With the deadline for foreign financial institutions to comply with the Foreign Account Tax Compliance Act having recently passed, there’s still a significant amount of discussion going on about the U.S. initiative.
A good deal of it is negative. Such as the claim that FATCA is merely one more way the U.S. government is implementing capital controls on its citizens.
I noted in a March 31 post:
Uncle Sam claims they are going after American tax evaders.
Others suspect the U.S. government is implementing capital controls in advance of another major financial crisis…
One of these “others” is the American financial writer, publisher, and filmmaker Addison Wiggin. Wiggin argued on The Daily Reckoning website on July 8:
One of the most insidious measures to keep your capital from fleeing overseas became law in spring 2010. Almost no one noticed. It was tucked into a “jobs bill.”
Maybe you’ve heard of it by now — H.R. 2847, the Foreign Account Tax Compliance Act, or FATCA…
The congressional Joint Committee on Taxation figures FATCA will generate $8.7 billion over 10 years. So that’s an average of $870 million in a single year… or a whopping 0.18% of this year’s federal budget deficit.
We’re no conspiracy theorists, but upon examining the evidence it’s easy to conclude FATCA was never about raising revenue or cracking down on “tax cheats.” It’s about control. It’s about keeping you trapped in U.S. banks and the U.S. dollar if a Cyprus-like crisis comes America’s way…
(Editor’s note: Bold added for emphasis)
Wiggins went on to suggest three options for Americans who want to protect themselves “from a sinking U.S. dollar and shaky U.S. banks.” An offshore bank safe deposit box was one of them. From the piece:
Choice #3 Gold. If you keep it in a safe-deposit box in an overseas bank, this too does not qualify as a “foreign financial asset.”
Sounds reasonable enough, but as Mr. Wiggin pointed out on Agora Financial’s Daily Resource Hunter website back on July 13, 2011:
For starters, you can keep gold in a safe-deposit box in a foreign bank. Many banks are willing to do this even if you don’t have an account. That’s because under IRS rules, gold in a safe-deposit box does not qualify as a “foreign financial account.”
Sounds great… until you start to think about the logistical hoops you have to jump through to make this happen. You have to buy the gold and then make arrangements for it to arrive at the bank of your choice, where it will then go in the safe-deposit box.
That creates its own paper trail. And good luck trying to do it yourself, transporting a significant amount of gold outside the United States…
“Many banks are willing to do this even if you don’t have an account”
It’s been my understanding that offshore banks generally don’t offer safe deposit boxes unless a client also has a financial account with that institution. Guess I’ll have to look into that and get back to readers.
Of course, there’s always the offshore private vault route.
So is FATCA part of some larger capital controls scheme being carried out by the U.S. government? Maybe. I wouldn’t be surprised if that’s the case.
I do know this, however. Wiggin won’t be the last high-profile individual in the financial world to claim FATCA is really about Uncle Sam “circling the wagons” on American citizens and their assets.
By Christopher E. Hill
Offshore Safe Deposit Boxes (www.offshoresafedepositboxes.com)
Sources:
Wiggin, Addison. “Another Brick in the ‘Virtual Berlin Wall.’” The Daily Reckoning. 8 July 2014. (http://dailyreckoning.com/another-brick-in-the-virtual-berlin-wall/). 15 July 2014.
Wiggin, Addison. “Three Offshore Havens to Protect Your Hard-earned Bucks.” Daily Resource Hunter. 13 July 2011. (http://dailyresourcehunter.com/three-offshore-havens-to-protect-bucks%E2%80%A6/). 15 July 2014.