I'm quite impressed by this attempt from some conservative bloggers (Don Surber, Say Anything, etc) to turn the absolute least controversial aspect of Barack Obama's tax proposals into a thriving scandal. Say Anything says "Obama's tax changes are so burdensome and complicated that foreign investors are actually thinking about pulling out of American markets." Don Surber says simply that "Obama wants to dump free trade." What on earth are they talking about?


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They're talking about this article from the Telegraph that catalogs complains about changes in American accounting and withholding rules for British banks that contract with the IRS. (If you're curious, the proposal is on pages 41 and 42 of the administration's tax green book.) What I find impressive is that, while these rules might impose additional administrative costs on banks, they have nothing -- really, absolutely nothing -- to do with investors 'pulling out of American markets,' much less 'free trade.'

The rules are entirely about getting Americans with accounts and investments abroad to pay taxes that they are already legally obligated to pay. There might be some practical disagreement about the best way to go about doing this, but as far as know no one makes a serious argument for why we shouldn't be enforcing existing US tax obligations. Plenty of unserious arguments, though.