Government Finance: Carrots for Foreign Investors

In financing its $175 billion budget deficit, the U.S. Government has relied heavily on foreign investors. To attract investment from abroad, Congress passed a law two months ago that eliminated the 30% withholding tax that foreigners had been paying on interest from American securities. Overseas banks and other institutions have been major buyers of U.S. Treasury bills, notes and bonds. Many individual foreigners, however, have been reluctant to buy Treasury bonds because they must supply their names and addresses when investing. Europeans, in particular, have long preferred making investments anonymously to avoid the scrutiny of tax collectors. Last week...

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