Estimated world population as of Oct. 31, 2011 7 billion
Estimated population of the U.S. for 2012 313,281,000
Estimated number of U.S. citizens living abroad 6 million
Estimated costs to administer FATCA and chase those 6 million- billions of dollars forever. Net benefit to be derived at the best is most likely zero but is more than likely to be negative because the taxes collected are not likely to ever exceed the cost of FATCA compliance. Of course we will never know because the U.S. very conveniently refuses to establish any criteria for costs calculation.
@tiger
Sure. Here’s some Ativan my friend.
@tiger,omg, I think I will take 2 Ativan tonight..
Even worse things can now happen to you at the border!
http://www.nytimes.com/2012/04/03/us/justices-approve-strip-searches-for-any-offense.html?_r=1&hp
http://12160.info/profiles/blogs/cointelpro-techniques-for?xg_source=shorten_twitter
I’m not naming names but the above link has always been useful to me as a reference when I suspect a forum getting a bit wobbly. Nevertheless I can see that everyone here is more than capable of looking after themselves.
@Joe: It’s already happening at the border. Three Canadian women were strip searched by female border guards. http://www.theglobeandmail.com/news/national/canadian-women-say-they-were-sexually-molested-by-female-us-border-guards/article
This Supreme Court decision won’t help their lawsuit. The rationale of this decision is beyond me. The justices seem to think someone who doesn’t have a license plate is out to blow up a government building and someone who speeds is preparing to fly a plane into a high rise. Hmm, I wonder if any of the judges have ever exceeded the speed limit or gone through a red light.
What must they think of someone who relinquished US citizenship to become a citizen of another country? Forget it, I don’t want to know!
You are wise not to visit US. My only reason for going there is to see my elderly mother. After her death, I will never again cross the border.
Ok so I have been reading up and I have some questions, and am prepared to accept that maybe you’re not all whiney or whining as I thought.
First how is it that these banks in foreign country’s are allowed to except your patronage based upon your national origin? Aren’t these country’s supposed to be the ones more socially liberal than the US? I mean they have ombudsman to deal with gender identity but banks are allowed to turn you away due to your national origin, that makes little sense to me?
I’m still reading about the reporting requirements, I think reporting your financial accounts shouldn’t be that difficult, but I’m still researching that.
@tiger
From the research I did although honestly it was less than an hour’s worth of searching around it did say “potentially” which seems to me to say that it’s up the Dept. of State whether or not they count that as actually an event that would cause you to lose your citizenship, it was a year or two ago so I’d have to dig around again to look, you’re probably way more knowledgeable than I am, but it seems to me as if State was saying we’re not in the business of taking away American citizenship so although this is a potential situation we’re not going to act on it.
@petros
Good article very informative, however is reporting your supermarket club card actually required or CYA?
@renounce…
I didn’t make American citizenship valuable, it just is. There’s a reason the line’s are as long as they are to get in. Don’t get me wrong I love this country but I can admit that sometimes we make mistakes or act stupid.
@WhoaIt’sSteve, I’m very pleased that you’ve been reading and have come back. I know you’re engaging in a dialogue with some of the others, and I will leave it to them to answer your specific questions. I did want to comment on one thing, though, where you mentioned that you thought that reporting on the financial accounts shouldn’t be that difficult. There are many who cannot take on something like all of those IRS forms themselves – my elderly mother (who has been in Canada since 1966, and Canadian since 1975) has only had her retirement income for many many years. She was quoted at $8,000+ to get her income taxes and financial reports in compliance. And that’s $8,000 for about as basic as it gets, out of a retired persons limited funds. (I won’t even go into what might happen to her last remaining retirement funds if any penalties were assessed.)
@WhoaIt’sSteve
I would agree US Green Card status is well sought after but the actual rate of naturalization has been going down for many years. Perhaps its because newer immigrants to the US don’t feel the same type of national connection that previous groups did or what I am not sure. On a per capital basis though Australia and Canada are probably more chosen than the US given their relatively low levels of existing population.
@whoait’ssteve- you are correct when you observe that there are laws in other countries which would seem to make it obligatory for banks to serve all legal residents and citizens without respect to national origin. The other unfortunate truth is that under FATCA if these banks want to be FATCA compliant, they have an extraterritorial obligation to divulge the names of all U.S. person’s who are account holders.
If they refuse to divulge the name of the “U.S. person” account holder then the IRS will withhold 30% of all U.S. source financial assets. If the money doesn’t come out of the account holder’s account then the IRS will take it out of the bank’s own account. If they are a compliant Foreign Financial Institution then the IRS will tell them to close the account of the “recalcitrant” account holder. As you can see FATCA will leave all foreign financial instittutions stuck between a rock and a hard place. On the one hand they can be squeezed by their country’s constitutional privacy laws and on the other they can be rendered bankrupt by the IRS. That more or less is the situation as it stands. Others on this site I am sure will be able to add more info to this.
As you can see if you are a foreign financial institution the easiest and less problematical answer is to just let go of all of your account holders who have any U.S. connections. In the case of green card holders this can mean letting go of people who are born citizens of the country where the bank is located. Now how is that for justice? To be made a stranger in your own land because some foreign government claims to have a right over your finances. Of course this works against you also if you move to the States and keep any bank accounts open in your homeland. The Swiss in the U.S. are finding this out.
@WhoaIt’sSteve,
Glad you are continuing to read.
Re the expatriating act of taking out citizenship in another country causing ‘relinquishment’ of U.S.citizenship. There was an amendment to the INA in 1986. Prior to that date, as long as the act was voluntary and with intent to relinquish, and the preponderance of evidence did not deny that intent – then it was a given – you lost your US citizenship. By preponderance of evidence, they meant things like you did not vote, you did not file taxes, you did not apply for a U.S. passport etc. The 1986 amendment to the Immigration and Nationality Act is quite clear about this. In 1990 (approximately), the DOS sent out a directive to all its consulates and embassies that they were to assume that if someone became a citizen of another country, that person DID NOT intend to relinquish. It would be up to the individual to prove to DOS that they really did intend to relinquish. This is where some of the confusion comes in because many people only know about the attitude post 1990. So the burden of proof changed from DOS to the individual to prove intent to relinquish.
There are many people on this site who became Canadians in the 60s,70s and early 80s. Many of us were told our ‘relinquishment’ was irrevocable. Some of us (myself included) even had to recite and sign an oath that stated: “I renounce all allegiance to any former state or sovereign”. There are some on the site, who received a CLN without even applying for it. So there was no consistency within the State Department. Was it a case that some consulates were more effecient than others; some with time on their hands; or perhaps some that were just too busy to get all the work done. Who knows, but you can see the confusion.
There are others on this site, who might not have performed the expatriating act until the late 80s or even the 90s who ‘intended to relinquish’ and perhaps had always assumed they had in fact relinquished. Because of the change of attitude (1990) some Canadian papers published articles about that time that stated that if you had formerly ‘relinquished’ your US citizenship, and perhaps really did not INTENT to relinquish, you MIGHT be able to get it back. I actually have a friend from University that did just that in the early 1990’s. I saw the forms she needed to fill out and realized that I would have definitely had to have lied on those forms to get back my US citizenship.
It is interesting they used the words – ‘you might be able to get back your U.S. citizenship’. You can only get something back, if it was taken away. So perhaps you can see the anguish of many of us on this site. I am a widowed, senior citizen with five grandchildren. For 40 years I have believed myself to be only a Canadian. A Canadian who happened to be born in the U.S. Now the US government wants to not only reclaim me, they also want to claim my 3 grown sons, born in Canada, who have nver had nor plan to have anything really to do with the U.S.
@WhoaIt’sSteve With regard to your comments about the State Department: The State Department doesn’t take away citizenship, but determines whether a potentially relinquishing act has taken place with the intent to relinquish. This should be verifiable fact of the matter. Please read the following post: http://isaacbrocksociety.com/2011/12/12/relinquish-dont-renounce-if-you-can/
As for supermarket cards, etc., the pedantic answer would be that they included if they add to the aggregate value of a one’s foreign financial accounts: aggregate value is a US government accounting fraud.
@whoaIt’sSteve
Welcome to the Debate. The issues that people have been discussing here are multiple and complex, and don’t fall into easy one line talking points. You have stirred things up, and that is good. Thanks for hanging around for the discussion. It’s ballsy, and welcome.
By now, you are getting the idea of that US Citizenship taxing is unique in the world. All the problems being discussed here stem from that major trunk, and everything else just branches from it. Most Americans don’t recognize or even understand that this is unusual, or why it has come to be the way it is. It arises from American Exceptionalism, and a hubristic view of it’s place in the world and the dominion it can assert on all others.
But, like everything, when you get past the conventional wisdom dogma of why America decides that by the accident of birth place, or by the granting of a Green Card, it can tax you forever, from a practical stand point you might consider the negative consequences that arise from these practices. Read this link below, and discover “The Cronklin Report” that was described there. There are plenty of negative consequences, like a gigantic Trade Deficit that has it’s root in US Tax Policy. Bet you never considered that. It is ok, neither did I, but Roger lived it and felt it, and testified to Congress about it.
http://isaacbrocksociety.com/2012/01/12/u-s-citizenship-based-taxation-harms-u-s-economy/
or this… 50 years of killing off our competitive position in the world.
http://isaacbrocksociety.com/2012/02/12/after-five-decades-of-abuse-enough-is-enough/
You also might just consider what would happen if other countries asserted on their citizens that which the US has solely taken to its self, the right to tax its citizens no matter where they live. Do a little thought experiment here of what would happen if others copied this model…
http://isaacbrocksociety.com/2012/02/16/what-is-the-systemic-risk-to-the-worlds-
That might broaden your understanding a little bit and help you know what this web site is all about.
It is NOT about evading taxes.
Finally, you might ask yourself, how did this all come to be? Why does America do what it does? What practices lead to this? It is unnatural situation, as even in America, the individual States practice a Territorial tax system just like the rest of the world. Why is the US such an outlier? What is the history?
http://isaacbrocksociety.com/2012/02/27/who-is-a-us-citizen/
That should keep you busy for a while, if you are truly interested in the subject, and not just stirring for stirring sake.
Happy reading
cheers Mate.
.
Whoait’sSteve:
I’m glad you joined this discussion, and I’m glad you’re hanging in there and perhaps learning something along the way.
I want to take a different approach to this to see if you — and 300 million other homeland Americans — can perhaps understand what all the fuss is about.
Obviously I don’t know you, but I’ll assume you were born in the US. Let’s go back a generation and assume that while you were born in the US, your father was born in Russia, emigrated to the US as a small child, and married your American-born mother. Totally unknown to you, Russia considers you a Russian citizen because your father is — even though you’ve never left the country. And what’s more, Russia thinks you should have been filing Russian income tax returns all these years; and it wants an annual report on all your bank accounts. And if you don’t do it, it’s going to assess penalties on you that might take away half of your life savings. And because you are now in your 50s (another assumption) your life savings actually represent a nice chunk of money — money that you are relying on to keep you fed, clothed and housed in retirement.
Now let’s further complicate this. Russia is broke and needs money, and it wants to track down all its expatriate citizens wherever they are so it can hit them up for cash. So Russia passes legislation that requires your American bank to tell the Russian IRS all about you, and your money, so it can track you down. And if the American bank doesn’t want to play ball because, well, it will cost the bank a small fortune to ferret out all the account holders who might be Russian — Russia will withhold 30% of all the money the bank gets from its Russian dealings. And, suppose you decide that what’s in your bank account is none of Russia’s business and you tell your bank to stick it where the sun don’t shine when it asks you to prove that you’re not Russian. Russia then tells your bank to close down your bank accounts because you have been deemed “recalcitrant.” And you bank does it, because it can’t afford to have 30% of its Russian transfers withheld.
There you are — a loyal American who just happens to also be Russian, and now you can’t even open a bank account in your homeland because Russia has branded you a tax cheat.
Does that help? Because that’s exactly what the US is doing now to every bank in the world, and to every person who has the supreme misfortune to have US connections — either long-expired citizenship or as a former green card holder. They say they are chasing tax cheats, but for every genuine tax cheat there are likely 1000 people like you (or the “you” I just invented).
Ask yourself — would that scenario I just outlined make a good story on CNN? Do you think there’d be any expressions of outrage from your Congressmen at the prospect of half your life savings being converted to rubles and shipped away? Do you think America would let that happen?
The vast majority of the people posting on this blog are people just like the fictitious “you” that I painted. They are people whose connections to the US are extremely tenuous, and they are people who thought they had relinquished that US citizenship — willingly and enthusiastically — as much as 40 or 50 years ago. In my wife’s case it was 38 years ago.
Do you still really think we’re just a bunch of whiners?
In a sense it is good that Steve is here with us. He represents what Americans who never lived outside the USA thinks about us. They have no clue.
@WhoaIt’sSteve What you do not seem to understand is that extraterritorial tax and reporting laws go against fundamental American principles of democracy, the 4th,5th,6th, 8th,13th,14th amendments, and the notion of proportional representation (we are not counted in the Census, thus the House of Representatives has no authority over us). We represent such a small proportion of population in our home states (if we even have one and are even allowed to vote) that congresspeople don’t bother listening to us. Yet our numbers compare to the populations of states like Arizona or Colorado.
The additional taxes required of the US by people living in higher cost of living areas abroad where the local tax burden is lower can put these people out on the street. The FEIE and AMT do not take into account the exchange rate situation which pushes people into higher tax brackets than before. I think that the AMT can even force people in high-tax countries like Denmark and Sweden to pay additional taxes to the US: money many families cannot do without. Housing exclusions are only allowed for those residents of city centers, not those who live in the suburbs where rents may be almost as high. A few years ago there was a change to the revenue code putting income above the 90kUSD FFIE in the 90k tax bracket: before this change any income over the FFIE was taxed progressively, starting at the lowest rate after the standard deductions were taken.
Congress doesn’t listen to us. Some of us here at IBS have tried to contact or call our congresspeople and been ignored or told to buzz off because we live abroad. Even members of our own Americans Abroad Caucus have voted to eliminate the FEIE. Congress is looking to US persons abroad to balance their budget following a huge economic bubble that arose out of greediness, mismanagement, and ignorance of basic macroeconomics. Many of us abroad did not take advantage of the bubble, never had McMansions, never were even allowed to invest in US markets because US and foreign financial institutions have not allowed middle class Americans abroad to maintain brokerage accounts! Thus, we cannot be expected to bail the US out.
The credit reporting agencies often will not provide credit reports to us. Even basic banking services in the US like checking or savings accounts have been refused to many of us. And now, because of FATCA, we are increasingly being denied banking where we live: even if we have the nationality of the country in which we live.
The effect of this is like the Nuerenberg laws. The Nazis did the same sort of crap to the Jews. First they removed them from economic life and marginalized them, deported or forced many to emigrate for a heavy fee, and then they annihilated those that were still around. After the US makes it impossible for us to function and make a living where we live, what next? How far will these traitors in the IRS and Congress go? Given the way the US is run like a police state these days I don’t know what will hold them back.
FATCA and FBAR reporting are general warrants and violate the 4th and 5th amendments, not to mention the excessive fines for noncompliance (unconstitutional under the 8th). They also compel people to commit CRIMES in their countries of residence by disclosing information that family members and business associates or employers do not want disclosed. They violate the sovereignty of the countries where we live. If another country tried to do what the US is doing the US would invade them or nuke them.
Although some people on IBS try to become compliant, I believe that US tax policy is unconstitutional and those abroad should not pay a dime unless they have income or property in the US, and then only on that property or income. For me, there are two valid options: renounce citizenship and tell the IRS to go to hell, or retain citizenship and tell the IRS to go to hell (but don’t cross the US border ever again). Congress and the administration are traitors against the Constitution.
The majority of people living in the US do not know what we are going through and that we already pay taxes where we live. We have a right to equal economic opportunity with our neighbors in our countries of residence.
The US shoots itself in the foot with its policy. It does not encourage Americans abroad to improve the US trade situation. FATCA will cost billions to the global financial sector, will cause another financial crisis and will discourage investment in the US. Ultimately, Congress and the President are making life worse for US homeland residents. You should not stand for this either.
Spread the word among homelanders : tell your congresspeople to quit scr**ing Americans abroad because to continue to do so will only mean the eventual downfall of the US, which I believe none of us at IBS really want.
Reblogged this on Stop Unconstitutional Double Taxation.
I’d like to bring up Showdown’s thread on contacting congresspeople again:
http://isaacbrocksociety.com/2012/03/15/dear-mr-congressman/#comment-11845
Michael Jackson sang: …they don’t really give a #%&% about us!
@justme
I read the post and the pdf how does Conklin’s data coalesce with the actuality that the US is a tech exporter, and has transformed in to a service based economy? Manufacturing and a well rounded economy is important for any country. The days of cheap Chinese labor will soon be behind us, the only remaining territory of exploitable human capital is Africa and that can’t last long either, the days of dirt cheap goods are numbered. But also there are fascinating developments in technology with 3d printers that will obsolete manufacturing within the next few decades anyway.
@justme & @arrow
Well the obvious solution is to end jus sanguinis, or end any recognition of multiple citizenship’s. I can see the point some of the renounce/relinquish people here, to me giving up my American citizenship would be like cutting off my arm, it’s just that as I have visited other country’s I never felt comfortable like here in the US or that I wanted to do anything there beyond visit. I can understand others have found new home’s other places, and that is fine for them, in fact I think that’s great for them that they have found a place that they call home.
The rest is getting pretty political. It’s not that I don’t think the IRS should be cut down to size too, but it’s that your viewpoints are what would be considered very liberal here I’m sure you guys know and realize this, after all you’re the smart one’s that decided to leave. American exceptionalism which may or may not hold sway over someone college educated who is living abroad, is very much still in the minds of many American’s who haven’t left, and trying to persuade them that you shouldn’t be taxed because you left I think is going to be difficult to sell to many. The Constitutional arguments I feel fall in to the same arguments the “income tax is voluntary” group use, or at least they sound similar, and we know how that works out for those guys.
Steve said: “or end any recognition of multiple citizenship’s”
Steve, I think that’s where this is headed. Once again we will likely return to the pre 1986 US citizenship policy.
If the US wants to continue on with citizenship based taxation (which is in conflict with the system used by the rest of the world) they have to allow average Joes to cut their ties to America.
I understand the argument that most very wealthy Americans would not have made their money if not for the US system. That kind of money is almost impossible to make anywhere else. They can afford expensive lawyers and accountants to deal with the complex US tax code. We can’t.
The rich folks would also benefit from remaining US citizens, to us it’s just a huge inconvenience. A Canadian citizenship is just as good as a US one (at least we think so). In fact we think it’s better because we have universal healthcare.
It’s good to believe you live in the best country in the world. We believe Canada is the greatest country in the world for various reasons … low taxes is not one of them.
By not filtering out millions of ordinary folks like us from the wealthy, the US will find it much harder to pursue the real tax cheats who are hiding millions all over the world. This is a problem that needs to be solved not just for our sake but for the sake of the US government which needs to collect from the real tax evaders.
Since 99% of us owe no taxes, we are just clogging up the system.
It is difficult to explain my distress being in a third world country trying to comply with the Treasure Department and the IRS. Apparently things should be easy. I jave an income exclusion (Form 2555) and I have Tax Credit (Form 1116). I am not a CPA and I don´t know who to fill these forms. They are a nighmare. Then now I have the FBARS. On my investments the banks here do not tell how much I pay of taxes. They just say that they withdrew the taxes automatically without saying how much, I then at my age have to go to banks to ask, spending there close to two hours in each and sometimes having to come back. Sometimes I am inclined not to report something just because the time and effort it will take to fill all the forms even though I will end up not paying taxes in the USA. Nighmare. Then there are inconsistencies: Americans living in France don´t pay US taxes on their pensions they have from working there. I do. Or, self employed in the country I am have to pay SS Self Employment Tax in the two countries. Can you imagine how much this will add to? I now have to hire a CPA in NYC. $150.00 for half an hour in the phone. Total cost 1000+ because i am unable to fill al those forms and the penalties are stiff if I make a mistake, much worse than for Americans living in the USA. I could go on and on. This year since January 1 I have spent more than one hour a day thinking about this. And wakening up at night, scared. This is not fair.
So are you guys more upset that FATCA will see that the banks are talking to government’s and with that you fear some sort of privacy violation or are you more angry that banks which choose to be outside the international system are refusing your patronage?
@omg
Canada is awesome, love visiting, trying to finalize plans for a trip to BC soon, and heading up to Canada’s Wonderland this summer!
Steve, what I wish that all Americans would understand is that we pay taxes where we live. Around 60% – 80% goes into local coffers, through a series of payroll taxes, deductions, consumption taxes, and sales taxes. For me to listen to US politicians say that I say I pay no tax is completely absurd.
Now with the FATCA, it is a game changer. Instead of just hearing the bald-face lie that we pay no taxes, they threaten our financial viability in other countries. How can someone live without a bank account to pay their bills?
I have a wife and a little boy to support. If my bank brings up this “citizenship issue”, my first order of business will be to renounce. ** I don’t care ** if I’m stateless for a year or two before my citizenship is granted. See what kind of brilliant laws come out of Washington?
“I have a wife and a little boy to support. If my bank brings up this “citizenship issue”, my first order of business will be to renounce. ** I don’t care ** if I’m stateless for a year or two before my citizenship is granted. See what kind of brilliant laws come out of Washington?”
It is so sad to see that this shit is screwing up well meaning citizens all over the world.
Steve, I’m definitely more angry that banks would refuse me because of where I was born. I didn’t pop out of my mother and say “Wait a minute… you better have me someplace else!”
Here for example, many things are paid for with bar coded “boletos” that you pay at banks. US Banks don’t even have such a thing. US banks aren’t even too keen on wiring money overseas anymore because of the Patriot Act. You get the 3rd degree if you want to wire money from many banks. Capital One WILL NOT even do an international transfer. So using a US bank account in most foreign countries for day-to-day issues is impossible.
Also, I don’t like being discriminated against or treated differently due to where I was born. The US (and the consular officers) said that this is the bank’s fault. However, if the US wouldn’t have come up with this, then it would be a non-issue.
All this stuff will probably work out for the greater good of the US. I hope so because something positive HAS to come out of this after the grief it has caused so many people.
Steve, I can’t speak for other countries but in Canada we would prefer our banks forward information directly to the Canadian government. I personally don’t consider it a privacy violation because I’ve got nothing to hide from my own government. Also, I’m pretty confident that Canada will not forward information on dual citizens to the US if those citizens are residents of Canada.
Canada is the only country that already had an agreement in place long before FATCA to automatically forward Canadian bank information on US residents to the US government. If you are a US resident trying to evade taxes, the last country you would put your money in is Canada.
What the Canadian government does not want to do is forward any information to the US on Canadian citizens resident in Canada who may also be considered US citizens. We are on a territorial tax system and consider what the US is doing to be a threat to our sovereignty. It’s a way to erode our tax base and this is what is causing the friction between our two governments.