1. FATCA was passed on an accounting lie
FATCA was passed on a PAYGO lie. PAYGO stands for “pay as you go budgeting” and it is supposed to keep spending bills deficit neutral. In this case, the HIRE Act of 2010 was a spending bill, so offsets needed to be found. The claim was that FATCA would find about an extra billion dollars or so per year in revenue.
And so how have these projections worked out? According to professor William Byrnes and Robert Munro at Texas A&M, the revenue is not there.
What you’ll see is a red herring from the government. The claim that thanks to FATCA, $10 billion in penalties were collectted as part of the Offshore Voluntary Disclosure Initiatives (OVDI), Offshore Voluntary Disclosure Programs (OVDP) and streamlined disclosure programs.
Yet, the bulk of these payments were one-time payments. And for the large majority of penalties paid, these were attributable to enforcement of the Bank Secrecy Act’s FBAR requirements, not FATCA. Very little of this $10 billion is from actual taxes — meaning the crux of FATCA — that it would meaningfully increased federal revenues — is proven by the IRS's own data to be false.
2. Does FATCA cost more money than it brings in?
The answer to this is most certainly a yes. FATCA compliance costs billions per year and it brings in a trickle. But even if we were to disclude all the compliance costs of FATCA, if we were to assume therr were none, would the law still raise revenue?
Perhaps not.
TIGTA puts the cost at $380 million so far. The IRS has spent $380 million to implement FATCA. And there is a lot more work to go.
3. The risks of a massive data collection program like FATCA
The government cannot provide any reliable assurances that the private financial information obtained on millions of U.S. and non-U.S. persons and institutions can be in any meaningful sense be considered secure.
Imagine a data breach here. Lots of sensitive information there. What if say Turkey or Iran was looking for info on dissidents? What if they got information on someone's whereabouts because of FATCA? That is scary.
4. Exposed the cowardice of nations (or greed of banks)
Every one seems to talk tough about standing up the the US. So why couldn’t they find some courage to tell the US to pound sand with FATCA? It is sad the US bullied other countries, and it is sad that all these countries acquiesced to the bullying. They may have done so thinking that they’d get something in return. But they haven’t. FATCA has been one-way sharing of information too the US. That is, not sharing.
One of our astute YouTube channel commenters pointed out that it was foreign banks that pushed foreign governments to abide by FATCA. Which seems worse.
5. The payoff to compliance vultures
This law benefits no one except those in the FATCA compliance industry. And for them, FATCA has gold. It’s been good for billions of dollars per year. Again the US Treasury sees no increase in revenue (and with a $380 million cost so far, the US Treasury actually may be losing money with FATCA).
Costs paid for by non-US banks but passed down to all their US and non-US customers.
6. FATCA made the 4th Amendment meaningless
The IRS is entitled to your financial information even when there is no income to report. Rand Paul tried to make the courts see this obvious travesty, but the courts refused to hear the case because they claimed that no one was actually harmed by FATCA. That is seriously their claim and reason why they feel the plaintiffs lacked standing to sue.
7. Exposed the tribalism and disfunction of our political system.
One party passed FATCA. Another party wants to repeal it. You would figure those harmed by FATCA would be on the side of the party that wants to repeal it. Yet, this is not the case. I have seen blame cast upon the people who are trying to solve the problem, and the people responsible or the FATCA disaster completely forgiven. Why? Base politicking.
It is sickening to watch.
8. Triplicative reporting
So you could have a bank account that needs to be reported on an FBAR form. And a Foreign Financial Institution may be reporting this account the the US. Yet, you still have to report this account again on a Form 8938 or face a possible $10,000 penalty, even though the account may actually make no income of which taxes could be due.
With the Bank Secrecy Act and FATCA, three times the government learns of a foreign account.
And as we learned form TIGTA report, the IRS is flooded with so much data, FATCA can’t be fully implemented.
9. The drain on IRS resources.
FATCA imposed more burdens on an already understaffed IRS. This meant the IRS had to pull resources away from other areas. There is a reason why when you call the IRS for help that hold times can b eso long. There is a reason why a lien release that used to take 5 days now can take 5 weeks or more. There is a reason why Claims for Refunds take much longer. FATCA is not helping the IRS in its core mission. But rather, created a bunch of busy work for the IRS, with substantially little increase in revenues.
10. Forced expatriation of US persons.
A US citizen should have the most opportunity in the world. FATCA made that impossible. In order to continue to live their lives overseas, many Americans from retirees to US armed services veterans have had to give up their US citizenship to survive.
Click here for updates on the Repeal FATCA movement.
