USA: Small Business Group Argues Against IRS Plan to Support Taxing Foreign Investments Made in the
A "small business advocacy group" claiming 70,000 members says that disclosure of interest paid to foreign depositors will reduce funds available to US businesses. Did he really mean to say what he said?
At a public hearing held at the Internal Revenue Service last week, Darrell McKigney, President of the "Small Business Survival Committee" which claims 70,000 members, argued against an IRS proposal that would require U.S. banks to report interest paid on deposits made by foreign investors.
Currently, non-resident aliens have about $1 billion deposited in U.S. banks. Those funds are available for loans to U.S. businesses and consumers.
Under U.S. law, the interest earned on those deposits is not federally taxed. Under the IRS proposal, U.S. banks would be required to report deposit and interest information to the IRS, which would then share it with some European governments. According to the Small Business Survival Committee "those governments would then be enabled to impose taxes on their citizens' U.S. deposit earnings, thus wiping out a key incentive for depositing money in U.S. banks."
"There is no question that removing the tax incentive for foreign deposits in U.S. banks threatens to dramatically reduce the amount of capital available for American small businesses and other sectors of the U.S. economy," according to McKigney. "This would be a big blow for small businesses -- especially at a time when access to capital is particularly difficult."
McKigney also warns against efforts by foreign governments to promote "tax harmonization" and undermine the advantage the U.S. possesses in having lower taxes than its European competitors.
Now, not that we are cynical at World Money Laundering Report: Online but we are somewhat intrigued by the notion that the "key incentive for depositing money in U.S. banks" is that the interest earned on them is not declared for tax purposes. The argument claimed to be against disclosure makes the contrary point with some considerable force, we feel.
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