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Rand Paul: Tea Party of One

May 3, 2012

No doubt muttering “Freedom!” under his breath the whole time, Senator Rand Paul has decided to block Senate ratification of a US-Swiss tax treaty. Paul claims the treaty is “too sweeping” and threatens to damage privacy protections and the 4th Amendment rights of Americans with Swiss bank accounts.  Others, such as former Treasury Department tax counsel Phillip West, say “it smacks of protecting financial secrecy for those who may have committed criminal tax fraud in the U.S.”

Bah…you say potato, I say poe-tah-toe… am I right?

The US and Swiss governments renegotiated their bilateral tax treaty as part of the 2009 settlement of the UBS case. That case charged the Swiss mega-bank UBS with facilitating tax evasion by US customers. Under the settlement agreement, UBS paid $780 million in criminal penalties and agreed to provide the IRS with names of 4,450 US account holders.

Before it could supply those names, however, UBS needed to be shielded from Swiss penalties for violating that country’s legendary bank-secrecy laws. The renegotiation of the US-Swiss tax treaty addressed that problem by providing, as most other recent tax treaties do, that a nation’s bank-secrecy laws cannot be a barrier to exchange of tax information.

Many tax haven countries were hiding behind their bank secrecy laws to deflect requests for account holder information, and the IRS and Justice Department have been investigating 11 Swiss financial institutions on criminal charges of facilitating tax evasion.

The Senate must ratify the treaty changes – which is normally a routine procedure.

By blocking the ratification, Senator Paul is holding up the exchange of information in the UBS case (and others) and hampering IRS efforts to crack down on tax evasion by Americans. (Citizens For Tax Justice)

Would I suggest Paul is making this move simply to protect tax-evading billionaire crooks? Maybe. Maybe not. It’s either that or he simply has no grasp of the Constitution. Take your pick.

The fact of the matter is that the constitutional right of the IRS  to review the books and records of persons who might be subject to taxation has never been questioned by US courts.  The provisions of this treaty are more about changes to Swiss law and procedure than to those of the US.

One might come to think that Rand Paul, just like all good Tea Partiers, simply has a knee-jerk reaction to anything that might actually lead to people paying taxes.

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One Comment leave one →
  1. Bob permalink
    August 7, 2012 4:52 pm

    Wrong! The IRS is the one committing a tax crime as IRS designation was cancelled in 2005 by treasury order 150-06! it’s a fact. Verify it here> -> http://www.treasury.gov/about/role-of-treasury/orders-directives/Pages/to150-06.aspx

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