CFP Asks OMB to Review Clinton-Era Bank Deposit Interest Regulation

Center for Freedom and Prosperity
Press Release – 19 December 2001

For Immediate Release
Thursday, December 19, 2001
202-285-0244
www.freedomandprosperity.org

CFP Asks OMB to Review Clinton-Era Bank Deposit Interest Regulation: IRS Should Not Harm U.S. Economy By Helping Foreign Governments Tax Income Earned in America

26 of the Country’s Most Prestigious Free Market Groups Join CFP in Letter to Bush Administration

Today, the Center for Freedom and Prosperity Foundation sent a letter to Office of Management and Budget Director Mitchell E. Daniels, Jr. asking him to review the Clinton-era Regulation (#126100-00), which would require the reporting of bank deposit interest paid to nonresident aliens. CFP Foundation was joined by more than 25 of the countries largest and most prestigious free-market organizations, representing tens-of-millions of Americans.

The signers of the letter believe that by “declaring most of its regulations either ‘interpretative’ within the meaning of the Administrative Procedure Act or not ‘major’ within the meaning of Executive Order 12866, the Internal Revenue Service has effectively exempted itself from regulatory oversight.”

“Today, we ask Director Daniels to please take this opportunity to halt this flagrant abuse of the regulatory process,” said Andrew Quinlan, President of the CFP Foundation. “The IRS should not be above the law. For years the IRS has shoved onerous regulations down the throats of the American people. If there was ever a regulation put forward that needed to be reviewed and killed by the OMB, it would be this one.” added Quinlan.

Dan Mitchell, Heritage Foundation Senior Fellow, said, “The IRS’s proposed regulation, issued during the final days of the Clinton administration, seeks to overturn existing law and puts the interests of European politicians ahead of the interests of American families, workers, and businesses. Unless the Treasury Department wants to sabotage President Bush, this regulation should be withdrawn immediately.”

Veronique de Rugy, Cato Institute policy analyst added, “This misguided initiative would have a terrible effect on US economic performance. Most foreign investors are attracted to America because of low taxes and financial privacy. If the IRS information exchange regulation is approved a substantial portion of this money will flee to competing institutions in other jurisdictions. At a minimum, it would drive several hundred $billion out of the country. Paradoxically, the resulting damage from this capital flight would far exceed the benefits from the president’s tax cut. The Bush administration must understand that the United States’ interests are not the same as high tax European nations’ interests.

The text of the letter:
http://www.multiracial.com/letters/2001-12-19.html

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The Center for Freedom and Prosperity is an Alexandria, Virginia-based, 501(c)(4) nonprofit, nonpartisan organization that lobbies Congress and the Administration on tax competition, financial privacy and fiscal sovereignty.

For additional comments:
Andrew Quinlan can be reached at 202-285-0244, quinlan@freedomandprosperity.org
Dan Mitchell can be reached at 202-608-6224, dan.mitchell@heritage.org
Veronique de Rugy can be reached at 202-842-0200, vderugy@cato.org

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