Monday, April 30, 2012

Rand Paul blocks US-Swiss Tax treaty update

Why?  Paul is worried about due process and unreasonable search & seizure that could happen if the US starts asking Switzerland for bank info on U.S. citizens and residents.  From Bloomberg:

"Paul, a Kentucky Republican, said the protocol is too “sweeping” and would threaten protections under the Fourth Amendment to the U.S. Constitution, which guards against unreasonable search and seizure. Paul said he is exercising his privilege to delay a Senate vote. 
“We’re concerned about the due process of whether or not people have any kind of process before their records are looked at, the privacy of your banking records,” Paul said in an interview last week. “There needs to be some constitutional protections to your banking records.”
That's a lot of worry, but Mr. Rand should be assured that unlike in some other countries, information requested from another government by the IRS would be inadmissible as evidence against a U.S. citizen if it was seized by the foreign government in contravention of U.S. law.  He could start by reading U.S. v. Wolf, 601 F. Supp 435 (ND Ill. 1984) and U.S. v. Phillips 479 F. Supp. 423 (1979).

Rand isn't sure if “they’re willing to rewrite the treaty for me."  Indeed.  Phil West responds to this silliness with:
 “It’s wrongheaded, it’s inappropriate,” said West, a partner at Steptoe & Johnson LLP in Washington. “Whether this is the senator’s motive or not, it smacks of protecting financial secrecy for those who may have committed criminal tax fraud in the U.S.”
That's absolutely true and Rand's move is outrageous.


  1. Is Paul opposed to the US government turning info over to Switzerland on a US resident? That would appear to be the more logical position to take. However, I didn't get that impression from article. My understanding is under US law the IRS is actually quite limited to non existent in sharing information with countries the US doesn't have tax treaties or TIEA's with.

  2. Tim, Paul is "worried" that the Swiss will unreasonably search and seize their records on US persons, then hand those records over to the IRS, who will use them to make a case they couldn't make if they had employed such a search & seizure in the US. I put "worried" in quotation marks because I doubt very much that Rand Paul is worried about that at all. It's more likely that his ideology about the appropriate size of government has led him to identify information sharing as a means of enabling governments to collect taxes and therefore a target to be eliminated. Perhaps even more likely: someone with a pecuniary interest in preventing increased information sharing has drawn the connection to this ideology for him.