[Congressional Record Volume 158, Number 113 (Thursday, July 26, 2012)]
[Extensions of Remarks]
[Page E1335]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




         RED TAPE REDUCTION AND SMALL BUSINESS JOB CREATION ACT

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                               speech of

                          HON. RUBEN HINOJOSA

                                of texas

                    in the house of representatives

                        Wednesday, July 25, 2012

       The House in Committee of the Whole House on the state of 
     the Union had under consideration the bill (H.R. 4078) to 
     provide that no agency may take any significant regulatory 
     action until the unemployment rate is equal to or less than 
     6.0 percent:

  Mr. HINOJOSA. Mr. Chair, I rise today in support of the Amendment 
offered by my esteemed colleague from Florida, Mr. Posey (#25). His 
Amendment would ensure that the rule recently approved by the Internal 
Revenue Service requiring that interest payments on foreign deposits be 
reported to the IRS would not move forward. This is extremely important 
to the region which I represent, deep South Texas. Our community banks 
and local economies benefit from investments and deposits from non-
residents, and would be harmed by the serious loss of capital caused by 
these depositors fleeing our communities. Many of these depositors have 
chosen to bank in the United States because of the stability of our 
financial institution system. If this ruling goes into effect, and 
these deposits evaporate, the capacity of these banks to invest in the 
local economies diminishes.
  A Mercatus Center 2004 study of a similar rule projected that $88 
billion of capital would exit United States banks if the rule were to 
take effect. At a time of extreme economic fragility, we need this 
capital to stay on our shores. Additionally, many foreign depositors 
have chosen to bank in the United States for security reasons; their 
home countries may be politically unstable, and they fear that personal 
financial information released by the United States may fall into the 
wrong hands, making them a target.
  Lastly, the Internal Revenue Service has exceeded its authority. 
Foreigners do not pay taxes on interest earned on deposits, so there is 
no reason for these deposits to be reported to the IRS. Congress 
intended to attract capital to the United States by allowing these 
deposits to go interest-free; to force these depositors to report will 
run contrary to this original intent.
  I urge all my colleagues to support this Amendment that will prevent 
much-needed capital from fleeing the American economy.

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