FATCA legislation and agreement is a breach of NZ sovereignty and rights

You may have concluded from my postings that I'm somewhat libertarian in my views and you'd be correct - most of my posts are rants about the ever-increasing encroachment by governments on individual rights - however, I recognise that the vast majority of government policies have the intention (however misguided that intention may be) of improving the lives of the citizens and residents the government represents. I part ways with my philosophical opponents in the means, not the ends. But the New Zealand Government is currently in the process of enacting legislation that has no benefit for New Zealanders, that is a breach of our sovereign rights as a nation, and that breaches our Human Rights Act and Privacy Act, solely because it has been demanded by a foreign government. I am talking about New Zealand's acquiescence to the United States Foreign Account Tax Compliance Act, known as FATCA.

The usually staid law firm of Minter Ellison describes this Act as "a striking example of what could be called American fiscal imperialism." In short, it is attempting to turn all foreign financial institutions into tax collectors and snoops for the US Government by forcing them to hand over information about anyone considered to be a "US taxpayer." This is not, as you might think, just people who live and work in the United States.  The US is one of only two countries (the other is that bastion of liberty and human rights, Ivory Coast) that think it is their sovereign right to extract tax not only from those who live and work in the country but anyone who lives outside the country who they might deem to be a US citizen. Let me give you an example of who the US considers to be US citizen.

My friend, a New Zealander born and bred, married a US woman and together they have a newborn baby who was born in New Zealand. Unsurprisingly, the wife, who holds both NZ and US citizenship, is considered by the US Internal Revenue Service to be a valid target for the FATCA regime. She not only has to pay tax in New Zealand, where she now lives, she has to file a US tax return and pay taxes there as well (although she gets to deduct some, but not all, of the taxes she pays on her NZ income). But here's the kicker - the IRS also considers the baby to be a US taxpayer, irrespective of whether the baby ever sets foot in the United States. My friend's child will be subject to intrusive surveillance by the IRS for the rest of her life and her bankers will be forced to hand over information to the IRS about her, against her will and contrary to her rights under other NZ laws, and all this will be abetted by the New Zealand Government that, as the writer of this blog points out, considers her to be a "US taxpayer habitually resident in New Zealand."

This is, frankly, a disgraceful capitulation by the New Zealand Government to bullying by a foreign power. It is the financial equivalent of 'renditions', that euphemistically-named US Government practice of snatching citizens of other countries off the streets of foreign cities in order to have them tortured and imprisoned.

It is high time the rest of the world stood up to these thuggish policies of the US Government. New Zealand has stood up to the United States before over issues such as visits of nuclear-armed warships and, in my view, this is a more fundamental issue of sovereignty than that. We need to stand united with other countries and tell the United States we will not comply with their unilateral policies and we need to take whatever retaliatory measures are necessary to force them to back down.  If enough countries stand against the US on this, they, like all bullies, will back down.