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142 IRET Congressional Advisory 1 (2002)

handle is hein.taxfoundation/iretcgadv0139 and id is 1 raw text is: INSTITUTE FOR RESEARCH ON THE ECONOMICS OF TAXATION IRET is a non-profit 501 (c)(3) economic policy research and educational organization devoted to informing the public about policies that will promote growth and efficient operation of the market economy. Advisory No. 142 IRET TESTIMONY Proposed IRS Regulation a Threat to Foreign Investment, U.S. Banks, the Dollar, and the Economy A proposed Internal Revenue Service Regulation would scare away foreign investors from developed nations by requiring U.S. banks to report to the IRS the interest they pay to such depositors even though the interest is not subject to U.S. tax. The information on the interest payments could then be transferred to the depositors' home countries' tax authorities. Hundreds of billions of dollars of foreign-owned deposits would probably flee the U.S. for friendlier tax havens, losing business for U.S. banks and making it harder to fund U.S. budget deficits and a strong level of U.S. business investment. The regulation is good for foreign governments, but not good for the U.S. economy. There would be no gain for U.S. tax enforcement. Weaker investment in the United States would actually reduce U.S. jobs and tax revenue. The regulation also flies in the face of Congressional intent to exempt the earnings of such deposits from tax to attract the funds to the United States. IRET's President, Stephen J. Entin, submitted the attached comments on the proposed regulation to the IRS, and spoke at the IRS public hearing held on December 5th. gin,, gem * m ii. 6 ~. ~6S

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