Cross posted from RenounceUScitizenship – updated from October 2011.

Hitching A Ride – Is A “Trojan Horse” Provision Legitimate?

@sencarllevin thinks extraneous legislative amendments should be bannedwashingtonpost.com/opinions/fight… How can he justify #FATCA wp.me/p1OvGl-18

— U.S. Citizen Abroad (@USCitizenAbroad) April 28, 2012

In order for legislation to have “moral force”, it should at a minimum:

1. Be read by legislators prior to it becoming law; and

2. Not contain provisions that are unrelated to the main purpose of the legislation – i.e. NOT “hitch a ride”

“Hitching a ride”** is especially easy if the Congressmen don’t read the legislation.  Nancy Pelosi commenting in relation to Obamacare, noted that it was important for Congress to pass the bill, so that the American people (and presumably Congress) could learn what was in it.

FATCA is unrelated to the  purpose of the HIRE Act. It simply “hitched a ride” into the Hire Act. Who knows how many Congressmen read and understood the Hire Act prior to voting in favor of it? Provisions that “hitch a ride” into legislation are analagous to  soldiers left inside a Trojan Horse*. Once the primary legislation takes effect, the “hitchhiker provisions” will be unleashed on an unsuspecting public.

FATCA has been referred to as the “neutron bomb” and the Berlin Wall of international finance. It is the most dangerous act of American Imperialism ever.  It will  hasten the demise of the U.S. as a world power.Given the importance of FATCA, some questions are in order.

Questions: Where could such a law have come from? Was there any discussion of it?  Was there any anticipation of it?

Answers: It came from Senator Carl Levin (click on the link to see his position on OVDI and other relevant matters). There was no discussion of it. There was no anticipation of it.

The Illegitimate Legislative Origins of FATCA – It was just added to the Hire Act

The purpose of FATCA is to impose financial reporting requirements on U.S. citizens and foreign financial institutions. Hence, one would expect that the Act of Congress creating FATCA would be for the purpose of financial reporting. This is not the case. FATCA is a small part of the H.I.R.E. Act, which is essentially an Act aimed at restoring employment.

To put it simply:

FATCA is a provision buried within a “jobs bill” President Obama signed into law in 2010.

The effects of FATCA on both U.S. citizens abroad and their financial institutions are well understood.

One of Canada’s Big Five banks, Toronto-Dominion, stood up and said this was ludicrous: It would cost $100 million for the software and staff to implement. Other big international banks spoke up too — Germany’s Allianz, Holland’s Aegon, and the Commonwealth Bank of Australia.

Given this push-back, IRS bureaucrats did the only thing that would logically occur to IRS bureaucrats: They decided that instead of enforcing this provision of FATCA starting in January 2013 as scheduled, they’d delay it till January 2014.)

But, I digress.

FATCA is the “Trojan Horse” of the Hire Act. FATCA is more important and will have far more impact than any provision related to jobs. The provisions of FATCA will remain and cause problems far  after the primary purpose of the Hire Act has become irrelevant.

How can this happen? How does Congress work?

The answer is that, legislation that is unrelated to the primary purpose of a proposed law, is often added to that proposed law. It’s a an easy way to “sneak something into law”. This is made doubly easy because Congressmen often do NOT even read the laws they enact.

One commentator commenting on the ugly side of Obamacare noted:

“This is why you have to be careful of what you ask for. You will get what you asked for and then some. Politicians love to do this all of the time. Most of them don’t even bother reading what’s in the bill – all of the pork and crap that has nothing to do with the main thrust of the bill.

…

This is why you have to be careful of what you ask for. You will get what you asked for and then some. Politicians love to do this all of the time. Most of them don’t even bother reading what’s in the bill – all of the pork and crap that has nothing to do with the main thrust of the bill.”

Thank you Senator Levin for bringing us FATCA.

The New Improved Carl Levin on “Trojan Horse” Provisions

On April 26, 2012 Carl Levin authored an opinion piece in the Washington Post. It is called “Fighting gridlock through self restraint”. Levin specifically identifies the practice of proposing amendments that are unrelated to the primary purpose of the bill as a problem. He notes that:

One area in which the Senate has had a hard time reaching unanimous consent is how to deal with amendments. Frequently, senators in the majority think those in the minority introduce amendments to delay bills or raise extraneous issues. Those in the minority think the majority unduly restricts consideration of amendments. The result is often gridlock.

Note that Levin is in NO way concerned with the principle that the provisions of the law, should be related to  the purpose of the law. His concern, is that the amendments simply cause gridlock. But hey, at least it’s a start.

Senator Levin actually uses the words “raise extraneous issues”. How might this apply to FATCA? Clearly FATCA was an issue that was “extraneous” to the purpose of the Hire Act. Talk about “the pot calling the kettle black”. Fortunately, this bit of Levin hypocrisy was noted by our very own Roger Conklin who commented as follows:

If there had been a law like this in effect then Senator Levin would never have been able to tack the FATCA legislation on to the HIRE Act which which was enacted by an overwhelming majority in March 2010. FATCA has made it impossible for US citizens living outside of the United States to survive. Most who voted Yea on HIRE never realized FATCA had been attached to it at the last minute.

Effective in 2013 every foreign bank in the world will be required to provide reports to the IRS of the accounts they hold with US persons. Failure to comply with this extraterritorial US legislation subjects those banks to a massive 30% withholding penalty on money transfers from the US.

Since this law requires foreign banks to violate the privacy laws, and sometimes even the constitutions of the countries where they are located by revealing confidential banking information on their clients to a foreign government, many of them, in anticipation of the effective date of this requirement, are already closing down the accounts of “US persons.” This includes foreign citizens with US permanent resident green cards, American spouses of foreign citizens who live abroad with their foreign citizen husbands or wives and foreign born children, foreign citizens who were born abroad to a US citizen parent and Americans who have become naturalized citizens of the foreign country where they live. There are some one million persons with US citizenship living just in Canada; most with dual US-Canadian citizenship. They are up in arms!

You simply cannot survive living in a foreign country without a local bank account into which to deposit your pay check and out of which to pay your rent and buy your groceries. So the “US person” living abroad has no other choice but to give up their foreign residence and move to the US, including those born abroad who have no English language skills, have never lived in the US or even visited this country; or renounce their US citizenship. FATCA has made US persons so toxic that foreign banks won’t touch them with a 10-ft. pole.

Last year nearly 1800 US citizens renounced their US citizenship. Why? Not because they no longer love America but because FATCA has made it impossible for them to survive living abroad. That total was 8 times the number of US citizens renouncing US citizenship in 2009. It is just the tip of the iceberg as 2013 approaches and hundreds of thousands of other Americans living abroad suddently discover that they no longer can survive because they can’t have bank accounts where they live.

Too bad this law did not exist in 2010. It would have avoided this mass destruction of the basic human right, guaranteed by the UN charter that any person has the right to freely leave any country, including his own, and freely return. FATCA has transformed the US from the world champion of human rights into a prime violator of these rights.

Mr. Conklin’s brilliant comment and insight generated the following responses:

Roger, you are so right ! Like you, I fear that the 1800 US citizens who renounced last year will become hundreds of thousands in the years to come, including highly competent and motivated people currently living and working overseas to the good of thte country, unless Congress deals with the self-defeating and toxic laws of FATCA and the punitive IRS application of FBAR rules.
The Senate must wake up to the terrible unintended consequences of these laws !!!

and

rogerconklin is absolutely correct. Our government has unbelievably complicated life for all U.S. citizens who are living and working off shore. Many are executives, sales engineers, etc. selling U.S. manufactured products to off-shore customers. They cannot exist under these new rules.Period. Another case of Congress hunting rabbits with an elephant gun .

and

4/27/2012 2:11 PM EDT

Roger, let me add my voice to how correct you are. This game of adding unrelated amendments buried in bills has to stop. There is no way that Senators know what they are voting on, like with the HIRE Act which had FATCA buried inside it. Right now, we also have the Son of FATCA SA 1818 (credit card restrictions for non FATCA compliant foreign banks) and the IRS Passport restrictions SA 1813 buried in the Senate version of the Transportation bill for gods sake. What do these have to do with transportation? Answer, nothing, but that is the game that is played and has to be stopped.

Amendments should be germane to the subject of the bill to improve it, or modify it, but not get something through Congress that could not pass on its merits. FATCA would have never passed, if it required and up or down vote in the light of day. Then the IRS wouldn’t have the excuse to create DATCA, the domestic equivalent of FATCA which it is unilaterally imposing by regulatory authority on US banks to chase away foreign depositors. We have a global tax data exchange being created as a direct result of FATCA. I call it GATCA. It is directly caused this FATCA amendment that was buried, by our dear ole Senator Carl Levin, (who is maybe now is seeing the light of day). Because of his amendment, we have a global tax data regime being created without any public discourse, debate, or reporting by even the Washington Post. All because of the this hidden FATCA amendment in the Hire Act. This nonsense has to stop!

* Here is the story of the Trojan Horse:

“The Trojan Horse is a tale from the Trojan War about the stratagem that allowed the Greeks finally to enter the city of Troy and end the conflict. In the canonical version, after a fruitless 10-year siege, the Greeks constructed a huge wooden horse, and hid a select force of men inside. The Greeks pretended to sail away, and the Trojans pulled the horse into their city as a victory trophy. That night the Greek force crept out of the horse and opened the gates for the rest of the Greek army, which had sailed back under cover of night. The Greeks entered and destroyed the city of Troy, decisively ending the war.”

** Hitchin a Ride was a song by Vanity Fare – If you are old enough you might remember this.