The move yesterday by US senator, Rand Paul, a Kentucky Republican and possible 2016 presidential candidate, to introduce a bill that would repeal parts of the highly controversial Foreign Account Tax Compliance Act (FATCA) represents a landmark moment in the mission to have this damaging tax act repealed.

Thanks, largely due to encouragement from anti-FATCA lobbyists, such as Washington-based lawyer James Jatras, Senator Paul has written to his senate colleagues about the detrimental effects of this new law and the fatally flawed claims that it would prevent tax evasion. And, I for one, think his actions should be seen as nothing short of heroic.

It’s a hugely positive step in the right direction that Sen. Rand Paul has taken this courageous stand against FATCA.  Why? Because FATCA is a law that will do little, if anything, to curb tax evasion – purportedly its primary objective – but it will reduce foreign investment in the US and threaten American jobs, will impose unnecessary costs and burdens on foreign financial institutions, will violate some local foreign laws and potentially damage important international relations, and will turn American citizens living outside the US into financial pariahs.

I’m pleased to report that there has already been some heavyweight support for the bill.  For instance, Bill Cheney, the president and CEO of the Credit Union National Association (CUNA) has written an open letter championing Mr Rand’s stance.

There appears to be something of a welcome sea change of opinion taking place in Washington on this issue.  As such, I hope foreign governments who are yet to sign up to FATCA through an intergovernmental agreement (IGA) will now feel more emboldened to reject the fiscal imperialism that the US Treasury is trying to impose worldwide.

The bill introduced by Senator Paul follows the Texas Bankers Association and Florida Bankers Association posting a lawsuit last month against the Treasury and Internal Revenue Service (IRS), citing that FATCA will be economically destructive.

FATCA, which Washington intends to implement from 1st January 2014, requires every single financial institution in the world to report all their American clients’ financial activities directly to the US Internal Revenue Service (IRS), or be issued with a 30 per cent withholding tax.

Nigel Green deVere Group

Blog written 9th May