FATCA is causing foreign investors to pull their money out of the United States. Don’t take my word for it alone. Today in Singapore reports:
The penalties for not following FATCA requirements correctly can be huge. FFIs that do not report or withhold taxes can be liable for all that withholding, plus interest and penalties. It may just be easier not to invest in the US at all and, indeed, asset management firm BlackRock says the FATCA “discourages foreign investment in US capital markets”. …
A fund manager here told me his company is also advising clients to avoid US investments, and other companies may similarly start telling large clients as well as smaller ones the same story. Investors could then see recommendations not to invest in the US, and they may put their money elsewhere.
Further, the FATCA could affect investment returns in the US. Prices of investments in the US such as bonds, shares and real estate are partially dependent on foreign demand. The US Treasury estimates that about one-third of its securities are owned by foreigners, for example.
Ok, the US is cutting off its nose to spite its face. As an DIY investor, I have to stay on top of huge trends like this. You have to get out of the US before the rush. Now, here is a fund manager saying the same thing as I am. I am also shorting the US dollar as a long term investment.
Well, the U.S. seems to not take notice that some places such as Singapore are very well off. They are doing just fine and dandy and are not hurting in the way the U.S. is. They have nothing to gain by going along with FATCA. They don’t need to go along with it. It will cost them money to implement. Singapore is not a place to be bullied by the U.S. It’s not the only place in the world that is not going to go along with this. FATCA among other issues it has, is a diplomatic nightmare for the United States.
It’s my understanding that Australia, Japan and China also have indicated they will not comply. How long will it be before the government realizes it is shooting itself in the foot?
Reblogged this on Stop Unconstitutional Double Taxation and commented:
The US is shooting themselves in the foot
@nobledreamer I would be surprised if Japan sticks to its position, they have often been very cooperative with the US. China is a place I wouldn’t want to go (one-party system that isn’t really communist anymore— why can’t they become a real social democracy?) Australia may be the future for some of the Diaspora. Anybody know anything about the position of the Kiwis?
@Jefferson — Hong Kong’s not a bad place to live. China usually tries to shield Hong Kong from the effects of the U.S.’ holy crusades. That’s how we stayed off the OECD tax cooperation greylist in 2009. Here’s a fairly detailed article about FATCA from an NZ perspective, but it’s a few months old. Revenue Minister’s quote basically sounded like he’s saying “don’t get your hopes up” — “the government is not necessarily in a position to influence decisions made by a sovereign power about tax on funds flowing through its jurisdiction”. Otherwise, NZ has been very quiet on the topic.