In a letter to his colleagues in the Senate on Tuesday, Kentucky Republican Rand Paul explained that he had introduced his bill, S.887, because FATCA diminished the privacy protections of Americans while at the same time being a poor tool for combating tax evasion, and also, potentially impacting foreign investment in the US.
"It goes without saying that overseas investment in the US is an important engine of our economic growth and prosperity," Sen Rand said in his letter, which was issued late yesterday by PRNewswire.
"FATCA endangers an estimated $25trn in foreign capital currently invested in the US."
As reported last week, Sen Paul has already made a name for himself in Washington for his anti-tax and libertarian views, primarily for having stood in the way of Senate approval of all US tax treaties with other countries since he was elected in 2010.
In his letter to his colleagues in the Senate, Sen Paul argued that FATCA, which will begin to be implemented next year, already "has had the practical effect of forcing [foreign financial institutions] to relinquish any association with American customers, and to avoid direct investment in the United States".
"Perhaps even more troubling, the implementation of FATCA has allowed the Treasury Department to make independent decisions with respect to the sovereignty of foreign nations and the privacy of United States citizens," Sen Rand continued.
“In order to implement this law, Treasury has initiated intergovernmental agreements (IGAs), citing the intent to engage in reciprocal information sharing with other nations.
“The Treasury Department, without the consent and authority of Congress, will force US financial institutions to provide the bank account information of private customers to foreign nations.
"Such a requirement not only diminishes US privacy protections, but also imposes billions of dollars in compliance costs here at home, which will be passed onto customers and the American public."
According to the US accounting news website, Accounting Today, which attributes its information to an anti-FATCA group, a companion version of Sen Rand’s bill is expected to be introduced "shortly" in the house.
"In addition, measures to block the Treasury Department from carrying out the intergovernmental agreements, which have not been authorised by Congress, are expected to be introduced as well," Accounting Today added.
It also reported that the Texas Bankers Association and Florida Bankers Association had recently filed a federal lawsuit against the Treasury Department and the IRS, claiming that new bank account reporting requirements mean that "they will lose billions of dollars in business over recent regulations requiring them to report on foreign residents’ deposits in US banks to foreign governments".
