#FATCA: A Taxing Law Made by a Whole Bunch of Zeroes.
A new US tax law raises only $9,000,000,000 for the USA. However the world pays $200,000,000,000 to implement that tax law. That means that 9 zeroes were made by 11 zeroes.
The 2010 Congress’ HR 2847 Jobs for Mainstream Act, a domestic jobs bill, was funded by the Foreign Account Tax Compliance Act (FATCA). FATCA’s mechanism is to force all of the world’s banks to identify their resident customers who might be suspected of being dual US citizens or US green card holders. The law takes advantage of US’ globally-unique taxation system, which is allowed to tax any dual citizens or US visa holders even when such persons do not reside in US. The only two countries of the world practicing this type of taxation is US and Eritrea. To better understand this method, envision being born in Iowa and paying lifelong taxes to Iowa even while living in Georgia or Ohio.
Of course, there is limited relief to this taxation. A dual citizen living in Sweden, via the use of a complicated set of forms, might be able to offset most of the US taxes with exclusions and credits for having paid Swedish taxes. Unfortunately, his Swedish pensions and Swedish unemployment benefits could still be taxed by USA. He could also be subject to self-employment taxes and (if qualified) could also not escape the Obamacare tax upon the rich. FATCA will make its revenue gains by ensuring that dual US/Swedish citizens in Sweden are identified so as to pay taxes upon their income not taxed by Sweden. And so forth. Country-by-country and instance-by-instance, FATCA would enable further IRS revenue by identifying previously-unidentified US dual citizens throughout the world.
Australia’s study determined that FATCA would cost its banks $1.065 billion USD, or $42.12 USD per capita. Hence, its recommendation was for the Australian government to absorb some of FATCA’s implementation costs, by signing an Intergovernmental Agreement (IGA) with the US Treasury Department. With the IGA, it was determined that its banks costs would be reduced by more than half—from $42.12 USD to $20.46 per capita. Canada and UK have also absorbed some of the banks implementation costs, so that their banks are only burdened with $26.02 and $25.28 USD per capita. These three countries verify each other’s calculations, in being able to transfer more than half of their bank’s implementation costs into each country’s own administration.
Up to half of the world’s governments have signed IGA’s. Even China, Russia, Kosovo, and UAE have agreed to collect and store FATCA’s identification of US persons within their countries. As a result, we can see that about half of the world has reduced it’s banks’ implementation costs from $42.12 to as low as approximately $22 US. Even though these IGA’s are not all the same, this could succeed to bring FATCA’s global bank burden down to as low as $221 billion USD.
FATCA is a law created by specialist US accountants with specialist FATCA competency. As such, FATCA’s implementation is primarily by very-high priced compliance firms. There are few discounts available in lower income countries. There are few lower-cost specialists outside of the developed world. It would be difficult to say that FATCA-implementation cost reductions might be possible in low income regions or in non-IGA countries.
It might also be said that low income countries have fewer banks for their populations and fewer banks trading in US investment products. If these banks could succeed to stay out of US investments, indeed, the global FATCA implementation costs might be reduced somewhat. Another possible reduction might be that, although the 2010 Congress intended for the entire world to implement FATCA, many developing countries can not or will not implement FATCA.
There is no other analyses available showing other than an $8.5-8.9 billion USD FATCA revenue benefit over a 10 year period. Round that up to $9,000,000,000—9 zeroes. However, with the analysis in this article, it shows that the FATCA implementation costs have been reduced from $291 billion to $221 billion. FATCA has then been shown to globally lose $212 billion dollars net. Rounding down, we see that FATCA is made by $200,000,000,000—11 zeroes.
FATCA was created by a whole bunch of zeroes.
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