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Senator Reid spins out, This is not the first time the IRS was used as a tool to target political opponents. (Thanks for the newsflash Senator, guess that makes it OK)
The IRS and the income tax are very powerful tools of coercion. Do I think the tactics employed against Tea Party groups recently would be employed by a big government “conservative” against groups which challenged his or her authority?
OF COURSE!!!
American • Guess What They Are Not Cutting In The Fiscal Cliff ….
November 15, 2012,
Santiago, Chile.
In his farewell address to Congress yesterday, Ron Paul blasted the dangers of what he called ‘Economic Ignorance’:
“Economic ignorance is commonplace. . . Believers in military Keynesianism and domestic Keynesianism continue to desperately promote their failed policies, as the economy languishes in a deep slumber.”
He’s dead right. Around the world, economic ignorance abounds. And perhaps nowhere is this more obvious today than in the senseless prattling over the US ‘Fiscal Cliff’.
Here’s the deal: You may remember the Debt Ceiling debacle of 2011. At the time, the US government was about to breach its debt ceiling, and there was an embarrassing standoff between Congress and President Obama.
As part of their eventual compromise, the debt ceiling increased by $400 billion in August 2011… then again by another $500 billion five weeks later… and finally by another $1.2 TRILLION twenty weeks after that.
In return, President Obama signed into law the Budget Control Act of 2011. The law stipulates that, unless another compromise is reached, a series of tax increases and budget cuts will automatically take place on January 1, 2013, including the expiration of the Bush tax cuts and the temporary 2% payroll tax holiday, plus new taxes related to Obamacare.
They call this the ‘Fiscal Cliff’ because everyone is terrified that all the budget cuts and new taxes will bring the US economy to its knees once again.
I’ve spent days analyzing the bill… and frankly, it’s a joke. You can read the 200+ pages yourself if you like, but here are the important points–
As we’ve discussed before, US government spending falls into three categories.
Discretionary spending is what we normally think of as ‘government.’ It funds everything from the military to Homeland Security to the national parks.
Mandatory spending covers all the major entitlement programs like Social Security and Medicare.
Then there’s interest on the debt, which is so large they had to make it a special category.
The latter two categories are spent automatically, just like your mortgage payment that gets sucked out of the bank account before you have a chance to spend it. The only thing Congress has a say over is Discretionary Spending. Hence the name.
But here’s the problem– the US fiscal situation is so untenable that the government fails to collect enough tax revenue to cover mandatory spending and debt interest. In Fiscal Year 2011, for example, the US government spent $176 billion MORE on debt interest and mandatory spending than they generated in tax revenue.
In Fiscal Year 2012, which just ended 6 weeks ago, that shortfall increased to $251 billion. This means that they could cut the ENTIRE discretionary budget and still be in the hole by $251 billion.
This is why the Fiscal Cliff is irrelevant. The automatic cuts that are going to take place don’t even begin to address the actual problem; they’re cutting $110 billion from the discretionary budget… yet only $16.9 billion from the mandatory budget.
Given that the entire problem is with mandatory spending, slashing the discretionary budget is pointless. It’s as if the US economy is a speeding train heading towards a ravine at 200 mph, and the conductors are arguing about whether they should slow down to 150 or 175.
Oh, and there’s just one more problem.
The government thinks that they will collect a few hundred billion dollars more in tax revenue when all of these new taxes kick in. Again, wishful thinking.
In the six+ decades since the end of World War II, tax rates in the US have been all over the board. Yet during this time, the US government has only managed to collect roughly 17.7% of GDP in tax revenue.
Conclusion? Increasing taxes won’t increase their total tax revenue. Politicians have tried this for decades. It doesn’t work. The only way to increase tax revenue is for the economy to grow… and higher tax rates do not pave this path to prosperity.
Ron Paul was spot on. Economic ignorance abounds. And all the Talking Heads in the mainstream media blathering away about the Fiscal Cliff are only reinforcing his premise.
Bottom line– the Fiscal Cliff doesn’t matter. The US passed the point of no return a long time ago.
http://www.sovereignman.com/expat/guess … liff-9803/
Statistics: Posted by yoda — Fri Nov 16, 2012 11:01 am
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American • Re: Guess What They Are Not Cutting In The Fiscal Cliff ….
That has got to be the best from sovereign man.
Statistics: Posted by Segestan — Fri Nov 16, 2012 11:17 am
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Guess Which Asset Class Has Crushed All Others Since Tuesday?
I’ll give you a hint. It’s not stocks.
Source: Zerohedge.com
If you can’t read the tiny lettering above, the asset class is the barbarous relic, gold.
Why is gold out performing?
Could it be that Europe continues to implode and Germany now looks like it will confront a fairly nasty recession?
Could it be that the “fiscal cliff” is now just a bit too close?
Could it be that Obama was re-elected?
Could it be that with the Obama re-election, Bernanke will be that much freer to continue operating with abandon?
Gold is out performing because of all of these things, plus a few others. The financial cumulonimbus clouds continue to gather and funds, governments, even retail investors are looking for shelter from what may be a very nasty storm in the relatively near future. A storm which could even overwhelm treasuries.
That’s crazy talk though right? Frankly, I hope so. But do YOU continue to consider treasuries a truly ”riskless” asset any longer? (If you ever did, and I’m not talking just about inflation risk.)
Gold is one of the few ways investors can hedge against the rampant crony capitalism which defines much of the economic world these days. It is a check on (though not a total cure for) the current economic insanity we are witness to. It is one of the reasons the Federal Reserve hates the yellow metal.
Saying that, how much do you want to bet that Bernanke has a little (or perhaps not so little) stash of gold somewhere?
The post Guess Which Asset Class Has Crushed All Others Since Tuesday? appeared first on AgainstCronyCapitalism.org.
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Guess Who Is Already Making Money Off The Fed’s Latest Round of Money Printing (QE-3)?
The article below by Jeffrey Snider, an investment advisor, may be a bit dense for the average reader. But here’s the bottom line: As the Fed has lowered “wholesale” mortgage rates by printing money and using that to buy mortgage bonds packaged by dependencies of the federal government, the big banks have not passed these lower mortgage rates onto the “retail” borrower, the average home buyer.
The banks, investment banks, and hedge funds have themselves made millions off the Fed program, but so far little if any of it has helped the average homebuyer.
Does this information surprise you in any way? No? We aren’t surprised either. This is how things work in the Wall Street/Washington crony capitalist system.
President Obama charges that the Republicans practice “trickle down” economics. Governor Romney counter-charges that the Democrats practice “trickle down” government. Excuse us, but what exactly is the difference?
As we have noted in other articles, wealth in a real market system cannot “trickle down” because workers and contractors benefit immediately from investment, while investors have to wait and see if they get anything back. But “trickle down” is typical of a crony capitalist system, and the latest windfall for Wall Street from QE-3 is yet another example. The favored rich will fatten off of it, the middle class get crumbs while their savings disappear from the Fed’s engineered negative interest rates. The poor will get nothing except even more unemployment.
The post Guess Who Is Already Making Money Off The Fed’s Latest Round of Money Printing (QE-3)? appeared first on AgainstCronyCapitalism.org.
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20 Signs That All Point To The Exact Same Thing – Can You Guess What That Is?
The U.S. economy is in a massive amount of trouble. There aren’t enough jobs. There isn’t enough money to go around. Business activity is slowing down again. Household wealth has been falling. Food prices have been rising. Many state and local governments all over the country are flat broke and are drowning in debt. The federal government has been rolling up unprecedented amounts of debt in an attempt to keep things going, but everyone knows that kind of borrowing is simply unsustainable. So where do we go from here? We consume far more than we produce and we use debt to make up the difference. 40 years ago the total amount of debt in America (government, business and consumer) was less than 2 trillion dollars. Today it is nearly 55 trillion dollars. How in the world did we let the total amount of debt in the United States grow more than 27 times larger over the past 40 years? Our economic system is fundamentally broken, but most Americans don’t realize it yet because times are still relatively good.
However, the next great economic crisis is going to wake a whole lot of Americans up.
And when they realize what has happened to our future, they are going to be really, really angry.
Enjoy the good times while they last. The next recession is rapidly approaching, and it will not be pleasant.
The following are 20 signs that all point to the exact same thing….
#1 The unemployment rate in the U.S. has been above 8 percent for 40 months in a row, and 42 percent of all unemployed Americans have been out of work for at least half a year. As I wrote about recently, there are never going to be enough jobs in America ever again. As bad as things are right now, they are about to get even worse. So what is our country going to look like once the unemployment rate starts shooting up rapidly once again?
#2 35 percent of all unemployed workers have had to dip into retirement savings in order to make ends meet over the past year.
#3 Since 2008, the U.S. economy has lost 1.3 million jobs while at the same time 3.6 million more Americans have been added to Social Security’s disability insurance program.
#4 A recent survey conducted by the National Association for Business Economics found that only 23 percent of all U.S. companies plan to hire more workers over the next 6 months. When the same question was asked a few months ago that number was at 39 percent.
#5 An important measure of U.S. manufacturing activity has fallen to its lowest level since June 2009.
#6 Hundreds of thousands of federal jobs at civilian agencies will likely be lost if Congress allows the automatic federal budget cuts to go into effect next year. The following is from a recent article posted on federalnewsradio.com….
A report released Tuesday suggests that several hundred thousand federal jobs at civilian agencies would be on the chopping block within the next year if Congress lets the automatic budget cutting process known as sequestration go into effect.
The study, authored by George Mason University professor Stephen Fuller, adds a new dimension to a budget debate that’s so far been centered on sequestration’s effects on the military.
#7 The teen unemployment rate in Washington D.C. right now is 51.7 percent.
#8 Gallup’s U.S. Economic Confidence Index is now the lowest that it has been since January.
#9 The median net worth of U.S. households in 2007 was $126,400. By 2010, it had fallen to just $77,300.
#10 Pensions at S&P 500 companies are more under-funded than they have ever been before.
#11 According to the New York Times, state and local governments across America “shortchanged their pension plans by more than $50 billion” between 2007 and 2011.
#12 The city of Compton, California is evaluating whether or not it should declare bankruptcy. If it did, it would become the fourth California city to declare bankruptcy this year.
#13 The percentage of U.S. households that are spending more than half their incomes on housing is at an all-time high.
#14 For the first time in modern history, Canadian households are wealthier than American households are.
#15 One recent poll found that 42 percent of all Americans believe that China is the leading economic power in the world while only 36 percent believe that the U.S. is still the leading economic power in the world.
#16 According to the federal government, the price of food rose much faster than the general rate of inflation did during 2011. Just check out these rates of food inflation for 2011….
- Beef: +10.2%
- Pork: +8.5%
- Fish: +7.1%
- Eggs: +9.2%
- Dairy: +6.8%
- Oils and Fats: +9.3%
If that happened during a somewhat “normal year”, what will food prices look like after we are done with the drought of 2012?
#17 The price of a bushel of corn has risen by 54 percent since mid-June.
#18 According to one survey, 42 percent of all American workers are living paycheck to paycheck.
#19 A different survey found that 28 percent of all Americans have absolutely no emergency savings at all right now.
#20 Federal Reserve Chairman Ben Bernanke made the following statement to Congress on Tuesday: “At this point we don’t see a double dip recession. We see continued moderate growth.”
Do you remember that old Seinfeld episode when George Costanza decided that he would “do the opposite” of everything that his instincts were telling him to do and everything started working out great for him?
Well, when it comes to Federal Reserve Chairman Ben Bernanke, the key is to “believe the opposite” of everything that he says.
And since Bernanke does not believe that a double dip recession is going to happen, that probably means that we are about to hit another recession.
If you doubt this theory about Bernanke, just go back and check out his track record.
Okay, so if our economy is in big trouble shouldn’t our leaders be doing something about it?
Well, it is election season now so I wouldn’t expect too much from Barack Obama. He is too busy raising money in France and in China.
I wouldn’t expect too much from Obama’s economic advisers either. In fact, Obama’s much-ballyhooed “jobs council” has not even met in six months.
Not that the “jobs council” was ever going to do anything substantive anyway.
The truth is that it was just for show and most of the CEOs on the council have been sending jobs overseas anyway.
Well, what about the SEC?
Shouldn’t they be doing something to fix the financial system?
No, they are too busy investigating the Amish.
It looks like we are on our own.
Soon, even more parts of the country will start looking like Detroit or Baltimore or Cleveland.
This country is rapidly falling apart, and the federal government is not going to save us.
That is why we need to focus on preparing to weather the coming storm on a family and community level.
There is hope in being prepared. The coming economic crisis will wipe out many Americans because they will never even see it coming. But that does not have to happen to you.
If you work really hard right now to prepare your family for the storm that is on the horizon, then you will have a much better chance of making it through to the other side.
View full post on The Economic Collapse
Other • Guess who’s bailing out bankrupt western governments now…
Guess who’s bailing out bankrupt western governments now…
Tim Staermose on JULY 5, 2012
July 5, 2012
Jakarta, Indonesia
Fourteen years ago during the Asian financial crisis, Indonesia endured a currency collapse, a severe 2-year recession, and an embarrassing IMF bailout.
Western bureaucrats wagged their fingers incessantly at Indonesia, lecturing the country about the dangers of excess and fiscal irresponsibility.
How sweet the irony is. In a stunning rags-to-riches story, Indonesia contributed US$1 billion to the IMF last week in order to help bail out bankrupt Western nations.
As I’ve written before, unlike Japan, the US, and Europe — which all seem to think the answer to an economic bust brought on by a debt-binge is to borrow and spend even more money– Indonesia took its medicine when its economy collapsed back in 1998.
The government cut spending. The economy was de-regulated and thrown open to more foreign investment.
The banking system was restructured, and after a difficult and admittedly very painful two years, the foundation was laid for new economic expansion, which continues to this day.
To be sure, the 1998 collapse of the Indonesian economy cost the incumbent political elite here their cushy positions. President Suharto’s three-decade long iron-grip came to an ignominious end. There were riots in the streets, and he was literally turfed out of office.
But so what? That’s EXACTLY what was needed. Part of the renewal process should always be to ship out the dead wood.
Wandering the streets of Menteng this week, Jakarta’s most up-market residential suburb, it’s as though the Suharto era never existed. The street where he used to live is just another non-descript, quiet, residential street in this leafy inner-city suburb.
Ironically, US President Barack Obama spent some of his childhood in this same suburb of Jakarta.
Unfortunately, as he pulls out all stops to cling to power for a second term, the kind of tough decisions that could help the US emerge from its economic malaise have no chance of being made.
Lest anyone accuse me of being “anti-Obama” or, shock-horror, FOR the Republicans, let me state emphatically that the PROBLEM is not one side of the aisle or the other. In fact, whoever coined the terms “Demopublicans” and “Repulicrats,” is right on the money in my book.
It’s the ENTIRE system that’s the problem. And that goes for nearly every Western, “free market,” democracy out there.
I use the term “free market” reluctantly, because these economies are anything but. There has not been a true free market economy anywhere in the Western world for many decades.
The most important price of all — that of MONEY — is completely rigged by a small band of dark-suited men who sit around an impressive boardroom table and DECREE what interest rates should be. It is a farce.
Moreover, politicians from opposing sides of the political spectrum may disagree in public and harangue each other in the press.
But, at the end of the day, they’re generally all members of the same club– a cabal of privileged, self-righteous individuals who think they know how to spend your money better than you do.
This system has a vice grip on society, and nothing short of a revolution– such as what Indonesia experienced in 1998– will force any change.
That leaves most people with a rather interesting choice—stay at home in a declining, bankrupt, insolvent nation and hope that a social and political revolution comes quickly…
… or head to greener pastures, to a place that’s stable, thriving, and has already swallowed its medicine.
Here at Sovereign Man, we strongly urge you to come on in. The water’s fine, and the view is much better from this side.
Tim Staermose
Chief Investment Strategist
Sovereign Man
Statistics: Posted by yoda — Thu Jul 05, 2012 10:07 am
View full post on opinions.caduceusx.com
American • Still think this Sarah is a wimp? Guess again
The Real Truth About Sarah Palin — Ouch!
Very interesting facts on two very different ladies.
Sarah Palin
Whether you’re a Democrat, Independent, or Republican….the second half of this email should make all of us very sick
READ TO THE VERY END! VERY ENLIGHTENING!!! AND VERY DISTURBING!!!
By Dewie Whetsell, Alaskan Fisherman.
As posted in comments on Greta’s article referencing the MOVEON ad about Sarah Palin.
The last 45 of my 66 years I’ve spent in a commercial fishing town in Alaska . I understand Alaska politics but never understood national politics well until this last year. Here’s the breaking point: Neither side of the Palin controversy gets it. It’s not about persona, style, rhetoric, it’s about doing things. Even Palin supporters never mention the things that I’m about to mention here.
1. Democrats forget when Palin was the Darling of the Democrats, because as soon as Palin took the Governor’s office away from a fellow Republican and tough SOB, Frank Murkowski, she tore into the Republican’s "Corrupt Bastards Club" (CBC) and sent them packing. Many of them are now residing in State housing and wearing orange jump suits The Democrats reacted by skipping around the yard, throwing confetti and singing, "la la la la" (well, you know how they are). Name another governor in this country that has ever done anything similar.
2. Now with the CBC gone, there were fewer Alaskan politicians to protect the huge, giant oil companies here. So she constructed and enacted a new system of splitting the oil profits called "ACES." Exxon (the biggest corporation in the world) protested and Sarah told them, "don’t let the door hit you in the stern on your way out." They stayed, andAlaska residents went from being merely wealthy to being filthy rich. Of course, the other huge international oil companies meekly fell in line. Again, give me the name of any other governor in the country that has done anything similar.
3. The other thing she did when she walked into the governor’s office is she got the list of State requests for federal funding for projects, known as "pork." She went through the list, took 85% of them and placed them in the "when-hell-freezes-over" stack. She let locals know that if we need something built, we’ll pay for it ourselves. Maybe she figured she could use the money she got from selling the previous governor’s jet because it was extravagant. Maybe she could use the money she saved by dismissing the governor’s cook (remarking that she could cook for her own family), giving back the State vehicle issued to her, maintaining that she already had a car, and dismissing her State-provided security force (never mentioning – I imagine – that she’s packing heat herself). I’m still waiting to hear the names of those other governors.
4. Now, even with her much-ridiculed "gosh and golly" mannerism, she also managed to put together a totally new approach to getting a natural gas pipeline built which will be the biggest private construction project in the history of North America. No one else could do it although they tried. If that doesn’t impress you, then you’re trying too hard to be unimpressed while watching her do things like this while baking up a batch of brownies with her other hand.
5. For 30 years, Exxon held a lease to do exploratory drilling at a place called Point Thompson. They made excuses the entire time why they couldn’t start drilling. In truth they were holding it like an investment. No governor for 30 years could make them get started. Then, she told them she was revoking their lease and kicking them out. They protested and threatened court action. She shrugged and reminded them that she knew the way to the court house. Alaska won again.
6. President Obama wants the nation to be on 25% renewable resources for electricity by 2025. Sarah went to the legislature and submitted her plan for Alaska to be at 50% renewable by 2025. We are already at 25%. I can give you more specifics about things done, as opposed to style and persona. Everybody wants to be cool, sound cool, look cool. But that’s just a cover-up. I’m still waiting to hear from liberals the names of other governors who can match what mine has done in two and a half years. I won’t be holding my breath.
By the way, she was content to return toAlaska after the national election and go to work, but the haters wouldn’t let her. Now these adolescent screechers are obviously not scuba divers. And no one ever told them what happens when you continually jab and pester a barracuda. Without warning, it will spin around and tear your face off. Shoulda known better.
You have just read the truth about Sarah Palin that sends the media, along with the Democrat party, into a wild uncontrolled frenzy to discredit her. I guess they are only interested in skirt chasers, dishonesty, immoral people, liars, womanizers, murderers, and bitter ex-presidents’ wives.
So "You go, Girl." I only wish the men inWashington had your guts, determination, honesty, and morals. I rest my case. Only FOOLS listen to the biased media
~ ~ ~ ~ ~ ~
NOW … If you’ve read this far …
now, open your eyes to this….
First Lady Michelle Obama’s
Servant List and Pay Scale
The First Lady Requires More Than Twenty Attendants (that’s 22 attendants to be exact)
1. $172,200 – Sher, Susan (Chief Of Staff)
2. $140,000 – Frye, Jocelyn C. (Deputy Assistant to the President and Director of Policy And Projects For The First Lady)
3. $113,000 – Rogers, Desiree G. (Special Assistant to the President and White House Social Secretary)
4. $102,000 – Johnston, Camille Y.
(Special Assistant to the President and Director of Communications for the First Lady)
5. $100,000 – Winter, Melissa E. (Special Assistant to the President and Deputy Chief Of Staff
to the First Lady)
6. $90,000 – Medina , David S. (Deputy Chief Of Staff to the First Lady)
7. $84,000 – Lelyveld, Catherine M. (Director and Press Secretary to the First Lady)
8. $75,000 – Starkey, Frances M. (Director of Scheduling and Advance for the First Lady)
9. $70,000 – Sanders, Trooper (Deputy Director of Policy and Projects for the First Lady)
10. $65,000 – Burnough, Erinn J. (Deputy Director and Deputy Social Secretary)
11. $64,000 – Reinstein, Joseph B. (Deputy Director and Deputy Social Secretary)
12. $62,000 – Goodman, Jennifer R. (Deputy Director of Scheduling and Events Coordinator For The First Lady)
13. $60,000 – Fitts, Alan O. (Deputy Director of Advance and Trip Director for the First Lady)
14. $57,500 – Lewis, Dana M. (Special Assistant and Personal Aide to the First Lady)
15. $52,500 – Mustaphi, Semonti M. (Associate Director and Deputy Press Secretary to The First Lady)
16. $50,000 – Jarvis, Kristen E. (Special-2Assistant for Scheduling and Traveling Aide to The First Lady)
17. $45,000 – Lechtenberg, Tyler A. (Associate Director of Correspondence For The First Lady)
18. $43,000 – Tubman, Samantha (Deputy Associate Director, Social Office)
19. $40,000 – Boswell, Joseph J. (Executive Assistant to the Chief Of Staff to the First Lady)
20. $36,000 – Armbruster, Sally M. (Staff Assistant to the Social Secretary)
21. $35,000 – Bookey, Natalie (Staff Assistant)
22. $35,000 – Jackson, Deilia A. (Deputy Associate Director of Correspondencefor the First Lady) (This is community organizing at it’s finest.)
There has NEVER been anyone in the White House at any time who has created such an army of staffers whose sole duties are the facilitation of the First Lady’s social life.One wonders why she needs so much help, at taxpayer expense, when even Hillary, only had three; Jackie Kennedy one; Laura Bush one; and prior to Mamie Eisenhower social help came from the President’s own pocket.
Note: This does not include makeup artist Ingrid Grimes-Miles, 49, and "First Hairstylist" Johnny Wright, 31, both of whom traveled aboard Air Force One to Europe .
FRIENDS…..THESE SALARIES ADD UP TO SIX MILLION, THREE HUNDRED SIXTY FOUR THOUSAND DOLLARS ($6,364,000) FOR THE 4 YEARS OF OFFICE????? AND WE ARE IN A RECESSION????? WELL…..MOST OF USARE.
I GUESS IT’S OK TO SPEND WILDLY WHEN IT’S NOT YOUR OWN MONEY?????
Copyright 2009
CanadaFreePress.Com
Yes, Yes, I know, The Canadian Free Press has to publish this because the USA media is too scared they might be considered racist.
Sorry USA !
Still think this Sarah is a wimp? Guess again.
Both political parties are scared to death of her.
I don’t ask you to send this to your mailing list. BUT, I do ask you to send it to everyone in Congress !!!!
Statistics: Posted by DIGGER DAN — Thu Jun 07, 2012 2:19 pm
View full post on opinions.caduceusx.com
Political Correctness • Guess who folded now?
Guess who folded now?
by Simon Black
February 27, 2012
Talca, Chile
Banking privacy is dead. Completely, totally dead. Murdered, really. The US government is the assailant, and FATCA is the murder weapon.
We’ve talked about this a few times before– FATCA is the heinously insidiously piece of legislation that the Honorable Barrack Hussein Obama passed into law in 2010 as part of the “Hiring Incentives to Restore Employment Act”.
There were no hiring incentives, and there was no restoration of employment. But any vestiges of banking privacy were destroyed.
In brief, FATCA has two key concepts. First, it requires an additional (and completely unnecessary) layer of reporting from all US taxpayers who have ‘foreign financial accounts’ at ‘foreign financial institutions.’ Though as we have discussed before, both of these critical terms are ridiculously and flagrantly ambiguous, putting the onus entirely on the taxpayer.
Without clarifying what constitutes foreign financial accounts and institutions, Congress has effectively created decades of debate in tax court… a move that will undoubtedly ruin the lives of the unfortunate folks who get dragged into the fight.
The second key issue is that FATCA puts a burden on ALL foreign financial institutions worldwide to enter into an information-sharing agreement with the IRS; this essentially obliges every bank on the planet to submit reports and customers’ private data to the IRS.
Banks who don’t enter into this information sharing agreement will have a 30% tax withheld on funds that originate from, or go through, the US banking system. Further, banks who enter into the information sharing agreement are obliged to withhold the 30% tax on transfers to other banks who do NOT enter into the agreement.
Such provisions are absolutely, 100% impossible. And it’s becoming clear that FATCA was passed with no intention of being enforceable. It’s inconceivable that every institution on the planet could enter into an agreement. And it’s inconceivable that every institution on the planet could possibly know whether every other institution has entered into the agreement.
The only thing FATCA has accomplished is scaring the living daylights out of non-US banks. So much so that foreign banks have approached their governments to ask for help.
As I wrote last week, in order to dull the effect of FATCA in their countries, the governments of Spain, Italy, Germany, France, and the United Kingdom recently announced that they were entering into inter-governmental information sharing agreements. Individual banks will no longer have to comply with the IRS, but instead share all with their home governments.
In other words, French banks will report to the French government, US banks will report to the US government, and the two governments will swap data.
It’s no small coincidence that the first signatories to such an inter-governmental sharing agreement are five of the largest (albeit most insolvent) countries on the planet, forming the core of the OECD. Now it’s only a matter of time for smaller nations to fall in line.
Last Friday, Isle of Man became the first. Treasury Minister Eddie Teare announced that “the inter-governmental partnership approach announced by the US, France, Germany, Italy, Spain and the UK should be explored by the Isle of Man Government” and that a “high-level FATCA working party has already been formed.”
With Isle of Man laying down, we can expect places like the Channel Islands, BVI, Cayman, Bermuda, Mauritius, and other popular offshore banking jurisdictions to sign up next.
There are two key points I’d like to make here-
1) There is no such thing as banking privacy. Do not trust your banker to keep secrets for you, and definitely do not trust a government-regulated banking system to keep secrets for you. If you have undeclared income that’s been nestled offshore, it should be obvious at this point that such arrangements will soon unravel.
Voluntary disclosure is always better than getting caught by your home government’s tax authorities. And, especially if you’re a US citizen where tax noncompliance is a criminal offense, paying hefty penalties is a much better outcome than going to court and ending up in a day-glow orange jumpsuit.
2) Most people who are interested in financial privacy tend to use cash. But since carrying large amounts of cash is more and more being criminalized (and confiscated), this is no longer a viable option.
The best form of financial privacy at the moment is physical gold, at least until a better option for digital currency hits the market. Gold may not be useful for day-to-day transactions, but as a store of value tucked away in an anonymous offshore facility, there is no better way of maintaining financial privacy.
Statistics: Posted by DIGGER DAN — Mon Feb 27, 2012 4:30 pm
View full post on opinions.caduceusx.com