Friday’s edition of the Wall Street Journal featured Opposition Leader, Kamla Persad-Bissessar, as having what it takes to challenge the FATCA legislation. The Journal says Persad-Bissessar became the first leader to do what she did and write to new US President Donald Trump about any plans by the US to repeal that legislation.
Below is the article featured in the Wall Street Journal.
Taming IRS Imperialism
A foreign leader asks President Trump if he will keep a promise.
In the tiny Caribbean nation of Trinidad and Tobago, Kamla Persad-Bissessar, the leader of the opposition coalition in parliament, recently did something no other world leader has done: She read the U.S. Republican Party platform.
There she discovered that the GOP had called for repeal of the Foreign Account Tax Compliance Act, or Fatca, which is best understood as a license for IRS imperialism. The Treasury Department has used the law to demand that foreign countries change their own laws so their financial institutions report information on their American account holders. Upon discovering the Republican call for Fatca’s repeal, Mrs. Persad-Bissessar wrote Donald Trump in January asking if he will keep this promise.
It’s a good question. Mrs. Persad-Bissessar, a former prime minister, wants to know because the Trinidad and Tobago parliament is now considering changing the nation’s laws to accommodate Fatca. It would make little sense to change her nation’s laws, she argues, if Fatca isn’t long for this world.
Americans have an even bigger stake in the answer. In theory this 2010 law was designed to go after fat cats hiding their wealth offshore by adding a new reporting form for taxpayers with assets overseas. In reality, the law has become another example of gross federal overreach, adding another burden on Americans overseas who are already paying taxes where they live.
The 2010 law has almost no parallel anywhere, for good reason. While most nations limit their taxes to income earned within their borders, the U.S. is among the smaller group of nations that taxes its citizens on global income. The Republican Congress is now considering proposals that would move the U.S. to a territorial system, which would solve the taxes part of this problem. But so long as Fatca remains law the reporting burden remains.
The roughly eight million Americans working overseas have been hit hardest by this bad law. Some foreign banks and financial institutions have responded simply by refusing to take American customers, on grounds that Fatca requirements are more trouble than the business is worth. For similar reasons others do not want Americans as business partners. Many others of modest means who owe no U.S. taxes can still find themselves hit by hefty fines and penalties because they have fallen afoul of the reporting requirements.
Meanwhile, back in Trinidad and Tobago, Mrs. Persad-Bissessar’s question to Mr. Trump has roiled the pro-Fatca establishment. The American ambassador (appointed by President Obama) has said Fatca is being held up by “some people with cocoa in the sun,” insinuating that only someone with something to hide could be opposed. The Fatca chief at Deloitte & Touche has been telling Trinidad and Tobago that Fatca is here to stay and Mr. Trump can’t do anything about it.
Well, yes and no. Only Congress can repeal Fatca. But the whole Fatca edifice has been built on the intergovernmental agreements that Treasury has negotiated with more than 100 countries—agreements for which there is no statutory authority or Congressional ratification. Mr. Trump could take the teeth out of Fatca by announcing he has suspended negotiations for future agreements and won’t enforce the ones we have.
So two cheers for Mrs. Persad-Bissessar for asking her question. Let’s hope President Trump gives the answer that Americans deserve, by making clear he intends to deliver on the GOP pledge to dismantle a bad law that never should have been passed.