It's Official - America Now Enforces Capital Controls (The Obama Fascists destroy Investing)

Zero Hedge ^ | 3/28/2010 | Tyler Durden

[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)

[AmericanInTokyo]

There is a way around everything.

They are fools.

They can be outsmarted.

They can hire as many fascist IRS agents, into the tens of thousands. I dont care.

King George with all his redcoats could not bring down the Patriot Colonials.

These people can shove it up their ass as far as I and many, many others overseas are concerned.

[algernonpj]

If it's true that no men or women of solid character still exist, then we are truly hosed. But I think there's still a few true Americans around who understand that the trappings of wealth and power don't necessarily mean individual happiness and contentment.

I don't see it so much are there true Americans around as it is will any true American get the $$ and media exposure necessary, and how honest will the election counts be.

[scannell]

Candor.........I'll try to review his 06 07 & 08 returns again in detail and write a comprehensive analysis of the exact (unchallengeable) details. I'll try and lay it out as a comparison and contrast of his complaints during the campaign of Americans (namely rich republicans) “not paying their fair share” and the ugly Americans (namely rich republican business men) exporting jobs. I was shocked the day that he made his tax returns for 10 years available on the Internet that the only discussion was about how much he gave to Charities (none my favorite charities) and how the mainstream media commented that everything in his return looked to be in order and straightforward. This is true if you aren't as offended with him making nearly $200K in foreign investments exempt from US taxes and even generating US credits against his domestic income. Most of his “book sales” proceeds must have flown to a short-term account upon receipt awaiting a opportunity to “sweep” it into his foreign investments. That short term account purchased US Treasury Bills (a security Heidegger until the foreign sweep) and the rest of his domestic investments were in to “tax exempt” securities. This is the thumbnail, it is true and simply gleaned from his tax return and I couldn't care how much he gave to charity. I don't even care if he made foreign investments that were tax exempt in the US because it is legal, but it is a far cry from his complaints during the campaign and his attitude against the producers in the country from a political perspective. Bottom line is he is really deft in tax avoidance (not evasion) and has supported far more jobs overseas than in the US with his one personal investment decisions.

[Loud Mime]

BFLR

[unspun]

The U.S. has no business being a moneychanger for the world.

[Candor7]

Get lost idiot.

[Candor7]

Get lost idiot.

[El Gato]

So they decided that the world would have to be re-engineered. We couldn't have anybody with nothing to lose anymore. At first, they tried bringing the bottom up. For two or three decades up until the 70's they tried to spread knowledge and skills to the third world, but this effort was largely futile, most of the lessons didn't take.
...
Nuclear blackmail and the deaths of millions is the only agenda I can see that's big enough, universal enough, to command such allegiance from our leaders."

Maybe, or maybe not. But, what we ended up with, and actually have had all along, was groups whose motivation had nothing to do with their economic status, and who are quite willing to sacrific million of their own. Most of the 9-11 hijackers were not the downtrodden poor, they came from quite well off families.

What motivates them is the words of a 8th Century pedophile, who commands them to Jihad from his grave.

In 1786 he Ambassdor of the Dey of Algiers was asked by US Ambassadors Jefferson (to France) and Adams (to Britain), why Musslemen (Muslims) hated Americans so. The Dey's ambassador answered "Islam was founded on the laws of the prophet, that it is written in their Quran, that all nations who should have not acknowledged their authority were sinners, that it was their right and duty to make war upon them, wherever they could be found, and make slaves of all they take as prisoners, and that every Musselman (Muslim) who should be slain in battle was sure to go to paradise"

Not much has changed in 200 years.

[Natural Born 54]

It’s possible of course that (tin foil conspiracy hat donned for a moment) that Muslims, Commies and other enemies of the West are useful tools themselves. Any agenda that weakens us serves the overall purpose.

One thing I do believe is, if world leaders have been promoting the decline of the West in this manner, they have been very misguided and foolish. As you point out, Islam has irrational beliefs along with a desire to nuke Israel off the face of the earth. Nothing short of doing the same to adherents of that so-called religion will change that. It brings us right back to the doomsday scenario they supposedly want to avert.

[El Gato]

As you point out, Islam has irrational beliefs along with a desire to nuke Israel off the face of the earth

My point was that the trouble with the Musslemen were evident 150 or so years before the invention of nuclear weapons.

[Natural Born 54]

Got ya. Who knows, maybe they just viewed the whole Muslim world as an element of the have nots and nothing else. Winston Churchill could have helped them avoid making that mistake.

[HiTech RedNeck]

A very Rat thing to do.

[9YearLurker]

Make that ‘crony fascist’.

[Candor7]

This would be great, it would be good ammo for election purposes, especially among fnancial services employed voters.

[Candor7]

Well the article may be correct. The New World Order seems to be an ideology whose time may have come, but you will notice that it was mostly campiagn centric. Very little on his recently.George Soros subscribes to this view, as long as he can make money off it.

The article disappeared eh? Well there are those who hild this NWO view, but they haveforgotton about one little thing, The US constition and the patriotic American.

This may be indeed a test run for the NWO, to see if population cotrol via media is possible. They are failing. The people will get rid of the Obama Junta, yes it is a Junta, a parasitic government form designed to reduce individual freedoms.

Novenebers elections will big changes, UNLESS the left successfully employs hard instead of soft tyranny, and then? Well there won’t be anywhere in the USA that will be safe.

[Candor7]

Oh I agree, no illegal will have any prblem with this law, hell no wealthy leftist will either, there is an exemption provision.

[Harrius Magnus]

Not to turd into your punch bowl, but a group of folks who wet themselves if they get called "racist," doesn't instill confidence.

 

This is OUR country, it belongs to its people, NOT the temporary resident of the White House and his unelected Czars. They're here to serve US, not the other way around.

 I'd like to know who is included in your "OUR country."

Yeah, they think they're holding all of the cards right now, with unconstitutional legislation rammed down our collective throat. But they forget a few things...

We outnumber them. In spades.

No you don't.  The majority of voting population now directly or indirectly recieve checks from a government entity, to buy their bread.

We're motivated. Highly motivated.

They are as (or more) motivated - they are beating people up.  They are closing conferences.  They are in charge of Wall Street, Education, Media, NGOs and government at almost all levels.

We're organizing. On a national level, not just in the "community".

Really?  Their May Day protests were sponsored by Kraft, Time Warner, Boeing and Coca Cola.  Who's sponsoring yours?

We're dedicated to protect and preserve the Constitution. More so than those who are sworn into public office, and them immediately forget that sacred oath.

The Civil War, onward, has been a textbook example of subverting, misrepresenting, and ignoring said Constitution, all in the name of centralizing authority.   It is now centered, and a court that allows tax-revenue based private land confiscation, fed-sanctioned discrimination, and fiat currency is actively suborning the process.

We've read Saul Alinsky. We're on to their tricks. And we can use them just as well.

You are reading their 40 year old playbook.  They are now in charge (defense, not offense)

We have faith. Unlike those who find ethics, morals, and the concept of right and wrong akin to Kryptonite, we're rock solid in our belief structure which will carry us through.

Faith, as a yes or no, won't cut it.  Faith that is strong enough to starve or die for is what is required.

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.

Rather than fix, we may need to start over... After we free ourselves from slavery.

[GOPJ]

bump

[Candor7]

Lets see if punitive witholding is enforceable ex juris. I do not belief it is under current international tax treaties.Few countries will go along with it.