FATCA: First Step Towards Capital Controls

The recently enacted Foreign Account Tax Compliance Act (FATCA) threatens to isolate the United States by treating every American citizen as a suspected tax evader.

Under FATCA, any bank anywhere in the world serving US citizens will be required to report on US account holders and disclose their balances, receipts, and withdrawals to the US tax authorities or face a 30% withholding tax on financial assets held in the US by said bank.

Apart from the arrogance of trying to regulate abroad, the law places a huge administrative burden on foreign banks. It will have severe repercussions for American businesses, as many smaller foreign banks will refuse American customers altogether.