l****z
发帖数: 29846 | 1 By Peter W. Dunn
Buried in an ostensible jobs bill signed by President Obama last year is a
little-noticed job-destroying government regulation that threatens to
trigger a massive outflow of capital from the American economy.
The U.S. economy is in bad shape. Many want the federal government to fix
it -- to end the deficits, create jobs, and get America back onto the track
of growth and stability. President Obama came to Washington with great
promises: to restore international respect for the United States and to
bring back the jobs. When signing the HIRE Act of 2010 on March 18, 2010,
President Obama said:
A consensus is forming that, partly because of the necessary -- and often
unpopular -- measures we took over the past year, our economy is now growing
again and we may soon be adding jobs instead of losing them. The jobs bill
I'm signing today is intended to help accelerate that process.
Now the HIRE Act of 2010 contains a time bomb called FATCA (Foreign Account
Tax Compliance Act), which has indeed accelerated a process. Unfortunately
that process is not job-generation, but job-destruction caused by an exodus
of capital from the United States. Investment means jobs; a departure of
investment capital means job losses. Thus, the HIRE Act is really the "FIRE
Act."
FATCA (Foreign Account Tax Compliance Act) is the brood of FBAR (Foreign
Bank Account Report). FBAR requires that U.S. persons divulge foreign
accounts to the Treasury Department, but few knew about or ever complied
with it (see "When Government turns Predator").
To stanch the bleeding of U.S. capital into secret bank jurisdictions like
the Cayman Islands and Switzerland, Congress introduced FATCA into law as
part of the HIRE Act. FATCA requires that foreign financial institutions (
FFIs) reveal the accounts of U.S. persons to the IRS. The FFIs will then
have to collect tax withholdings for the IRS from these clients. If by
January 1, 2014 the FFI is unwilling to reveal its U.S. clients' accounts,
the IRS will impose a punitive 30% withholding on all payments to the FFIs,
on dividends, interest, and gross sales of stocks, bonds, and financial
derivatives.
Let's suppose that a foreign investor trades stocks on a U.S. exchange, but
his broker is FATCA non-compliant. One day he buys 10,000 shares of XYZ at
$25 per share, and the next day, he takes advantage of a nice uptick of $1.
00 in XYZ and sells at $26 per share. He makes a tidy profit of $10,000.
But because his broker is non-compliant, the IRS now withholds 30% -- not of
the profit, but of the gross proceeds of the sale! So the client now
receives the sum of $260,000 minus 30%. The foreign investor is unhappy
because his $250,000 investment has become $182,000. If he wants his money
back, he must file a U.S. tax return.
No investor would accept such conditions. Hence, an FFI must either comply
with the invasive regulations of FATCA or simply abandon the U.S. markets.
After some study, FFIs have warned that the costs of FATCA compliance will
be in the hundreds of millions and likely in excess of whatever taxes that
the IRS could gather through its enforcement (not that the IRS cares about
that!). It is likely that many FFIs will simply choose to leave the United
States, taking their clients' money with them. In an open letter, "Farewell
America," Wegelin & Co., a private Swiss bank, cited their reasons for
leaving the United States: excessive regulations, tax issues, and above all,
the insolvency of U.S. government. Now add the expense of FATCA, and many
other FFIs are going to follow Wegelin's lead. American Citizens Abroad has
cited Japanese and European FFIs as indicating a strong likelihood that
they would pull out of the United States.
FFIs could also face privacy lawsuits from affected customers. Canada's
privacy laws, for example, may not permit banks to divulge clients' account
information, for compliance is voluntary. Thus, Canada and several other
countries would probably require a change in their privacy laws before their
FFIs could lawfully comply with FATCA.
FATCA's enforcement of U.S. tax globally has resulted in serious alarm and
backlash. FATCA is a clear violation of President Obama's campaign promise
on July 2007:
To renew American leadership in the world, I intend to rebuild the alliances
, partnerships, and institutions necessary to confront common threats and
enhance common security. Needed reform of these alliances and institutions
will not come by bullying other countries to ratify changes we hatch in
isolation. It will come when we convince other governments and peoples that
they, too, have a stake in effective partnerships.
FATCA is an attempt to impose unilaterally the collection of U.S. taxes
without consideration of the laws and the rights of sovereign nations, and
that makes it bullying of the worst kind. In response, some FFIs are
already turning away U.S. citizens and closing their existing accounts;
their business is not worth the hassle anymore.
U.S. citizens abroad, numbering about six million, would normally be America
's goodwill ambassadors. But they have become angry because of the threat
of excessive FBAR penalties. Those who thought they could ignore FBAR now
dread FATCA, which will force their FFIs to tattle on them. An increasing
number of Americans are renouncing their U.S. citizenship. The U.S.
consulates have had so many requests for renunciation that they have started
arranging group sessions, like the one at the U.S. Consulate in Toronto in
October. Moreover, some Americans abroad have pulled all of their
investments out of the United States and are also planning their vacations
to non-U.S. destinations -- not from anger alone, but also from fear that
border guards will arrest them and that a computer system will soon link the
IRS to border enforcement.
Richard W. Rahn writes in the Washington Post that FATCA has already sent
foreign capital fleeing. He claims that the people running Washington are "
mental midgets" unaware of how their policies affect the economy. He
estimates that FATCA will cause the departure of an estimated $14 trillion
of private foreign investment, destroying as many as 10,000,000 jobs in the
United States.
By signing the HIRE Act with its FATCA provisions, President Obama has
bullied our allies, penalized FFIs, alienated many American citizens, and
seriously jeopardized any possibility of an economic recovery. Apparently,
Mr. Obama's ideological predisposition in favor of taxes and against wealth
blinds him to a balanced approach to the economy and its problems. FATCA's
imposition on FFIs is hegemony of the worst kind. Foreign investors are
interpreting FATCA as a sign of the desperation that often precedes the
imposition of capital and currency controls. In an investment climate now
dominated by fear, capital flight is inevitable. FATCA only ensures its
arrival, and it will exaggerate its effects.
American Citizens Abroad reaches the following conclusions regarding the
legislation:
FATCA legislation is predicated on the faulty assumption that foreigners
throughout the world with no predisposition to favor the U.S. will react
positively to its attempts to convert them into unpaid IRS agents. Faced
with similar investment and personnel options without the legal jeopardy and
financial risks, reasonable people will choose non-U.S. alternatives. FATCA
implementation will constitute a major disruption of the entire
international financial world as we know it today. Reasonable persons and
entities will develop effective antibodies to this perceived infection, in
ways too numerous and manifold to predict. What can be predicted is that the
cumulative effect of this legislation will be a major blow to U.S. economic
interests and prestige. At stake for the United States is the potential
loss of trillions of dollars of investment, the opportunity for American
companies and financial institutions to compete in a competitive global
environment and the possibility for American citizens residing overseas to
survive and thrive. In brief, the economic future of the United States.
In a time when government has caused what may be irreparable economic
problems, we don't need "help" like this. Mr. Obama, please stop helping us.
Read more: http://www.americanthinker.com/2011/11/fatca_a_ticking_time_bomb_for_the_economy.html#ixzz1fDo3ZiXy |
|
