FATCA, the expatriate financial reporting law, has been a compliance nightmare for many ordinary Americans abroad, and soon it may vex the British royal family. Depending on how and whether Prince Harry mingles his finances with those of American-born fiancee Meghan Markle, various aspects of Crown finances might have to be reported to American authorities. “The United States and Eritrea are the only countries in the world that tax based on citizenship, rather than residency.” [Suzanne Lucas, Evil HR Lady/Inc.; Amy Alkon] More: Andreas Kluth, Bloomberg.
Today the expatriate-punishing tax law, rife with unintended consequences, expands its reach further into the insurance sector. [Frederic Garsson and David Shapiro, Saul Ewing]
Many previous posts in this space have addressed the Foreign Account Tax Compliance Act, which presumes to regulate overseas banks and financial institutions that do business with Americans, and which goes into effect next June. So it’s nice to see the Paper of Record running a reasonably informative introductory piece on its problems, even if at too late a date to get the thing stopped. “Global banks and investment firms have made their dislike of the law known, though they are reluctant to speak out individually” — and how common that last point is these days, given the retaliatory potential of the U.S. government’s vast regulatory and enforcement apparatus for a business that does dare to speak out. Still, a few critics are willing to show their heads above ground, including
Georges Ugeux, a dual Belgian-American citizen, a lecturer at Columbia Law School and the founder of Galileo Global Advisors, an international business consulting firm. He described the law as “bullying and selfish.” The United States, he said, “is acting outside its borders as if they were its home.”
..a surge in U.S. citizenship renunciations by expatriates [Bloomberg] The United States is “the only nation in the Organization for Economic Cooperation and Development that taxes citizens wherever they reside,” a departure whose disincentive effects are magnified now that Congress is insisting on regulating foreign financial institutions that deal with Americans. Earlier on FATCA here. More: Dan Mitchell, Cato.
I’ve got a piece in Thursday’s Washington Examiner on a remarkable new law enforcement tool in Britain:
It’s like, “Your papers, please,” but for things you own.
Authorities in Britain have begun trying out a new police power called unexplained wealth orders under a law that took effect last year. The police go to a court and say you’re living way above any known legitimate income. The judge then signs an order compelling you to show that your possessions (whether a house, fancy car, or jewelry) have been obtained honestly and not with dirty money. In the meantime, the boat or artwork or other assets get frozen, and you can’t sell them until you’ve shown you obtained them innocently.
The kicker: The burden of proof falls on you, not the government. If you don’t prove the funds were clean, Her Majesty may be presumed entitled to keep the goodies….
Related to the flipping of the burden of proof, the law says information dug up via one of the orders can’t then be used in criminal charges against the target.
…advocates want this to be the start of hundreds of seizure actions against other rich foreigners in the British capital.
Some are already calling for bringing a law like this to the United States, and maybe we’re halfway there already. Asset forfeiture laws, blessed by the Supreme Court, already let police seize your property on suspicion of involvement in a crime and make you go to court to get it back. We’ve been chipping away at financial privacy in this country for decades, through Know Your Customer, suspicious-activity reports, and FATCA (expatriate tax) rules.
Ironically — though recent enactments by Parliament may be changing this, too — Britain’s own peripheral territories and dependencies, including the Channel Islands, British Virgin Islands, Cayman Islands, etc. have long made a good business out of furnishing the rest of the world with the means of financial privacy.
The reversal of the presumption of innocence troubles many Britons, too. For the moment, use of the orders is limited to a few elite law enforcement agencies. One of those agencies, however, is Her Majesty’s Revenue and Customs — the tax collectors. It’s not wrong to worry about where this idea is headed.
- Advice to Mark Calabria, newly installed as head of the Federal Housing Finance Administration, or FHFA [Arnold Kling; more on what to do with Fannie and Freddie]
- Bad blood between Joe Biden and Elizabeth Warren on consumer bankruptcy issue goes back decades [Matthew Yglesias, Vox]
- “Financial planning websites consistently emphasize paying off revolving high-interest debt before saving for retirement (unless a company offers a match rate).” But state-mandated auto-IRAs nudge workers the other way [Aaron Yelowitz, Cato, earlier]
- Competition for incorporation: “Nevada adopts fee-shifting: Should Delaware worry?” [Stephen Bainbridge]
- “The True Winners and Losers of Financial Regulation” [Diego Zuluaga] Fed vs. narrow banks [John Cochrane, more]
- FATCA was the bad fairy’s curse at the royal baby shower: “Welcome to Tax Hell, Little Earl of Sussex” [Suzanne Lucas, earlier]
- FATCA, the expatriate financial reporting law, may soon vex the British royal family;
- Passenger asked to leave US Airways flight after emotional support pig becomes disruptive;
- Quebec lawmakers to shopkeepers: don’t greet customers with “Bonjour hi,” might make English speakers feel too welcome;
- “Now unsealed: official report on Wisconsin John Doe probes“;
- Philadelphia city council votes to ban bulletproof glass in many delis, and more;
- D.C.’s ordinance requiring child care workers to have degrees in early childhood development: the year’s worst law?
- Penalties mount skyward: Oregon appeals court upholds $135,000 cake fine.
- “The Rise of Financial Regulation by Settlement” [Matthew C. Turk, Columbia Law School Blue Sky Blog]
- Before buying into the idea that fractional reserve banking has some sort of fraudulent roots, consider the common law concepts of detinue, bailment, and debt [George Selgin, Cato]
- Cato files brief urging Supreme Court to clarify constitutional status of SEC’s use of in-house administrative law judges [Thaya Brook Knight on Lucia v. SEC]
- Between FATCA and the Patriot Act, American extraterritorial banking rules keep wreaking havoc on other countries [Ernesto Londoño, New York Times on Uruguay legal marijuana businesses]
- “Congress Can Rescind the CFPB’s Gift to Trial Lawyers” [Ted Frank, WSJ]
- “Absent Reform, Little Relief in Sight from Chronic “Merger Tax” Class-Action Litigation” [Anthony Rickey, WLF]
- What’s actually in the new House-passed bill revamping Dodd-Frank? And what’s likely to happen to it in the Senate? [David Henderson, EconLib; Benjamin Parker, Weekly Standard; Stephen Bainbridge]
- Supreme Court, 9-0, rebuffs SEC: yes, disgorgement is a penalty and statute of limitations applies to it [Theresa Gabaldon/SCOTUSBlog (statutes of limitations “vital to the welfare of society,” per Sotomayor), Bainbridge and more, Thaya Brook Knight and Ilya Shapiro/Cato]
- Allan Meltzer, R.I.P. [James Dorn, Gerald O’Driscoll, Ian Vásquez, Cato]
- “The Foreign Corrupt Practices Act and the New Trump Administration: Your Top Ten Questions Answered” [Foley & Lardner]
- June 15, mark your calendar: “Financial Crisis and Reform: Have We Done Enough to Fix the Government-Sponsored Entities?” with John Allison, Susan Wharton Gates, R. Christopher Whalen, Landon Parsons, and Ike Brannon, Cato event streaming live or in person in Washington, D.C.;
- Why, yes: “Is It Time to Repeal FATCA?” [Veronique de Rugy, more]