The Isaac Brock Society

Financial Post: Diane Francis: Shaming Won’t Prevent Tax Avoidance

Does she take advantage of a Canadian Tax Free Savings Account (TFSA), have mutual funds, RRSPs? Are these profitable investments for her after her US tax compliance with 3520 and 3520A’s, 8621, 8891 form preparations? Does someone handle and pay for this compliance for Ms Francis?

And, why does she use the term “Tax Avoidance”? Does the CRA take their lead in terminology from Ms Francis?

But now the big nations — the United States and the European Union with its tax havens — are finally preparing to crack down on tax leakage as they struggle with debt and entitlement burdens and slow growth.

They have few choices: High profile tax evasion in Greece, Cyprus and Southern Europe has rattled the EU, as has Russia’s no-tax enticement of Gerard Depardieu to its jurisdiction. Finally, steps are being taken to remove secrecy in financial centers such as Luxembourg, Ireland, Austria and even the Switzerland.

The United States is also realizing that its tough system is being eroded by international tax gamesmanship. This week, the CEO Tim Cook of America’s Darling, Apple, was grilled by Congress on its clever tax avoidance schemes around the world and pilloried alongside Wall Street’s greedy and parasitic sector. Britain attacked Google’s and Amazon’s tax games, too.

But shame won’t do the job. Only an international tax regime, and rewriting of tax treaties that facilitate cheating, will.

To that end, the Organization of Economic Co-operation and Development (OECD) is preparing a template for international tax collection to eliminate loopholes and rein in evaders that will be presented this fall to the G20.

http://www.taxanalysts.com/taxcom/taxblog.nsf/Permalink/CBEN-97XAA3?OpenDocument

I also agree with a brilliant colleague who recently put it to me this way: The IRS is broken, that’s for sure. But the IRS is a symptom. The “disease” is the tax code. I think that’s absolutely right. And for me, this latest “scandal” concerning the IRS is going to make it impossible to reform our tax code anytime soon.

Why?

It’s already sucking the oxygen out of Washington. And tax reform is hard; it involves picking winners and losers. Politicians don’t like publicly picking winners and losers, which is inevitable at least somewhat in tax reform. They like picking winners and losers behind closed doors. But picking on the IRS? No danger there. Give them a choice between something hard and something that will cost them nothing politically, and I think we all know where the politicians will go.

I can tell you what they do talk about over here: FATCA. FATCA is a game changer, and with its negatives it will bring a great positive: increased transparency. Transparency is good for a tax system, and that makes things like advanced pricing agreements bad for tax systems.

Only the United States could have imposed FATCA on the tax systems of other countries. The United States has the power – read markets – to do it. And that is a huge reason why the United States should put some of its power into dealing with its own sick tax code and it’s own transparency issues. “Because with great power comes responsibility.” A lot of famous people get credit for that quote. But it sure sounds like something Winston Churchill would have said.

Perhaps Brockers might want to give Tax Notes Today editor Christopher Bergin a piece of their minds.

Almost at the Goal: Repeal FATCA Move-On Petition, for your signature. Thank you very much.

I’m posting this on behalf of bubblebustin and Just Me — and all of us who want to help repeal FATCA.

bubblebustin comment to @just me:

Rami returned my email of this morning and said that Helen Burggraf was in touch with him yesterday. Also informed me that “Moveon.org won’t do anything with the petition unless it reaches a critical mass as well.

It’s up to we small activists to make it big!

In the meantime we have had some impact with the ways and means committees, writing letters directly. It’s a multi-pronged approach that turns the tides eventually, we hope ”

Inspiring words.

We finally have the draft agenda of the European Parliament’s Economic and Monetary Affairs Committee public hearing on FATCA next Tuesday.

http://www.europarl.europa.eu/document/activities/cont/201305/20130521ATT66354/20130521ATT66354EN.pdf

Unfortunately,  all of the scheduled speakers will almost certain defend FATCA as if their lives depended on it. My sense is there is a real political problem in Europe as more become aware of the IGA terms however, many others with all of Europe’s economic and deficit problems are strongly in favor of cracking down on tax “evasion.” I do know for a fact the reason this hearing is being called is do the protestations of anti FATCA MEPs such as Sophia In’t Veld however the net effect seems to be to have a hearing that at this point is completely dominated by pro FATCA voices. I do expect some tough questions from the likse of Ms In’t Veld that I suspect will cause some real discomfort for the currently scheduled speakers. However,  I expect plenty of softballs from the FATCA sympathizers on the committee. I also expect the IRS/Treasury rep to lie through his death and essentially pray on the lack of knowledge many European politicians have of the US system of government.

One problem and issue is the only organized groups against FATCA other than purely domestic US groups like Center for Freedom and Prosperity are those such as AARO, FAWCO, ACA etc that are volunteer based and relatively small. For whatever its worth I have strongly encouraged my contacts at those orgs to make a formal petition for participation(The current schedule is only a “draft”).  I have not heard a response back at this point.

23.05.2013

Expatriation

US-Bürger geben ihren Pass aus Steuerfurcht ab

By Markus Gärtner

The EU has made the flight of paying taxes its top theme.  The problem is, however, that a growing number of US citizens are handing in their passports to their consulates outside of their homeland with the task of being disposing hassling taxes…

[bla bla bla glamour, rich, tax evasion, false figures, bla bla bla (no time to translate nonsense during my lunch break)]

…The rapidly growing number of Americans handing in their passports can be explained, according to the experts, with FATCA since 2010.  By 2014, Americans living abroad will have to file US tax returns or face draconian penalties.  When reporting their [local] accounts via FBAR, unlisted details will be slapped with a 27.5 penalty on the highest balance of one account over 8 years.

Escaping from this tax trap is becoming ever more difficult, since FATCA forces [local] banks to disclose their data through bilateral agreements with the US, else pay a 30% penalty on their US earnings.  Switzerland and America signed such an agreement in February.

Part 2: Aggressiveness of US justice.

This is the reason why a large number of Americans in Switzerland returned their US passport.  Yet, many dual citizens in Hong Kong also returned their us passport.   The Chinese Morning Post reported about Chinese in the mainland, who gained a US passport as the “ultimate symbol status”, later returned to China and were shocked to discover that they were still taxed by the US.

For Americans living abroad, it has become more difficult to live outside of America since they are being rejected by multiple banks who fear IRS sniffing.  “The foreign banks are so appalled over US policy, that they don’t want to have any more US customers, causing many Americans living abroad to be sleepless at night”, said Francisca Mordi, the vice president and tax expert of the American bankers association.

Result: Americans abroad are not only returning their passports, but they are mobilizing their organizations.

A professional association for Americans abroad in Geneva, the Americans in Switzerland sent a 10 page letter to the US Congress last fall, listing the problems Americans abroad were facing as a result of FATCA.

“It is mainly the jihad against foreign accounts”, stated Phil Hodgen, a tax lawyer in Pasadena, California, which is responsible for the large number of renunciations.  Hodgen knows that a growing number of wealthy investors in the middle east have advised their children to renounce us citizenship if they wish to inherit the family company.

US authorities are putting banks under pressure…

[talks about financial institutions]

… FATCA has made it more difficult to attract top managers and well paid specialists overseas, they argue.  The double-taxing of expats combined with increased IRS pressure has made it more difficult to recruit talents needed for international expansions, and this in a time when the US economy is suffering with growth in developing countries.

Manager Magazin Online

http://www.youtube.com/watch?v=3uVZiFNkDsA

Many of her colleagues speaking prior as I understand were pretty pro FATCA

Additional press release comments from ALDE group(of which Ms In’t Veld is part of)

http://www.alde.eu/press/press-and-release-news/press-release/article/member-states-must-endorse-an-eu-strategy-against-tax-fraud-evasion-and-tax-havens-41476/

Only the EU, in a leading role, can ensure genuine international cooperation in this fight“. On FATCA, he concluded: “We cannot accept the direct application of FATCA on EU territory. Rather the EU should take FATCA as an example to develop, by democratic procedure, its own system of tax data sharing rather than importing wholesale the US one, in accordance with our own standards of data protection“.

Note: Sophia In’t Veld is part of the Dutch D66 along with two other MEP’s which in turn is part of a larger group of Alliance for Liberal Democrats in Europe which published the above release. I don’t have the Dutch translation at this point but D66 came out with a much stronger statement in opposition to FATCA.