A $18 trillion-dollar economy like the United States takes a lot of capital from investors to keep the wheels of progress well-greased.

While some people object to “capitalism” as a matter of ideology, every economic system using capital and is a capitalist system.

Unlike socialist or communist or other capitalist collective economic systems, the United States bills are seen as a capitalist free-market system which is attractive to global investors.

Unfortunately, the U.S. has effectively a hybrid system overly manipulated by direct government involvement and regulations indirectly influencing the financial markets.

The U.S. needs foreign investors as it has limited ability internally to generate the vast capital needed to keep its massive economy well feed, so to speak, with capital.

To get the capital needed to fuel economic productivity, the United States has a complex web of laws to attract the flow of capital from foreign investors and discourage U.S. based capital going out.

The world’s capital markets accepted this situation until the United States in a fit of political insanity forced the entire financial system of the world under the control of the U.S. Treasury.

Yes, the Party of Evil (the Dems) and the Party of Stupid (the GOP) got together to fund a massive spending bill in 2010. To make it appear that it would all be paid for without raising taxes, they passed the Foreign Account Tax Compliance Act of 2010 as a revenue offset.

The claim by those in Congress was that FATCA would raise $897 million in taxes annually from those U.S. taxpayers using secret offshore tax havens to avoid paying U.S. tax.

Like every other bipartisan bill enacted by Congress, the law of unintended consequences appears to be kicking in.

The world’s competing financial centers are now realizing that the biggest secret offshore tax haven in the world is the United States.

FATCA turned the global financial industry into tax informants to the U.S. treasury. But, the United States is not becoming a tax informant in return.

Critics high and low have been vocal about the hypocrisy of the United States.

The European countries following the OECD (the Organization for Economic Cooperation and Development) put together a separate Common Reporting Standards (CRS) which is similar to FATCA but applies to all accounts regardless of dollar amounts.

The United States has refused to sign onto the CRS.

The United States is classified as a nonparticipating country and in return opens up the U.S. to countries refusing to implement FATCA.

Basically, the United States has been outed as a massive tax haven of the kind it and its fellow OECD countries have been excoriating.

FATCA has also been a costly failure as a tax generator for the United States.

FATCA has garnered $10 billion. Nearly all of this amount was for penalties for non-compliance and not a tax.

This puts to lie the whole claim by some international tax experts there was $100 billion of tax annually to be collected through FATCA.

What’s worse is that the 7 million Americans working outside the United States are all viewed as tax evaders and most local banks where they are now living and working won’t do business with them,

The whole idea behind FATCA and CRS has turned out to be another enormously bad politically driven idea which has no hope of producing viable tax revenue benefits to any country—only lots of costs.

What FATCA and CRS does is interfere with the free flow of capital which every country desperately must make their economy’s work.

While the Democrats are solidly behind expanding FATCA and worse, the GOP has made the repeal of FACTA part of its official election platform.

For the global financial markets, anything that encourages capital flows and lowers the barriers is good for investors.

Denis Kleinfeld is known as a strategic tax and wealth protection lawyer, widely published author and creative teacher.