FATCA remains unscathed even after vote of repeal by the Republicans

According to reports by a senior Treasury Official on Wednesday, the 22nd of January, 2014, the opposition of the Republican Party to a new law (FATCA), meant to combat offshore tax dodging by the Americans will not hinder or obstruct the efforts of the Obama administration to implement it worldwide. With the huge outrage over the political spectrum of the nation over the controversial new addition to the US tax regime called the FATCA or the Foreign Account Tax Compliance Act, the RNC (Republican National Committee) voted largely to adopt and implement a resolution calling for a re-appeal. This strongly worded GOP measure has already generated immense support among the middle-class Americans who stay abroad and this, according to the analysts, represents simply the beginning of the aggravating campaign to stop FATCA and this reaction is being deemed to be one of the devastating consequences.

According to Mark Mazur, the Treasury Assistant Secretary for Tax Policy, the vote of the republicans for abolishing and exterminating FATCA won’t be a big deal for the Obama administration. The FATCA was approved in the year 2010 and was planned to take effect on the 1st of July. It required more foreign banks and the investment funds report to Uncle Sam or the Internal Revenue Service (IRS) about the worth of the customer’s accounts, whether it’s $50,000 or more. There were too many Americans who were hiding their assets from the IRS by depositing them in Swiss bank accounts and this was when this law came into effect. This habit of the Non-resident Americans was blatantly criticized by the libertarians and banks and was being called an unneeded government outreach.

Mazur didn’t expect such reactions and steps from the Republicans to stop the FATCA but he assures the nation that he’ll soon see to it. In order to implement FATCA worldwide, the Treasury Department is earnest taking on effective negotiations with “intergovernmental agreements” and more than 50 international governments. Each deal would offer financial institutions in the foreign countries with more certainty about what they need to do in order to comply with the FATCA. The Treasury has so far signed on the dotted line of more than a dozen of deals, including negotiations with other countries, but their efforts with China and Canada hasn’t been strong enough.

In the resolution where the Republicans called for FATCA to be repealed, the RNC is of the opinion that this entire scheme has terrorized every citizen of the US who is living abroad due to its zealous nature of invading the privacy and punitive enforcement and taxation. However, despite the fact that the US is one of the two nations in the world that taxes citizens irrespective of where they reside, the GOP measure didn’t call for an end to citizenship-based taxation. While critics of FATCA says that repealing the law is a vital step in regaining fundamental rights and helping in avoiding any potential financial calamity, there are broader issues that are yet to be addressed. Citizenship-based taxation has proved to be a disaster leading to exploding trade deficits and decreasing tax revenue. Whether or not lawmakers pay any attention is yet to be seen.