It looks like we got a bit too optimistic last week about the initial victory in the Israel Foreign Account Tax Compliance Act (FATCA) case. The temporary injunction issued by Justice Hanan Meltzer which ordered officials to stop work of FATCA implementation has been overturned.
The story from Haaretz:
"It is difficult to think about a purpose of a law more worthy than this legislation, which is part of a long series of acts taken over the past 20 years to combat the black market, tax evasion and international crime. All of them require reporting that harms privacy,' said Justice Menahem Mazuz."
The justice who ordered the temporary injunction rules:
"Another of the justices, Hanan Meltzer, cited three reasons to allow the law the value of preventing tax evasion, cooperating with the many other countries that are combating the problem and the fact the U.S. would likely impose sanctions on Israeli banks that failed to provide the data."
So let's dismantle this reasoning:
- "reventing tax evasion" Why is US tax evasion an issue for Israel? Fine, let's assume it is. Yet did Justice Hannan inquire at all how much FATCA will help the US reduce tax evasion? If he did, he would find that as part somewhere in the budgeting process that FATCA was claimed by its proponents to bring in an extra $800 million a year. $800 million! For gross tax receipts of well over $3 trillion. So the claim is that Israel should abandon its declaration of rights because a US law's supporters say it will increase us tax receipts by 0.03%?
- "Cooperating with the many other countries that are combating the problem." There is only one other country. The US. There is no other countries to cooperate with on FATCA because FATCA is a US law.
- "he fact the U.S. would likely impose sanctions on Israeli banks that failed to provide the data." Well then there's your real answer. Israel feared sanctions. So why didn't they just say so? It would have been a lot more honest just to say, hey look — we are afraid of push-back on FATCA. Like every other country that knuckled under.
The US Congress gets way too much credit. Congress doesn't read the the things they sign into law, yet other countries are supposed to give anything that effuses out of Washington a presumption of constitutionality.
Oh well. Our hopes that Israel would ignite a global movement that would lead to the eventual repeal of FATCA were a tad unrealistic. Our next (probably unrealistic) hope is that President Trump is smart enough to see the merit in repealing the Democrat boondoggle that is FATCA.
