Some senators think they have found a way to get around the problem of international hackers stealing the tax information of American citizens. Unfortunately, that plan is to have the United States simply turn over that information whenever a country that has signed up to international treaties on taxes requests it. Sen. Rand Paul (R-Ky.) has put a hold on the plan, with the intention to protect the Constitution, American taxpayers, businesses, and the nation’s economic health by blocking these dubious treaties. Far from benign agreements, these tax accords are significant threats to the United States. One in particular, the Convention on Mutual Administrative Assistance, is particularly troublesome.
Last November the Senate Foreign Relations Committee passed the Convention on Mutual Administrative Assistance, along with tax treaties, with seven countries. The United States government signed the convention on May 27, 2010, but it cannot come into force unless it is approved by the Senate. Sen. Paul’s courageous hold on the treaties has prevented them from being approved by the chamber thus far. These treaties, and the convention in particular, would require the United States, “to share with foreign governments the financial information of foreign individuals and businesses with accounts in the U.S. Additionally, foreign governments would be required to share with the U.S. the financial information of Americans’ and U.S.-based businesses with accounts overseas.”
The United States is a magnet for foreign investment, but the convention could threaten this status. If the convention is approved, repressive states like Russia and China could use it to get information about political opponents who have investments or accounts in the United States and use this information to cause them or their families financial harm. In the process, information about American banking, businesses, and investors could be divulged, resulting in possible violations of the Fourth Amendment rights of Americans “to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures.” It will have been the United States government, which is charged with safeguarding Fourth Amendment rights, facilitating its degradation.
The United States government has proved itself to be particularly inept at protecting its citizens’ data. The Internal Revenue Service was hacked, resulting in the theft of tax information of over 100,000 people. Russia is the likely culprit behind the attack. Furthermore, the Office of Personnel Management failed to prevent a hack of their system from China, which resulted in the Chinese government obtaining the fingerprints of 5.6 million people. If the government makes so many errors trying to protect our data, it is reasonable to wonder how many more errors will be made, then, if sensitive information is voluntarily exchanged.
Also at stake is how foreign governments could use the financial information covered by the convention to connect the dots with other intelligence information they have gathered about Americans. Unscrupulous governments — and it is difficult to name a scrupulous one — will profit at the expense of the United States once they get financial information that must be surrendered if the convention is approved by the Senate. If the government can’t protect the sensitive information of its citizens from hackers in hostile foreign countries, it should, at a bare minimum, not voluntarily surrender it to them through a freely negotiated treaty.
When country is no longer willing to protect the financial data of its citizens, it sends a message to other actors in the international system that it is holding a garage sale of information of national importance. The winning bidders will be those who promise that the information will yield international cooperation. Astute observers know better. The international system is archaic, filled with temporary alliances, and marked by a never ending struggle for power among states. Sen. Paul understands that it is unwise to surrender this information to international competitors for virtually no reason. As he previously explained, “[t]he treaties in the past had a standard that said that you had to be committing tax fraud or that had you [sic] to be engaged in fraudulent activity, the same way every American here expects that the government’s not going to look at your bank account unless they have gone to a judge with evidence that you are cheating on your taxes.”
Sen. Paul is seeking to block a treaty regime that would codify phishing for financial information under the jurisdiction of the United States. This novel and dangerous approach would harm the right to privacy enshrined in the Constitution and would establish a precedent for an American foreign policy that promotes naïveté over competence, and accommodation over confidently standing by the Constitution. The Convention on Mutual Administrative Assistance would weaken our economy, causing domestic and international harm to the United States. Sen. Paul is right to block this approach. The Senate should show its gratitude by removing the treaties from consideration.