Congressmen Bill Posey (R-FL), Mario Diaz-Balart (R-FL), and Gregory Meeks (D-NY) have introduced a bill to bar the Treasury Department from adopting rules requiring US Banks to report interest paid on deposits by non-resident aliens to their native countries. This shocking bill reinforces the message of Nicholas Shaxson’s book, Treasure Islands, that the US is one of the biggest tax havens in the world.
Posey put out a press release explaining his rationale for this astonishing legislation:
“If you’re an investor from a country with massive human rights violations or a corrupt regime, chances are you want your personal bank account information held in confidence,” said Representative Bill Posey, a member of the House Financial Services Committee. “By imposing this new reporting requirement, those depositors will think twice about where they invest their money and cause many to invest elsewhere at a cost of billions of dollars to our economy. This is the wrong time to encourage individuals to withdraw billions from U.S. banks.”
In a possibly related move, the Independent Community Bankers Association wrote to Treasury Secretary Geithner violently opposing regulations that require notice to other nations under US tax treaties and other safeguards. The ICBA claims that there are $4 trillion on deposit from non-resident aliens, which may explain why other nations might be interested in knowing where their despots and drug lords and tax evaders keep their money.
The US has been working hard to get other nations to disclose the foreign holdings of US nationals. For example, it forced the giant Swiss bank, UBS, to pay a huge fine and disclose the names of thousands of US tax cheats.
The key to an effective program for catching tax cheats is reciprocity. If we refuse to work with other nations, why would they work with us? This is the kind of law that will harm those efforts. Apparently Posey, Diaz-Balart and Meeks don’t care whether the US is able to continue to enforce tax laws against cheats.
Is there any piece of legislation that could embarrass our elected representatives?