I recently noted that the Foreign Account Tax Compliance Act (FATCA) would threaten America’s global economic dominance because, among other reasons, “Investment will instead go to places like China, where the government is unlikely to sign away their fiscal sovereignty to US tax collectors.” This view was seconded in a recent interview by Nigel Green, chief executive of deVere Group, the world’s biggest independent financial advisory firm:
It is looking increasing likely that China will not sign an intergovernmental agreement (IGA) with the US on Fatca. This will be of huge concern to the US government because Fatca’s strength is reliant upon every country in the world agreeing to abide by its rules. No other country in Asia has yet agreed to a Fatca IGA either, and countries in the region, and indeed across the world due to China’s enormous – and growing – economic and political power, are influenced heavily by Beijing on such issues.
CF&P President Andrew Quinlan Fights the FATCA Menace
But with FATCA poised to put a stranglehold on global economic activity, Mr. Green also notes an even greater concern:
It seems a reasonable, yet extremely unfortunate, assumption that other governments will consider implementing their own Fatca-style laws, should the American experiment prove, in their eyes, to be successful.
Though he sees reason for optimism:
However, as we can see, the US Fatca project is already looking like it is beginning to unravel – as it is fundamentally flawed and will do little to achieve its original aims – and this, one would hope, might deter other governments from attempting something similar.
He is right; FATCA is vulnerable. As I wrote previously, “FATCA was written so poorly as to be nearly unenforceable. …To get around these problems, the bureaucrats got creative and devised a scheme to trick foreign governments into relinquishing their sovereignty: intergovernmental agreements (IGAs).”
These same IGA’s are also the law’s weakness. If foreign governments properly defend their fiscal sovereignty by telling US tax collectors to go pound sand, FATCA will indeed unravel. CF&P is working hard to ensure that happens, and needs your help.
