It’s been ten days now since the US election. Many (including me) were surprised by the result. Regardless of how you voted (or didn’t – I’m no longer eligible to vote), the US electorate has spoken, and it’s time to move forward under the new regime. Over on the Isaac Brock website, they are organising a letter writing and Twitter campaign to encourage the Trump transition team to enact the planks in the GOP platform calling for the repeal of FATCA and legislation to enact Residence Based Taxation (here are two other currently active threads – , ). It appears now that the current FATCA repeal bills will be re-introduced when the new Congress convenes in January.
Here at FixTheTaxTreaty.org, however, we are focused on action inside Australia. While I am hopeful that some relief may come from a repeal or softening of FATCA on the US side, until we see any actual changes being proposed in Congress or by the Trump transition team, we need to proceed on the basis that nothing will change. This is not pessimism on my part, I’m just trying to be pragmatic. Outside of the “walled garden” of US expat sites, all of the discussion I see of Trump’s tax reform proposals include corporate reform to repatriate the billions of dollars that Congress assumes US companies are holding overseas to avoid US tax, and tax cuts for the wealthy including repeal of the estate tax (e.g., New York Times, Forbes). While there are some in Congress who understand the injustice of FATCA, it will take some persuasion to get repeal passed. A move to RBT will be even more controversial.
If the FATCA repeal makes it through Congress without the RBT legislation, then all of the problems with the tax treaty will still affect those Australian citizens and residents who are required to also pay US tax. Even if FATCA is repealed and RBT is enacted, there are still problems with the treaty, though the number affected will be much smaller. The US will still tax US residents, which will include Australian expats and former Australian residents who have superannuation accounts and, possibly, Australian managed investments.
For these reasons, I think we have to proceed on the basis that nothing really has changed – until any changes are known.