Center for Freedom and Prosperity Foundation
For Immediate Release
Tuesday, May 7, 2013
202-285-0244
www.freedomandprosperity.org
CF&P Welcomes FATCA Repeal Bill From Senator Rand Paul
(Washington, D.C., Tuesday, May 7, 2013) The Center for Freedom and Prosperity (CF&P) today applauded Senator Rand Paul (R-KY) for introducing legislation that would repeal the most economically destructive and privacy violating provisions of the Foreign Account Tax Compliance Act (FATCA).
CF&P President Andrew Quinlan commented on the news, “Sen. Paul is offering real leadership, working to defend individual rights and promoting common sense tax policy.” He added, “FATCA has caused significant harm for many Americans. This legislation is a critical and necessary first step toward cleaning up a colossal mess.”
Passed in 2010 as part of the so-called Hiring Incentives to Restore Employment Act, FATCA threatens foreign financial centers with a 30% withholding requirement on US accounts if they don’t comply with draconian new reporting requirements. Since its passage FATCA has come under increasingly heavy fire from foreign governments, financial institutions, taxpayer protection groups and privacy rights advocates.
FATCA was implemented to combat offshore tax evasion, which some politicians claim amounts to $100 billion. But the Joint Committee on Taxation estimated FATCA would raise less than 1/100th of that amount, about $800 million per year. Compliance costs for financial institutions and the subsequent lost investment in the US economy due to capital flight is widely expected to far exceed those limited revenues.
FATCA treats all Americans living, working or investing overseas as criminally suspect. In the Dear Colleague letter he sent to fellow Senators announcing his intention to file the bill, Sen. Paul noted that “any law enforcement benefits have been vastly outweighed by the deleterious effects of FATCA on economic growth and financial privacy of Americans.”
Sen. Paul goes on to highlight the significant problems introduced by the Treasury Department’s decision to pursue unauthorized intergovernmental agreements (IGA’s), which “will force U.S. financial institutions to provide the bank account information of private customers to foreign nations,” and thereby “diminishes U.S. privacy protections.” He further notes that Treasury has undertaken this process “without the consent and authority of Congress.”
Additional comments from the experts:
Dan Mitchell, Senior Fellow, Cato Institute:
“FATCA only exists because of bad American tax policy. The United States should not be double-taxing income that is saved and invested. Nor should the American government be imposing tax on income earned in other nations. The right tax policy is to reform the tax system with something akin to a Hall-Rabushka flat tax, at which point FATCA becomes totally irrelevant.”
Grover Norquist, President, Americans for Tax Reform:
“Successful tax systems attract capital. Unsuccessful tax systems attempt to force other countries to become their tax collectors. That’s what FACTA is, and it should be repealed.”
Veronique de Rugy, Senior Research Fellow, Mercatus Center:
“The passage of FATCA reveals a fundamental misunderstanding of tax evasion on the part of policymakers. There is no need for violating privacy rights or engaging in an international witch hunt to reduce tax evasion. Simplifying the tax code and reducing rates will do the job and grow the economy at the same time.”
Bruce Zagaris, International Tax Law Expert and Partner, Berliner, Corcoran & Rowe LLP:
“The combination of FATCA’s enormous complexity, the global financial downturn, sequestration, and difficulties in adjusting foreign law and culture to FATCA, even with the FATCA intergovernmental agreements, pose obstacles to implementing FATCA and risk dislocation of foreign investment in the U.S. Just implementing FATCA has required the IRS and Treasury to spend scarce resources and has overtaxed the good will of the U.S. as governments and investors react harshly to the unilateral extraterritorial application of U.S. law and at a time when good will and diplomacy are critical components to achieving economic prosperity.”
James George Jatras, Former Senate Staffer and U.S. Diplomat, and Manager of RepealFATCA.com:
“Senator Paul’s introduction of this bill is a game-changer. It has to be clear to everyone that FATCA has almost nothing to do with stopping actual “tax evasion” and everything to do with massive unintended consequences that will lose money for federal treasury. FATCA’s demise is now a question of ‘when,’ not ‘if.’ With the wind in Washington blowing against FATCA, foreign governments are on notice that Treasury’s promises of ‘reciprocity’ are worthless. Congress will not provide the needed authority to rescue this fatally flawed law. Instead of getting aboard this sinking ship, foreign governments should reject the constitutionally deficient ‘intergovernmental agreements’ Treasury has offered them. Finally, American and non-U.S. firms that stand to lose millions complying with FATCA need to make their voices heard. FATCA repeal needs to be part of any deal on tax reform.”
Pete Sepp, Executive Vice President, National Taxpayers Union:
“The U.S. federal income tax system already imposes 6.7 billion hours of paperwork on individuals and businesses; FATCA would not only worsen this burden here it home, it would also impose onerous new liabilities abroad. The last thing America should be exporting is its complex tax laws. Senator Paul deserves a round of applause from taxpayers in our nation and around the world for recognizing the dangers FATCA poses to our economy and our civil liberties.”
John Berlau, Senior Fellow for Finance and Access to Capital, Competitive Enterprise Institute:
“Not only is FATCA doing great harm to America’s international competitiveness, it is also straining international travel and damaging goodwill among nations the Obama administration promised to improve.”
Brian Garst, Director of Government Affairs, Center for Freedom and Prosperity:
“FATCA is as arrogant as it is destructive. Under what possible authority does the US government presume to demand that the entire world be responsible for chasing down every last dollar for it to waste? If not simply for its size and vindictiveness, the US would have been laughed off the world stage for such demands. Thankfully, it’s not too late to reverse course and put an end to America’s destructive and counter-productive policy of fiscal bullying.”
For more information on FATCA visit http://freedomandprosperity.org/issues/foreign-account-tax-compliance-act/
For additional comments:
Andrew Quinlan, President, can be reached at 202-285-0244, andy@freedomandprosperity.org
Brian Garst, Director of Government Affairs, can be reached at bgarst@freedomandprosperity.org
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