It has been reported that Kentucky Senator Randal Paul on May 7 confirmed via a letter to United States Senate Majority Leader Harry Reid that he will continue to block the passage of five tax treaties that are presently awaiting a move to the Senate floor.
The passage of tax treaties through Congress has been blocked since 2011, largely through the efforts of Paul, who also introduced a bill last year to repeal swathes of the Foreign Account Tax Compliance Act (FATCA). Paul has cited privacy concerns surrounding the exchange of US taxpayer information within both the tax treaties and under FATCA.
In his letter to Reid, Paul again cites his view that five proposed agreements – with Switzerland, Luxembourg, Hungary, Chile and the Organization for Economic Cooperation and Development – would flout the privacy rights of US individuals and US expats.
Previous treaties, he wrote, “were more focused on information specific to suspicions of tax fraud, while requiring that serious allegations of wrongdoing were grounded in evidence. It appears these treaties may end up being the tool that implements FATCA,” which purports to require foreign financial institutions to “send the Internal Revenue Service (IRS) the private records of overseas American bank account holders – no questions asked, and no reasonable suspicion, due process, or court order required.”
While reiterating that he does not “condone tax cheats,” he continued that he cannot “support a law that punishes every American in pursuit of a few tax cheats, … (and he will) object to any unanimous consent request, motion, or waiver of any rule in relation to these treaties or any related measure.”
Was it JFK who said the greatest sin is committed when an honest man does nothing to fight an obvious injustice?
It’s interesting to see that there is someone within the system with the guts to stand up to America’s attempts to bully the entire banking/finance world. It’s every man’s god given right to try and reduce his tax low bill to the lowest possible amount. Moreover anyone with clarity of vision can see that the US’s attempts to create a system enabling them to discover the holder of Offshore Bank Accounts is designed to intimidate persons thinking of deploying what might otherwise be lawful Offshore Tax Minimisation or Offshore Asset Protection structures in a vain (but ultimately futile – see below) attempt to keep more tax/currency at home.
The really sad part is had the US paid more attention to the principles of sound fiscal management (and effectual financial market regulation) this wouldn’t be happening. Nevertheless one can feel the winds of liberalisation beginning to blow. If the freedom fighters can hold out a bit longer imminent regime change might just save the day.
Lest the arrogant behemoth forget Capital ALWAYS flights to where Capital gets the best deal….
Maybe rather than trying to squeeze a few extra dollars out of those smart enough to Incorporate Offshore, Invest Offshore (or hold their money Offshore) the US lawmakers should be more focussed on reigning in record levels of government debt and offering investment incentives to shift up a gear the slowly idling US economy.
All such country-centric measures do is rob Peter (ie smaller countries) to pay Paul, or should I say Sam (as in Uncle).