History will ultimately teach us that America’s far-reaching new global tax law, which came into effect Tuesday, is a “hammer blow for the US economy”, warns the founder and chief executive of one of the world’s largest independent financial advisory organizations.
The stark warning from Nigel Green of deVere Group, which has $10 billion under advice and management, is in response to the Foreign Account Tax Compliance Act, better known as ‘FATCA’, which was implemented by Washington yesterday.
Mr Green explains: “Potentially, FATCA is a ticking time bomb that threatens the long-term sustainable growth of America’s economy and its international economic standing. There are three primary reasons for this.
Less Investment, More Capital Flight
“First, a considerable reduction in future foreign investment is now, I suspect, inevitable as sensible overseas investors will, not unreasonably, prefer to put their funds elsewhere due to the heavy penalties of not fully complying with FATCA’s preposterously onerous regulations.
“Second, further capital flight is a real and serious possibility due to the current investment climate characterized by suspicion. According to the Texas Bankers Association, $500 million had already ‘flown’ from the state’s banking system by the early part of this year as a direct result of the IRS rules.”
“And third, US businesses that operate internationally are now routinely rejected from foreign banks and other financial institutions. Having no access to non-U.S. financial institutions in countries where they do business significantly reduces their competitiveness. “
Green says for these reasons and a “host” of others, “I believe that history will ultimately teach us that FATCA is a hammer blow for American jobs and the broader US economy.”
‘Cannot Achieve Its Aims’
Green says FATCA “cannot possibly effectively achieve its purported aims of combating tax evasion” and that he will continue to call for the law to be repealed.
“I will also continue to champion the legal and constitutional challenges being prepared by the likes of American super-lawyer Jim Bopp Jr. and the Alliance for the Defence of Canadian Sovereignty.”
George Prior ([email protected]) is principal and founder of Prior Consultancy, an international communications agency in the United Kingdom and Spain.