Republicans are looking to repeal the Foreign Account Tax Compliance Act (FATCA), which combats federal tax evasion via offshore bank accounts.
FATCA requires Americans living in-country and abroad who hold offshore accounts worth $50,000 or more to report their assets to the IRS. FATCA was signed into law in March of 2010 as a result of an international tax evasion scandal. Swiss bank UBS was found to have helped many wealthy Americans hide their money from the Internal Revenue Service in order to avoid paying their fair share of federal taxes. International tax investigators discovered that UBS, and other large banks Credit Suisse Wegelin, helped 17,000 wealthy Americans hide a combined amount of $20 billion.
Reuters reported that this attempt will be the first by the Republicans to repeal FATCA, although the GOP has delayed the law’s implementation for nearly four years. The law is supposed to activate on July 1 of this year. The GOP’s repeal attempt is expected to fail, but that’s not to say that won’t pursue another implementation delay.
Early last year, Wegelin, the oldest private Swiss bank, announced a ceasing of operations because of its guilty role in the trax scandal. According to Wegelin’s managing partner, the bank “agreed with certain US taxpayers to evade the US tax obligations of these US taxpayer clients, who filed false tax returns with the IRS.”
Wealthy Americans and corporations have frequently gone to offshore banks, or “tax havens” as they’ve been known as, in order to increase their net worth by avoiding paying U.S. federal taxes. In 2012, 80 American corporations kept $166 billion in tax havens, effectively avoiding paying U.S. taxes. The total amount of corporate offshore assets now equals $1.5 trillion.
Currently, the corporate tax rate is 35 percent, but companies have been pushing for a 25 percent tax rate. In 1973, corporate tax rates dipped into 37 percent of American corporations’ profits, and these companies still made profits. Lightened regulation and pro-corporate laws now have tax rates dipping into only 14 percent.
Companies have drastically increased their profits over the last four decades, while the income inequality gap widens and workers struggle to provide for their families, most of which are barely surviving on minimum wage.