“America’s new law on tax compliance is heavy-handed, inequitable and hypocritical.
In the depths of recession in 2010, a jobs-obsessed Congress passed the Hiring Incentives to Restore Employment Act. Bolted on to it was the arcane-sounding Foreign Account Tax Compliance Act. There was scant debate about FATCA, as it is more commonly known, because it was touted as a way to bring in money by curbing offshore tax evasion. In tough times, such “revenue-generators” are no-brainers.
Going after tax dodgers is understandable. But FATCA, which will take effect on July 1st, is overkill.
America is the only large economy to tax its citizens on everything they earn anywhere in the world. FATCA’s purpose is to ensure that not a centime or rouble that a “US person” has stashed away goes undetected by the IRS. In a piece of extraterritoriality stunning even by Washington’s standards, the new law requires banks, funds and other financial institutions around the world to report assets held by American clients or face a ruinous 30% withholding tax. America is, in essence, using threats to outsource its financial policing. This is working: so far, more than 77,000 financial institutions have agreed to pass information to the IRS.”
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