New IRS Rule Would Benefit Foreign Dictators, Drive $87 Billion Out of U.S. Economy, Could Cause Bank Failures
A new IRS rule would benefit foreign dictators and drive $87 billion out of U.S. economy, as my colleague, Iain Murray, explains in The American Spectator. It would require reporting of U.S. interest income of overseas account holders to foreign regimes.
It could wipe out banks in Florida, where one-third of all bank deposits are from foreigners, many of whom who don’t trust their corrupt or oppressive home-country governments (e.g., Venezuela). It could result in a new wave of costly bank failures or bailouts, as overseas depositors pull their money out of U.S. banks and put it in other countries instead.
Most countries have no legitimate interest in knowing the U.S. interest income of their nationals, since their tax laws — unlike American tax laws — do not tax the worldwide income of their residents, only their income in the home country. (For example, French citizens who work in the United States don’t owe taxes to the French government on their American income under French tax law.)
The IRS has refused to conduct the required cost-benefit analysis for the rule, presumably because it has enormous costs and few if any benefits, notes the Center for Freedom and Prosperity. The IRS has admitted that the rule is not needed to enforce U.S. tax law.