The IRS is now reaching into foreign bank accounts in pursuit of taxpayers. Using a new weapon provided by Congress in 2010, the IRS will withhold 30%of amounts paid to foreign banks from U.S. investments — unless the foreign bank has an agreement with the IRS to provide information about its U.S. account holders. If we were to do that sort of thing, it would no doubt be illegal. However, we can see by observation that nothing done by the Obama Administration is illegal, right? Especially when the thing originates in Congress.
Compounding this, the Administration is proceeding to use it against Russia, to try to offset its wimpish position on Russian Ukraine policy. Clamping a 30% withholding upon U.S. investment payments to Russian banks will be a huge financial hit on the Russian banking system and that’s to start in July assuming Mr. Putin fails to back off.
Flash back to the Great Depression: An international trade war smothered world trade, accelerating economic decline. The infamous “Smoot-Hawley Tariff” on imports was the U.S. contribution; you likely read of it in school. Sick economies don’t need governments shutting off investments and payments, right? We learned that the hard way back then; why are we doing it again?
Well, our take is: President Obama is reacting to being seen as a wimp. Why not, this is a President who believes in raising taxes and upping costs to his sick economy, isn’t he? Isn’t that Obamacare? And we have yet to hear of the inevitable retaliation; no other government can afford to be seen by its citizens letting the U.S. push it around. Wonderful!
U.S. foreign policy these days seems to us to consist of annoying the hell out of everybody and then handing them a barrel full of borrowed money. Feel the love yet?