A reader has asked me to post the following letter to Finance Minister Jim Flaherty, a warning about FATCA.
22 February 2012
The Hon. James Flaherty, Minister of Finance
House of Commons Centre Block Building – Room 435-S
Ottawa, Ontario K1A 0A6
RE: FATCA: Noli me tangere
Dear Minister Flaherty:
As you stated in your letter to several US newspapers in October 2011, Canada has a relatively high rate of taxation and is therefore not a tax haven. Wealthy Americans in the United States are taxed at a rate far lower than their income counterparts in Canada. There is no economic incentive for them to flee to Canada to avoid taxes. Therefore, the US government’s agenda has the effect of both subverting the Canadian government’s authority as well as compromising client confidentiality and the integrity of Canadian financial institutions with the imposition of an extraterritorial jurisdiction.
If Canada allows US government attempts to compel Canadian financial institutions to disclose private banking and investment information, then expatriate Americans residing legally in Canada could possibly be subject to double taxation, which would contravene Canada’s tax treaty with the United States.
Furthermore, if the IRS is allowed to monitor the income of the legal residents of Canada, there is no assurance that the minimum income/assets threshold would not change, thus at some point potentially leaving American expatriates living and working in Canada with a US tax liability. This kind of uncertainty leaves the US government with unlimited opportunities to extort Canadian residents and citizens of a sovereign nation with threats of tax liabilities and penalties. Expatriates would of necessity have to divide their attention between US and Canadian politics and policy changes; such a bifurcation would weaken people’s relationship to Canada. Were Canada to agree to such a faustian bargain, there would be significantly less incentive to reside in Canada; American expatriates would, in effect, not have actually left the US system and its threat to the inviolability of the individual’s freedom of choice and movement. Those among us who have become citizens of Canada would conceivably become targets of suspicion and reprisal.
There is no reason for timidity, because Canada has an increasingly strong economic position vis à vis the United States and should be able to avoid the historical US tactic of linking political agendas with trade agreements, of which there were notable examples during the Vietnam era, when Canada received American refugees from a political war. During this era of an unpegged dollar, the United States could and did respond with currency manipulation and customs inspection delays at the border. Historically, the United States has been the bully with regard to its neighbours.
With an ever more Caesaristic mentality from the United States, it is therefore incumbent on the Canadian government to protect not only the political integrity of its sovereignty, but also the rights of its people from the confiscatory and predatory designs of the United States of America.
Thank you for your attention, and I await your informed decision.
(signed with writer’s real name)
cc: Right Hon. Stephen Harper, Prime Minister
Hon. John Baird, Minister of Foreign Affairs
Hon. Jason Kenney, Minister of Citizenship, Immigration, and Multiculturalism
MP Bob Rae, Leader (Acting), Liberal Party of Canada
MP Don Davies, NDP, Official Opposition Critic for Citizenship and Immigration
MP Elizabeth May, Green Party of Canada
MP John Duncan, Vancouver Island North