The IRS proposal is to begin reporting interest income paid to foreigners to their foreign governments. You have until May 31, 2001 to send comments (for or against) to the IRS. Some people think that this will hurt the U.S. economy (and the dollar) because foreign money will flee the U.S.-- I came across this view at this URL (I found the URL in a Washington Post article): http://www.freedomandprosperity.org/update/irsreg/irsreg.shtml Apparently, the U.S. is a huge tax haven for foreign money because there is no effective information sharing (except with Canada) of interest and most capital gains paid to foreigners. I did not know about this. I thought some of you would find the proposal of interest.
The U.S. is definately NOT a tax haven for foreign money. We currently have tax treaties with most Western European countries. So, unless you're from Eastern Europe or the former Soviet Republics, you're probably not going to succeed in hiding your assets in the U.S. I think the U.S. is attractive for lots of foreign investors because of the security and stability of the country. You don't have to worry about the currency being devalued by 1000% overnight, or the government seizing your assets. My guess is the U.S. is trying to get more treaties with other countries so they can keep better tabs on Americans hiding money abroad. As you know, we get the "privilage" of being taxed on all our worldly income. Why else would our government want the extra burden of reporting to foreign countries, if they wasn't a hidden agenda for the U.S. lurking somewhere?
I wonât post anymore on this topic because it is only tenuously related to currency trading, but I did want to reply. The Florida Congressional Delegation wrote a letter to the IRS opposing this regulation. Did they do that because in Miami, for example, one-third of the bank deposits come from foreigners? There is an article on that website titled âWho Are The Real Tax Havens?â. It points out that the U.S and U.K. have characteristics of being tax havens. For example: Foreigners can use LLCs in Delaware and Nevada to evade their home country taxes. (see p.5 right hand column) Residents of the U.S. could use their foreign relatives to evade U.S. taxes on bank account interest. (p.6 right hand column) The article suggests that one reason foreign money is here, is to evade home country taxes. http://www.freedomandprosperity.org/Articles/tni12-18-00.pdf The U.S. trade deficit is a record, approaching 5% of GDP which is considered a danger point by some. The trade deficit is financed by foreign money . In the 1980âs the last time the trade deficit reached record levels, the dollar fell 50%. I think that traders (well, maybe not daytraders) should keep their eyes on the dollar and things that may affect the dollar.