[Congressional Record (Bound Edition), Volume 160 (2014), Part 6]
[Senate]
[Pages 8992-8993]
[From the U.S. Government Publishing Office, www.gpo.gov]




             UNANIMOUS CONSENT REQUEST--EXECUTIVE CALENDAR

  Mr. MENENDEZ. I thank the distinguished Senator from Arizona and a 
distinguished member of the Senate Foreign Relations Committee for his 
courtesy. I know he will be making comments in which I share his 
concerns and for which he has been very outspoken. I will try to 
condense my effort here.
  On Monday, the Department of Justice announced that Swiss bank Credit 
Suisse pled guilty to the criminal charge of helping American citizens 
cheat on their taxes, and agreed to pay a $2.6 billion fine. The bank 
admitted to using bogus entities to disguise undeclared U.S. accounts 
from American tax authorities, and it admitted to helping its clients 
arrange large cash transactions to skirt U.S. reporting requirements.
  The guilty plea means that the bank will be punished for its 
transgressions, and it serves as a warning to others who would engage 
in or enable tax evasion. But astoundingly, Credit Suisse will not be 
required to disclose additional names of U.S. citizens who hired the 
bank to help them cheat on their taxes and evade prosecution by U.S. 
authorities.
  As the Permanent Subcommittee on Investigations reported earlier this 
year, the Justice Department has only been able to obtain the names of 
238 Credit Suisse customers out of 22,000 U.S.-owned accounts at the 
bank. The reason for this is simple. Swiss bank secrecy laws forbid 
Credit Suisse and other Swiss banks from sharing information about 
their clients with U.S. tax authorities, even if those clients are 
actively violating U.S. tax laws.
  Luckily, we have a simple solution, one which we could enact right 
now with the agreement from this body. On April 1, the Foreign 
Relations Committee, with strong bipartisan support, reported out 
favorably a new protocol amending our tax treaty with Switzerland. For 
decades, tax treaties have played a key role in facilitating greater 
and more transparent trade and investment. They have helped protect 
American companies from double taxation and made it easier for them to 
explore new markets and business opportunities.
  They do this all while simultaneously protecting U.S. taxpayer 
privacy and information confidentiality. They enhance our efforts to 
prevent tax avoidance or evasion. The new protocol with Switzerland 
would not permit Swiss banks, like Credit Suisse, to withhold 
information on U.S. individuals who have, for years, hidden behind 
Swiss bank secrecy laws to avoid paying U.S. taxes.
  The protocol brings our tax treaty with Switzerland into conformity 
with both the entire internationally accepted standards on the 
information exchange as well as the most recent U.S. model tax treaty. 
It includes an arbitration provision to ensure that when disputes arise 
between the U.S. and

[[Page 8993]]

Swiss tax authorities over issues like the exchange of information, 
these disputes will be resolved expeditiously, rather than dragging on 
and frustrating cross-border tax enforcement.
  The Swiss government has already ratified the protocol. We should do 
the same. Credit Suisse pled guilty to abetting tax evasion--a criminal 
charge. But they were not forced to disclose the names of actual tax 
evaders because doing so would violate Swiss bank secrecy laws. 
Ratifying the treaty with Switzerland is therefore necessary.
  It will enable U.S. authorities to obtain information about these and 
other tax evaders who are still taking advantage of bank secrecy laws 
to avoid paying their fair share.
  I ask unanimous consent that at a time to be determined by the 
majority leader, in consultation with the Republican leader, the Senate 
proceed to executive session to consider Calendar No. 9, treaty 
document No. 112-1; that the treaty be considered as having advanced 
through the various parliamentary stages up to and including the 
presentation of resolutions of ratification; that any committee 
declarations be agreed to as applicable; that any statements be printed 
in the Record as if read; that if the resolution of ratification is 
agreed to, the motion to reconsider be considered made and laid upon 
the table; that the President be immediately notified of the Senate's 
action, and the Senate resume legislative session.
  The PRESIDING OFFICER (Ms. Baldwin). Is there objection?
  Mr. PAUL. Madam President, reserving the right to object, as you 
know, I have been a critic of these treaties for some time. This 
discussion has gone on for quite a while. I disagree with many of the 
implications of where these treaties would take us. But I realize there 
are some beneficial aspects of the treaties.
  But because of the critical invasion of privacy that these treaties 
would allow, I cannot support them. These treaties are an encroachment 
on our privacy and our constitutional right to privacy. Many of the 
previous treaties that we have had in the past focused on information 
specific to tax fraud.
  I am not opposed to getting the information of those who have 
committed fraud or broken the law, but you must have an accusation, you 
must submit some proof.
  We are going to have bulk collection of records without suspicion.
  As previously stated in the previous treaties, the information that 
was exchanged in the past under the current treaties had to show that 
they were for preventing tax fraud. The new treaty, though, is going to 
change the standard from looking for tax fraud--which seems to be what 
everybody is talking about--to saying that we will look for financial 
information that may be relevant.
  What we are doing is taking the standard down to something ``may be 
relevant,'' which could be a dragnet for getting everyone's 
information. It will be a deterrent to foreign investors both in our 
country as well as in other countries. I think at the very least every 
American, whether at home or abroad, deserves the right to the fourth 
amendment protections guaranteed by the Constitution.
  I want the record to be very clear. I certainly do not condone 
Americans who have not followed the letter of the law, but I can't 
support a law that endangers regular foreign investment and punishes 
every American regardless of whether there is suspicion that they have 
committed a crime.
  While I want the important benefits included in the tax treaties to 
be ratified, I cannot support a treaty that would pave the way for a 
law that would permit the IRS to share information of customers at U.S. 
banks with foreign governments. Imagine, we will be conceivably sharing 
information about customers here with governments that may well not 
even be our friends. Also, I cannot support a treaty that may 
facilitate the bulk collection of private financial data for all U.S. 
citizens living abroad. For those reasons, I object.
  The PRESIDING OFFICER. Objection is heard.
  The Senator from New Jersey.
  Mr. MENENDEZ. Very briefly, I am disappointed because basically what 
we are going to do--those of us who are law-abiding and pay our taxes 
have to suffer the consequences of those who cheat and go abroad to do 
so. When they do that, they undermine the ability of this government to 
have the resources to arm the men and women who serve us abroad, 
protect them, take care of their health care, and deal with the 
challenges of educating the next generation of Americans.
  Let me just say that this question that the treaty somehow 
infringes--first of all, if Switzerland is not a friendly country, I 
don't know what is. It is not a question of a country that isn't 
friendly, so let's remove that objection.
  The treaty supposedly infringes on the fourth amendment rights of 
U.S. citizens. Look, these bilateral tax treaties only permit the 
exchange of information that is foreseeably relevant to the collection 
of taxes.
  The proposed treaty also provides protection against fishing 
expeditions. To exchange information, the requesting country must 
demonstrate that the individuals targeted have engaged in activities 
that suggested they are engaging in fraud.
  The existing treaty with Switzerland requires the requesting country 
to establish tax fraud or fraudulent misconduct as a basis for the 
exchange. That standard has clearly proven to be too narrow for the 
purposes of prosecuting tax evasion, as demonstrated by the outcome of 
this Credit Suisse settlement, where the bank still does not have to 
hand over the names of individuals who use Credit Suisse accounts to 
hide their income.
  Now the wages and U.S. bank account interests of Americans are both 
reported to the IRS. There is no reason why people with foreign bank 
accounts should be able to hide their money from the IRS in a way that 
average, hard-working Americans cannot. It boggles my mind that we are 
going to treat average, hard-working Americans in a different way than 
those who have the money to cheat and ultimately avoid their 
responsibility to our collective society, so we will continue to raise 
this issue.
  I won't expound upon it any more--I have plenty to say--in deference 
to the Senator from Arizona, who was gracious enough to yield the 
floor.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Arizona.
  Mr. McCAIN. Madam President, I ask unanimous consent to address the 
Senate as in morning business for such time as I may consume.
  The PRESIDING OFFICER. Without objection, it is so ordered.

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