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| Economy |
| US Now Has Capital Control Act - Foreign, US Owned Bank Accts, 30 Percent Tax Or Closed |
| 2010-04-03 |
| 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. The only exemption to the rule? If you hold the meager sum of $50,000 or less in foreign accounts. 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. Just as things were with the Russian Ruble and the German Reichsmark. |
| Posted by: Anonymoose |
| #7 After a little more research, I can see how it is implemented. |
| Posted by: flash91 2010-04-03 23:55 |
| #6 How exactly does US law apply to foreign banks? It seems to me that a good bank would simply give the US the finger on this one. |
| Posted by: flash91 2010-04-03 23:39 |
| #5 Old Spook, That is simply an oversight, expect an amendment to follow. I would eventually expect to see a similar control domestically, when they get around to it. |
| Posted by: bigjim-CA 2010-04-03 16:15 |
| #4 You can be sure that large corporation campaign contributors have a superhighway to move 'investment' monies overseas not subject to these same level of taxes. |
| Posted by: Procopius2k 2010-04-03 16:13 |
| #3 Whelp, capitalism was fun while it lasted. There is no way Obama will let it survive until 2012. |
| Posted by: DarthVader 2010-04-03 15:54 |
| #2 The only semi-loophole left now is precious gems and metals. |
| Posted by: OldSpook 2010-04-03 14:25 |
| #1 All of the above predicted here months ago. |
| Posted by: Besoeker 2010-04-03 13:41 |