The Foreign Account Tax Compliance Act (FATCA) will not live up to expectations.


December 4, 2012.

What we can see here is that the developed countries have shown their hand for all to see (as is always the case it seems). FATCA is how we are going to put the hammer down on all you wealthy people (FATCATs) that don't pay your "fair share". Whatever the fair share is, it will never be enough to satisfy the thirst of "wasteful" government spending. (What is wasteful to you is a lifesaving government program to me.) We would suggest that covert government operations would be more successful but that would be more expensive to institute and maintain.

We believe that the FATCAT legislation will create new kinds of methods to avoid detection by those that are citizens of high tax nations and are subject to the consequences of its reporting requirements. If you are a citizen of a low tax nation or a country that does not tax your international income then it is not an issue.

We already see some banking institutions saying that they are not taking any customers from X country. Therefore, those banks will have nothing to report to X country. How convenient. We think it is just a general cover for the bank to say, if you are a FATCAT from X country don't open the account with documents from X country or we will have nothing to do with you. And the FATCATs find a way again.

Who is telling the truth and who is not? The banks do not know anymore (assuming they did know in the past), all they know is that they suddenly have no customers from specific countries that they used to have a lot of customers from. Even if a bank is not one of the banking institutions that are discriminating against customers from certain countries, the result is likely to be the same (i.e. we have nothing to report here.)

The FATCA will not live up to the expectations of tax revenue streams from offshore accounts because FATCATs always find a way. That is one of the main characteristic of a FATCAT. Ingenuity! And if we are wrong and FATCA becomes a success then we can envision an Exodus from high tax to low tax nations.