There’s a bill that will go into effect on July 1. It’s known as H.R. 2847 which contains FATCA (the Foreign Account Tax Compliance Act of 2010). H.R. 2847 also known as HIRE (the Hiring Incentives to Restore Employment Act) was a law passed in March 2010 which will go into effect on July 1. The bill seeks to provide payroll tax breaks and incentives for businesses to hire unemployed workers.
However, “the worry” is the FATCA piece of that bill. FATCA deals with U.S. taxpayers that hold foreign accounts overseas. It requires them to report their foreign accounts and offshore assets to the government and foreign financial institutions (banks, stock brokers, hedge funds, pension funds, insurance companies, trusts, etc.) are also required to report information about the ownership of overseas assets.
These institutions will have to send annual reports to the IRS on the name and address of each U.S. client as well as their largest account balance in the year and their total debits and credits within the accounts. If an institution does not comply, the United States will impose a 30 percent withholding tax. There are other requirements too. This is just an overview to better inform you about this bill and what it entails. There are reports that attempt to spark fear in the investor, saying that the dollar will collapse on July 1 when this bill goes into effect. I just want to go on record by saying that is ridiculous and that it’s not going to happen.
Yes, the dollar will continue its gradual erosion…but there will not be a collapse on that date nor any other date soon. Why? Everything always goes back to politics. So you must view this through the eyes of an elected official. If the dollar instantly collapses, what’s going to happen? There would be riots in the streets and the risk of a political overthrow. At best, the current elected officials would not be re-elected and new officials would be voted into their places. They can’t have this.
Therefore, they aren’t going to allow a quick dollar collapse to happen. Secondly, the Federal Reserve has much more to do with the speed of dollar depreciation than any governmental law that’s passed. Now, with that said…will this bill be a “dollar negative” and a negative for the U.S. overall? Yes! There’s no doubt about it.
Full story:
http://www.moneynews.com/SeanHyman/Foreign-Account-Tax-Compliance-Act-FATCA/2014/05/24/id/573219/
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