FATCA: America’s policy of regaining lost taxes is skewed
This week it was revealed by the global media that Wal-Mart, the American multinational retail corporation, owns more than $76 billion of assets in overseas tax havens.
The story was covered by a whole host of media outlets, including Bloomberg, USA Today, the New York Post and many more.
Wal-Mart is doing nothing wrong as it has structured itself properly and efficiently. Therefore it doesn’t owe any tax or is not accused of any wrongdoing.
This is much like the vast majority of the 7.6 million Americans living overseas. So why does the highly contentious Foreign Account Tax Compliance Act, or FATCA, force these mostly middle-income Americans to comply with the drawn-out, cumbersome, expensive process, to prove they are not tax evaders, when corporates are not faced with the same scrutiny?
To me this policy – of retrieving supposedly undisclosed taxes from American expats but not big business – is unfair, skewed and nonsensical.
I have no problem in giving my full support to FATCA’s main objective, which is to catch out tax evaders. In principle, a very noble objective as I’m sure anyone would agree. But I do not in any way support the ineffective dragnet way in which it is being carried out.
Since it came into effect last summer, millions of hard-working U.S. citizens living and/or working abroad must report their private financial information to the IRS. Of course I would agree that everything possible must be done to try and eradicate tax evasion, but the costly, burdensome, ineffective approach of FATCA is certainly not the answer.
I have spoken out on countless occasions against FATCA – indeed, I was recently presented with an award in New York for my campaigning on this issue – and I will continue working as hard as I can to see the law repealed. It is fatally flawed and as we have seen in its first year of operation, it has given us a masterclass in the law of unintended consequences.
I’m referring here, amongst other things, to the fact that Americans overseas are now being routinely ejected from banks and other financial institutions in their adopted countries because they are deemed more trouble than they are worth due to FATCA’s onerous regulations.
American firms operating in international markets as well as the U.S. are also feeling the negativity of FATCA. And as such, down the line we’ll see America’s worldwide competitiveness damaged, which will in turn affect U.S. and global economic growth.
With this issue clearly being of major importance, in a blog I wrote earlier this month, I called on America’s presidential candidates to come clean on their viewpoint regarding FATCA. This law affects millions of ordinary Americans all over the world, as well as U.S. companies operating globally, so candidates running for the White House who support FATCA must validate their reasons why, whilst those who are against it need to stress to voters why their believe it is profoundly flawed and what steps they will take to see it revoked.
The issue of FATCA must therefore play a crucial part in America’s conversation ahead of the 2016 election. For everyone’s sake.