Coalition For Tax Competition Condemns Reid Jobs Bill
Friday, February 26, 2010
The Center for Freedom and Prosperity (CF&P), joined by a number of US
taxpayer groups and academics with free market leanings, has written to
all members of Congress warning about the potentially adverse impact of
"anti investment" provisions a tax bill introduced by Senate Majority
Leader Harry Reid.
The letter highlights the inclusion of provisions taken from the
Foreign Account Tax Compliance Act, which impose a 30% withholding tax
on the American investments of foreign financial institutions unless
they agree reporting requirements with the Treasury Department
that the CF&P considers are "onerous and intrusive."
"The Foreign Account Tax Compliance Act contained in
Senator Reid's so-called jobs bill would result in the loss of jobs as
investors would shift funds outside of the United States," said
CF&P President Andrew Quinlan.
"This bill is a threat to fiscal sovereignty, both in
the United States and around the world" added Dan Mitchell of the Cato
Institute. "Governments should have no right to impose laws and
regulations outside their borders, and this effort to impose bad
American policy on foreign banks will invite bad consequences and open
the door for foreign governments to do the same to us."
Additionally, the letter points out that these
provisions create significant threats to fiscal sovereignty and
financial privacy. " European governments and bureaucrats are
increasingly meddling in the affairs of American companies, so setting
a precedent for further interference seems particularly foolish," the
"These provisions will make it more expensive to invest
and do business in the United States," the group states. "Making it
more expensive to invest in the United States will divert global
capital to other nations. This will reduce growth and jobs creation in
"Furthermore, the reporting requirements are a threat to fiscal
sovereignty. By attempting to impose American laws on foreign companies
acting outside of the United States, we open the door for similarly
misguided efforts on the part of foreign governments and international
bureaucracies," the letter adds.
However, given that the Senate bill differs from the
version of the legislation passed by the House of Representatives, the
CF&P believes that it is not too late for such "anti growth
provisions" to be removed from the final bill.
The Hiring Incentives to Restore Employment (HIRE) Act
passed the Senate on February 23 by a vote of 70 to 28. Among its tax
cutting provisions include a new jobs payroll tax exemption, and an
extension of expanded Section 179 expensing allowing businesses to
write off more of their expenditures in 2010.
Besides the more stringent reporting requirements, the
bill is also offset by a provision which codifies the economic
substance doctrine used by courts to determine whether transactions are
used purely to avoid tax, and through modifications to the USD1.01 per
gallon cellulosic biofuel producer credit.