There are many, many reasons to repeal the Foreign Account Tax Compliance Act (FATCA), but one of the most jarring is its destructive impact on families.
The Findings and Recommendations of the Americans Resident Abroad Working Group (PDF) highlight the fact that both the Report of Foreign Bank Accounts (FBAR) and FATCA require disclosures to the Internal Revenue Service of information about joint financial accounts even if only one spouse is a U.S. citizen. The findings note that:
Several distraught American wives described the anguished dilemmas they faced in such cases. For those who were not aware of, and had not previously filed, the necessary FBARs, they will have to declare these joint accounts with their non-American spouses and be subjected to heavy penalties, possibly on their joint life savings, something their non-U.S. husbands may be reluctant to accept. The tragic choices facing the women can boil down to divorce, renunciation of U.S. citizenship, the sale of businesses and investments they helped build, or living “on a cash basis”—which would put them and their children at risk under local law.
Anecdotal evidence suggests many are opting for divorce, which is a tragic and self-defeating outcome from both a human and a public policy perspective. Our laws should strengthen families, not weaken them by offering incentives to destroy them. There is a tragic analog to this in the legacy of our flawed welfare system, which historically prevented families in need from receiving benefits if the father remained a part of the household.
What is more, 900 Americans, or about 5% of the dual-national American-Swiss residing in Switzerland, renounced their U.S. citizenship in Switzerland in 2012 — double the number in 2011. And as many have noted, Switzerland is the canary in the coal mine with respect to the repercussions of FBAR enforcement and FATCA implementation.
Ultimately, unless the shortcomings in these laws are addressed, increasing numbers of Americans will be forced into the awful situation of having to decide whether to destroy their families or to renounce their citizenship. Decisions that none of us should be coerced into making by our own government.