Posted on 04/03/2010 6:00:07 AM PDT by Candor7
It couldn't have happened to a nicer country. On March 18, with very little pomp and circumstance, president Obama passed the most recent stimulus act, the $17.5 billion Hiring Incentives to Restore Employment Act (H.R. 2487), brilliantly goalseeked by the administration's millionaire cronies to abbreviate as HIRE. As it was merely the latest in an endless stream of acts destined to expand the government payroll to infinity, nobody cared about it, or actually read it. Because if anyone had read it, the act would have been known as the Capital Controls Act, as one of the lesser, but infinitely more important provisions on page 27, known as Offset Provisions - Subtitle A—Foreign Account Tax Compliance, institutes just that. In brief, the Provision requires that foreign banks not only withhold 30% of all outgoing capital flows (likely remitting the collection promptly back to the US Treasury) but also disclose the full details of non-exempt account-holders to the US and the IRS. And should this provision be deemed illegal by a given foreign nation's domestic laws (think Switzerland), well the foreign financial institution is required to close the account. It's the law. If you thought you could move your capital to the non-sequestration safety of non-US financial institutions, sorry you lose - the law now says so. Capital Controls are now here and are now fully enforced by the law.
Let's parse through the just passed law, which has been mentioned by exactly zero mainstream media outlets.
Here is the default new state of capital outflows:
(a) IN GENERAL.—The Internal Revenue Code of 1986 is amended by inserting after chapter 3 the following new chapter:
‘‘CHAPTER 4—TAXES TO ENFORCE REPORTING ON CERTAIN FOREIGN ACCOUNTS ‘‘Sec. 1471. Withholdable payments to foreign financial institutions. ‘‘Sec. 1472. Withholdable payments to other foreign entities. ‘‘Sec. 1473. Definitions. ‘‘Sec. 1474. Special rules. ‘‘SEC. 1471. WITHHOLDABLE PAYMENTS TO FOREIGN FINANCIAL INSTITUTIONS.
‘‘(a) IN GENERAL.—In the case of any withholdable payment to a foreign financial institution which does not meet the requirements of subsection (b), the withholding agent with respect to such payment shall deduct and withhold from such payment a tax equal to 30 percent of the amount of such payment.
Clarifying who this law applies to:
‘‘(C) in the case of any United States account maintained by such institution, to report on an annual basis the information described in subsection (c) with respect to such account, ‘‘(D) to deduct and withhold a tax equal to 30 percent of—
‘‘(i) any passthru payment which is made by such institution to a recalcitrant account holder or another foreign financial institution which does not meet the requirements of this subsection, and
‘‘(ii) in the case of any passthru payment which is made by such institution to a foreign financial institution which has in effect an election under paragraph (3) with respect to such payment, so much of such payment as is allocable to accounts held by recalcitrant account holders or foreign financial institutions which do not meet the requirements of this subsection.
What happens if this brand new law impinges and/or is in blatant contradiction with existing foreign laws?
‘‘(F) in any case in which any foreign law would (but for a waiver described in clause (i)) prevent the reporting of any information referred to in this subsection or subsection (c) with respect to any United States account maintained by such institution—
‘‘(i) to attempt to obtain a valid and effective waiver of such law from each holder of such account, and ‘‘(ii) if a waiver described in clause (i) is not obtained from each such holder within a reasonable period of time, to close such account.
Not only are capital flows now to be overseen and controlled by the government and the IRS, but holders of foreign accounts can kiss any semblance of privacy goodbye:
‘‘(c) INFORMATION REQUIRED TO BE REPORTED ON UNITED STATES ACCOUNTS.— ‘‘(1) IN GENERAL.—The agreement described in subsection (b) shall require the foreign financial institution to report the following with respect to each United States account maintained by such institution: ‘‘(A) The name, address, and TIN of each account holder which is a specified United States person and, in the case of any account holder which is a United States owned foreign entity, the name, address, and TIN of each substantial United States owner of such entity. ‘‘(B) The account number. ‘‘(C) The account balance or value (determined at such time and in such manner as the Secretary may provide). ‘‘(D) Except to the extent provided by the Secretary, the gross receipts and gross withdrawals or payments from the account (determined for such period and in such manner as the Secretary may provide).
The only exemption to the rule? If you hold the meager sum of $50,000 or less in foreign accounts.
‘‘(B) EXCEPTION FOR CERTAIN ACCOUNTS HELD BY INDIVIDUALS.—Unless the foreign financial institution elects to not have this subparagraph apply, such term shall not include any depository account maintained by such financial institution if— ‘‘(i) each holder of such account is a natural person,and ‘‘(ii) with respect to each holder of such account, the aggregate value of all depository accounts held (in whole or in part) by such holder and maintained by the same financial institution which maintains such account does not exceed $50,000.
And, while we are on the topic of definitions, here is how "financial account" is defined by the US:
‘‘(2) FINANCIAL ACCOUNT.—Except as otherwise provided by the Secretary, the term ‘financial account’ means, with respect to any financial institution— ‘‘(A) any depository account maintained by such financial institution, ‘‘(B) any custodial account maintained by such financial institution, and ‘‘(C) any equity or debt interest in such financial institution (other than interests which are regularly traded on an established securities market). Any equity or debt interest which constitutes a financial account under subparagraph (C) with respect to any financial institution shall be treated for purposes of this section as maintained by such financial institution.
In case you find you do not like to be subject to capital controls, you are now deemed a "Recalcitrant Account Holder."
‘‘(6) RECALCITRANT ACCOUNT HOLDER.—The term ‘recalcitrant account holder’ means any account holder which— ‘‘(A) fails to comply with reasonable requests for the information referred to in subsection (b)(1)(A) or (c)(1)(A), or ‘‘(B) fails to provide a waiver described in subsection (b)(1)(F) upon request.
But guess what - if you are a foreign Central Bank, or if the Secretary determined that you are "a low risk for tax evasion" (unlike the Secretary himself) you still can do whatever the hell you want:
‘‘(f) EXCEPTION FOR CERTAIN PAYMENTS.—Subsection (a) shall not apply to any payment to the extent that the beneficial owner of such payment is— ‘‘(1) any foreign government, any political subdivision of a foreign government, or any wholly owned agency or instrumentality of any one or more of the foregoing, ‘‘(2) any international organization or any wholly owned agency or instrumentality thereof, ‘‘(3) any foreign central bank of issue, or ‘‘(4) any other class of persons identified by the Secretary for purposes of this subsection as posing a low risk of tax evasion.
One thing we are confused about is whether this law is a preamble, or already incorporates, the flow of non-cash assets, such as commodities, and, thus, gold. If an account transfers, via physical or paper delivery, gold from a domestic account to a foreign one, we are not sure if the language deems this a 30% taxable transaction, although preliminary discussions with lawyers indicates this is likely the case.
And so the noose on capital mobility tightens, as very soon the only option US citizens have when it comes to investing their money, will be in government mandated retirement annuities, which will likely be the next step in the capital control escalation, which will culminate with every single free dollar required to be reinvested into the US, likely in the form of purchasing US Treasury emissions such as Treasuries, TIPS and other worthless pieces of paper.
Congratulations bankrupt America - you are now one step closer to a thoroughly non-free market.
Full HIRE Act text: ( at link)
When i see a bill like this i inevitably ask myself questions. In this case the first would be,who had input? This seems like a mistake with the potential for as we both said,a trade war so who decided the benefits outweighed the negatives? My second question comes off of the first and is,why do this if it was done with malice aforethought? The only conclusion i come up with is,assuming this was done knowing the potential fallout,is that our governments finances are far worse off than we know. Far worse than the rating agencies,our trade partners and those supporting us by buying our debt know as well.
The payments of bribes to the democrat party Permanent Government will be the only way to get waivers.
Australia is looking good about now.
Shifting their their hard earned resources so the socialist beast cannot detect it and find it and unconstitutionally seize assentsand render one a tax slave to the New Obama America, but still maintaining a presence and continuing unconventional resistence such as at Tea Party rallies and flipping the entire Congress and donating paypal or wire transfer to Conservative races in the primaries, is what a lot of these common sense Patriots are doing these days. They can fight Obama and his ilk from many nations of the earth, they dont have to physically be on US soil (though it helps).
There is a way around that.
We found no other countries in which we could own a gun so we decided to stay.
Okaka has been the best thing that ever happened to gun sales in our country.
CWII may happen or someone who hates him more than we do may cough up his birth certificate and other evidence that he isn't a U.S. Citizen.
God is still in control and I put my faith and trust in Him.
Touche! You might well have a point! What a blessing in disguise!
I saw this and was wondering how this can be enforced if one simply takes stock shares, bearer bonds, gold coins or any other readily negotiable asset across the border.
A liberal(?) comments on this thread article by Durden
as well as the new draconian Chapter 4 or the Internal Revenue Code.:
« Expatriation Slowdown | Main
April 01, 2010
USA: No Overt Capital Controls…Yet
Over the last week dozens of readers have sent me a link to an article with the provocative title of “It’s Official—America Now Enforces Capital Controls.” In the article, author Tyler Durden states that the Hiring Incentives to Restore Employment (HIRE) Act signed last month by President Obama “requires that foreign banks not only withhold 30% of all outgoing capital flows (likely remitting the collection promptly back to the US Treasury) but also disclose the full details of non-exempt account-holders to the US and the IRS.”
Mr. Durden is a terrific writer, and the series of articles he wrote analyzing the real causes of the crash of 2007-09 is the best explanation of these events I’ve read. However, his article on capital controls is highly misleading.
I wrote about the implications of the HIRE Act immediately after its enactment here. It’s a terrible law that will make it much more difficult for U.S. citizens to invest, do business, or even live outside the United States. But it doesn’t impose capital controls, although it’s an important step in this direction.
Along with requiring U.S. citizens and permanent residents to disclose a great deal more information about their offshore investments than they currently do, the law imposes a 30% withholding tax on certain types of U.S-source income and gross sales proceeds to foreign financial institutions (FFIs) and certain foreign non-financial entities (FNFE). The only way to avoid the tax is for the FFI or a “withholding agent” for the FNFE to enter into an information reporting agreement with the IRS. These rules become effective in 2013.
If entering into such an agreement violates foreign law…well, too bad. Indeed, the HIRE Act states that if a FFI refuses to enter into an agreement with the IRS, it must close all accounts owned by U.S. taxpayers.
So, the HIRE Act isn’t about capital controls, at least not directly. It’s about enforcing IRS rules. You can still have money offshore if you report it and pay tax on it. The challenge will be to find a bank that will let you open and maintain an account.
However, with this law, if the government ever imposes capital controls or foreign exchange controls, it will have a much more complete picture of assets U.S. taxpayers have stashed overseas. It could then try to force repatriation of these funds, although as a first step I believe the government will simply impose a tax on all outgoing capital flows, as Mr. Durden postulates. Fortunately, we’re not there...yet.
Nor is this type of withholding new. Numerous categories of U.S.-source income are already subject to a 30% withholding tax. This withholding can often be reduced or eliminated if a tax treaty exists between the United States and the country in which the recipient of the income resides. There’s also a 30% withholding tax imposed on U.S. source income and gross sales proceeds payable to FFIs if the FFI fails to sign a “qualified intermediary” (QI) agreement with the IRS. The QI rules have been in effect since 2001.
To recap, I think the main effect of the HIRE Act will be to make offshore financial services much more difficult for U.S. citizens and permanent residents to obtain. It will also isolate the United States economically. That has important consequences for the U.S. dollar and the market for U.S. Treasury debt. Even without this law, the Treasury is already having problems finding buyers for the gargantuan U.S. budget deficit, as Eric Roseman recently described here.
One final note: if the U.S. government ever imposes foreign exchange or capital controls, it will be in response to overwhelming popular demand. Those with investments outside the United States, or outside the U.S. dollar, will be labeled “greedy unpatriotic speculators.” The average Joe will believe the media hype and political posturing, and thus be manipulated into supporting them.
That’s what happened in Venezuela. And it could happen in “Amerika,” as well.
Copyright © 2010 by Mark Nestmann
Source:
You can into sone countries take an unlimited amount of bullion. IN most countries you enter, you are llinited to cash and negotiableinstruments of $10,000 USD or less, or you must declare. Ify9u try to depost a cash or such negotiable instruments at a bank in excess of ten grand, they will refuse to take it without a customs declaration form.
One can electronically transfer millions of bucks across national boundaries between banks without ANY of this problem. Go figure.
Should have been done the very first thing when he announced his intent of running as many of us requested. TOOOOO late now!!!
“...Every day something evil pops out of BO. He wants to control every aspect of our lives.
When will it stop????...”
January 20, 2013. That’s when Sarah Palin will take the Oath of Office.
But let’s hope that it’ll end a lot sooner than that.
RISE UP AMERICA!!!
LIFE IS TOO SWEET TO WASTE!!!!
CALL TO ARMS!!! ALERT THE MILITIA!
ONE IF BY LAND, TWO IF BY SEA!!! THREE IF BY SEDITION!!!
So before you go looking for a better country, don't forget that it's our job to first protect this one. And if it's broken, it's up to us to fix it.
We WILL fix it. Count on it.
Keep your powder dry.
Fascism
Strict regulation and control of the economy by the regime through some form of corporatist economic planning in which the legal forms of private ownership of industry are nominally preserved but in which both workers and capitalists are obliged to submit their plans and objectives to the most detailed state regulation and extensive wage and price controls, which are designed to insure the priority of the political leadership’s objectives over the private economic interests of the citizenry. Therefore under fascism most of the more important markets are allowed to operate only in a non-competitive, cartelized, and governmentally “rigged” fashion.
See also: http://www.econlib.org/library/Enc/Fascism.html
They’re on a spending spree with a maxed-out credit card and know they need to confiscate every source of cash they can. Witness the seizing of the student loan industry: now that “free money” interest is theirs for the general fund.
Fascism is here. I just now figured out the difference between communism and fascism: the former seizes private industry as a matter of principle; the latter out of financial desperation. Guess which we face now.
Will we wait for them to come for us?
I don’t have much, but what I have is free and clear.
I will fight them to the death.
If one declared the face value of the gold coins, which is significantly less than their actual value I don’t know how the Feds could do anything.
Going to the new tax code itself, it sounds like this applies to accounts in the USA (as with a Swiss bank that does business in the USA). There is no means other than treaty or war to do it otherwise, any more than Canada can force the closure of my personal bank account with a United States bank.
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