Plans in the United States aim to introduce a full financial tracing/monitoring system that will automatically transmit electronic financial transactions of all kinds to the revenue service IRS in the future. Ultimately, this agenda aims to close existing tax loopholes on a global scale. What else is this all about?
It is an open secret that the U.S. government has for a long time now spent far more money than the government itself generates through taxes. The exorbitant budget deficits of the U.S. government speak for themselves, year after year, which is complemented by a constantly widening trade deficit with foreign nations.
In this regard, there is often reference to the so-called twin deficit, which makes the existence of the American nation seem questionable in the medium to long term and has raised doubts among observers about “carrying on like this” and sticking to the current political course.
Just imagine a world in which all non-cash financial transactions are automatically sent to a financial authority with far more monitoring resources.
Let it be said that the administration of U.S. President Joe Biden is well on its way to making such a dystopian world a reality. That’s because the White House, with the support of U.S. Treasury Secretary Janet Yellen and some key partners in Congress, such as Democratic Senator Elizabeth Warren, is pushing for the introduction of an all-encompassing financial monitoring system in the U.S. to close the widening (government) tax gap.
These points can be found in a document published by the U.S. Treasury Department entitled “The American Families Plan Tax Compliance Agenda’“. It did not take long for numerous critics to come forward to accuse the U.S. government of “authoritarian behavior” in addition to transgressing its constitutional powers.
Taking world history into account, things always seem to develop in an authoritarian way when a government – and therefore a state system – had lived far beyond its resources in the past.
From the perspective of the United States of America, this seems truer than ever. Not without reason have years of critics of the American spending and government course, such as Jim Rogers, described the USA as having become the largest debtor nation in the history of the world over the past decades.
And where there is no longer enough money coming in, the state must, at a certain point, creatively procure this money in order to remain viable.
The fact that the competitiveness of a nation, the will to independence of its citizens, and the belief in a free market threaten to dwindle to an extent that intensifies over time is another matter.
In the end, a bureaucratically overgrown state and a government that is deeply in debt will at some point fight only for its own survival, burying under it everything that once had the hallmark of a free economy and the freedom of its citizens to make their own decisions.
The document linked above states, among other points, that the measures envisaged are primarily related to new guidelines in order to make non-compliant taxpayers aware that those risks associated with tax evasion will increase in a significant way in the future.
But who are the biggest global tax evaders? Aren’t they the world’s largest corporations and – as the so-called Pandora Papers, for example, have recently revealed once again following the previously published Panama Papers – leading politicians around the globe?
Be that as it may, the plans on the table in the United States call for the introduction of a fully comprehensive financial account reporting regime, in the course of which electronic financial transactions, regardless of their nature and amount, would be automatically transmitted to the IRS in the future.
In the future, this would include all corporate and personal accounts at banks, including loan commitments granted, as well as pure investment custody accounts. In the future, all incoming and outgoing transactions in these areas would be automatically transmitted to the IRS by the account-holding banks and securities account providers.
It should also be noted at this point that it would not only be a matter of accounts held with banks or securities account providers, but also other providers such as PayPal, other payment processing service providers and also cryptocurrency exchanges would be included in this regime.
It is very likely that the U.S. government can and will transmit traced transactions of foreigners to their respective governments as well. So this article is definitely not limited to US citizens only!
The government plans on the table in the U.S., which would have to be approved by the Washington Congress by means of a corresponding bill, thus envisage not only the introduction of a domestic financial monitoring system, but also, in addition, the transformation of the global financial system into a fully comprehensive reporter to a correspondingly “upgraded” IRS.
Ultimately, this agenda aims to close existing tax loopholes at the global level. It is probably no coincidence that the Biden administration and the U.S. Treasury Department have already presented their plans for the introduction of a global minimum tax in the corporate sector in parallel.
There is a persistent lobbying effort at all levels of global institutions to bring the last dissenters among sovereign nations that want to shape their own fiscal and financial policies to the same table in order to persuade their political leaders to relent.
In this context, the Americans have already proposed the introduction of a minimum tax rate of fifteen percent in the global corporate sector. Parallel plans envisage the introduction of a system by means of which transnational companies are to be prevented in the future from reporting the lion’s share of their profits in so-called low-tax havens.
If this proposal seems at least understandable in parts, attentive observers also get the impression that the Americans, as the “largest debtor nation in world history,” seem to be looking for ways to remain liquid in the face of potentially rising corporate taxes under the Biden administration.
In April, U.S. Treasury Secretary Janet Yellen had declared that the new U.S. administration would focus on declaring war on global tax competition in the corporate sector. Neither U.S. President Biden nor she herself (Janet Yellen) wanted to continue to stand idly by and watch this “self-destructive competition”.
Instead, the new administration in the White House has taken it upon itself to change the rules of the game. Of course, it didn’t take long for plans of this kind to attract critics around the world, who accuse the U.S. government of trying to hold the rest of the world accountable for its own shortcomings and financial incompetence.
However, in July, representatives from 130 countries, including the G-20 finance ministers, agreed in principle on the introduction of a global minimum tax in the corporate sector, which seemed to have been finalized a few days ago.
However, it could be some time before this will formally happen, as legislators in 130 nations, including the Washington Congress, will have to approve this request and ratify it accordingly.
From a U.S. perspective, it is worth noting that as early as 2009, President Barack Obama promised to install a system that would raise federal tax revenues by more than two hundred billion dollars over the next ten years.
The plan was designed to plug tax loopholes overseas. While countless lobbyists in Washington eventually prevailed to exempt companies and corporations from these plans, in the end it was only American private citizens who found themselves exposed to this new regime in light of the passage of the 2010 Foreign Account Tax Compliance Act(FATCA).
From today’s perspective, we are fully aware of the associated results, as banks around the world soon found themselves unwilling to open any accounts at all – of any kind – for U.S. citizens, lest they have to automatically transmit information about these customers to the IRS in the U.S. year after year in a monstrous bureaucratic act.
Furthermore, the U.S. is the only country on earth, besides one other nation, that fully taxes income generated abroad by its own citizens, although there are some loopholes in this area as well, but a citizen has to know and find them first.
American citizens holding amounts in excess of ten thousand U.S. dollars deposited in accounts held by foreign banks were automatically required to report to the IRS by the banks concerned following the adoption of FATCA. Otherwise, these foreign banks were threatened with consequences and repercussions for failing to comply with FATCA.
Since then, banking secrecy in the Swiss Confederation has taken a beating following an agreement between the U.S. and Swiss governments in 2013, as trust among its own clients in the secrecy of their institutions has suffered in a massive way.
Since its introduction, FATCA has had a particularly severe impact on so-called expatriates, i.e. Americans living abroad, who have since found themselves virtually excluded from the (foreign) banking system.
At the same time, in the course of the past few years, there have been record numbers in the area of renunciation of American citizenship among broadly middle-class Americans.
How has FATCA affected the revenue situation of the IRS? Well, as the latest data and figures from the U.S. Department of the Treasury show, apparently not very positively, since the taxes collected by the government have not changed significantly over the past few years.
The introduction of monstrous bureaucratic requirements has probably only contributed to making life literally hell on earth for foreign banks and a certain American clientele, which is why many foreign banks are increasingly no longer open accounts for American citizens.
With an estimated nine million Americans currently living abroad, the U.S. government nevertheless saw itself in a position to impose its will and the associated label on the entire global financial system by introducing FATCA.
The plans currently being pursued in Washington now go far beyond the requirements, restrictions and reporting obligations associated with FATCA.
Even the U.S. Treasury Department freely admits that its own concerns are growing, as plans to introduce the new and automatic reporting system could be accompanied by greater use and payment of cash.
At the same time, the mere existence and use of cryptocurrencies of all kinds would give rise to risks associated with significant detection and identification problems. Moreover, the use of cryptocurrencies would facilitate illegal activities, which would threaten to intensify potential tax evasion.
Cash and cryptocurrencies, although it has long been proven that they are nowhere near as anonymous as the hardcore fans of digital currencies would have us believe, soon appear to be the last refuges for preserving one’s privacy and anonymity in national-international payment transactions.
Let’s see how long this will last, that is, until (anonymous) cryptocurrency transactions are completely banned, as in the People’s Republic of China, or until cash is finally killed off in an attempt by the state to transform the existing monetary system into a purely digital (fiat) money system.
It is generally noticeable how states and governments with their backs to the wall seem to view their own citizens more and more in the light of potential criminals whose activities must be stopped at all costs.
In the meantime, the burden of proof has already shifted in many cases, i.e. it is no longer the state authorities that have a burden of proof toward the citizens, but the citizens themselves who increasingly have to prove to the state that they have not done or committed anything wrong.
In Europe, there are already existing or recently demanded tax finance portals on the Internet, where citizens are able to anonymously denounce other citizens, no matter how hard-hitting their accusations may be.
In this way, the door is opened to a spy state, in which, for example, disagreeable neighbors can be anonymously denounced by other neighbors in order to really beat the other person up and settle “old scores”.