Trump must “show some backbone” and repeal Obama’s highly controversial global tax law that negatively impacts foreign financial institutions (FFIs) and is forcing a record number of Americans to ditch their U.S. passports, affirms the boss of one of the world’s largest independent financial advisory organizations.
Nigel Green, founder and CEO of deVere Group, is demanding that the president-elect addresses the issue of abandoning the Foreign Account Tax Compliance Act (FATCA), which adversely affects FFIs and millions of Americans around the world as “a priority.”
Mr Green comments: “Donald Trump has publicly stated that he will revoke some of Obama’s executive orders. I would urge him to make repealing FATCA one of those he revokes.
“This must be a major priority as FATCA negatively impacts millions of U.S. citizens. It has been responsible for the record number of Americans, most of whom are proud patriots, feeling that there is no other option than to relinquish their U.S. citizenship.
“Since FATCA was introduced, official figures show that more and more Americans give up their U.S. passports every year. This correlates with a deVere Group survey carried out last year that reveals 73 percent of Americans living overseas are tempted to give up their U.S. passports.”
He continues: “This toxic legislation turns law-abiding Americans living overseas, of whom there are approximately eight million, into financial pariahs.
“For instance, many U.S. citizens cannot even now hold a bank account in their country of residence as foreign banks routinely feel Americans are too much trouble thanks to FATCA’s onerous and costly rules by which they would need to abide to take them on as clients. This makes normal life extremely challenging, to say the least.
“By using its super power status, the U.S. has over the last few years been coercing foreign financial institutions around the world into accepting FATCA, or facing stiff financial penalties and extraterritorial sanctions. These FFIs are now working as de facto agents of America’s tax authority.”
Mr Green goes on to say: “This is a golden opportunity for Trump to show his mettle and reverse a fatally flawed, misguided, imperialistic law that’s nothing more than a masterclass in the law of unintended consequences.
“Once in the White House, he must do the right thing and show some backbone on FATCA.”
Under FATCA which came into effect in July 2014, all non-U.S. financial institutions (including banks, insurance companies, investment funds and pension funds) are required to report the financial information of American clients who have accounts holding more than $50,000 directly to the IRS.
The official aim of the legislation is to try and combat tax evasion. However, its opponents, including Nigel Green, a long-term vocal critic of the legislation, says: “Tackling tax evasion is a noble and worthwhile objective, yet FATCA’s dragnet approach will be highly ineffective at achieving this as well as being prohibitively costly.”
The deVere CEO concludes: “Until the decent thing is done and FATCA is repealed, Americans must adhere to its far-reaching rules.
“Whilst the campaign continues to repeal FATCA, there are, thankfully, established solutions to help mitigate FATCA’s complicated, costly and privacy-infringing demands.
“These include supplementary overseas pension contracts which allow qualifying U.S. taxpayers to make annual contributions to a pension fund over and above US$51,000 – which is not possible within the current U.S. tax-approved regime. These products also allow tax-deferred investment growth and the opportunity to invest freely into Passive Foreign Investment Companies (PFICs), without incurring U.S. tax penalties and burdensome tax reporting procedures.”