Cross-posted from the Franco-American Flophouse.
The relationship between the American diaspora and the home country is a strange one. There is no official recognition of its existence. Since the early years of the last century, efforts to track the number of Americans civilians leaving the U.S. and living abroad has been half-hearted at best. When asked, the U.S. government replies that it simply lacks the means to conduct a census, which is a rather odd response when you consider that U.S. government is publicly committed to enforcing taxation of American citizens abroad. If you can’t count them and you don’t know where they are, how in heaven’s name are you going to send them a tax bill?
The answer to this, of course, was FATCA which asks the host countries to be enforcers of American law abroad – something that other countries are understandably rather loathe to do. In some sense FATCA is, in my view, an admission of weakness by the U.S. government. It is saying openly that it lacks the means to assert effective sovereignty over its citizens abroad and must call on other countries for help.
This is a very sad state of affairs since it assumes ill-will on the part of Americans abroad, it punishes the host countries that welcome American citizens as residents and it is quite likely to reduce foreign investment in the U.S. If including an American as a business partner in a transnational business venture means tons of paperwork, complying with onerous reporting requirements, and risking the seizure of one’s assets, that does have a dampening effect on the non-U.S. partners’ enthusiasm for doing business with Americans.
I suspect that this will not end well for anyone and I think that is a shame. May I make a modest proposition? Wouldn’t it be better if, instead of trying to punish people, a real effort were made by the U.S. government to negotiate with its diaspora?
When the U.S. government takes action that impacts the states, it listens to their representatives and is obliged to take their interests and concerns into account. The American diaspora does not have that kind of representation but it should. If the American diaspora was taken into account, it would have a population larger than 25 states – a bit bigger than Kentucky but somewhat smaller than Colorado. There is even a precedent that goes back to 1787 for this kind of representation for people living outside the borders of the United States proper. They are called “delegates.” These delegates can vote in the committees of which they are members but they cannot vote on the floor of the House of Representatives.
But to get there from where we are now would require a major shift in mentality. First of all, the United States of America would have to admit (and there seem to be some real psychological barriers to this) that a large number of its citizens do not choose to live in the United States. In all my years I have never met an American who liked hearing this.
It would also mean learning something about the diasporans and putting a human face on them. It’s very easy to call U.S. citizens abroad tax cheats and so on until you actually meet a lovely 70ish American lady who has been living in Paris since just after World War II who is not rich, who still identifies herself firmly as an American and who considers herself to be an unofficial ambassador from her home country to her country of residence.
Another very good example of the diaspora as asset can be found in one of Robert Kaplan’s books where he describes how one retired military expatriate American in Thailand acts as a facilitator between the U.S. military and the Thai authorities. Or, for another example, watch Suzanne Moyer’s Ted Talk about connecting people in Morocco with people in the States to everyone’s benefit.
I would argue that these people are assets, not liabilities, or people to be punished. Their activities are generally helpful, not hurtful, of American interests. It is unfortunate that all the quiet good they do is not better recognized.
Furthermore it is downright painful to listen to some of the rhetoric coming from members of Congress. Americans in general tend to have a very healthy suspicion of government and talk like this can drive them to a state of deep paranoia since it implies that their government sees them as the enemy to be hunted down with the help of their host countries.
It doesn’t have to be this way and I honestly don’t think that much effort would be required to make it better. How hard would it be really to come up with an outreach program through the U.S. embassies all around the world that would gently remind Americans abroad of their rights (to vote, for example) and their responsibilities as citizens wherever they happen to be living? Or what about an amnesty for those citizens who, after living abroad for many years, had no idea of the laws being passed in Congress that affected them since they had no effective representation that would keep them informed and work on their behalf?
For this to work and for Americans abroad to come forward and participate there needs to be an atmosphere of trust. No sane individual is going to do so if he or she thinks that the U.S. government is going to punish him or her for ignorance and destroy his or her family. FATCA is simply confirmation for many that this is exactly what will happen.
And that, mes amis, is a very sad state of affairs indeed.
It’s very sad because if that 70ish American lady in Paris has a bank account at a large bank, they will most likely close it, and she will have to move her account over to an unsafer small community bank with no ties to America.
I will never forget 9-11. I was glued to the TV watching everything unfolding live on TV. Later, I thought it strange that a few things that I saw on TV were never included, or even mentioned in the official reports. I saw how people who questioned the events were fired from their jobs. How any and all requests for information were denied. I saw how 9-11 was used to justify the invasion of two countries, and build up forces in many more. I remembered being told in 2000 that the army was planning a massive build up in the Middle East and that I HAD to get vaccinated for Anthrax. I connected all the dots, and well, I’m sure you can get the picture.
At this point, I really had no desire to live in America anymore. All I wanted to do is live in a place where terror alerts didn’t exist and the government doesn’t meddle with global policy. With these banking rules, and requirements to file tax returns, it feels as though I never left! To make matters worse, cutting the relationship is serious and expensive. But.. I think it’s worth it, and I’m looking forward to my second appointment at the consulate.
I don’t trust any government, much less the US Government. I don’t expect the this punishment for Americans who have the gall to relocate to another country — to end anytime soon, only to get worse.
My advice: renounce while you still can!
And I will say this till I am blue in the face. The US Gov. is not stupid. They know a few things:
1- Overall, we’re not rich group. At a really long stretch, 10% “could be” rich.
2- Enforcing tax law transnationally is almost impossible to do because tax laws are completely different. This is most likely the reason why I haven’t seen any case of an overseas American actually being prosecuted. If anyone has any stories *** PLEASE *** post them here.
For example, a small business in Brazil pays about 15% tax. It doesn’t seem like a lot, but this is done on ** GROSS REVENUE **, collected monthly, with heavy fines if not paid within 2-3 days. Oh, and we can’t throw out the idea that the business owner pays:
– 100% of the employees social security,
– mandatory Christmas bonus,
– mandatory Sunday rest period,
– mandatory workers fund (like 401k called FGTS)
– mandatory 30 days vacation
– mandatory 1/3 vacation bonus. This is just an extra bonus that is 30% of their salary.
*** Whereas in Ameirca, throw all that out!** Taxes are usually paid quarterly on PROFIT, not gross revenue. So, if one tax code taxes on Gross Revenue, and the other on quarterly profit (USA), they are incompatible.
3- Since our resources and potential tax revenue from our group is quite low, the ONLY possible justification to this nonsense is what I said about having leverage over the world financial system. Yes, we are being used as pawns for the US Gov’s objective to get total control. Believe it or not!
“Overall, we’re not rich group.” Absolutely right, geeeez. Alas, that is not the impression that people in the U.S. have. Most of the expats I know here in France teach English as a second language for a living. Not the best way to get rich. 🙂 A lot of my friends back in the States have this fantasy about living in France and when I am feeling peevish I ask them if their fantasy includes working long hours for low wages, living in a one-room studio with no hot water, panhandling, substance abuse problems and mental hospitals. I’m not saying that this is the norm but expats are just like folks at home – a few are rich, most are doing OK, and some of them have some serious problems including poverty.
I’m more inclined to extend this individual ignorance to the U.S. government. I think both have simply preferred not to know too much about the numbers and the realities of living abroad. The American national myth just does not have a space for American emigration (as opposed to immigration). I could be wrong but I strongly suspect that the Congressmen and women who passed FATCA had no clue as to how FATCA would impact us. Read the Fallows article and the note from one Congressional staffer who seemed to think that it would be highly unusual for an overseas American to have more than 50,000 USD in a foreign bank account. My dear man (or woman) if after nearly 20 years abroad I DIDN’T have at least that much socked away for a rainy day, then obviously I’ve been doing something really wrong all these years. 🙂
You may be right about renouncing but, for the moment, I retain some optimism that all this can be resolved. Countries, like people, are fallible and even the worst decisions can be reversed. But for that to happen, in the case of FATCA, the U.S. government needs to start listening.
It is functionally impossible for an American to own a small business in another country and be tax compliant in the United States. This became another reason, among many, for me to relinquish my US citizenship.
That staffer was properly ridiculed at Jack Townsend’s blog in the comment stream, as likely a greenhorn about 20-22 years old. He is an idiot and there is hardly need even to refute what he said, because it is so patently stupid. The first thing is, whether it is 50,000 or ten million, the IRS/Treasury Dept has no right to the information. There is no wealth taxes in the United States, and having that information serves no purpose.
Totally agree with you. What makes it really bad in my case is that I’m married to a foreign national (yep, I’m of them “foreign brides”) and many of our accounts are joint.
My husband is naturally not thrilled about having HIS information shared with the US gov. He is not a US citizen and does not have a Green Card. I had a lot of fun explaining all this to him. Ah, one of the joys of bi-national marriage is that you do tend to have these conversations every so often that start with, “Your damn government….”
It’s not that the U.S. government is not listening (although it isn’t). It’s that it is not paying attention in the first place.
I think that the ExPat community should nominate a candidate to run for president as an independent. That will get the expat community some publicity and then this can all be explained.
Would anyone like to put their name in the hat? Actually I am serious. The very fact of doing this would open up so many issues that the U.S. government would be forced to – PAY ATTENTION and then maybe if they were to PAY ATTENTION then they might listen.
Let’s find a U.S. citizen living outside the U.S. by the name of Isaac Brock. It is 2012. To celebrate the 200th year anniversary of the war of 1812 – Let’s nominate:
Isaac Brock For President – Seeking Liberty and Justice for U.S.. Citizens living outside the U.S.
Victoria, glad to see you on here. I’m glad to see how there’s starting to be some people from around the world!
I don’t know your individual situation, but I believe French ctiizens can go to America visa free for short stays, I think less than 30 days (could be longer). So if your a French national as well, there’s not very much to lose by renouncing American citizenship. After all, “getting back in” to visit relatives is what scares a lot of people, when it really SHOULDN’T, according to the people at the consulate.
My parents and relatives are just mum on the issue. They think the US law is unfair and overreaching, but there’s not a whole lot they can do about it. Plus, since this law doesn’t have a direct effect on most Americans’ everyday lives (yet), they seem to not even really care too much about it.
I’m actually looking forward to go back to the consulate to tell them to shove it where the sun doesn’t shine (I won’t say anything, but my actions say that!). Hopefully, I’ll be able to do that within the next 60-90 days. Then I’ll be free…. ahh..
hahah, great idea. I’m not bashing the ACA, but that “caucus” really let me down. I see the ACA complaining a little bit, but I think Petros, alone, has done more complaining and getting heard by the media in 2 weeks than the ACA has done in 2 years!
Thanks, geeeez, and I hope everything goes smoothly for you. I agree – Petros is AMAZING. 🙂
Concerning the reactions of family members, I have to admit that renounceuscitizenship has a point – it’s not so much listening as it is about paying attention.
I had a huge fight with a family member last year. I was explaining what FATCA meant to me and he just kept coming back to, “we have to catch those darn tax cheats in Switzerland!” And I kept coming back with, “But I’m not a rich tax cheat. I’m an IT manager who lives in France!” My lips were moving and I’m sure the sound made it to his ears but he wasn’t paying attention. The message I got from this was that he actually expects me to sacrifice myself in the service of a greater cause.
Quelle connerie….
I have a twin living in Fort Worth Texas, and she is extremely sympathetic to our situation. She is asking me to give her all the info I can, so she can do her part to bring it to the attention of some Congresscritters in the Lone Star state. Texans are known for their independent spirit and proud of the fact that Texas was once an independent republic
It may be futile, but you never know when the right piece of information will get to the right person.
“The message I got from this was that he actually expects me to sacrifice myself in the service of a greater cause. ”
Yep, I have felt the same thing. This is why I have a strong pessimistic feeling it’s not going to change. American Expat is an oxymoron; the two words aren’t compatible.
c’est la vie…
On the subject of taxation WITH representation —
My issue of the Guardian Weekly (30 Dec 2011 – 5 Jan 2012) has an article on page 8 headlined “France establishes global parliamentary constituencies.” The article reports that an estimated 2.5 million French people living abroad will for the first time have their own MPs; 11 French parliamentary constituencies are being created across the world, one of which is for French persons living in US or Canada. Another is for French people living in the UK, Ireland, Scandinavia and the Baltic States. Etc.
The article mentions that other European countries, including Italy, already have overseas-national constituencies in their parliaments.
Isn’t it ironic that France, Italy, and other European countries (not named in the article alas) give parliamentary representation, and hence votes on taxation issues among other things, to their nationals who live outside their borders! Even though none of these countries tax on the basis of citizenship rather than residence or income source, though the US does.
The US has NEVER had Congressional or Senate representation for US persons living abroad. The country that rebelled from Great Britain over “taxation without representation” has never practiced what it preached in the Declaration of Independence and the Boston Tea Party, and has some interesting lessons to learn from France and Italy, among other nations.
But no, America is “exceptional” and has nothing to learn from anyone else. Or so they think.
Until America wakes up to the fact that they aren’t any more exceptional than any other country and comes to terms with the serious flaws in their governmental system (and I’m not denying that we Canadians have a lot of ground to cover on that regard too), they will continue to see their “empire” crumble about their feet and their stature throughout the rest of the world evaporate into thin air. Especially among their own ex-pats and former citizens.
I agree, but it is inevitable merely from a fiscal point of view. They cannot continue down the current unsustainable path of deficits both in government spending and trade, expecting to dilute the currency forever. When the rest of the world rejects utterly the US dollar, then the it will be game over–time to put the monopoly money back in the box.
Thanks for the heads-up schubert. I had heard this was in the works but didn’t know it was a go for 2012. To see all that the French expats have from their government in terms of services and representation, I posted this today:
http://thefranco-americanflophouse.blogspot.com/2012/01/representation-for-overseas-citizens-it.html
Amazing…..