Senator Paul stirs business ire over blocking of tax treaties

By Patrick Temple-West

WASHINGTON (Reuters) - Senator Rand Paul is coming under pressure from some multi-national businesses to drop his opposition to tax treaties between the United States and other nations.

Citing privacy concerns about Americans' tax data, Paul, a Republican and libertarian, has single-handedly blocked Senate action on treaties with Hungary, Switzerland and Luxembourg that have been signed by authorities on both sides, but have been awaiting Senate review since 2011.

At least six other tax treaties or treaty updates -- with Chile, Spain, Poland, Japan, Norway and Britain -- may soon be added to the Senate's queue for confirmation votes.

Major U.S. businesses such as IBM Corp and Fluor Corp are lobbying for Senate action on tax treaties, according to Senate lobbying disclosure documents.

"How many treaties will be held hostage?" asked Cathy Schultz, a lobbyist for the National Foreign Trade Council, a Washington, D.C.-based group that represents companies such as Caterpillar Inc and Pfizer Inc.

Paul has said he is concerned that recent treaties would give foreign governments too much access to U.S. citizens' tax information, a stance that has some support among like-minded conservative libertarians.

"Rand Paul is not a typical senator who may bend over to business lobbyists," said Chris Edwards, director of tax policy at The Cato Institute, a libertarian think tank.

"I am very concerned about this increasingly aggressive international exchange of information," Edwards said.

NO APPROVALS SINCE 2010

No new tax treaties or treaty updates have been approved since 2010, when Paul was elected as the junior senator from Kentucky on a wave of support for Tea Party-aligned Republicans.

Paul recently declined to answer questions from a reporter in a Capitol hallway about the "hold" he has placed on the treaties. Under Senate rules, one senator can prevent a motion from reaching a vote on the Senate floor.

Paul's staff did not reply to repeated requests for comment.

"There's never really been an objection of this sort and a hold that's gone on this long," said Nancy McLernon, president of the Organization for International Investment, which lobbies in Washington on behalf of foreign companies.

In an effort to sway the senator, McLernon said her group would be lobbying both parties to draw attention to the tax treaties. "Let's stop with the self-inflicted wounds," she said.

The United States has tax treaties with more than 60 countries, ranging from China to Kyrgyzstan.

The agreements previously have routinely won Senate approval with little controversy and accomplished their main purpose of preventing double-taxation of income and profits.

In recent years, tax treaties have begun to play an increasing role in efforts by the United States and major European Union countries to crack down on tax avoidance.

The U.S. Treasury in 2012 began signing new tax pacts with countries as part of implementation of the U.S. Foreign Account Tax Compliance Act, a 2010 anti-tax-evasion law.

The law, known as FATCA, which takes effect in January 2014, will require foreign financial institutions to disclose to the United States information about Americans' accounts worth more than $50,000.

SWISS A DRIVING FORCE

Switzerland, a long-time bastion of banking secrecy, is under international pressure to change its ways, and FATCA has been a driving force in that. The United States and Switzerland in February signed a FATCA implementation agreement that would make more information available to U.S. authorities about the financial interests of Americans in Switzerland.

But the taxpayer information exchange cannot go into force without Senate approval of the U.S.-Swiss tax treaty.

The Senate's delayed action on tax treaties could convince other countries to stop negotiating with the United States on tax matters, said John Harrington, a former Treasury tax official who is now a partner at law firm SNR Denton.

Paul, seen as a possible 2016 presidential contender, has taken a position that sets up a clash of traditional Republican interest groups: big business and libertarian ideologues.

In this sense, Paul is in the forefront of the party's search for a new identity since Republicans lost the presidential race last year, as well as numerous seats in the House of Representatives.

Looking toward a possible 2016 White House bid, Paul told reporters earlier this month that he will visit early-voting states this year and make a final decision next year.

New Republicans such as Paul are shifting the party away from its business-first agenda, said Dan Holler, communications director for Heritage Action, a conservative group.

"The party is not being reflexively pro-business," he said.

(Reporting by Patrick Temple-West; Editing by Kevin Drawbaugh and Leslie Adler)

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Republican senator sees Obama budget offer as positive

WASHINGTON (Reuters) - South Carolina Senator Lindsey Graham on Sunday became the first prominent Republican to publicly praise, however lukewarm, the budget proposal the White House outlined last week.

Graham said that while he believes President Barack Obama's plan is overall bad for the economy, "there are nuggets of his budget that I think are optimistic." He was speaking on NBC's "Meet the Press" program.

Graham, a conservative who has deviated from party positions in the past, and has said he would consider raising up to $600 billion in new tax revenue if Democrats accept significant changes to Medicare, the government health program for elderly Americans, and Medicaid, the health safety net for low-income people.

The White House on Friday said the president would propose a budget that would offer cuts to so-called entitlement programs such as Social Security, a retirement program, and Medicare in exchange for increased tax revenues and a commitment to spend money on education and infrastructure repair.

Obama's proposal, which will formally be made public on Wednesday, is a symbolic document, and both the Senate and House of Representatives have already passed their own budget resolutions.

The president's aides have said he hopes to use the offer to appeal to enough middle-of-the-road lawmakers of both parties to pass a broad deal to reduce the budget deficit.

Obama also hopes to reverse the deep spending cuts that automatically kicked in March 1 as a result of the failure of the White House and Congress to reach an agreement on replacing them.

Graham's reception of the president's budget proposal is warmer than fellow Republicans and some of the president's own allies have accorded it so far.

House Speaker John Boehner said last week the president was ignoring Republicans' staunch opposition to any tax hikes. And independent Senator Bernie Sanders, who votes with the Democrats, said he would oppose any efforts to lower payments to Social Security beneficiaries.

But Graham said that the president's offer contained approaches to cutting spending that he supports. One is the proposal to index cost-of-living increases for government program benefits to a less-generous measure of inflation.

"The president is showing a little bit of leg here, this is somewhat encouraging," Graham said. "He has sort of made a step forward in the entitlement-reform process."

Obama has invited 12 Republican senators for dinner on the day of the budget release as part of an effort to soften resistance among the opposition political party.

"The president's focus, in addition to the regular order process that members of Congress say they want, is to try to find a caucus of common sense, folks who are willing to compromise, that don't think compromise is a dirty word, and try to get something done," White House senior advisor Dan Pfeiffer said on ABC News' "This Week with George Stephanopoulos" program.

(Reporting By Aruna Viswanatha and Philip Barbara, writing by Mark Felsenthal)

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Another Democratic Senator Flips on Gay Marriage

Another Senate Democrat has come out in support of same-sex marriage, which leaves six Senate Democratic holdouts who have yet to embrace marriage equality. Today, Sen. Bill Nelson, D-Fla., flipped and announced that he now supported same-sex marriage.

The senator made the announcement during an interview today with the Tampa Bay Times, saying, "It is generally accepted in American law and U.S. society today … that all men are created equal, that they are endowed by their creator with certain unalienable rights, that among these are life, liberty and the pursuit of happiness. I believe that. The civil rights and responsibilities for one must pertain to all," he told the Tampa Bay Times.

Nelson later confirmed his switch to ABC News.

READ MORE: Majority of Senate Backs Same-Sex Marriage

This marks the ninth Senate Democrat since last week to reverse course and now embrace same-sex marriage. The six Senate Democrats who continue to oppose marriage equality in some way are are Heidi Heitkamp of North Dakota, Joe Manchin of West Virginia, Mary Landrieu of Louisiana, Joe Donnelly of Indiana, Mark Pryor of Arkansas and Tim Johnson of South Dakota.

Two Republican senators have endorsed same-sex marriage: Rob Portman of Ohio and Mark Kirk of Illinois.

READ MORE: Republicans Predict Fraud, Bestiality if Gay Marriage is Legal

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Republican senator with gay son now backs gay marriage

WASHINGTON (Reuters) - Ohio Republican Senator Rob Portman has reversed his longtime opposition to same-sex marriage after learning two years ago that his son is gay, Ohio newspapers reported on Friday.

Portman, who played a key role in Republican Mitt Romney's 2012 presidential campaign, on Thursday told reporters from Ohio papers including the Cleveland Plain Dealer and Columbus Dispatch that his 21-year-old son Will informed the senator and his wife that he was gay in February 2011.

"It allowed me to think of this issue from a new perspective, and that's of a dad who loves his son a lot and wants him to have the same opportunities that his brother and sister would have - to have a relationship like Jane and I have had for over 26 years," the papers quoted Portman as saying in an interview in his office.

Portman's announcement comes about a week before the Supreme Court is to hear oral arguments in two cases related to gay marriage. One case is challenging the 1996 federal Defense of Marriage Act, which defines marriage as a union between a man and a woman.

In a related case, the court will also hear arguments that question a California law, known as Proposition 8, banning gay marriage. The cases will be argued on March 26 and March 27.

Portman's son, now a junior at Yale University, told the senator that being gay was "not a choice," and that he had been gay "since he could remember," Portman told the papers.

He added that his views on the matter have evolved over the past two years, and he had consulted clergy members and friends including former Vice President Dick Cheney, who has an openly gay daughter.

A spokesman for Portman could not be immediately reached for comment.

Portman told the Plain Dealer he now believes same-sex couples who marry in states where it is legal should be eligible for the same federal benefits granted to heterosexual couples.

He does not, however, plan to sign onto any legal briefs in the Supreme Court cases.

Portman previously backed the Defense of Marriage Act that is now at the heart of the battle in the Supreme Court.

(Reporting by Sarah N. Lynch; Editing by Vicki Allen)

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