We have President Trump in our sights.
Having this week officially launched the Washington DC-based Campaign to Repeal FATCA, we’re lobbying to have America’s toxic, imperialistic global tax law swept into the dustbin of history.
I’ve been an outspoken critic of the Foreign Account Tax Compliance Act (FATCA) since it was rushed through Congress by the Obama administration in 2010. Finally coming into effect in 2014, FATCA’s purported aim is to catch US tax evaders who stash cash offshore. Global tax evasion is, of course, a major international problem that must be tackled head on. But FATCA’s dragnet approach is simply not effective in this regard.
Moreover, it is a masterclass in the law of unintended consequences. It has been wreaking havoc on the global financial system outside the US by requiring all non-US financial institutions – including banks, credit unions, insurance companies, investment firms and pension funds – in every country in the world to report data on all specified US accounts directly to America’s Internal Revenue Service (IRS).
In addition, it has turned law-abiding, middle-class Americans living overseas, of whom there are approximately 8m, into financial pariahs. These people, for example, are now routinely told by banks in their countries of residence that they cannot hold or open bank accounts because the banks do not want the extra burden and costs of having US clients.
FATCA also adversely affects US companies that operate internationally – and, therefore, impacts US jobs and the American and global economy. It disregards the mutual respect of sovereignty among nations too, while overstepping the limits of executive power at the expense of congressional authority, especially the Senate’s advice and consent to the ratification of treaties.
So, why are we launching the campaign in Washington now? For two main reasons.
First, with a change of administration in the White House, with the Republicans controlling Congress, with Donald Trump vowing to revoke some of Obama’s ill-conceived, overreaching executive orders, and with his team working on a tax reform package, this could be the best – and only – chance for repeal.
Second, under new rules just published on the IRS website, American citizens could soon be banned from travelling by having their passports revoked for unpaid taxes. FATCA has made tax returns considerably more complex and costly for US citizens living outside America due to the extra reporting requirements.
It seems that as a US appeals court hears a challenge to the Republican President’s controversial travel ban for citizens of seven Muslim majority countries, American citizens too could face a ban on travelling internationally thanks to the new powers of the IRS.
My co-leader of the Campaign to Repeal FATCA is former US diplomat and long-time Senate leadership staffer, Jim Jatras, who is assembling a team of experienced DC professionals to help push the repeal effort to higher heights.
Jatras recently stated: “Billions of dollars have been wasted worldwide complying with FATCA, billions of words have been written complaining about it. Now it’s time for action. When that tax bill gets to President Trump’s desk, we want FATCA repeal in it.”
With Obama in the White House, doing away with FATCA was virtually impossible, despite repeal bills introduced by senator Rand Paul and representative Mark Meadows. This is likely to be our last chance, and every effort will be made by the campaign to scrap this fatally flawed and far-reaching tax law for good.
City A.M.’s opinion pages are a place for thought-provoking views and debate. These views are not necessarily shared by City A.M.