The highly controversial Foreign Account Tax Compliance Act is a monumental failure for the public purse and a "windfall of corporate welfare for compliance industries," warns Nigel Green, CEO of deVere Group and Co-Founder of the Campaign to Repeal FATCA.
Citing research from William Byrnes, a law professor at Texas A&M, Mr. Green debunks the IRS claim that it has helped to collect $10 billion since 2009 from "taxpayers coming back into compliance." In his report Byrnes, as Mr. Green notes, believes FATCA's net recovery could be as low as $100 million and the law could "soon cost more than it brings in".
"That isn't enough to fund the federal government for more than half an hour. It is far less than was expected at Fatca's enactment, since the law was scored as bringing in $800 million a year, writes Mr. Green. "That meager gain must be weighed against the law's costs. Fatca adds one more onerous and expensive reporting obligation for American taxpayers who hold any asset abroad."
Mr. Green further points out the duplicative nature of FATCA, as its reporting mandates are similar to the Report of Foreign Banks and Foreign Accounts, and its draconian penalties for error.
In his op-ed, Mr. Green also references a 2014 Thomson Reuters survey of 300 financial institutions, which found "27% expect their spend on FATCA compliance in 2015 to cost between $100,000 and $1million." The Wall Street Journal, as Mr. Green notes, reported that the five largest banks in Canada spent nearly $700 million on initial FACTA costs.
An estimated 250,000 foreign financial institutions are impacted by FATCA's reporting requirements according to a citation in his report. One representative of a large Spanish bank decried the high costs of compliance could range from $8.5 million for a local bank branch to $850 for a global financial institution. Estimates of the costs to U.K. financial institutions range from $1.1 billion to $1.9 billion, with annual costs ranging between $60-100 million.
"Thus there are plausible projections that the law's aggregate global cost is anywhere from $60 billion to $170 billion," stated Mr. Green. "That money comes out of the pockets of consumers, depositors and perhaps shareholders."
Last month, Mr. Green warned $1.5 million US citizens in East Asia may renounce their citizenship according to a poll conducted by deVere Group and its Hong Kong division Acuma.
(Source: Repeal FATCA)
