ABSTRACT
The Reagan Administration supported very forcefully the repeal of the thirty percent withholding tax on foreign interest income, contained in section 127 of the 1984 Deficit Reduction Act. Congress left to specific regulations issued by the Treasury Secretary the task of filling in legislative gaps in this area. More specifically, Congress decided to put an end to the uncertainty created by the Internal Revenue Service audits questioning the legitimacy of finance subsidiaries activities. The repeal applies only to obligations issued after the date of enactment. The exclusion of "assumed debt" was meant to give the NA economy time to adapt to the new situation created by the repeal. The exceptions to the repeal created by the 1984 legislation follow in large part the logic of the three bills favourable to the repeal—H.R. 3025, H.R. 4029 and the Senate phase-out. The powers attributed by the repeal legislation to the Secretary of the Treasury are quite substantial.
