Paul L. Caron

Sunday, February 5, 2017

WSJ:  Taming IRS Imperialism

FATCAWall Street Journal editorial, Taming IRS Imperialism: A Foreign Leader Asks President Trump If He Will Keep a Promise:

In the tiny Caribbean nation of Trinidad and Tobago, Kamla Persad-Bissessar, the leader of the opposition coalition in parliament, recently did something no other world leader has done: She read the U.S. Republican Party platform.

There she discovered that the GOP had called for repeal of the Foreign Account Tax Compliance Act, or Fatca, which is best understood as a license for IRS imperialism. The Treasury Department has used the law to demand that foreign countries change their own laws so their financial institutions report information on their American account holders. Upon discovering the Republican call for Fatca’s repeal, Mrs. Persad-Bissessar wrote Donald Trump in January asking if he will keep this promise.

It’s a good question. Mrs. Persad-Bissessar, a former prime minister, wants to know because the Trinidad and Tobago parliament is now considering changing the nation’s laws to accommodate Fatca. It would make little sense to change her nation’s laws, she argues, if Fatca isn’t long for this world.

Americans have an even bigger stake in the answer. In theory this 2010 law was designed to go after fat cats hiding their wealth offshore by adding a new reporting form for taxpayers with assets overseas. In reality, the law has become another example of gross federal overreach, adding another burden on Americans overseas who are already paying taxes where they live. ...

Mrs. Persad-Bissessar’s question to Mr. Trump has roiled the pro-Fatca establishment. The American ambassador (appointed by President Obama) has said Fatca is being held up by “some people with cocoa in the sun,” insinuating that only someone with something to hide could be opposed. The Fatca chief at Deloitte & Touche has been telling Trinidad and Tobago that Fatca is here to stay and Mr. Trump can’t do anything about it.

Well, yes and no. Only Congress can repeal Fatca. But the whole Fatca edifice has been built on the intergovernmental agreements that Treasury has negotiated with more than 100 countries—agreements for which there is no statutory authority or Congressional ratification. Mr. Trump could take the teeth out of Fatca by announcing he has suspended negotiations for future agreements and won’t enforce the ones we have.

So two cheers for Mrs. Persad-Bissessar for asking her question. Let’s hope President Trump gives the answer that Americans deserve, by making clear he intends to deliver on the GOP pledge to dismantle a bad law that never should have been passed.

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