Thanks for this, Just Me, and for Mark Twain, suggesting this work deserves its own post. James Jatras has highlighted this article as well as has commenter, Joseph Zernik.
Con’s and Some Pro’s (why’s and why not’s) are given — good work and read! Perhaps with its own post, more will see and read it.
Frederic Alain Behrens, University of Wisconsin
April 9, 2013
Wisconsin Law Review, Vol. 2013, No. 1, p. 205
Several methods, used along with lobbying Congress, can achieve
the repeal of FATCA. “These include hearings, ordering [a]
cost/benefit stud[y] (which never was done for FATCA), withholding
[IRS] enforcement funding, freezing Executive Branch nominations, and
. . . most importantly, blocking implementation of [more Model 1 and 2]
IGAs as the ‘weak link’ in the FATCA enforcement plan . . . .”178 A
significant public relations campaign is also needed to educate the public
about FATCA. The financial industry should consider funding a
substantial Congressional lobbying and media campaign to avoid the
substantial compliance costs it will face once FATCA goes into full
effect.
…
In considering whether the movement to repeal FATCA will be
successful, it is important to consider some roadblocks that groups
lobbying for its repeal must face. First, FATCA was voted into law under
the HIRE Act, which had broad bipartisan support.185 The main purpose
of this Act was to get Americans back into jobs and bolster the American
economy through a significant stimulus package.186 Besides the FATCA
provisions, other parts of the bill create new tax credits that encourages
businesses to hire new employees.187In the current environment, with voters not interested in raising
taxes, a repeal of FATCA, which is aimed at increasing tax revenue, will
not be looked upon favorably. Even the most vociferous proponents of
repeal concede that FATCA will be a tough nut to crack, but claim that
“if and when FATCA receives the kind of scrutiny in the United States it
should have received before enactment, it is unlikely to survive.” 188
Further, tax evasion is a contentious political issue. Voters will not like
seeing a bill repealed that is aimed to target tax evasion by wealthy
Americans taking advantage of loopholes in the current system.189 As
long as getting Americans back to work remains a top priority for
Congress, the bipartisan support that enacted FATCA will struggle to
repeal it.
In addition, Americans living outside the United States do not have
a big footprint in American politics and have no concentrated voting
strength in any particular state or district. Although groups such as
American Citizens Abroad and Republicans Abroad have organized
movements to repeal FATCA, American expatriates have trouble
speaking with a unified voice on the issue.190 A strong unified message is
needed to ensure the success of the repeal movement.
Lastly, FATCA is not mainly about revenue and is more about
information on foreign bank accounts held in foreign countries.191 This
may also be part of the reason why a proposed withholding regime would
not be implemented because it is not in line with Congress’s policy
purpose behind the bill when it was enacted. There could be other ways
to get information from banks, but in general there will be a similar
sentiment against this. However, efforts to repeal tax legislation enacted
by President Barack Obama have succeeded before.192
187.
…
CONCLUSION: FATCA, THE ROAD TO NOWHERE
It is critical for all participants, including government organizations
and the general public of consumers, to strike an acceptable balance of
burdens on each side, so that all participants can achieve their goals.
FATCA is not the way for the U.S. government to prevent income tax
evasion. Moreover, the current state of the U.S. economy is already
problematic, and legislation increasing the reluctance of foreigners to
invest in the United States is worrisome.203 The IRS should not force
taxpayers and banking consumers of foreign nations to pay the costs of
compliance with American tax laws from which these people derive no
benefit.
It is becoming increasingly apparent that the protests against the
implementation of FATCA, the burden on IRS regulation writers, and the
enormous cost of compliance for FFIs are not worth the tax revenue and
information that FATCA is projected to produce.204 The growing
opposition movement will continue to attract the opposition of foreign
banks, international governments, and American citizens abroad likely
culminating in the repeal of FATCA. In the end, if someone wants to
hide their assets abroad, they will figure out a way to do it. The goal of
FATCA is laudable, but using it as a means of achieving a reduction in
offshore tax evasion is destined to fail.
