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  1. The “why?” question is hard to answer. I could make something up and say it is because of graft by US mutual fund companies to cut off the oxygen from their competitors. Probably that’s too paranoid and wrong. Plus Fidelity would rather cut off T. Rowe Price’s oxygen.

    More likely is that someone in government perceived Unmitigated Evil occurring because a multinational corporation somewhere was cutting its tax bill. In response, Congress created a thermonuclear device to lay waste to multinationals. You, dear human, are collateral damage in the War on Evil. Sorry. Eggs, omelettes, etc.

  2. Phil- love your writing style (and content).

    What is the motivation behind taxing PFICs so heavily?
    – Pushing non-experts to invest in single-name stocks and bonds over pooled investments seems financially unwise. I work in finance and I’m too shy to pick single-name investments. After selling PFICs (from UK ISAs), where does one invest (if one does not like the investment-concentration risk of single-names)??
    – Steering people away from foreign investments seems like plain US protectionism (i.e. steer capital into the US economy rather than allowing it to go outside, even if the capital came from outside in the first place). Why don’t other countries object when signing up double-tax treaties?

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