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Rand Paul Not Backing Down on Tax Treaty Fight

Image: Rand Paul Not Backing Down on Tax Treaty Fight

Sunday, 05 May 2013 04:13 PM

By Sandy Fitzgerald

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Business groups and liberals are joining forces to fight back against Sen. Rand Paul's continuing block of international tax treaties, saying his unwillingness to budge is harming business interests.

For over a year, the Kentucky Republican has held up passage of treaties with Hungary, Luxembourg, and Switzerland, reports The Hill. Business insiders say the approval, until now, has been routine. Liberals backing the treaties say that they'll make it easier to crack down on Americans who use foreign banks to cheat on taxes.

But Paul has refused to meet with people who support the tax treaties, and has refused comment about what changes could make him support the treaties.

In 2012, however, a Senate aide said Paul had privacy concerns about the treaties and how they could allow the government to gather information about people without evidence that they were, indeed, hiding money.

The tax treaty block is just one way Paul is showing his libertarian views, say political insiders, as he shows increased interest in the 2016 presidential race. Already this year, he led a 13-hour-long filibuster to protest President Barack Obama's drone policies, and has opposed a push for gun control laws.

Paul's holding up the treaties could leave a bad precedent, making other countries hesitant to enter into information sharing agreements with the United States, said Cathy Schultz of the National Foreign Trade Council.

"This is eroding our credibility around the world," said Schultz, noting the treaties can stop double taxation and help resolve disputes.

"They’re not looking for ways to resolve the issue," she said. "They’re not coming back to anybody and saying, how do we work this out? It’s not like treaties have never had holds on them. That part isn’t new. The new part is the unwillingness to meet with business, and discuss these issues.”

Groups like Global Financial Integrity say the block on the tax treaties mean a hold on the Foreign Account Tax Compliance Act (FATCA). Passed in 2010, the law requires foreign banks to give information about Americans' bank accounts to the Internal Revenue Service.

However, the law can't be implemented in Switzerland without the tax treaty, even though the United States signed a bilateral agreement in February to begin FATCA.

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