Time Running Out For FATCA Repeal Action

Time is running out for Washington senators to back the repeal of the controversial Foreign Account Tax Compliance Act (FATCA).

Politics in Congress is all about horse trading between senators and the White House.

Donald Trump has presented his tax reform package to lawmakers and expects them to vote in his favour.

But the ruling Republicans have a narrow 52-48 majority, and if just a couple abstain or even worse, vote with the Democrats, his plans will stall.

The Republicans did pledge to repeal FATCA, but a year into Trump’s presidency, that promise is still waiting to be fulfilled.

Move to scrap FATCA?

If senators against FATCA want to see the bill pulled, now is the time for them to use their leverage to demand the law is scrapped.

Trump and leading Republicans need to listen to what their senators want and deliver the goods if they expect them to vote in favour of the package.

The leading opponent of FATCA, Republican Rand Paul has been suspiciously quiet on his views about tax reform. The Republicans need his vote. He wants FATCA repealed. His leverage seems a match that fits.

“Just do the math. The Republicans desperately need Rand Paul as a solid yes vote on tax reform,” writes tax analyst Robert Goulder in Forbes.

“If he’s still serious about repealing FATCA, he knows what he has to do. The leverage is his to use, but the window in which he can use it is closing.”

He may just play his hand by offering a floor amendment his bill to repeal FATCA, although nothing has been seen yet.

Tax on residence not nationality

Campaigners also want a reversal of America’s basic tax principle – that all Americans anywhere in the world should pay US taxes.

Many lobbyists and politicians want to see anyone living in America paying tax on their earnings and investments, but those living abroad left to pay taxes in the country where they live.

This nationality based taxation is an anachronism left over from the Civil War. The law was brought in to make Americans fleeing service in the Army pay to fund the fighting. No other country of note taxes citizens in this way and campaigners say reform is well overdue.

“Residency-based taxation rules, which would not tax the foreign income of Americans truly resident in a foreign country, can be adopted. US income would remain taxable,” said a spokesman for lobbyists American Citizens Abroad

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1 COMMENT

  1. As I’ve said in other occasions: For me, “Residence-Based” taxation is a much worse problem than FATCA. Filing US tax returns abroad is a total nightmare. That should be target #1; and repeal of FATCA, #2.

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