16 thoughts on “The real probability of a FrankenFATCA”
Interesting proposition but I’m not convinced. For one thing I would hate to ascribe more “intelligence” to the U.S. politicians than they have shown themselves capable of. For another thing, the weight of U.S. FATCA will be so heavy administratively, that a subsequent global version of FATCA, would be sure to serve as the demise of FATCA period.
Because FATCA is ultimately a bottleneck to world capital flows it will have to go if the world economy is to survive.
We can speculate about the future all we want to, but it’s really going to depend on who is elected. Most people on the Republican side have said publically that they are against the regulation in the US such as Sabanes-Oxley, Dodd Frank, etc.. I bet the FATCA and DATCA are probably on that list.
I think it was Mitt Romney who was poking at Obama’s over-regulation, showing how it costs more to administer than it actually brings in through tax revenue. At least 1 sane voice…
I think this story was also posted here…. I have posted segments of the story if it is behind a paywall for you…
I think it is very optimistic to think it woul be different under a different government. The US is still very short of money and needs it wherever it can get it. I don’t think the republicans care any more about overseas Americans than the democrats. And FATCA doesn’t cost the US a lot to administer It just costs FFI’s a lot!
There are a number of possible outcomes:
– China or EU for example could impose FATCA on the US making US FFIs start screaming when they pay a withholding tax
– The US loses reserve currency status which immediately would reduce the need to use the US Dollar (then the US ironically may find itself in the same position its putting other countries today).
– Foreign legal challenges could make implementation different in various countries
– US companies start relocating their HQs to other countries and trade their stock outside of the FATCA zone
At the end of the day, if the world starts finding ways to bypass the US, to start in small ways, then growing, FATCA’s power will decrease day by day….as will the US.
Then Congress will have to make a choice (or climb down)
John – here are your points:
1) I don’t have enough data…
2) Every time this comes up, or someone raises a REAL credible threat against the dollar, the US blows them up. A lot of people say that Gadaffi was about to start the circulation of a Gold dinar, and Saddam before him. Seriously, take a look at *any* credible “threat” to US Dollar hedgmony. Either the US blows them up, ignores them, or acts if they are on the fringe.
3) I agree with you there.
4) This has already been going on for a LONG time. I think the most common Bermunda and Cayman-based companies are large US Government Contrators and Reinsurance companies, the latter having a large US presence. Do some checking. You will find heaps of companies that picked up and left the US many years ago. YET their largest market is many times — you guessed it — the USA.
It’s a bit of a double standard: companies that relocate overseas is no problem, but for individuals it’s a bit of a no-no.
FATCA aka CLUSTERFU*K! It’s all starting to take on a surreal-ness when fund managers speculate that US lawmakers actually made some comprehensive plan when creating FATCA when there’s so much evidence to the contrary (ie, sneaking it into a bill, plugging holes-like restricting the use of credit cards from non-compliant FFI’s- the list goes on!).
Sorry, it was not behind a paywall when I posted it, and a few managed to read it in its entirety. I have a copy but would we run into copyright issues?
Geeze – on the dollar’s future, I think ithe main problem is the US economy is down to 20% world GDP. Who is going to listen to the US at the bargining table seriously when it’s down to say 15% or whatever number you think is the tipping point. The US can jump up and down all they want, but it will them being ignored and told to go back to its room and calm down.
I’m sure British in 1900 thought the £ would be the world’s currency forever. This week the BRIC countries held a conference in India and the world’s reserve currency was certainly discussed.
Other than the US can blow up some country, why does the doilar deserve the status of reserve currency going forward? I find it difficult to come up with compelling reasons.
Has anyone come across this weekly bulletin yet, Mountain Vision? Everything you want (and don’t want) to know about the current state of the investment industry’s FATCA challenges: http://www.mountainvision.com/newsletter.php?view=a8baa56554
And this more recent story on similar topic is not behind a paywall…
Fatca could send fund groups ‘back to the dark ages’
Fund groups could go “back to the dark ages”, selling only domestically, if other countries adopt a version of the new US tax regime, an expert has warned.
@justme
sorry i missed that on the first go ’round, but i think a few others may have too.
-the Dept of Redundancy Dept.
@bubblebustin.. Not a problem. I miss things here too, and doesn’t hurt to get additional attention on the direction the world maybe heading. GATCA is in our future, I think.
And if you don’t believe a Global Tax Data Exchange regime (GATCA) is in the making, read this on Ireland. http://bit.ly/JcaSmO
As the IFIA has pointed out, Ireland is negotiating the possible adoption of a model global agreement, which would not alter or amend the obligation to identify or report certain information under FATCA, but would outline an alternative pathway for reporting FATCA information. The IFIA expects this agreement to be concluded by the end of the year.
@justme, the impression I get from reading this is that Ireland would only be interested in talking about FATCA it if there is reciprocity or progress toward a global compliance, an “alternative pathway for reporting FATCA”. GATCA would be a mammoth undertaking and would take years or even decades to develop. Great stall tactic. Those Irish are a wiley bunch.
@bubblebustin
You are correct bubblebustin. Others have told me the same.
Interesting proposition but I’m not convinced. For one thing I would hate to ascribe more “intelligence” to the U.S. politicians than they have shown themselves capable of. For another thing, the weight of U.S. FATCA will be so heavy administratively, that a subsequent global version of FATCA, would be sure to serve as the demise of FATCA period.
Because FATCA is ultimately a bottleneck to world capital flows it will have to go if the world economy is to survive.
We can speculate about the future all we want to, but it’s really going to depend on who is elected. Most people on the Republican side have said publically that they are against the regulation in the US such as Sabanes-Oxley, Dodd Frank, etc.. I bet the FATCA and DATCA are probably on that list.
I think it was Mitt Romney who was poking at Obama’s over-regulation, showing how it costs more to administer than it actually brings in through tax revenue. At least 1 sane voice…
I think this story was also posted here…. I have posted segments of the story if it is behind a paywall for you…
http://isaacbrocksociety.com/2012/03/27/a-global-fatca-in-the-future/
I think it is very optimistic to think it woul be different under a different government. The US is still very short of money and needs it wherever it can get it. I don’t think the republicans care any more about overseas Americans than the democrats. And FATCA doesn’t cost the US a lot to administer It just costs FFI’s a lot!
There are a number of possible outcomes:
– China or EU for example could impose FATCA on the US making US FFIs start screaming when they pay a withholding tax
– The US loses reserve currency status which immediately would reduce the need to use the US Dollar (then the US ironically may find itself in the same position its putting other countries today).
– Foreign legal challenges could make implementation different in various countries
– US companies start relocating their HQs to other countries and trade their stock outside of the FATCA zone
At the end of the day, if the world starts finding ways to bypass the US, to start in small ways, then growing, FATCA’s power will decrease day by day….as will the US.
Then Congress will have to make a choice (or climb down)
John – here are your points:
1) I don’t have enough data…
2) Every time this comes up, or someone raises a REAL credible threat against the dollar, the US blows them up. A lot of people say that Gadaffi was about to start the circulation of a Gold dinar, and Saddam before him. Seriously, take a look at *any* credible “threat” to US Dollar hedgmony. Either the US blows them up, ignores them, or acts if they are on the fringe.
3) I agree with you there.
4) This has already been going on for a LONG time. I think the most common Bermunda and Cayman-based companies are large US Government Contrators and Reinsurance companies, the latter having a large US presence. Do some checking. You will find heaps of companies that picked up and left the US many years ago. YET their largest market is many times — you guessed it — the USA.
It’s a bit of a double standard: companies that relocate overseas is no problem, but for individuals it’s a bit of a no-no.
FATCA aka CLUSTERFU*K! It’s all starting to take on a surreal-ness when fund managers speculate that US lawmakers actually made some comprehensive plan when creating FATCA when there’s so much evidence to the contrary (ie, sneaking it into a bill, plugging holes-like restricting the use of credit cards from non-compliant FFI’s- the list goes on!).
Sorry, it was not behind a paywall when I posted it, and a few managed to read it in its entirety. I have a copy but would we run into copyright issues?
Geeze – on the dollar’s future, I think ithe main problem is the US economy is down to 20% world GDP. Who is going to listen to the US at the bargining table seriously when it’s down to say 15% or whatever number you think is the tipping point. The US can jump up and down all they want, but it will them being ignored and told to go back to its room and calm down.
I’m sure British in 1900 thought the £ would be the world’s currency forever. This week the BRIC countries held a conference in India and the world’s reserve currency was certainly discussed.
Other than the US can blow up some country, why does the doilar deserve the status of reserve currency going forward? I find it difficult to come up with compelling reasons.
Has anyone come across this weekly bulletin yet, Mountain Vision? Everything you want (and don’t want) to know about the current state of the investment industry’s FATCA challenges:
http://www.mountainvision.com/newsletter.php?view=a8baa56554
@bubblebustin
Here are the relevant portions…
http://isaacbrocksociety.com/2012/03/27/a-global-fatca-in-the-future/#comment-11176
And this more recent story on similar topic is not behind a paywall…
Fatca could send fund groups ‘back to the dark ages’
Fund groups could go “back to the dark ages”, selling only domestically, if other countries adopt a version of the new US tax regime, an expert has warned.
http://www.ftadviser.com/2012/03/30/investments/north-america/fatca-could-send-fund-groups-back-to-the-dark-ages-ygyuT5F40rpxXWfBdhwI5L/article.html
@justme
sorry i missed that on the first go ’round, but i think a few others may have too.
-the Dept of Redundancy Dept.
@bubblebustin.. Not a problem. I miss things here too, and doesn’t hurt to get additional attention on the direction the world maybe heading. GATCA is in our future, I think.
And if you don’t believe a Global Tax Data Exchange regime (GATCA) is in the making, read this on Ireland. http://bit.ly/JcaSmO
@justme, the impression I get from reading this is that Ireland would only be interested in talking about FATCA it if there is reciprocity or progress toward a global compliance, an “alternative pathway for reporting FATCA”. GATCA would be a mammoth undertaking and would take years or even decades to develop. Great stall tactic. Those Irish are a wiley bunch.
@bubblebustin
You are correct bubblebustin. Others have told me the same.