Tax Evasion & Overseas Accounts

Last updated on March 12, 2022

Billions of dollars in taxes are lost every year because of tax evasion. Even though tax evasion is present among individual taxpayers, it is the wealthy that abuse the system and hide their income in overseas accounts or tax havens.

To curb tax evasion, the U.S. government introduced FATCA, the Foreign Account Tax and Compliance Act. Under this act, the U.S. government will make agreements with different countries to share bank details of U.S. citizens who hold accounts. This will not only help limit tax evasion, but will also bring the untaxed money back into the U.S.

The Obama administration’s twin plan of increasing revenue and introducing spending cuts is expected to bring relief to the aching economy, even if in the short-term. Through increasing taxes on the rich and targeting offshore accounts, the government is looking to push the rich to pay their share of taxes.

With President Obama promising an increase in taxes for the rich and showing reluctance to increase taxes on average taxpayers, the policy of the Democrats is clear for the near future.

Whether short-term solutions to help close down the fiscal deficit will lead to long-term solutions or not is yet to be seen, but what is apparent, is the government is looking to stop the rich from essentially “stealing” tax money.