You Decide: Reasonable Tax Compliance Measures or Capital Controls
Back in mid-March, in case you missed it, President Obama inked into law another bill to get the economy, and employment in particular, moving again. The new law is named the Hiring Incentives to Restore Employment Act, or HIRE for short. In addition to providing yet another endearing acronym for spending $17.5 billion, the law nonchalantly introduces new capital controls under the benign guise of standard-seeming tax compliance measures.
According to Zero Hedge:
“As it was merely the latest in an endless stream of acts destined to expand the government payroll to infinity, nobody cared about it, or actually read it. Because if anyone had read it, the act would have been known as the Capital Controls Act, as one of the lesser, but infinitely more important provisions on page 27, known as Offset Provisions – Subtitle A—Foreign Account Tax Compliance, institutes just that.
“In brief, the Provision requires that foreign banks not only withhold 30% of all outgoing capital flows (likely remitting the collection promptly back to the US Treasury) but also disclose the full details of non-exempt account-holders to the US and the IRS. And should this provision be deemed illegal by a given foreign nation’s domestic laws (think Switzerland), well the foreign financial institution is required to close the account. It’s the law. If you thought you could move your capital to the non-sequestration safety of non-US financial institutions, sorry you lose – the law now says so. Capital Controls are now here and are now fully enforced by the law.”
Clearly the main intent of the law is to further tighten the IRS’ grip on money sent abroad in search of tax havens. However, it’s also another significant step toward putting measures in place that restrict the free flow of deposits and savings held by US citizens. It also lays the foundation for more government involvement in your personal assets.
Worst of all is how it’s done. If there’s to be legislation written on taxes, so be it. Call it by name and open it up for public discourse. To bury the details in a law that’s supposedly intent on putting more Americans to work seems, albeit unsurprisingly, sneaky to say the least.
You can read more details, and view the law’s entire text, in Zero Hedge coverage of how America now enforces capital controls.