(a) IN GENERAL.—The Internal Revenue Code of 1986 is amended by inserting after chapter 3 the following new chapter:
‘‘CHAPTER 4—TAXES TO ENFORCE REPORTING ON CERTAIN FOREIGN ACCOUNTS
‘‘Sec. 1471. Withholdable payments to foreign financial institutions.
‘‘Sec. 1472. Withholdable payments to other foreign entities.
‘‘Sec. 1473. Definitions.
‘‘Sec. 1474. Special rules.
‘‘SEC. 1471. WITHHOLDABLE PAYMENTS TO FOREIGN FINANCIAL INSTITUTIONS.
‘‘(a) IN GENERAL.—In the case of any withholdable payment to a foreign financial institution which does not meet the requirements of subsection (b), the withholding agent with respect to such payment shall deduct and withhold from such payment a tax equal to 30 percent of the amount of such payment."
This is Jesse's response to the ZH article. He seems to agree with FRED.
on Sun, 03/28/2010 - 14:58
Not to be nitpicky, but these are not "capital controls."
Capital controls are restrictions on moving currency in and out of a country, in order to help to manage against volatile swings in valuation.
These are tax controls on foreign held assets, part of the admittedly widening grip of the US on its citizens wealth. It is almost assuredly in anticipation of a 'capital flight' from those who wish to evade taxes as you suggest.
China has capital controls. One cannot take their currency out of country when you leave. But given the huge amount of eurodollars and their relative free flow, it is a bit misleading to say that 'capital controls' are now in place.
It sounds nitpicky again, I know. But it is important. Because if the US ever does put in genuine capital controls, you know the dollar is on the precipice.
As it is this is just the taxman doing his thing, trying to crack the tax shelters, and upsetting some nations that made an industry out of it.