Latest Senate Amendment to repeal FATCA
In an interesting development on U.S. tax reform, Senator Rand Paul has entered an amendment to the Senate tax bill to repeal FATCA. Sen. Paul is asking everyone to call their Senators and ask them to support this amendment. Sen. Paul's letter is re-published below. After you’ve called your Senator, would you please let us know on our Facebook page?
Letter from Senator Rand Paul
"Senator Rand Paul will introduce his FATCA repeal bill as an amendment to the FY 2018 Budget Reconciliation legislation (tax reform). For far too long the IRS has been able to conduct mass collection of financial data on U.S. citizens who are living overseas. The information the IRS is able to collect on U.S. citizens living abroad is not allowed domestically. FATCA not only violates the 4th Amendment but it also hinders international finance. The 30 percent withholding tax for banks that do not comply with FATCA has caused disruption in the financial marketplace, and forces banks from holding accounts of U.S. citizens. Senator Paul feels it is important to be a voice for the estimated eight million U.S. citizens living abroad.
Feel free to join Senator Paul in support of repealing FATCA. Below is additional information on FATCA that was provided by the Campaign to Repeal FATCA. Feel free to share it with stakeholders and members of Congress.
Vernon Robinson | Legislative Assistant
Senator Rand Paul (KY)
“Support the Paul Amendment to Repeal FATCA!”
The GOP called for repeal in its 2016 Platform. “The Foreign Account Tax Compliance Act (FATCA) and the Foreign Bank and Asset Reporting Requirements result in government’s warrantless seizure of personal financial information without reasonable suspicion or probable cause. Americans overseas should enjoy the same rights as Americans residing in the United States, whose private financial information is not subject to disclosure to the government except as to interest earned. The requirement for all banks around the world to provide detailed information to the IRS about American account holders outside the United States has resulted in banks refusing service to them. Thus, FATCA not only allows ‘unreasonable search and seizures’ but also threatens the ability of overseas Americans to lead normal lives. We call for its repeal and for a change to residency-based taxation for U.S. citizens overseas.”
FATCA fails in its stated purpose of recovering tax revenues. On enactment in 2010, FATCA was scored as raising about $800M per year. According to Texas A&M law professor William Byrnes, actual recoveries are closer to $100-200M per year and falling. FATCA will soon cost more than it brings in.
FATCA is an indiscriminate violation of privacy. FATCA data reporting requires no probable cause or even suspicion. Unlike domestic 1099s and W2s, no taxable event is required. Compliance burdens fall disproportionately upon people of moderate means, few of whom are engaged in evasion or owe any tax. Foreign banks’ denying services to Americans leads to increased U.S citizenship renunciations.
FATCA is costly. Estimates of global compliance spending rely on aggregation of per-institution costs: millions for each small bank, hundreds of millions for a big one. One projection puts cumulative cost at $58 to $170 billion. This is an order of magnitude greater than any recoveries from FATCA.
FATCA relies on Obama-era Executive overreach. Because of other countries’ privacy laws, FATCA is unenforceable without so-called “intergovernmental agreements” (IGAs) invented by Tim Geithner’s Treasury Department. The IGAs are not authorized by statute or submitted to the U.S. Senate as treaties.
FATCA threatens our domestic financial industry. Reciprocal “Model 1” IGAs promise “reciprocity” from U.S. domestic banks. This threatens massive FATCA-like costs on U.S. banks and consumers.
Keeping FATCA on the books risks future harm. The OECD, which for years has sought to extinguish personal financial privacy and create a worldwide financial data fishbowl, has praised the IGAs as a “catalyst” to that end. If FATCA remains on the books, the next Democrat Administration and Congress may press reciprocity on domestic American financial firms to create a global FATCA – or “GATCA.” This is the opposite of what the GOP Platform promised.
Transparency is when citizens monitor government. When government monitors citizens, that’s tyranny."