The bankers, billionaires, and wealthy elite are losing one of their favorite offshore tax havens. The Cayman Islands has finally agreed to cooperate with the U.S., and make it more difficult for the wealthy to stash money overseas. Officials in that nation have agreed to accept provisions of the Foreign Account Tax Compliance Act, which will take effect in July of next year. After that, the Caymans will have to alert our Treasury Department about Americans’ who have more than $50,000 dollars stashed in tax-free accounts in that nation.
The FATCA was enacted in 2010, after a Swiss banking scandal revealed that wealthy Americans were hiding substantial fortunes overseas. According to Reuters, banks and financial institutions that refuse to comply with the new law will be hit with a 30 percent withholding tax, which would essentially freeze them out of U.S. financial markets. The deal between the U.S. and the Caymans also puts pressure on several other low-tax nations, like Luxembourg, Bermuda, and the British Virgin Islands, to sign on to similar plans meant to fight U.S. tax evasion.
As it becomes more difficult to hide money offshore, rich people will actually have to pay their taxes, and there will be incentive for the wealthy to invest here at home. The days of the rich skipping out on their patriotic duty of paying taxes could soon be over, and the wealthy may have to start contributing to the care of our commons, which made their vast fortunes possible in the first place.