Developments in New Zealand, where officials are already jumping onboard the deeply controversial U.S. Foreign Account Tax Compliance Act (FATCA) bandwagon, illustrate the problems well.
Policymakers in New Zealand are working on “enabling” legislation to comply with the latest addition to the sprawling U.S. tax regime, which authorities there admit would likely conflict with the nation’s Bill of Rights, the Human Rights Act, privacy rights, anti-discrimination protections, and more. Around the world, the trends are similar, with individual rights in government crosshairs owing to FATCA. However, outrage over the draconian U.S. tax scheme is escalating quickly as well.
As part of the unimaginably complex job-destroying FATCA regime — passed in 2010 buried inside an unrelated “stimulus” and “jobs” bill — the Obama administration is essentially trying to force foreign governments and financial institutions to become de facto agents of the IRS. One of the avenues for accomplishing that involves coercing other national governments into signing unconstitutional so-called “inter-governmental agreements” with the U.S. Treasury Department.
Among the primary alleged “benefits” used to entice foreign governments into compliance, the Obama administration is making unlawful promises to share financial information on citizens of other jurisdictions. If foreign governments refuse to be bullied into submission, banks and other financial institutions in their nations will face essentially two choices.
The first option is to submit to even more draconian yet-to-be unveiled regulations, exorbitant compliance costs, and crippling “withholding taxes” imposed by Washington. The other alternative is to simply be excluded from the U.S. market entirely, which analysts say will hurt not just foreign firms, but also the American economy itself. Banks in New Zealand estimated in 2011 that compliance with FATCA could cost more than $80 million.
Authorities in New Zealand, meanwhile, acknowledged that they have no way of properly estimating the costs and supposed “benefits” of complying with the Obama administration’s assault on their nation’s laws and sovereignty — not to mention on individual rights. Still, they are hoping to comply, working quietly to undo multiple guaranteed individual rights in the process.
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