FATCA Repeal Call Backed By Republicans
Foreign Account Tax Compliance Act (FATCA) watchers will have found the Republican National Committee vote to repeal the controversial tax law no surprise after all the ballyhoo leading to the decision.
The Republican National Committee’s annual meeting voted to support a resolution to scrap the law.
The main grounds for the resolution was FATCA is causing increasing numbers of US expats to renounce their citizenship.
However, figures from the government show only around 1,800 citizens gave up their passports and nationality last year.
The figures double that of the previous year.
The statistics do no note the reason why these Americans gave up citizenship.
The US has a population of around 315 million, of whom about 6 million are expats.
The Republicans claim FATCA is to blame because many overseas banks and financial institutions are refusing to do business with US customers as the reporting rules are too onerous.
FATCA demands foreign financial institutions register with the Internal Revenue Service (IRS) by April 25. If they do not, US banks dealing with them must withhold 30% of the value of all transactions with the foreign bank should they fail to report the financial affairs of their US customers.
Many pundits in America are cynical about the Republican call to scrap FATCA, claiming the policy is short-termist and only aimed at raising funds for the approaching mid-term elections from overseas financial companies opposing FATCA.
Assuming taxpayer guilt
Andrew Quinlan, president of the Center for Freedom and Prosperity. “FATCA is an unmitigated disaster. The aim is to fight tax evasion but the government admits FATCA will claw back only a small amount of the true amount estimated lost to evasion.
“FATCA will automatically scan the financial affairs of millions of Americans with bank accounts and investments overseas for evidence of guilt regardless of whether they are trying to hide their assets or not.
Quinlan also heads an alliance of 20 or so anti-FATCA groups.
FATCA is due to start on July 1, 2015. Few believe the Republican move will result in the repeal of the law, and at best, will only delay the fateful day when reporting begins.
The law calls on around 700,000 foreign financial institutions to identify American customers and then to send information naming them and listing details of any accounts with balances of $50,000 or more in the tax year to the IRS.