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compliance might not be worth the cost, UPI is running a full-blown call-to-arms against FATCA: “Why FATCA should be repealed”, by James George Jatras of Washington, DC law firm Squires Sanders.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 …
Eric, I’m getting an eerie feeling that the US makes it clear that it doesn’t want any NEGATIVE reports about the FATCA. After all, we have 1 for the hall of fame and dozens, or hundreds for the hall of shame. Someone also said somewhere that the “big deal” going on at the IRS now is the FATCA…. it’s an election year. It sounds like the policymakers want FATCA to be synonomous with “stop tax cheats” when it’s really about so many other negative things.
I think it was GW Bush that said “I have to repeat this stuff so many times so you will believe it”.
I’m all for catching tax cheats, but I cannot support a law negatively affects the lives of 6.3 million people living abroad. There has got to be a more practice less damaging way to get what they want.
It’s like a giant form of constructive dismissal, i.e. “we’ll make life overseas so unattractive and difficult for you that you’ll have no choice but to either move back or renounce”. Sadly, there’s no industrial tribunal to appeal to!
I know this isn’t the right place to put this link, but being new I don’t think I can start threads. I was reading the ABI (Association of British Insurers) response to FATCA the other day. I didn’t see it posted here, so thought I’d add a link. They seem to want most of their policies to be out of scope, and also want to be able to rely on IFAs to carry out the checks for US persons. I understand the business reasons for wanting the responsibility put onto the IFAs, but now worry that will make us less attractive customers to IFAs than we already are!
At the moment, it’s the third paper down here: http://www.abi.org.uk/Media/Consultation_Papers/Consultation_Responses.aspx
FATCA vs. The STAMP ACT.
Same $#!+ — different package.
The justification from GB in 1776 was the same, the outcome for the US in 2013/14 will be the same — they will lose their ex-pats.
The first three paragraphs are worth a quick read. The parallels are self-evident:
http://en.wikipedia.org/wiki/Stamp_Act_1765
Eric, I’ve heard it from two sources here recently, Phil Hodgen, and ACA, that there is a growing understanding among some in government of the obstacles we as US persons face when living abroad.
Phil: http://hodgen.com/irs-meetings-today-about-rrsps/
and in a letter to me from the ACA in reference to FATCA: “The IRS and Treasury are aware that the legislation is not practical and very unworkable.” ACA writes, as well: ” Please remember that, the IRS and Treasury can not “repeal” or “eliminate” FATCA only the Congress can do this.”
You write, decisions are being made by “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…” I know from talking to people of this mindset that many feel that the mere thought of leaving the country to make a life elsewhere is an expatriating act. They obviously use the same amount of effort in researching why people leave as they do the unemployment numbers in the US. If another country can provide for US citizens what the US cannot-survival or even prosperity-what right does anyone have to criticize those who make that choice? The American dream is really meant to be realized by those living within the borders of America, otherwise it would not be impossible to remain American for many who live elsewhere. As George Carlin said, the American dream is called that because you have to be asleep to believe it. But, like anyone else, Americans desire to know the truth and the truth will come out. There needs to be more realization that renunciations are a symptom of the disease of citizenship based taxation, not a defect of the citizen himself.
@Eric
Thanks for summarizing these articles.
@all
Here is comment form one of the articles:
“American is a state of mind and exists only in people with the desire to be truly free. America is where are hearts and mind feel free not where politicians tell us we are free. Americans have much less liberty now than ever before. Our forfathers left their countries to be free now Americans are doing the same and you are accusing them of being unpatriotic. You are ignorant … and dangerous and contribute to the destruction of the USA.”
http://www.marketwatch.com/story/tax-dodgers-are-proudly-un-american2012-05-04?link=MW_latest_news#comment7161542
Reblogged this on Renounce U.S. Citizenship – Be Free.
Yet another one (unless I missed this in your post).
https://twitter.com/#!/renounceus/status/200240540183302145
https://twitter.com/#!/joebwan/status/200233438589104129
All this has made me certain of one thing – I shall never, ever apply for a US citizenship as long as I live here. Being punished for sending money to your homeland, where you might want to relocate in the future is being considered a crime, even when we have honestly paid taxes on the interest earned in our home country too!! All that I am learning from this is – honesty does not pay!
Another columnist worthy of the Isaac Brock HALL OF FAME is William McGurn from WSJ.
Some notable quotes from his recent article, “What’s U.S. Citizenship Worth?”
“these 1,800 ex-Americans are canaries in the coal mine.”
“Our tax code—and especially the onerous reporting requirements that come with it—is turning U.S. citizens into economic lepers.”
“a small-business man abroad would be to think twice about acquiring U.S. citizenship”
“the whole reason Treasury reports the numbers of Americans renouncing citizenship instead of the State Department is because Congress—Republicans as well as Democrats—set it up that way. The aim is to “name and shame.” That’s the Berlin Wall approach: The idea that the thrust of U.S. tax law should be to prevent any American from benefiting from a better deal somewhere else.”
“That a record 1,800 Americans gave up their citizenship last year suggests something else: Instead of building walls to keep talent and investment from getting out, Congress might start treating these as capital we ought to work to attract.”
http://online.wsj.com/article/SB10001424052702303592404577362050670738024.html
Plus some great comments from Isaac Brockers
@Joe Expat
yes, that was a good one for a Hall of Fame…
An excellent an interview with Bill McGurn regarding his article.
http://www.ustream.tv/recorded/22079569
He definitely has it right.
I just returned from more than two weeks in Pennsylvania. Not one person I spoke with had ever heard of any of the issues which are affecting us so dramatically. Most people were outraged when I told them and often said “Why do we wonder why people hate us so much?”
Yet, I don’t think it will make any difference to how any of them may vote. The only ones who are affected by it personally are my sister and her partner. My sister’s partner is an accidental Canadian (born and raised in the US to Canadian parents). As a married gay couple (They came to Canada several years ago to get married),, they would love to retire in Canada. But, now that they know all about filing requirements, FBARs, FATCA, etc, they know it is likely out of the picture for them.
On a positive note for me, everyone I spoke with remembered what a “big deal” and “how controversial” it was when I became a Canadian citizen in 1973. They all remember quite clearly that I was losing my American citizenship by doing so. At the time, none of them could understand how I could even consider such a thing.
Now, more than 20 people said “I will testify for you” or words to that effect.
We still need a lot more media coverage in the US before this issue will ever be addressed. I don’t think Michelle Bachman’s new Swiss citizenship will help us much.
Maybe Obama will take Kenyan citizenship.
Hall of Fame and Hall of Shame would make good stickies. But real estate on the first page is scarce. Maybe Petros can make some links.
Johnny: Obama’s mother also took out Indonesian citizenship for him when he was a child living in Indonesia. A copy of it was posted somewhere here at Brock.
On another thread a few months ago, I pointed out how under “reciprocity,” Kenya and Indonesia could claim the President of the US as a “Kenyan person” or an “Indonesian person.” Then, everything Obama has signing authority for, including his retirement savings, joint accounts with MIchelle, education savings plans for his daughters and all of the finances of the US government would be required to be reported to Indonesia and Kenya under GATCA
Of course, Michelle Bachman, her husband and children just became Swiss citizens. Under “reciprocity,” Switzerland would have every right to demand information on all of their financial holdings, value of their home, children’s education savings, etc. Seriously!
This could be what we need to bring an end to this insanity. Uncle Tell and Jefferson Thomas, your great country may be our greatest hope to get the US to see how insane this all is.
For the love of God, I think we are on an impossible mission to show the REAL side of living abroad to Resident Americans. Here is an exchange between me and someone who I worked with in Europe (an American):
————————
Her:
Hey! Yup things are allright. Living in Brazil? How exciting!
Me:
umm.. it’s not THAT exciting. I guess it’s like living in Europe when we lived there! I’m a little more “native” now. I have to speak portuguese nearly 24/7. Things are OK.
—————————
“Exciting!” Jeeezz.. when are people going to stop seeing this as “exciting” and see as it really is.. like living anywhere else. – this is really depressing because this person lived in Europe with me for 3-4 years. Educating that US Residents when the media is working against us, sure is tough to face.
@blaze. good points. Gatca, what a clusterf**ck it will be for everyone on the planet.
@Joe Expat
Thanks for that link to McGrun interview. I had not seen that followup to the story he did in the WSJ, which was very great. I always email and comment on this stories, as do others, and ti seems he has taken the messages to heart. He obviously gets it now. Good to see a columnist is finally hitting the nail on the head! Now if we could get some journalist choruses started and not so many solos….
@bubblebustin “I know from talking to people of this mindset that many feel that the mere thought of leaving the country to make a life elsewhere is an expatriating act.”
Yes! That is exactly what I’m hearing too. And to add insult to injury I actually married one of those foreigners. 🙂 The U.S. public can not wrap its head around the idea that there is immigration and emigration (that solde migratoire). All very normal.
Reframing the issue might help. For me it’s really about whether or not Americans will be able to fully participate in globalization. Do homelanders really want opportunities for their children to be limited to the US? Do they really want a world where their very bright son or daughter can’t take that job in Shanghai or Budapest?
@Victoria…
Yup, they do. Having driven through the Mid West last summer, I know there are many out there on the great plains that think Eureka, Kansas is good enough for their Kids.
Oh, say it isn’t so, Just Me!
That is beyond depressing…
@Victoria… Well, it probably is too much of a generalization, but having been raised there, I see so many that can’t imagine anything beyond the curve of the horizon. I was one who couldn’t wait to move away, but that was not the wish my parents!
Cheers Just me.
Your comments at the end of news stories along with those from other Brockers are great because they are always constructive and thought provoking, rather than highly charged emotional rants.
I think the journalists are actually reading them, which helps set the tone for their next stories on the issue. And every time the renunciation / relinquishment numbers go up, more news stories come out.
Public opinion is still not on the side of ex-pats, but it is changing, one journalist at a time.
@justme, I think that some may disagree that there is a curve on the horizon:-)
@Victoria, I think it was Badger who said that countries will just stop accepting Americans as immigrants. Too toxic! Those fortresses have a way of keeping people in as well as out.