Speaking against the FATCA tax law (Foreign Account Tax Compliance Act), Senator Paul told the Washington Times “that the law has wrongly deprived American expatriates of access to banking services, violated their privacy and forced many to renounce their citizenship.”
In 2010, the U.S. Congress introduced the HIREA (Hiring Incentives to Restore Employment Act), according to The Economist. Since this was a time of economic recession, the act was seen by some as a way of getting more jobs to U.S. citizens.
However, this act came with an unwanted and unnecessary tax law.
FATCA was basically meant to prevent offshore tax evasion. The idea was that every penny an American citizen or company earns in another country gets accounted for. Those that don’t play by this rule get a call from the IRS.
In theory, the FATCA sounded nice, especially at the time it was introduced, but reality was much, much different.
Instead of preventing money laundering, this law actually put a big burden on the shoulders of every American living abroad, which are now faced with a choice to either pay an enormous tax for the work they do in another country, or, as many have already done, renounce their U.S. citizenship.
FATCA strikes not only at U.S. citizens, but anyone who has the slightest connection with our country, including people who are born here, but have lived their entire lives somewhere else.
In addition to this, foreign banks are also forced to reveal the financial information of their American clients to the IRS or face a 30% withholding tax, says The Economist. This is a clear violation of their privacy.
The first attempt by Rand Paul to repel the oppressive FATCA failed in 2013. At that time, the Democrats held the majority in the Senate, writes of the Washington Times. However, the situation there has changed radically over the last year or two and the GOP is now the dominant party.
Senator Paul now hopes that the Republican Party holds enough power in the Senate and is pushing for his anti-FATCA bill again.
What do you think about the FATCA tax law? Did it succeed in stopping tax evasion, or was it an unnecessary burden to U.S. citizens and their privacy? Tell us what you think in the comments below and don’t forget to visit us on Facebook and Twitter for more updates.
(Photo courtesy of focalpunkt, CC BY-ND 2.0 )
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