One Response to “Another FATCA Delay”

  1. Just Me October 25, 2012 at 5:36 PM #

    Congress created the FATCA mess, and the IRS has compounded it, maybe unwittingly with the IGAs. At first, I thought this was a clever strategy, using the FATCA as the Tip of the Spear, to help put into place, the OECD dream of world wide financial transparency. They are trying to end tax competition between nations, and FATCA was the lever. Sounds good, until you really think about the cost to the economy and the systemic Risk issues it raises.

    This delay is good, and let’s hope for more. FATCAs IGAs are repatriating the cost back to the Mainland via the domestic version which I call DATCA. This means that the US banks and customers will now have to bear a sizable portion of the cost that was only supposed be on the FFIs and foreign Governments.

    Congress didn’t do a cost vs benefit analysis of FATCA, when then passed it. It was just a phantom way to pay for the cost of the Hire Act. Now that the cost is blowing back on America, maybe some more, like Congressman Reichert will begin to question what they created.

    Let’s hope this global GATCA, which they are struggling to put into place, collapses on its own bureaucratic weight, and the IGA and FCC (Foreign Compliance Complex)co-enabling mechanism doesn’t get firmly attached to the fee and revenue regulatory teat, or it will be impossible to pry them loose.

    This doesn’t mean I favor tax evasion of any kind. I just think there are many nuanced ways to accomplish the goal of reducing offshore evasion that aren’t as evasive and destructive as the FATCA monster. Consider major tax code reform and targeted nudges, instead of grand expensive FATCA schemes. They actually work better and are way way cheaper.

    Here, this Ted Talk will explain why. “Rory Sutherland: Sweat the small stuff”

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