisfaction i can get from day to day: knowing that the very act of keeping on from day to day is pissing these social engineers off.

abobo on April 11, 2011 at 11:26 AM

The time-proven principle is, “if you want LESS of something, tax it”!!

Sooooo…..

At a time when the USA needs an infusion of at least $4 Billion per day of foreign cash…just to stay afloat until the next day…the IRS wants to tax (and thus cut off) that infusion!!!???!!!

This must be the Democrat’s WTF 2.0!!!

landlines on April 11, 2011 at 11:27 AM

Doesn’t this whole argument highlight the fundamental difference in philosophy between the Left and the Right?

The Left wants to continue to implement their proven to fail “Progressive” agenda of ‘spreading the wealth around’.

A “Progressive” agenda that has failed Repeatedly throughout history, and will only serve to run the place over a fiscal precipice.

The Right wants to turn back from that INSANITY to a system that actually works.

The almost criminally insane radical Socialist-Progressive left wants to ignore history and human nature in demented quest for power no matter what happens.

Why should we let them impose their Insanity on the rest of us?

Chip on April 11, 2011 at 11:39 AM

The Hawley-Smoot act: did it raise or lower tariffs?
. . .
Bueller? Bueller? Bueller?

The Monster on April 11, 2011 at 11:39 AM

How about a 50% tax on all federal employees earning over $100,000 instead?

They like this government expansion/tax stuff so much, let them divvy up first.

profitsbeard on April 11, 2011 at 11:39 AM

NOTE:

The average federal worker gets $101.628 in wages and benefits.

profitsbeard on April 11, 2011 at 11:44 AM

Too many people in government at all levels spend too much of their day thinking of ways to confiscate other people’s money.

That’s why smart States like NH flood the legislature and makes them part time.

TheBigOldDog on April 11, 2011 at 11:05 AM

We also have Article 10 in our constitution.
http://bit.ly/eclOM5

evilned on April 11, 2011 at 11:44 AM

Imagine you bought some shares in an emerging market mutual fund. Now imagine you just got an income tax form from Taiwan, stating that you owe money you made from Taiwanese companies that were part of that mutual fund? And yes, you still get to pay US income tax on that also.

Maybe that’s why the likes of Taiwan are growing like gangbusters and we’re…well, we’re electing Barry.

MNHawk on April 11, 2011 at 11:58 AM

“Who’s bright idea is this, anyway? And who is pushing the IRS to defy clear Congressional intent and changing American tax policy?”

QUESTION OF THE DAY

novaculus on April 11, 2011 at 11:59 AM

Does Soros have a manifesto that I can read and try to stay ahead?

faraway on April 11, 2011 at 12:06 PM

This is about tax compliance.

Canadians should be familiar with this since they have been subject to this for some time.

If you think that non-trade interest should be tax free then you should be against this law. If you think non-trade interest on deposits should be subject to tax either in the US or country of the deposit holder, you should support this law.

This closes a tax loophole. One many of my clients enjoy and which I have used myself to avoid any taxes on certain deposits. This is non-trade interest… this will shine a light on a corner of finance activity which is illegal and this is being orchestrated through tax treaties. The mutual tax exclusions remain in place. America will still be a good place to invest.

Let’s put the question differently…. should Americans be allowed to earn tax free interest on non-trade activity overseas? Of course not. The US is putting pressure on other countries to track tax cheats and we are obliged to reciprocate.

If depositors are honest and paying tax in the US or their home country for that interest they have nothing to fear from this change.

lexhamfox on April 11, 2011 at 12:35 PM

Update: Commenters are calling this a new “Smoot-Hawley”, which is particularly apt.

It is not apt… they are completely different. Tariffs are an extra tax on international trade. This rule change is not an extra tax and it does not add to the cost of international trade.

lexhamfox on April 11, 2011 at 12:38 PM

I think this is absolutely necessary. How can we manage our national economy, much less an international economy, if each government is blinded to where citizens are investing? How can we gather that information about our people if we’re not willing to give it to other governments?

If we can continue to add $1.5 trillion a year in social programs to our $15 trillion debt, how many more years to you think our economy will stand without fundamental transformational change? We, as well most of the developed word, have to prepare ourselves and stop a select few from taking our money away from us. Transparent banking is as critical a preparation for central control to rise from crisis as is:
1) financial reform regulations eliminating the right to private ownership of virtually all financial and corporate institutions,
2) nationalizing 2/3 of the auto industry,
3) expanded regulatory control of food production,
4) building a framework for nationalizing healthcare, and
5) getting people like Glenn Beck off Fox News.

Look, we know capitalism is a failed system, we’ve said so. We’ve delayed the full collapse of housing prices by taking on many trillions of dollars of debt by nationalizing Freddie and Fannie, TARP & Stimulus I & II. When we can no stop the collapse because no one will buy our debt and quantitative easing threatens hyperinflation, how are we going to control our people if we can’t keep our money here? Otherwise, they might consider absurd ideas like “The Virtues of Selfishness” and lose faith in central control. These IRS reporting rules a critically to keeping that from happening.

elfman on April 11, 2011 at 12:41 PM

The IRS costs American taxpayers $275Billion annually to collect taxes. Implement the Fair Tax( or a 10% flat tax)and I can think of a cut the U.S. can make for approximately $275,000,000,000 every year….

adamsmith on April 11, 2011 at 12:47 PM

Socilism has to fail as an economic system to suceed.

Once the economic system is beyond recovery, communism is the next step in the Marxist progression.

Is this the next step towards socilism success?

Has Obama ever appointed anyone to a position of power that is not a socialist, if not die hard communist?

Is Obama not supported by any organization that is socialist or communist?

Is there any evidence that his grandfather that raised him was not a socialist or his childhood mentor, Frank Davis not a communist?

Any questions on where the IRS planning is coming from?

Socialism has to fail as an economic system to succeed and failure is always the results it achieves.

Franklyn on April 11, 2011 at 1:04 PM

If you think that non-trade interest should be tax free then you should be against this law. If you think non-trade interest on deposits should be subject to tax either in the US or country of the deposit holder, you should support this law.

lexhamfox on April 11, 2011 at 12:35 PM

But this law only penalizes foreign tax cheaters. What you’re suggesting is like saying, “If you think that we should live in a world without tariffs, then you should be in favor eliminating all US tariffs.” This has to be universal in order bring fairness. It also has to be consistent with laws passed by Congress, which it apparently isn’t.

elfman on April 11, 2011 at 1:16 PM

short-term thinking in the administration

It has to be short term, as Valerie Jarrett says, The Most Intelligent Person in the World gets bored easily.

GarandFan on April 11, 2011 at 1:23 PM

Khun Joe on April 11, 2011 at 10:58 AM

As a clown I am particularly insulted by that comment!

jdkchem on April 11, 2011 at 1:24 PM

The destruction of America proceeds apace.

sandspur on April 11, 2011 at 11:04 AM

Oh, come on. It’s not like they’re doing it on purpose, right?

iurockhead on April 11, 2011 at 1:43 PM

But this law only penalizes foreign tax cheaters. What you’re suggesting is like saying, “If you think that we should live in a world without tariffs, then you should be in favor eliminating all US tariffs.” This has to be universal in order bring fairness. It also has to be consistent with laws passed by Congress, which it apparently isn’t.

elfman on April 11, 2011 at 1:16 PM

It does not penalize them. It reports their interest. Congress has nothing to do with this. It is not a new tax. Americans are required by law to report their overseas income… that does not mean that have to pay taxes on it but it does require that it is declared. I have to detail my overseas deposits and I do but this keeps the system honest for those who just leave holdings off the schedule. This is not just a US effort… it is happening in former tax havens all over the world. Tax harmonization is crucial to having a level playing field and this regulation (sorry I called it a law earlier) is a part of that.

lexhamfox on April 11, 2011 at 2:04 PM

The IRS would only want the reporting in order to argue for the taxation, ie, “Look how much revenue we’re letting slip through our fingers!” Investors react to signals like this, and the application of the tax itself might be a moot point once the reporting requirement was in place. I still should have been more accurate.

If investors want to put their money where this kind of reporting isn’t done they are welcome to do it but I doubt that Zimbabwe and other such places are attractive to investors. This is being done in concert with other economies. Also… this trillions of dollars leaving the country is BS. Most people are honest with their own country’s tax regime and already report this just as most Americans and American businesses complete their foreign despoit/income schedules honestly.

lexhamfox on April 11, 2011 at 2:11 PM

The EPA wants those in agriculture to ‘report’ all sorts of things to them.
It is bcs they will have need of it later.
It’s called gathering information.
They will then use it against you.
How effing stupid are people?!
OMG I am watching the train wreck from the front seat!

Badger40 on April 11, 2011 at 2:36 PM

We averted a catastrophe? 20%+ unemployment, housing market crash, government take over of private companies to enrich the unions (and ditch the investors) soaring food and fuel prices indicate the reverse.

Except in the minds of Failbama & the clown circus.

Time for some golf or a vacation isn’t it?

dogsoldier on April 11, 2011 at 2:37 PM

lexhamfox on April 11, 2011 at 2:11 PM

So you have no problem with the IRS gathering new kinds of information?
Why do they need this information?
How have they been doing without it?
I’m reminded of the registering of guns.
Why does the govt need to know how many guns a law biding citizen has?
What business is it of theirs?
Do you think they might do something with that information some day?

Badger40 on April 11, 2011 at 2:38 PM

It does not penalize them. It reports their interest…

lexhamfox on April 11, 2011 at 2:04 PM

Semantics. Having foreign investors’ interest reported from the US, but not reported from London, Hongkong, Sinapor Zuric, Camens, Luxemgurge ect… would cost foreigners who invest money here, even if it’s not technically a penalty. If the rules are not universal, they “penalize” America with capital flight. We have about 10 Trillion in foreign investment.

Congress has nothing to do with this. It is not a new tax…

According to the video, in 1921, 76 and 86 Congress emphasized that no regulations were to be made that contradicted our attempts to attact foreign investment. Also, Clinton’s Executive Order 12866 requires regulations affecting the economy by $100 million or more to include a cost benefits analysis.

Americans are required by law to report their overseas income… that does not mean that have to pay taxes on it but it does require that it is declared…

American have to pay taxes on overseas income, but there are generous exclusions for the middle class.

I’ve got to run now.

elfman on April 11, 2011 at 2:56 PM

Badger40 on April 11, 2011 at 2:38 PM

So you have no problem with the IRS gathering new kinds of information?

No I don’t. And I don’t have a problem with the Swiss, Germans, or British reporting my interest and other incomes there to the IRS because I am making accurate and honest returns to the IRS. If I am a tax cheat I should be worried.

Why do they need this information?

To make sure tax cheaters don;t get away with it.

How have they been doing without it?

Trusting that everyone is volunteering correct info on their tax returns.

I’m reminded of the registering of guns.
Why does the govt need to know how many guns a law biding citizen has?
What business is it of theirs?
Do you think they might do something with that information some day?

It’s not like registering guns. It’s about registering income. Are you fine with having to pay more taxes to cover people who cheat on paying taxes?

lexhamfox on April 11, 2011 at 3:07 PM

Look, we know capitalism is a failed system, we’ve said so. We’ve delayed the full collapse of housing prices by taking on many trillions of dollars of debt by nationalizing Freddie and Fannie, TARP & Stimulus I & II. When we can no stop the collapse because no one will buy our debt and quantitative easing threatens hyperinflation, how are we going to control our people if we can’t keep our money here? Otherwise, they might consider absurd ideas like “The Virtues of Selfishness” and lose faith in central control. These IRS reporting rules a critically to keeping that from happening.

Wrong, Capitalism hasn’t failed, the U.S. has simply failed to implement it. We haven’t seen free-market capitalism for quite some time now. I think you are looking for the term “mixed economy.” Mixed economy has failed because it essentially is central planning light. You have the same results, it just takes longer for the system to become top heavy and fall over. What you are seeing is the result of mixed economic central planning where government weds itself to big business in order to cheat the risks of doing business in a free market and entrench political power among the elite class with political donations that are exchanged for legislative assistance.

We started the process of ballooning federal involvement in the economy in the 1930s (some argue before) and guess what…now we are spiraling toward central planning (socialism)…in fact, it can be argued that we already are a centrally planned pseudo-fascist economy. The similarities between our economy and that of Japan in the 1920s and 1930s is striking. The similarity between that of interwar Germany and Italy are scary.

Pattosensei on April 11, 2011 at 3:14 PM

Americans are required by law to report their overseas income… that does not mean that have to pay taxes on it but it does require that it is declared…

American have to pay taxes on overseas income, but there are generous exclusions for the middle class.

I’ve got to run now.

elfman on April 11, 2011 at 2:56 PM

For most places overseas that depends on the tax regime and if a tax treaty exists with the US. The article you are referring to has NOTHING to do with the regulation in question here. This is for non-resident aliens and only pertains to non-trade related interest income. Huge difference between that and someone’s income related to a job overseas.

emantics. Having foreign investors’ interest reported from the US, but not reported from London, Hongkong, Sinapor Zuric, Camens, Luxemgurge ect… would cost foreigners who invest money here, even if it’s not technically a penalty. If the rules are not universal, they “penalize” America with capital flight. We have about 10 Trillion in foreign investment.

All those places you name are on board with reporting non-resident alien income either through bilateral agreements or through multi-national tax harmonization agreements. The new regulation is part of that so the US can reciprocate.

The video’s hysterical claim that ten trillion will leave the US economy is complete nonsense.

According to the video, in 1921, 76 and 86 Congress emphasized that no regulations were to be made that contradicted our attempts to attact foreign investment. Also, Clinton’s Executive Order 12866 requires regulations affecting the economy by $100 million or more to include a cost benefits analysis.

That’s correct. How does this restrict or hamper overseas investment?

lexhamfox on April 11, 2011 at 3:24 PM

elfman on April 11, 2011 at 12:41 PM

When has anyone other than Obama, Castro, Chavez or their mouth breathing worshipers ever said capitalism has failed? Freddie and Fannie were nationalized long before there was any housing crisis and your heroes refused to perform their duties by performing the tiniest amount of oversight.

jdkchem on April 11, 2011 at 3:43 PM

lexhamfox on April 11, 2011 at 12:35 PM

The easiest way to close any tax loopholes is to implement a sane and simple tax system where every entity knows they will pay x.x%.

jdkchem on April 11, 2011 at 3:46 PM

The easiest way to close any tax loopholes is to implement a sane and simple tax system where every entity knows they will pay x.x%.

jdkchem on April 11, 2011 at 3:46 PM

Yes… tax harmonization. That is what countries are doing. Reporting is a critical part of that. It does not matter if you all have the same tax rate if that particular income is hidden away overseas and you don’t declare it on your return.

lexhamfox on April 11, 2011 at 3:53 PM

Yes, because the Number 1 thing that we want to do in a competitive world economy is punish those who seek to capitalize this country.

Dumbasses, plain and simple.

JohnGalt23 on April 11, 2011 at 4:18 PM

What all these brilliant thinkers forget is that people will avoid rules that are inconvenient. When rules get onerous, they are flat out ignored. We are getting more rules from teh Won & co. that must be “explained to the sheeple”.

An interesting phenomena called barter is the first step. After that it is a full black market. That really does “spread the wealth around”. HOPE you have a marketable skill.

Caststeel on April 11, 2011 at 4:25 PM

All those places you name are on board with reporting non-resident alien income either through bilateral agreements or through multi-national tax harmonization agreements. The new regulation is part of that so the US can reciprocate.

The video’s hysterical claim that ten trillion will leave the US economy is complete nonsense.

Can you point me to a source that says that this new reporting requirement is part of an agreement with those or other nations.

Also, The video made it clear that not all foreign investment would leave if this regulation took effect.

I can’t respond more thoroughly at this time.

elfman on April 11, 2011 at 8:43 PM

Pattosensei on April 11, 2011 at 3:14 PM

jdkchem on April 11, 2011 at 3:43 PM

That was satire.

elfman on April 11, 2011 at 8:44 PM

elfman on April 11, 2011 at 8:43 PM

Sure. Here is one example that started with Bush and you might remember off the top of your head when the US pressured Switzerland on this. This has been going on for a long time and the measure highlighted here is the reciprocal side. It is usually part of bilateral tax agreements. Found this right away and I will ask my international tax accountant for something more thorough.

http://www.uniset.ca/microstates/tel_offshore.htm

lexhamfox on April 11, 2011 at 9:13 PM

elfman on April 11, 2011 at 8:43 PM

Further to my earlier post please allow me to clarify/elaborate on some things.

The video goes on about ten trillion at risk. That is nonsense and the true number at risk in US is probably one maybe two billion rather than trillions. The video qualified it but in a way that is misleading. If you are breaking the law money laundering or tax evasion and you place your funds anywhere in the US, you are an idiot. You are no smarter if you place your funds or hide your income from your own tax regime with any transnational bank. For a year in the 90′s I was a compliance officer with Republic National Bank of New York in London before any notion of regular reporting was instituted. We were the largest privately owned Swiss Bank in the world then and I can tell you that Edmund Safra had a list of tax and investigative authorities that we told to work with back then and it included most of the big players we are discussing… Germany, Switzerland, US, and UK.. you get the picture. If you think you are protected by Swiss or Benelux privacy laws and you try to hide your money you are going to get hammered. That is what this is about. Everybody complies with these guys because your legitimate business is at stake if you f*&ck with them and legitimate business is everyone’s bread and butter. Even you have high net worth private clients who want to evade… we didn’t let them do it then and now it’s ten times harder. That is a good thing. I’m not sure why this trash (the video) is put out by American Conservative groups. Law abiding people have nothing to fear and this is pro-taxpayer policy. If you can make a legitimate argument why we should protect tax fraud or evasion I am willing to listen but frankly I am surprised that a guy like Ed seems to oppose this even in a partisan sense as I doubt either party would want to deliberately enable illegal activity in the US or abroad. Big brother and all that yeah sure but in this day and age we can only save money and lives by collecting and sharing this kind of information rather than creating a safe haven for this.

When illegally avoiding tax is a conservative principle then I stop being a conservative. It really is that clear and if the US wants to stop it’s citizens from evading legal taxes in our interconnected world it is going to have to implement regulations like this. Same goes for terrorist funding and a range of other illegal activities. You can’t expect other countries to play and have the US stand aside when their banks have similar clients breaking the law.

lexhamfox on April 11, 2011 at 10:44 PM

lexhamfox on April 11, 2011 at 2:04 PM

I’ve done a little investigating. A Tax blog here describes reg-146097-09. It’s apparently an incremental expansion of another from 2002 that required reporting from NRAs from select countries that included only Canada at the time.

I see a complaint from and international investment bank
concerned with a supposed 17 page document reporting requirement that would replace the 1 page electronic document they use to report US investors. In closing, it seems to question the “lack of consensus” for this. I don’t know if that means reciprocity does not exist.

This video from Cato parallels the text of a letter to the president signed by about 25 congress members on March 1st.

They both quote a 2004 study from the Mercatus Center at George Mason estimating a $88 billion loss of investment from a scaled back version of reg-146097-09. I don’t know your source for a likely $2 billion loss.

I see three critical issues that need to be accounted for in this law:

1) Will the newly collected NRA information be used only in cases where there is international reciprocity, in which the NRA’s home country shares that information with us?

2) Will NRA information only be shared simultaneously with all other international investment havens doing the same, preferably by a formal treaty? Banking transparency is a worthy ideal, like free trade. But implementing either unilaterally would accomplish nothing other than damaging our economy to the benefit of others. And in this case, foreign tax cheats would just continue their practices elsewhere.

3) Will there be a mechanism for withholding the information under special considerations outlined in the March 1st letter to the president?

4) Will Congress approve this new policy. Since Congress appears to have refused to authorize it when it came up before, it appears to be implemented though a power that only Congress should have. Even if this is a good regulation, the need for it does not negate our constitutional principle of separation of powers, reserving lawmaking for Congress.

elfman on April 12, 2011 at 12:30 PM