All of us have experienced the merciless effects of the “law of unintended consequences” at one time or another. We do something that we think is good or proactive, only to discover that there are negative effects produced as byproducts of our good intent. The creation of an unanticipated pejorative result from purposeful action is classified as an unintended consequence, and the government is masterful at it. Perhaps the granddaddy of them all is about to be enacted on July 1, 2014.
In March of 2010, the HIRE Act (Hiring Incentives to Restore Employment Act) was signed into law by the president, having been passed by the House under Speaker Pelosi and the Senate under Harry Reid. It was designed as a bill that would provide incentives for employers to start creating jobs again. The bill’s efficacy could be debated, but one component of the law could prove debilitating to the dollar as the global reserve currency (and the nation’s ability to finance our debt and deficit.)
Embedded in that piece of legislation under Title V is the Foreign Account Tax Compliance Act (FATCA), which was designed to target American taxpayers with assets in foreign banks. It had nothing to do with the intent of the HIRE Act, but that seems to be the modus operandi of the federal government–to hide things in plain sight so as to not arouse suspicion. Forbes calls FATCA “the worst law Americans have never heard about.”
FATCA is creating a data retrieval system that some have compared with the NSA’s (National Security Administration) meta-data information dragnet. It requires all non-U.S. based financial institutions, including banks, credit unions, insurance companies, and investment and pension funds, to provide data on all specified U.S. accounts to the IRS (Internal Revenue Service). From that data, the IRS will attempt to collect taxes on revenue from overseas-based accounts of U.S. citizens.
There could be as much as about $800 million a year that could be collected by the IRS from implementation of FATCA, according to the Joint Committee on Taxation. Based on the nation’s current spending level, that’s enough to run the government for about two hours.
While $800 million is still a large sum, IRS Commissioner John Koskinen recently informed Congress that the cost of implementation will zero out any anticipated gain to the treasury. And the IRS’s internal Taxpayer Advocate Service issued a report that came to the same conclusion, indicating that “FATCA-related costs will equal or exceed projected FATCA revenue.”
The questionable enforcement measures implemented in the Act are what could portend ominous consequences for all of us. Beginning July 1, 2014, any foreign institution, including foreign government, failing to fully cooperate in providing the requested information to the IRS can be classified by Treasury as “recalcitrant.” Such institutions will not be paid the full interest they are due on the U.S. bonds, notes, and bills that they own. The Department of the Treasury will consequently withhold as much as 30% of interest payments to them as an “economic sanction.”
The views expressed in this opinion article are solely those of their author and are not necessarily either shared or endorsed by WesternJournalism.com.
This post originally appeared on Western Journalism – Informing And Equipping Americans Who Love Freedom