The US is all about having total world control. The FACTA is merely the largest extension of this scheme to date. US citizens who live abroad are still required to file US tax returns even though they receive no real benefit from any US Government services. The US Government’s true desire is to have leverage over the maximum number of people, companies, and whole countries that they possibly can. I think this fact alone explains the $450 renunciation fee. They simply don’t want to lose control over people. It’s not really about taxes because tax revenue from expats is somewhat low. They want to keep the connection and leverage so that one day, if they so wish, they can impose their will on the US Citizen or anyone else connected to this person. This “will” could come in the most common form which is extorting money, or in some cases, it may be political, or they could force people to spy on foreign companies and governments or whatever task they see fit. As long as someone is a citizen, or a company has US assets, they are a potential resource.
So what is the benefit of leverage and control? Probably the easiest way to illustrate this is with international companies. The FACTA creates an environment where financial institutions around the world have to report to the IRS, so the IRS/U.S. Government is in total control and can levy (extort) whatever penalty they so desire. Additionally, the FACTA amounts to nothing more than blackmail to obtain even more leverage: either an institution signs on to the new system, which the US Government controls, or faces a withholding tax of 30% on US assets. A very similar environment of US total control already exists for companies listed on the US stock exchanges, or have a business presence in America. UBS, the large Swiss bank, has a large business presence in America, so when they got caught helping US Residents hide money in Swiss Bank Accounts, they paid the hefty penalty. I agree that UBS made a mistake because they did help tax frauds who are American Residents, but the pace of company fines is quickening and where are the checks and balances to ensure this system isn’t being abused? And when should US law apply to cases overseas?
The recent bribery case involving Deutsche Telekom and the US is quite interesting. The most surprising feature about this is that it has nothing to do with US Citizens, US Residents, The US, or anything related to the US. The alleged infractions occurred in Europe and may or may not be illegal according to local laws, but they were fined by the USA to the tune of $95 million dollars. So how can this happen? After all, this didn’t happen in US Jurisdiction? The reason is that Deutche Telekom trades on the New York Stock Exchange where the US has it’s hook and leverage. In my view, this was a quick and easy money grab from a foreign company. If money were not the issue, the Department of Justice (DOJ) could have easily turned the case over to European Union officials to prosecute in the jurisdiction where the alleged infractions had occurred. I see this as just another example of US exerting extraterritorial powers and laws on people and businesses for the sake of exhorting money. The whole story can be found here
Who knows where the tipping point will be for foreign companies who have dealings with the US. There has to come a time when foreign companies agree that it just isn’t worth it to have any ties to the US whatsoever. For US Citizens abroad, the best way is just to pay the $450 and renounce and be done with it, thereby denying the US leverage over you, your family, and any business associates. It’s a small price to pay for freedom that I’m afraid won’t be around much longer if this wave of renunciations keeps increasing. I can easily picture the US disallowing renunciation if they feel that they are losing too much leverage overseas. I really don’t want to wait around long enough to see this happen.