Ron Paul and three other members of Congress write to tax-cheat Secretary of the Treasury, the Honorable Timothy F. Geithner, to warn him of how foreign investors will pull their money out of the United States if FATCA is implemented.
September 22, 2011
The Honorable Timothy F. Geithner
Secretary of the Treasury
1500 Pennsylvania Avenue, NW
Washington, D.C. 20220
Dear Secretary Geithner:
We write to express our strong interest in protecting the U.S. capital markets from the irreparable damage that may be caused by excessively burdensome regulations resulting from the implementation of the Foreign Account Tax Compliance Act (FATCA). We were pleased to see the IRS has agreed to delay FATCA withholding for one year payments of dividends and interest and for two years all other types of payments. Nevertheless, our offices continue to hear from U.S. firms who are concerned that FATCA will eventually cause foreign financial services companies to incur significant costs, likely resulting in the sale of their U.S. securities and exodus from our domestic marketplace.
FATCA’s damage to our markets could appear in many forms. The most immediate impact, as foreign investors abandon our markets before 2013, could be rapidly deteriorating stock and bond prices. Any sharp drop in stock and bond prices, in turn, could impair consumer confidence. The combined effect of these results could decimate any fragile economic recovery finally taking hold in 2012. The long-term impacts could include:
• Reluctance by foreign firms to enter U.S. markets or conduct business domestically;
• Relocation of U.S. firms offshore; and
• Anemic U.S. capital markets that hurt current retirees and soon-to-be retiring individuals who may be forced to sell investments to meet retirement needs, as well as younger Americans saving for their own retirement.
In June, President Obama issued a statement that read “The United States reaffirms our open investment policy. My Administration is committed to ensuring that the United States continues to be the most attractive place for businesses to locate, invest, grow, and create jobs.” The President went on to state that “In the global economy, the United States faces increasing competition for the jobs and industries of the future. Taking steps to ensure that we remain the destination of choice for investors around the world will help us win that competition and bring prosperity to our people.” This is precisely why rules like FATCA are troublesome: they threaten our nation’s ability to attract and maintain foreign investment, which is in direct contrast with the President’s stated mission.
We are fully supportive of making U.S. persons pay all taxes owed to the federal government. However, care must be taken to impose on institutions investing in our markets targeted and cost-effective burdens proportional with the derived benefits. We urge you in the strongest possible terms to keep our concerns about the U.S. capital markets foremost in mind as you draft FATCA regulations.
Sincerely,
Blaine Luetlkemeyer
Member of Congress
Ron Paul
Member of Congress
John Campbell
Member of Congress
Donald Manzullo
Member of Congress
Good find. Although that would have been a very predictable and consistent letter to expect out of Ron. Do you have a link for this letter?
Too bad he’s not electable in the US since he speaks too much common sense when it comes to security issues!
If this man were elected though and he had a Congress that he could work with it would be dream come true because I bet he would immediately sign off the “Fair Tax” act, which would replace all personal and income taxes with a consumption or VAT-style tax. I would imagine that this would in and of itself immediately remove citizenship-based taxation by default? Or would that create the nightmare scenario where the US would expect us to report every single purchase ever made and keep the receipts for everything, paying the difference in VAT should it be higher in the US? What a nightmare 😛
I think your later statement…. “Or would that created the nightmare scenario” sounds like the American Way to me… 🙂
Can we imagine the power of the absentee votes of millions of Americans Living Abroad? The question is how to organize ourselves,,, I believe that first we should fight to have a representation in the US Congress as other countris have for their citizens living abroad. The we all should support ACA: http://www.aca.ch
Ron Paul is making similar points to what I wrote my Nov 28 article at the American Thinker, in which I give an example of a stock transaction which would show why no foreign investor will trade in the US any more.
The article also shows that this same point has been made by ACA and by Richard W. Rahn in the Washington Post months ago. The administration is aware of these objections.
@markpinetree
There is no power in absentee votes. First, they are diluted across 50 states. Secondly, more dead people vote in every election than Americans living abroad. (that may be slight exaggeration but not by much).
I think FACTA is really the red-line for Americans abroad. We need to organize and start fighting back through legal channels. Americans abroad need to be:
1- Exempt from FATCA and FBAR
2- We should not be taxed by the US govt’ as we have no representation and we not use any US services.
It is ironic that Amazon.com successfully uses that argument for why it should NOT collect sales tax in most American states and yet Americans abroad who aren’t even in the same country are subject to taxation even though they don’t use any American services and do not have representation.
@justme- here is the link:
http://cticompliance.com/assets/pdf/FATCA_LUETKEMEYER.pdf
@donpomodoro- A VAT would kill citizenship based taxation. There would be no way to enforce a VAT on expats.
@markpinetree- doing so would mean making a paradigm shifting change to the U.S. Constitution and the American mindset that I don’t think would happen. If they can’t wrap their heads around resident based taxation then how could it be expected that they would ever understand something that is even more drastic?
Even D.C. has very limited representation in Congress and the people of Puerto Rico and American Samoa have no representation at all, even though it is a U.S. territory.
For me I don’t think that Congressional representation would be worth the price of double taxation and I seriously doubt that such representation would be anything more than symbolic.
Last I knew Puerto Rico and Am. Samoa had non-voting representative to the House, in which they could vote at the Committee level. And I believe both are at least counted in the Census.
Putting pressure on these issues, as even these terrritories are light years ahead of americans abroad, is worth pursuing in my opinion, it will gain some leverage.
Even the DC vote issue was coming close to a resolution in 2010, there was quite a momentum by the Dems. in congress on this.
@nofatcat- exactly what kind of appropriations could the Congress make on behalf of expats? The answer is, “none”. Congress only has Constitutional authority to spend money where the U.S. has jurisdictional powers. There are no U.S. powers to put money into the Canadian education system. Retired Americans can’t even get the government to spend Medicaid money on the services that they receive in Mexico and Costa Rica or wherever it is that they live outside of America.
@nofatcat- Puerto Rico has no Congressional representation and no representation in the Electoral College
http://en.wikipedia.org/wiki/Voting_rights_in_Puerto_Rico
It’s not a problem…
Here’s an important and infuriating Letter to the Editor published in the Miami Herald today from the acting assistant secretary for tax policy of the U S Treasury Department, Emily McMahon. It is on today’s Opinion Page with a bold print title.
http://www.miamiherald.com/2012/03/15/2695864/offshore-depositors-wont-be-hurt.html.
@justme- I wonder if China counts on that list of trusted countries? The U.S. does have a tax treaty with China. The same China that shot its own people in Tiananmen Square, that harvest human organs from the volunteers that populate its prisons, that continues to occupy Tibet, that censors its press, and does not allow foreigners to freely move about in its country.
The only criteria that the IRS has for signing a tax treaty is whether or not the other country is willing to accept U.S. terms. Such high standards the IRS has.
Thanks for posting the article. It was good reading.
Need to get some Brock folks posting some comments there. You know this IRS person,Emily McMahon, will be reading them, just like Rubio and Posey probably read the comments on their original editorial which is here…
http://bit.ly/AcYnhl
Of course Rubio and Posey were talking about Datca, but Fatca is the mother of this step child, and we need to be keeping them linked together as the average reader has no idea.
“”I think FATCA is really the red-line for Americans abroad. We need to organize and start fighting back through legal channels.””
yeah right. I filed citizenship papers this week where I live. I never thought I would do it. I did it specifically because of the FATCA and the threat to my life overseas. The next step is renunciation of the US altogether.
Whoever wants to be a citizen of that place, be my guest. Meanwhile, I’ll live my life being an ex-American, but with a huge load OFF my back. The US couldn’t PAY ME to keep their citizenship.
@geeez
Agreed of course. Do you have an appointment yet at the Consulate? I have to wait until May where I am and they are very by the book here: I have to go to the Consulate three times to complete the renunciation. Have to admit to being a bit surprised that there is any wait at all where I am. Maybe some of the people who can’t get an appointment this year in the UK or Switzerland are Consulate hopping in the EU now – Wouldn’t surprise me!
Here is the written reply that Ron Paul got back from Treasury on Oct 10, 2012.
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