What would you do?

My neighbor has a dog that is constantly roaming the neighborhood.(when he isn't tied)
The dog barks all day long while tied in the yard.
I have spoken to the owner before and without actually telling me to piss off....he basically said piss off.

This is starting to really get on my nerves even more lately.
When I let my dogs out in my fenced yard to play, the neighbors dog is on the other side of the fence freaking out which of course gets my big dog going.
A few of the neighbors have already called the dog catcher.
I was told that if they receive one more complaint, they will take the dog away.
(Can they really do that?)
Any suggestions?
I don't want to see the kids lose their dog but it is getting so bad that it is becoming miserable to let my dogs out to play.
I keep my dogs in check and only have a problem with my big dog when the other dog is growling at him.

I am not a really nice person,I would turn it in,if you have spoken to him and got that kind of response then what else are you supposed to do? If it is annoying now it will just get worse with every passing day