Rand Paul vs. Tax Treaties

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“I’m calling on the Senate, in particular Sen. Rand Paul, who’s been a little quirky on this issue, to stop blocking the implementation of tax treaties that have been pending for years,”

Someone sounds a little upset. These are the words of President Obama, who was talking about tax treaties that he’s really wanted to be passed in the Senate. The reason why he wants these treaties put through? So he can stop “tax evasion”, a problem which he is looking to address.

Now, on the surface, this doesn’t look like it should be much of an issue. You need to understand that nothing in Washington is simple though. What these tax treaties would do is allow for law enforcement to basically act as if it were unbound by the 4th Amendment, and become almost NSA-like, since it would have the power to allow law enforcement to see what you’re doing, when you’re doing it, and what comes in and goes out. Yes, this can all be seen from bank activity. Scary, isn’t it?

So what about tax cheats? To be honest, these are the symptom of a much larger problem: a tax system not many know how to properly navigate, and many would like to just avoid all together, seeing as how there is no hope in trying to figure it out while keeping their costs low. And compliance? Haha, that’s a funny one.

2 of these treaties are with Switzerland and Luxembourg, two of the wealthiest nations on the planet, and since they see a lot of monetary traffic, the White House feels like it would be wise to have access to their records, so they can be used in tax investigations by the IRS if needed.

Going further into some research, I can across this gem over at Accounting Today:

Of the eight treaties, seven of them are bilateral agreements with various countries to facilitate cooperation to avoid double taxation and to lower compliance costs. Regrettably, these agreements also unnecessarily change the standard for providing personal financial information to law enforcement agencies from probable cause of criminal behavior, such as fraud—which Paul correctly regards as the only constitutionally permissible standard under the Fourth Amendment—to what amounts to wholesale bulk collection on the pattern of the NSA’s violations of email and phone privacy.

This is Paul’s only concern with these seven bilateral treaties. A simple amendment could conform them to constitutional standards and they could move forward expeditiously.

However, that reasonable solution is not acceptable to Secretary Jack Lew’s Treasury Department. That’s because the Department also insists on using the treaties as a Trojan Horse for one of the most dangerous and dysfunctional laws enacted under the presidency of Barack Obama: the Foreign Account Tax Compliance Act, or FATCA. 

FATCA, which few Americans have ever heard of, was passed by a Democrat-controlled Congress in 2010, supposedly as a weapon against “fatcat” offshore tax evasion. Disdaining the constitutional path of investigating individuals who are suspected of wrongdoing and securing a warrant for accessing their private records, FATCA takes the NSA approach: to require all non-U.S. banks to hand over information on U.S. private persons (not corporations, by the way) absent any requirement of reasonable suspicion, due process, or a court order. If banks fail to do so, they face crippling sanctions that essentially shut them out of the American market. FATCA has led many foreign banks to deny services to Americans rather than deal with the burdens and crushing compliance costs, thus impeding U.S. business and export opportunities and risking economic harm.

*bolding is my own*

Now you see why Obama wants these treaties passed in Congress, don’t you? There’s always another reason than just something like “tax evasion”. There’s always something more to it.

Rand Paul is right to be in opposition to these, and the thing is, is that these cannot pass while there is still opposition to them. Meaning, that as long as Rand keeps saying “I object”, then these cannot move on at all. They’ll just continue to sit around and collect dust.

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