Tax Rule Provokes Foreign Banks’ Ire
Takeways:
Whatever lobbying Democrats Abroad and ACA is basically completely ineffective and disregarded if you believe what is said in this article. I might send an email to Joe Green himself to get his reaction. An unnamed Treasury Department official appears to view the Democrats Abroad FBAR/FATCA survey as a “joke” because its anonymous. It appears Treasury has very much made up its mind on this issue prior to next weeks hearing.
If this is a the general attitude the US is going to take the odds of an intergovernmental agreement with Canada are low. In fact there is a pattern here of whenever Ottawa makes noises as in the Barrie McKenna piece a few days ago in the Globe and Mail of some type of compromise the civil service at US Treasury pours cold water over it.
Credit to Steven Mopsick. He has said all along they will push this as long as hard as possible even to the point of this ending up in an absolute legal mess with court fights all over the world.
What is the why?
Treasury believes most individuals will comply and not want to risk never being able to enter the US. I don’t think they really understand the political dimensions of this in Canada yet.
Questions:
At one point the term “Administration official” is used at another “Treasury official” does “Administration official” mean the White House and Obama himself.
Wikipedia definition of Senior Administration Official:
http://en.wikipedia.org/wiki/Senior_Administration_Official
In another comment, American Citizens Abroad, a group representing expatriates, provided testimonials, many unsigned, from people saying some European banks have refused to open accounts for them, citing FATCA compliance burdens.
Treasury officials are aware of anecdotal complaints about FATCA affecting U.S. citizens abroad, but they don’t see a systemic problem, the Treasury official said.
A catch-22 situation. People are afraid to be cited by name lest they attract the attention of the gov. But without names and stories the gov can blow off the information as “anecdotal” and therefore not worthy of their notice.
And in defense of Democrats abroad (which I feel compelled to offer since I’ve said some mean-spirited things about them) they have a president to re-elect and they don’t want to do anything that will harm his chances. So if this can be quietly managed behind the scenes with a minimum of fuss that would be their preferred method for effecting change. But again all this very polite persistent political maneuvering just isn’t cutting it. There needs to be a fuss, a bit of embarrassment and even, dare I say it, some nastiness. My .02
@Tim…
It just goes to show that you can’t deal with these DC types. I am beginning to think that ACA and Dems Abroad time and lobby efforts might be better place lobbying other governments not to comply with FATCA so there is indeed a legal mess.
Since there was only 3 comments, thought I would add mine…
It’s awful. Such an arrogant government.
Reblogged this on Stop Unconstitutional Double Taxation.
@Just Me
Exactly. I gave up long ago on the US government, but the dismissive attitude shown of the surveys mentioned annoys me still. What I would like to see is indeed for ACA and others to start lobbying the EU, Canada, etc through their own internal channels. Here in the EU the entire issue of citizenship-based taxation and the violation of our data protections laws due to FATCA need to be brought before the European Court of Justice asap.
The US is also dreaming if they think that the threat to not be able to visit would truly scare as many as they believe into complacence. I believe that the Reed Amendment will start to be enforced if a few more billionaire entrepreneurs start to renounce, and that threat won’t sway me at all if the choice is keep my bank accounts or be forced to move back to the US!
So far we have debunked the myths to US Citizenship:
1- NO HELP OVERSEAS – if they help you, they will send you a massive bill to pay.
2- SOCIAL SECURITY – if you earned it, you keep it.
What else do they try to use as a “benefit”?
+1 You can go to the US whenever you want to with a US passport.
+2 You can go to the US and collect welfare like so many oher people do.
So far, here are my negatives on my scorecard:
-1 No social healthcare program. Maybe VA Hospitals for veterans.
-2 You can’t open financial accounts abroad, even if you live abroad;
-3 You have to keep track of 2 sets of laws because breaking either can get you in trouble, especially in the US;
-4 You have to file taxes, even if you don’t owe anything;
-5 You are a potential target for violence in many areas of the globe due to US “interventions”.
-6 You pay reciprocal visa fees to travel to many countries, more than many other nationalities.
-7 You are “associated with” (guilt by association) a country that uses military force excessively. Where were those WMDs?
-8 If you go overseas, you are treated like a piggy bank to the IRS, even if your money was acquired legally and taxes paid where you are a resident.
-9 You have to subject yourself to X-rated scanning machines and “massages” in the name of fighting terrorism.
-10 You have to deal with an organisation that deliberately leaves wording vague so that they can charge higher penalities for errors. The same organisation uses bait-and-switch tactics that are illegal in most countries.
-11 You have to deal with a country full of arrogant people that are very near sighted — they can’t see beyond the US borders. They think the US is the only place someone can make money and anyone who lives abroad is a “traitor”.
-12 The US is the highest “regulated” country in the world, passing tens of thousands of laws every year. But laws that are really needed to protect people, like segregation of customer funds, never get passed.
Hmm.. out of 12, only 3 were even tax-related. There’re many reasons for not wanting to be US citizen anymore. I don’t hear anyone grumbling in Brazil that Eduardo didn’t want to come to Brazil to share his wealth.
Don, the US is the LAST place I want to go. My wife keeps telling me that in a couple of years I have to go say goodbye to everyone. My grandparents are VERY old. The older I get, and the more settled I am here, the less I want to travel. 11 hours on a cramped plane is not fun.
Add to that the tasering, the violence, the arrogance, everything they say is a vicious threat, the excessive use of force…
An American could say, “Well you live in Brazil, and according to the very “reliable” statistics of the US Dept. of State, the murder rate is twice in Brazil what it is in the US. Maybe so, but I don’t live in a big urban center.
The ACA needs to change track. On Phil’s blog the lady from the ACA was asked whether they were engaging the EU and the Swiss government to protest against FATCA. Her response was it was against the ACA’s charter to work against the American government’s interests and basically any change has to come from Washington (ie: waste your time lobbying a bunch of prats in Congress who couldn’t give a monkey for its ex-pats). The charter is admirable, but it doesn’t take into account when the American government tries to export US law and itself becomes the problem.
The charter is fine for issues like “little Johnny” being denied citizenship, or some other civic right because he was born abroad and potentially will be cheated out of all the glorious benefits that US citizenship has to offer.
I suppose that’s why the Facebook kid handed is blue book in. If the US ran the resident-based citizenship model at least if the tide ever turned, he may return the US to live because running US company from Singapore is a lot harder than living in the US – at least the US still has a future chance to tax him.
Because of Levin, and his “all or nothing” citizenship-based model harking back from the world of 1950, the kid will never ever pay the US a dime in future. You have to ask yourself who has really lost out in the world of 2012? Answer: not the kid.
@ John, yesterday, I explained to two journalists (including Enjoli Francis) the significance of Isaac Brock. The name itself, if anyone bothers to look it up, means that we are much more edgy. I like the work that ACA is doing. We however are aware that they been doing this work for going on four decades with little successes (yeah, except the ability to gain US citizenship from a grandparent). Those of us who have chosen to renounce do not see it as “extreme” as Phil Hodgen suggested, but as the natural conclusion of having gone native in our host countries and having the US now hound us for filings, taxes and penalties. So we want to leave, pure and simple, and we want the IRS to leave us alone.
I told Enjoli that I wish I could have retained my birthright to take up residence in the United States, but with the money I save by renouncing, there will be few other countries in the world who won’t actually want me and my wife to buy a house and live there. So I’ve lost the US but gained the world. Saverin made the same choice. He now will be able to keep his fabulous wealth and live anywhere else in the world. See Phil Hodgen’s speculative explanation of the tax consequences of the timging of Saverin’s expatriation: http://hodgen.com/why-the-facebook-dude-expatriated/
@geez
All of your points are spot on. For me the main reason that I refuse to travel to the US is due to my last “enhanced putdown” experience by the US airport security staff. I haven’t been back since and I can’t say that I miss the crazy long flight either! Now I travel on the train or around Europe on budget airlines for a fraction of the cost, time and worry.
@Petros – Please don’t get me wrong about the ACA, there’s a place for them and they should continue their good work as a conduit between ex-pats and Washington.
However the ACA is a “loose coalition of ex-pats” who make an annual pilgrimage to Washington, meet a few politicians that find them interesting, hold their annual fundraiser in Switzerland complete with prizes, and an outlet for ex-pats who want to keep their finger in the US pie. The ACA is a sort of club. What they aren’t is a super PAC with the financial clout to incentivise policitians with $$$ into their way of thinking. Judging by the looks of their offices on Google Streetview in Geneva, it looks like don’t spend a lot on rent let alone give it away to politicians. When did the ACA last host a fund raiser for a US politican? That’s the kind of activity needed to repeal FATCA. I’m not trying to paint a negative picture of the ACA but be truthful and realistic about what the ACA is really up against in DC. The ACA knows deep down that wishful thinking and blogging is not going to repeal FATCA and so does Carl Levin The average representative in the House needs to raise $10,000 a week in order to have the required fire power to win every two years. Look at the Senate race in Massachusetts today, Brown vs Warren, it’s estimated they will spend $10M each which works out to $32,000 per week during a six year term To the politician the ACA offers no dinero so the consequence is a few brief conversations full of platitudes. It’s not the ACA’s fault they simply don’t have the tools for the job at hand.
I’m sure the ACA are very nice people, but the it’s not the right type of organisation to repeal FATCA and protect ex-pat’s liberties from being eroded by the US government.
I’m not convinced a fully funded PAC is even possible when if you can’t take the “heat in the kitchen” anymore then you can exercise your own escape clause and renounce. So how would such a PAC ever raise enough money to buy off politicans? Would’ve the Facebook guy cut a cheque for a cool $1M in PAC money to repeal FATCA probably not, he’s left the US club and doesn’t care what rules the US Congress lays down in future.
This is why I think the fire break for ex-pats is hassle your local government (like the Canadians have) and at least limit the scope of FATCA to American-only passport holders who can’t swim through Carl Levin’s net.
Interestingly enough US domestic banks are now kicking up a fuss about FATCA reporting, but I’m not hopeful they’ll gain much traction after all the bail outs.
@John, the ACA is composed of some wonderful folks but the situation reminds me a bit of another expat group that I joined when I first moved to France in 1989. This group was for American women married to Europeans at a time when most women in that situation did not work. I remember that they held a lot of their events in the afternoons and I couldn’t attend because I had a job. They did change over time but I still have not re-upped my membership and most of the women I meet these days here aren’t members either. Times change. Organizations have to change too or become irrelevant.
I’ve often wondered if it wouldn’t be better for ACA to pack up and move to Bruxelles – heart of the EU. In the migration equation there is the US but there is also our host countries. Any expat org needs to take both into account. Very recently here in France foreign students were being thrown out after they completed their studies here because of a new rule called the Circulaire Gueant. American kids were being tossed out on their ear and I thought it was fascinating that the not one US expat org (or the US gove) so much as said one word on their behalf. Other countries governments and expat orgs did. Very sad.
This is all about money. Money buys everything.
Phil Hodgen says on his blog that the people who have the power to change things care about one thing: to be reelected. If they can’t be bribed to support our cause, we’re out of luck. They don’t even hide that.
Phil Hodgen says:
May 10, 2012 at 8:09 am
@Chris,
The people with the power to change things care about one thing: getting re-elected. That means you must come in with more votes (or more money to buy votes) than the other side.
This is not hidden. It is explicit in the conversations. One of the proposals from the State Bar of California quite clearly was something that is sane to everyone on the planet except the affected industry. We were asked — twice that I heard — who we could organize as a lobby to counteract the industry that would be put out of business by our proposal. Failing that, our efforts were pointless. Logic and sanity rarely prevail.
If ACA, for instance, wants to push its views, they should pitch their recommendations in terms of jobs for Americans — jobs abroad. (This was a suggestion from someone at the Senate Finance Committee who knows and seems to be sympathetic to ACA’s agenda). That is something that helps on the “get votes” side of things for a random Senator or Representative.”
I am loosing hope that anything will change… As Victoria said, American abroad are not seen very highly by homeland people, and immigrants “steal US jobs”. Lots of people would be happy to see us leave. I am a little gloom today. OK, maybe more than just a little.
@Christophe…@John
You are both right about the effect of money to influence politicians in Washington. I keep encouraging folks to listen to the Planet money podcast, called Take the Money and Run for Office.
That is the reality we are up against with these guys who we want to influence. There might have been a day in American history where real advocacy had impact, but I thought political contributions for running for office drive the process now, and like John says, if you don’t have a Super Pac, you aren’t in the game. Unless we can hitch our wagon to someone who has a similar agenda funded by BIG Corporations, we are probably just spinning our wheels. That is my fatalistic view this morning… and Christophe I understand your gloom and often experience it myself! I just try not to let it stop me from trying. Maybe I need a cause, or maybe I am just drawing inspiration from the Roger Cronklin example and pressing on. I do recognize that the effort might come to naught.
http://bit.ly/M77An2
Courage, everyone! When I get too depressed I head out into the garden. My columbine, roses and a host of other stuff is blooming. They are not letting the bastards get them down and neither should we…
@Victoria, I agree! I hope IBS stay active rather than gradually fading away if they conclude nothing can be done. It’s depressing how money-driven things have become in Washington. It’s a shame my paternal grandfather is no more, as he’d once been a Congressional lobbyist and might have been able to help!
In London, back in the 80s, lots of people wrote to the Queen, complaining about their shoddy services provided by Brixton’s local government council. Her Majesty had the letters referred to the relevant authorities, plus she wrote a letter directly to Brixton’s local authority and reprimanded them.
Heads began to roll, especially as the local councillors didn’t want to miss out on their future potential knighthoods, etc.. Needless to say, things vastly improved there. Wouldn’t happen in America. I have a lot of time for the Queen, especially as she’s above politics and genuinely wants to serve the best interests of her subjects. I appreciate that many may resent her inborne role but at least things aren’t so driven by money.
@Victoria – I agree the ACA should consider going to Bruxelles to be in the “thick of it.” I think they’d have better luck lobbying the EU with the intent to put pressure on the US while working with Congress at the same time would be a more successful strategy. People forget the EU’s economy is the same size as the US – the EU is a big economic player.
When dealing with Congress don’t tell them about your activities in Bruxelles. Odds are they probably wouldn’t even notice. Remember homelanders are soooo insular. I’m exaggerating but you get the point.
The ACA’s track record couldn’t be any worse (I think Petros mentioned the ACA was successful changing some aspect of US citizenship law years ago). So one minor victory has been obtained. Again they probably nice folks but they need to adapt. The world was a different place 40 years ago.
The lobbyists have less power in Bruxelles than in Washington.
Why do they stay in Geneva? Or does it matter if they can’t get their hands on real money to effect change in the US? I suspect they’re in Geneva because one person started the organisation and there they stay.
The ACA should change its charter to include working with EU governments as well or whoever it takes to effect change for American ex-pats. After all they’re not the US Embassy there to fly the flag. The ACA probably receives no money from the US government so why be so loyal and effectively put a ball and chain on your foot?
In fact when the ACA springs into action it’s because they oppose some aspect of US law or a US government action.
Without real money I’m afraid in the world of multi-million dollar campaigns, US politicians don’t have time to spend with the ACA unless it means a hefty cheque in the end. Remember that all Representatives and Senators are on the treadmill to raise $10,000+ every week or he risks not being re-elected and banished back into the real world. Everytime the ACA sits down with someone with that load on their shoulders they have to ask themselves how much money are these guys going to give me? Ex-pat issues are complex, don’t earn any votes, take a lot of time, and pay no money towards the next campaign. Ex-pat issues get ignored out of the US politician’s self-preservation instinct.
If the ACA has had limited success with Washington in the 70s onward when the competition of big lobbyist money was far less, what chance do they have in 2012? The lobbyist money has ruined Washington and has drowned out the voices of groups like the ACA.
Now what kind of reception would the ACA get if they went to Washington in the midst of the EU threatening to slap on a 30% reciprocity withholding tax on American banks and someone in Congress has suggested the ACA testify in front of a committee because the ACA is on the frontline and Congress wants their opinion?
I wonder.
If the ACA is so engaged with ex-pat issues why don’t they organise a friendly webinar so IBS bloggers can ask questions? I’m sure they’d be a few takers. I think that would be a great first step and perhaps get Phil Hodgen as well. He seems to be the type of chap who might do it.
@ Christophe & Just me,
I gave up hope a long time ago that anything would change for the better for ex-pats. So I expatriated.
In fact, I expect things to get even worse.
Sorry to be so doomy and gloomy, but that’s the way I see it.
I’ve had enough tonight it’s 20.15 – off to the pub!
There’s an idea? Do you think any US politician would dare do a webinar with us lot?
Christope, even the California Bar proposal is discrimination plain-and-simple. They specifically states that a US Person, residnent in Panama could not open an account in Uruguay. Umm.. why not? Last time I checked, Panama uses the US dollar, but there is no deposit insurance so if the banks fail, then the depositor loses money.
Ok, where I live my Brazilian wife and friends can open an accounts anywhere they so please, like the Channel Islands or in Uruguay, even though we are all residents of Brazil.
I don’t like being treated differently, especially for the worse, just because I was born in the US. I didn’t ask to be born there. I’m soooo ready to leave the “US club”.
How about trying to get some prime time TV exposure? Maybe a group of people who went through OVDI hell could get featured on 20 20 or another popular national show. Just Me, would you be up for that?
@Christophe.
Well, thanks for the thought, but…..
First of all, the reality TV world, or sensational programs like 20 / 20 aren’t interested in such subjects. They couldn’t sell enough commercials for the topic.
Secondly, I am not a TV type. I don’t like the U.S. commercial media, (actually, I detest it) and would not be good in that medium.
Thirdly, I am not looking for my 15 seconds of fame. I am happy to make comments in these forums, lobby where I can, attempt to get print journalism attention, and help out others who are struggling with the tough decisions. I have already let my name be public in a Reuters story, and that is about enough publicity for me. 🙂