America’s controversial global tax law, FATCA, has been slammed as “a masterclass in fiscal imperialism and the law of unintended consequences,” by the chief executive of one of the world’s largest independent financial advisory organizations.
The comments from Nigel Green, deVere Group CEO and founder, come as it is revealed that, despite FATCA, America is increasingly secret in matters of financial data.
In addition, because of FATCA, a growing number of U.S. citizens are giving up their American citizenship.
Under the Foreign Account Tax Compliance Act (FATCA), which came into effect in July 2014, all non-U.S. financial institutions are required to report the financial information of American clients who have accounts holding more than $50,000 directly to the IRS.
The official aim of the legislation is to try and combat tax evasion. However, its opponents claim FATCA’s dragnet approach will be highly ineffective at achieving this serious and worthwhile objective.
“FATCA is becoming increasingly recognized in America and abroad as being a masterclass in fiscal imperialism and the law of unintended consequences,” Green said.
A deVere Group survey undertaken earlier this year revealed that a massive 73 percent of Americans living overseas are tempted to give up their U.S. passports.
“This is because this toxic legislation turns law-abiding Americans living overseas, of whom there are approximately eight million, into financial pariahs,” Green said.
“For instance, many U.S. citizens cannot even now hold a bank account in their country of residence as foreign banks routinely feel Americans are too much trouble thanks to FATCA’s onerous and costly rules by which they would need to abide to take them on as clients.”
“By using its super power status, the U.S. has over the last few years been coercing foreign financial institutions around the world into accepting FATCA, or facing stiff financial penalties and, in effect, being frozen out of U.S. markets,” he said.
The U.S. intended to “provide ‘equivalent levels of reciprocal automatic exchange’ to foreign ‘FATCA partners,’” Green references the United States’ No. 3 ranking in the recent Financial Secrecy Index 2015 as proof that such reciprocation hasn’t happened.
“No longer can the American government claim that FATCA is anything other than a one-way, extraterritorial diktat that burdens other countries’ financial institutions and their clients, which violates other countries’ sovereignty, and which is detrimental to their taxpayers,” Green said.
“FATCA is misguided and ill-conceived. More must be done to have it consigned to the history books,” Green said.
Meanwhile, OneNewsNow reported that FATCA is having adverse effects on millions of American expatriates “who simply want to work, save, and live their lives without being hammered by the government.”
“There are a number of homeland American journalists who have maligned us in the media, always associating us with wealthy tax cheats living the high-life overseas. That is the furthest from the truth,” Keith Redmond, an American living overseas, told OneNewsNow.
“We are average people, just like in the United States. We’re trying to work, save, and just live our lives.”
Redmond compared FATCA to a “sledgehammer trying to catch a few ants.”
Redmond says he and many other Americans overseas are seeing their banking and checking accounts closed. In certain countries, he adds, Americans are being denied mortgages or having their mortgages revoked on their homes.
Redmond says many Americans overseas feel as though they have no other choice but to rescind their citizenship.
“The fact is that we do pay taxes, most of the times at higher rates than if we lived in the United States,” he continues.
“We pay those taxes where we live, because that is where we live, and also for the infrastructure where we live and for the benefits and services that we get where we live – in France, Germany, Singapore, Hong Kong, Australia, etcetera.”
Ironically, the U.S. government’s refusal to take part in a global system for exchanging bank data has moved it above the Cayman Islands in a financial secrecy list compiled by the Tax Justice Network, Bloomberg reported.
The U.S. trails only Switzerland and Hong Kong in a league of offshore havens after refusing to comply with information-sharing standards created by the Organization for Economic Cooperation and Development, according to London-based TJN, which campaigns for greater transparency in finance.
That’s despite the U.S. creating its own system of data collection: FATCA.
(Newsmax wire services contributed to this report).