In 2010, the 111th Congress passed the Hiring Incentives to Restore Employment Act in order to help stimulate hiring in a sluggish post-recession economy. Within that law was a measure that has been controversial from the beginning: the Foreign Account Tax Compliance Act or FATCA. This law requires that financial institutions across the world send information about Americans’ accounts valued at over $50,000.
The date this law goes into effect has changed, but it is currently set for July 1, 2014. The law is intended to curb “tax dodging,” where U.S. citizens effectively hide their money outside the scrutiny of the IRS. Although, according to Reuters, a panel at the Republican National Committee is set to approve a resolution that demands the repeal of this law.
On the surface, the RNC’s concerns are not simply to save the tax shelters of some of their richest donors (and former candidates). The most convincing of their arguments involves the cost of the program, both to financial institutions and for the program itself. They are also concerned about the possibility of American capital flying overseas and even renounced citizenship for America’s wealthiest. Libertarian concerns include the invasion of privacy—the IRS can take the money from the foreign bank if one chooses not to pay willingly—and that the U.S. is forcing other nations to adhere to its laws.
Still, a coalition of nations has already signed on to international agreements to comply with the law, including Switzerland whose banks have come to symbolize money untouchable by the law. Chinese officials however, remains opposed to this law telling Reuters in 2010, “China's banking and tax laws and regulations do not allow Chinese financial institutions to comply with FATCA directly.”
Solomon Yue, an Oregon RNC official, also believes the law “will attract American overseas donors” to the party.