Ms. Atossa Abrahamian’s article last month about U.S. persons abroad giving up citizenship has really opened up the floodgates to a deluge of reporting on issues of interest to us here at the Isaac Brock Society. It’s hard to keep up with all of it, let enough find the time to comment on everything. Here’s a roundup of recent coverage. Thanks to FromTheWilderness and others who left comments pointing us to these articles.
On the back of Ian Sayers’ mild-mannered comments that FATCA compliance might not be worth the cost, UPI is running a full-blown call-to-arms against FATCA: “Why FATCA should be repealed”, by James George Jatras of Washington, DC law firm Squires Sanders. Jatras, a former Foreign Service Officer and Senate staffer, points out four destructive myths about FATCA, which accord with many of the talking points we’ve been making at the Isaac Brock Society:
- Myth 1: FATCA’s costs will fall only on foreigners, not Americans.
- Myth 2: By cooperating with the United States, foreign “partner” governments are rescuing their firms from a crushing compliance burden.
- Myth 3: FATCA is only about making “fat cats” pay their fair share.
- Myth 4: FATCA is set in concrete — all we can do is live with it.
And ends with a suggestion for concrete action: “During this election year, presidential and congressional candidates need to be put on the spot where they stand on FATCA.” (However, do keep in mind that if you have already obtained a non-U.S. citizenship, you should think very carefully about registering to vote in the U.S. — since this will hurt any claim you might have that your acquisition of non-U.S. citizenship was a “relinquishing act”).
The Financial Times is also running some good, solid FATCA coverage: “Industry concerned at extraterritorial tax clampdown plan”. If you get hit by the paywall, click on the first link in this Google search. It’s not a partisan editorial call to arms, merely a wide-ranging column which covers the reactions from a number of players in the finance industry. In general, it shows us what we already know: financial institutions are not happy with FATCA, but then the “solutions” they propose are often worse than the original problems:
Julie Patterson, from the UK’s Investment Management Association, welcomed the exemption of some regulated investment funds, although she pointed out it was still “not clear whether the draft wording provides the exemption we are seeking for pension funds”.
The 400 pages introduce added complexities, says the head of tax at one international bank. “We don’t know when we have to comply with the bilateral agreements. There are no templates, no timelines. As a global business, it would be easier to address a single regime.
Another good piece comes from Bloomberg/Businessweek — where unfortunately, editors continue their tradition of sticking inflammatory titles onto their poor suffering journalists’ detailed and well-researched material. This time, the headline-writers claim that “U.S. Millionaires told to go away as tax evasion rule looms”, but in fact, the journalist got quotes from people showing that this is hardly the whole story. Marylouise Serrato of American Citizens Abroad gets a hat-tip in the article, and her comments are echoed by a Hong Kong lawyer:
“Americans either will not be allowed to enter into international partnerships or live and work overseas, and will be replaced by foreign nationals who do not have these limitations,” Serrato wrote. “The extensive reporting requirements of Fatca will be destructive to those who wish to do business internationally as well as to those Americans who are legitimately living and working overseas.”
That view is shared by Richard L. Weisman, Hong Kong-based head of law firm Baker & McKenzie LLP’s global tax practice. “U.S. expatriates already face severe U.S. tax rules related to their non-U.S. income and investments,” Weisman said. “Fatca will increase the extent to which they are turned away by non-U.S. financial institutions.”
On BusinessWeek.com, the article has just one comment; over on Bloomberg.com, it gets hundreds. Some good ones in there, mixed in amongst the usual Homelander “It’s Romney’s Fault!” “No It’s Obama’s Fault” arguments.
And of course, for every one journalist or blogger who does careful research to understand the issues involved, dozens more don’t. First the Pittsburgh Post-Gazette reprinted Bloomberg/Businessweek’s story about “Wealthy Americans increasingly renouncing citizenship”. A number of people left quite diplomatic comments contesting that tired narrative, including our very own Jefferson D. Tomas. Apparently, however, Post-Gazette staff writer Tony Norman didn’t read them, but still felt himself sufficiently informed about the subject to stick in this little jab in an entirely unrelated article about a rock music festival:
Few of us believe in concepts as basic as civic obligation and voter participation anymore. The rituals and responsibilities of living in a republic bore us. Although we’re awash in more information technology than citizens of any democracy in history, we choose to conduct our political lives as willing inmates of an idiocracy.
It’s difficult not to be demoralized by recent headlines about wealthy Americans overseas choosing to renounce their U.S. citizenship rather than pay their fair share in taxes back home. What could be more shortsighted than the pursuit of wealth at the expense of the very republic that made the accumulation of that wealth possible?
And then there’s this piece: “Wealthy of the World, Unite — and Party!” which runs with that same ignorant assumption that U.S. tax laws are only a problem for the rich, and that anyone who leaves the Homeland, let alone thinks about renouncing his citizenship, must be some sort of “rootless cosmopolitan”:
The spark for this surge in statelessness? Since 2008, U.S. tax officials have been endeavoring to clamp down more firmly on overseas tax evasion. Swiss private banks, for instance, have come under new pressure to divulge data on the millions wealthy Americans have stuffed in secret accounts.
That pressure has some of those wealthy irritated enough to renounce their ties to Uncle Sam. The cost to renounce: a $450 paperwork fee and an “exit tax” on unrealized capital gains for renouncers who hold assets worth over $2 million — or have paid over $151,000 to the IRS in any recent year.
But the affluent who’ve gone to the trouble of formally renouncing their citizenship make up just a tiny share of what the Financial Times has labeled the “stateless super rich.” These uber wealthy have no interest in the notoriety of renunciation. They just live their lives as if they had no nation to call their own.
Variants of this article are making the rounds of DC think tanks, like the Institute for Policy Studies. As always, our choice to live ordinary lives abroad in the great lands of our choosing is being mocked and libelled and threatened by the demagoguery of shallow, parochial nationalists who don’t have the slightest understanding of the world outside their borders and who think that their own land is the only place in the world where anyone could possibly make money or that could be the object of anyone’s affection and attachment. Like geeez says of his life in Brazil:
In fact, I’m paying more in taxes where I live, but at least I’m surrounded by people who DON’T think they live in the center of the universe.
And that’s it for the media roundup. At some point I should also do a roundup of the coverage I’ve been running across in other expat blogs …