Cross posted from RenouceUScitizenship
Last night I watched Fareed Zakria host a very interesting show:
Immigration lessons for the U.S. from around the world
Mr. Zakaria – Thank’s for a job well done! I assume the Podcast will be available soon.
A fair characterization of the “Readers Digest” version would be:
1. In certain parts of the world with declining populations, immigration is a necessity for the survival of the nation. He uses Japan as the example.
2. As important as immigration is, some countries manage immigration better than others. The countries of the EU have NOT done a good job assimilating immigrants from outside the EU into their cultures.
3. Australia and Canada are countries that need immigration and they have done a good job of managing immigration and assimilating immigrants into their cultures. (My understanding is that approximately 50% of the population of the City of Toronto was born outside of Canada. Although Toronto has its share of problems, the problems are not based on cultural diversity.)
4. The U.S. could learn a great deal from other countries. When one considers the issue of immigration it needs to be considered from both the perspective of:
A. Legal Immigration – How to proactively and intelligently bring people into the country
On this note it is important to recognize that the U.S. absolutely needs immigration. Some of the reasons are:
– the U.S. like most Western countries has a declining birth rate, an aging population and an inability to fund government services for that aging population. It needs to bring in younger people to broaden its tax base and essentially pay for a population that is aging.
– the U.S. desperately needs workers with the skills demanded by U.S. companies. Specifically those with advanced degrees in math and technology. Mr. Zakaria suggests that the shortage is approximately two million. In other words, U.S. companies cannot find the workers they need to run their companies. Should U.S. companies leave the United States in search of a better work force? Does it make sense that a “super bright” young person from India comes to MIT, earns that advanced degree, wants to remain in the U.S., and then returns to India because of an immigration policy that won’t allow them to stay? How stupid this that? Shouldn’t the U.S. automatically allow certain graduate students to have that “Green Card?”
B. Illegal Immigration – How to deal with the problem of people moving to the U.S. and living and working illegally. In fairness, Canada does not have a significant problem with illegal immigrants. Perhaps the climate is too cold. The U.S. perceives itself to have a problem with illegal immigrants. Assuming the U.S. does have a number of illegal immigrants, one might ask whether this is really a problem. New York’s Mayor Bloomberg was interviewed by Mr. Zakaria. He noted that:
– there is a very low crime rate in the community of illegal immigrants;
– illegal immigrants seem willing and able to take jobs that U.S. citizens will not;
– illegal immigrants pay taxes;
– illegal immigrants are low users of government services.
Comment: If this is how illegal immigrants behave, I am not sure why the U.S. is not encouraging more illegal immigration. Wouldn’t it be better to find a way to deport the legal immigrants who are a drain on government services?
@fareedzakaria A+ comparison of#gpsimmigration policy – Legals may be > problem than illegals renounceuscitizenship.wordpress.com/2012/06/11/far… What about #FBAR#OVDI
— U.S. Citizen Abroad (@USCitizenAbroad) June 11, 2012
Towards An Effective and Rational U.S. Immigration Policy
Good political leadership can turn a bad situation around. So, at least in theory not all is lost. How can this be done? The starting point is “Form Nation” is an extremely dysfunctional political entity. While the rest of the world is progressing, “Form Nation” creates more forms, creates more criminals (by creating more laws) and works hard at increasing the regulation of people’s lives and stripping them of their constitutional rights. Because of it’s “Nationalistic Narcissism” it can’t see the world as anything but a reflection of itself. But, enough of my rant today … Getting back to business …
North Bay, Ontario – A Profile of a “Turn Around” – Getting Different Government Departments Working Together
North Bay is a small city in Northern Ontario. It has seen its share of economic bad times. Former Ontario Premier Mike Harris hails from North Bay. In any event, a previous Mayor of North Bay had a problem. The problem was attracting business to North Bay. He recognized the frustration that businesses experienced when considering establishing themselves in North Bay – all these different government departments. Examples include: zoning, building, environmental, tax, etc. He recognized that all of these departments would have an impact on the decision to locate in North Bay. In other words, various government departments worked together to anticipate and solve potential problems. A business would know what it was “looking at” and what needed to be done.
Therefore, he did something mindlessly simple and unprecedented. He invited a prospective business to a meeting where representatives from ALL the relevant government departments would be present. All issues recognized and all questions answered at the same time.
This is a model that the U.S. could use. Of course, present at the meeting should be the IRS and Treasury to inform would be immigrants in clear terms what will happen to them if they maintain foreign bank accounts, etc. The current policy of the U.S. government is to keep all this nastiness a secret until it is too late.
The failure to include “Tax and Compliance Education” in the immigration process
It’s mindlessly simple. By allowing the IRS to come after legal immigrants for failing to report foreign bank accounts (how could anybody know of this) the U.S. is:
– giving legal immigrants every reason to leave
– potential immigrants every reason to go to Canada instead
– tarnishing the reputation of the U.S. as having a just society
This is simply not conducive to a rational immigration policy. The effects of this will be far reaching. Some may point to statistics that suggest that the U.S. is a “high demand” location for immigrants. Possibly. But, the real issue is whether the U.S. will be a “high demand” location for those math and technology types – the ones that the country so desperately needs. This group will have a choice of destination. Canada and Australia are very high demand places for immigration. They are also countries that won’t subject an immigrant to “life altering” penalties if they violate laws they didn’t know about.
@fareedzakaria – A+ analysis of #gpsimmigration Can US get good immigrants with insane taxation policies? #FBAR #OVDI isaacbrocksociety.ca/2012/06/11/far…
— U.S. Citizen Abroad (@USCitizenAbroad) June 11, 2012
The Most Costly Mistake Ever To U.S. Immigration
This one is the fault of the IRS. The fact that the IRS has allowed a single legal immigrant to enter OVDI because they didn’t know about FBAR requirements and other aspects of U.S. taxation is an embarrasment to the United States. The OVDI program (with the help of the “cross border professionals”) has caused massive and irreparable damage to the immigrant community. Not all of these immigrants will leave. Many will leave before they are subject to the “Exit Tax”. But, you can be sure that their friends and family members will look to other countries as their destination of choice. The IRS commissioner has publicly stated that OVDI is a success because approximately 30,000 people entered it and the IRS grossed approximately 3 billion dollars from this “FBAR Fundraiser“. When one evaluates success one must consider both benefits and costs. What do you think OVDI might have cost the U.S. in “good will”? I suspect that by any rational standard the IRS has orchestrated and presided over the most costly mistake in the history of U.S. immigration policy. Of course, it may be some time the real damage is apparent.
Immigrants expected the American Dream and a just society – Instead welcomed to #OVDI nightmare and #FBAR fundraiser – renounceuscitizenship.wordpress.com/2011/11/16/ovd…
— U.S. Citizen Abroad (@USCitizenAbroad) May 11, 2012
Oh, and by the way: these legal immigrants who did not know about FBARs are NOT “tax cheats”! Just hard working, honest people, trying to take care of their families, and participate in (what they thought) was the American Dream! Will they encourage others to immigrate to the U.S.? Not likely. The fear and stress of possible tax non-compliance has destroyed the lives of many immigrants. The loss to the U.S. is the gain of Canada and Australia.
Fareet hits the nail squarely on the head with this one. Our world-wide taxation, unique to the US, is rapidly becoming the single largest barrier to discourage precisely the foreign immigrants the nation needs to survive from coming here. If they transfer everything they own to the US they are probably more or less ok, but if they continue to have business interests back where they came from, they dare dead in the water and would be much better off to consider Canada or another developed country as the destination for their investments. If they should ever decide to go back to where they came from they will find that as US citizens or long-time green card holders they will have to pay such a horrendous exit tax to the IRS that it certainly is enough to discourage them from coming in the first place.
Thanks for the update on this, renounce.
May your words on Tax and Reporting compliance for immigrants resonate where it matters.
The “American Dream”? As I just commented on another thread, “A lie of omission is still a lie.”
For international viewers the show will repeat on CNN International on Saturday, June 16, at 4 am and 9pm ET
@renounce, thank you for the synopsis. An item of note though is that Mayor Bloomberg attributed the low crime rate of illegals to the fact that they are illegal and want to avoid deportation.
It would have been nice if he’d touched on the expatriations, but maybe that’s coming because there is that Time reporter (where he’s an editor) who’s doing a story on renunciations. ACA: TIME Magazine is preparing a piece on Americans considering relinquishing their citizenship, or others who have already done so, and is looking for people to interview on this question, as well as any tales of complication and woes regarding the tax regulations, FATCA and FBAR. Privacy respected if needed. If you are interested in helping with this piece please contact Vivienne Walt of Time Magazine directly at:
+ 33 6 80 88 77 92
Indeed. I imagine that very few immigrants nowadays close all of their bank accounts and relocate everything that they own to their destination countries. That sounds like a 19th century cliche – You know, boarding the boat with the single suitcase full of everything that you own, never to return to your ancestral homeland. I think that FATCA and the FBARs will especially hit the immigrants that matter the most to the US – The highly educated and well-connected. These are the people who build international contacts and companies and can bridge multiple cultures, and are also those who bring in lots of wealth. Terrible publicity once this really gets out I imagine. The only people who don’t have to worry about FATCA and the FBAR are, and I apologise for generalising, are those immigrants from poorer countries or asylum seekers – The people with nothing to lose and no assets back in their home countries.
Lastly, the report above was indeed excellent, but I wish that everyone would stop referring to ‘the EU’ as if we have some sort of universal immigration programme here in Europe – We don’t and every country has had a wildly different record with regards to integration of immigrants. Countries like the UK, Belgium, Netherlands, Sweden, Denmark, etc. have some of the most open societies in the world and have been very successful at integrating immigrants. France and Germany less so. What annoys me is that these studies referring ‘to the whole of the EU’ tend to gloss over the success stories and focus on the admittedly horrible integration of many 2nd or even 3rd generation immigrants in France or Germany or the almost entire lack of integration in some countries like Greece and Malta. I heard once that it is actually impossible to be naturalised as a Maltese citizen, for example.
Canada, Australia, the UK, etc. seem to have hit the right spot with their “points-based” immigration programmes, yet these countries also do not have to deal with the very real problem of illegal immigration on the scale that the US and southern European countries have to deal with.
One other thought – I think that countries like the US, Canada and Australia will always have a better record at integrating immigrants for the very reason that there is no such thing as an ‘ethnic’ American, Canadian or Australian. No matter how open our countries here in Europe are, you will always have some on the right who view anyone with a different last name or background as not a true citizen of country X,Y, or Z. I am not apologising for this and I think that it is horrible, but this is the reality when 80% of a country share the same ancestors, which I would argue is true for most countries in the world outside of the Americas. This issue is even worse in a country like Japan which has been so closed to foreigners for generations and has an arguably entrenched xenophobia of foreigners. I recently read an article on China that also featured quotes from a top English news personality there praising the country for “cleaning out the foreign trash”.
The US’s focus on civic values as the glue that holds the nation together is the secret to its success. I imagine that Canada’s citizenship identity is similarly built around its democratic institutions and framework. The rest of us have quite a long way to come it would seem.
It looks like more unsuspecting innocent victims just
waking into FBAR trap: http://articles.latimes.com/2012/mar/11/business/la-fi-lew-20120311
Don’t they need o file tax returns, if they live few months in the USA or make money by renting the properly? If they are, how we can inform them about this trap and help them make informed decision. How can we inform them about their obligations, so that they will be compliant and not hit by life altering penalties? I hope this is the job of IRS to educate the sales people or real-estate agents, who can educate the foreign buyers about their FBAR obligations to IRS.
@Bharat: Wow. And look who is laying the trap: “But to grease the wheels a bit further, Sens. Charles E. Schumer, a New York Democrat, and Mike Lee, a Utah Republican, have introduced legislation that would grant three-year visas to those who spend at least $500,000 in cash on at least one house. Noting the strong desire to own homes in places where the inventory of properties for sale is currently bloated, Schumer said of the measure: ‘This is a way of letting them live here and solving our housing crisis.'”
The FBAR fundraising need more victims like this Mexican: http://isaacbrocksociety.ca/2012/04/21/mark-nestmanns-story-of-a-mexican/
Accepting the Visa makes each of them automatically a US person and must file tax returns. I don’t know what to say about this kind of congress sponsored entrapment of innocent investors, without informing about certain hidden dangers and devastating consequences. Foreign investors who can invest US$500,000 likely be rich and exposing their wealth to huge penalties. I believe more than 90% of the buyers don’t know about FBAR or can’t even imagine the possibility of such sneaky law. Due to this genuine ignorance many won’t file taxes/FBAR, and shocked or devastated no differently than many US ex-pats in this forum, when eventually they learn about their obligations and innocent mistakes.
That’s absolutely disgusting that Schumer is behind the residency visa as well. He knows perfectly well the trap that he is setting. What would it take for the US to simply issue some paperwork at the time of applying for a visa or Green Card which highlights the tax implications of moving to the US? I find it outright mean-spirited the way that they have taken everyone for a ride and don’t even seem to want to bother to inform anyone about what is going on. Would the printing costs for a few pamphlets here and there really dent the trillion dollar deficit much?
How I wish Issaac Brock could become a reverse (and Schumer would say perverse) Paul Revere. I wish we could warn those rich unsuspecting investor immigrants about the IRS trap waiting for them. We need a wealthy philanthropic Brocker who can afford to pay for message boards at the arrival gates of all the US international airports to warn about the IRS trap, although I’m sure Homeland Security would immediately have the messages removed.
I know when I read about the Alberta government trying to get unsuspecting skilled American workers to come here to boost our work force I wished I could afford to pay for billboards at our border crossings to warn them about the consequences of US citizenship based taxation.
Potential US investors from overseas and potential American workers in Canada would seldom, if ever, be lucky enough to find their way to this site beforehand and thus become truly aware of what they will be getting themselves into. The US and Canadian governments will not do their due diligence and inform these potential new IRS tax slaves what lies ahead. The internet is far reaching but only those who are smart enough or lucky enough to search for the right sources of information would get a proper heads up in time to have a good rethink about how badly they want American citizenship or how badly they need that job in Canada. They might catch a TV program or read an article somewhere but if that TV program is inadequate or that article is slanted they will still be none the wiser. Sure it’s the so-called information age but you have to know what you are looking for and where to look for the right answers. I wish there was a sure fire way to reach these investors and workers because I don’t want the ranks of Brockers to swell in the future when they too learn about the treachery and the long tentacles of the IRS.
Furthermore, now I feel that even our sun-seeking Snowbirds need to be warned about the IRS trap. Most of them probably don’t even know that if they stay a minute too long in the USA they too are subject to US tax filing and all that goes with it.
@Bharat, it is actively criminal of the US to solicit immigrants and investors from other countries, and not to alert them of the potential tax and reporting liabilities so that they have the chance to arrange their affairs ahead of time, accordingly – or to choose not to come to the US at all. One would think that by now the problem is so obvious to officials in the US that it must be conscious and premeditated.
And @Eric, regarding “Schumer said of the measure: ” ‘This is a way of letting them live here and solving our housing crisis.’”” i.e. the attempts to solve the housing crisis in the US by selling to buyers from other countries, there have been several ads for sessions in Canada where the benefits of buying in Florida, Arizona, and other states have been promoted to Canadians looking for a vacation home, or a retirement home (ex. gated retirement communities). By definition, those with enough assets to buy a second home in the US, and to retire there for a portion of the year would have the 10,000. and up to be subjected to the ‘FBAR fundraiser’ (and probably the FATCA) reporting and penalty jeopardies. They would most likely have the registered savings (ex. RRSPs, RRIFs, TFSAs) that are treated so punitively by the US. We should publicize the jeopardy – and make it obvious that buying US property is extremely toxic for those living outside the US. It looks like a cheap deal right now – because the REAL costs are those imposed by the pitfalls of extra-territorial tax, reporting and penalty structures – not well known, not publicized, – deliberately it seems.
I’ve already warned a couple thinking about buying US properties about the hidden pitfalls and ever-shifting quicksand. Another retired couple decided to sell their US property not long after buying it when they found out from an accountant that they were very likely to become entrapped in the US tax and penalty quicksand if they were to live there part-time as they had planned. The intent was to be near family and enjoy their grandkids for longer visits. Now that is not possible – the potential jeopardy made that impossible. Why make ordinary life so fraught with liability in these instances? These are ordinary law-abiding people, with taxes all paid up in their country of permanent residence – who were prepared to spend some significant money in the US on a regular basis. Now that money is staying away.
Problem is that there are so many powerful vested interests in making sure these pitfalls aren’t publicized – to suck in assets from the unwary. The FBAR, 3520, FATCA and other fundraisers, plus the real estate and banking interests that just want to make those sales and solicit funds from abroad – no matter the cost to the average person.
@Em, I agree wholeheartedly about wanting to try and warn unsuspecting innocent victims of the pitfalls. What is going on is criminal – and Schumer’s quote shows ‘willful’ premeditation. If it was only limited to taxation based on earnings in the US, that would be something that immigrants coming to work or live would expect, but no-one – even most of those in the US know about the FBAR and other fundraising through willful ENTRAPMENT.
Obviously it is not ‘compliance’ that is the honest goal, because knowledgeable compliance wouldn’t generate funds on the scale that the penalty structures do. To actually promote compliance you need to provide education and a method of complying that people can actually understand and successfully follow. That is obviously and egregiously not the case here. Therefore it is NOT compliance that they value, it is revenues generated covertly through fines.
There is no logic or ethics in continuing to pretend that the person’s post-tax assets in their home country was some kind of money laundering or evasion – against all evidence. It is simply extortion thinly veiled with disingenuous assertions.
Great post @renounce;
Hoping that this will get passed on to those thinking of immigrating to the US. If we had readers who could post to sites and papers in India, and other countries with large groups of would-be immigrants to the US, we could save some people from this jeopardy.
Canada’s federal government should use this type of information to advertise why Canada is a better destination – by pointing out the irrational and unethical FBAR, FATCA and other purely ‘reporting’ form fundraising by the US. We all expect to pay taxes where we live and earn, and in Canada we get good value for our taxes. Pointing out how the US aims to indenture people into reporting and tax servitude for life WHEREVER they are, forever, – and forcibly impressing their children into servitude at birth, is a really really good argument for choosing to immigrate somewhere else if you have the choice
“While the Realtors counted buyers from more than 70 countries,
Canada accounted for nearly a fourth of all international sales,
followed by China at 9% and India, Mexico and Britain each with a 7%
share. Together, these five countries accounted for 53% of the
It might be worth it if we could publicize this to realtors in Canada (and elsewhere) – they could use the information about the jeopardies of buying in the US, to spur sales and investment in Canada (or other countries) instead. Even if we haven’t got the climate of Arizona or Florida, there are some overwhelming disadvantages to buying American and inheriting the FBAR and FATCA fundraisers. More like this ‘Lottery’ http://en.wikipedia.org/wiki/The_Lottery than winning from the OLG http://www.olg.ca/index.jsp !
“It might be worth it if we could publicize this to realtors in Canada
(and elsewhere) – they could use the information about the jeopardies
of buying in the US, to spur sales and investment in Canada (or other
Yet another good angle of attack. Come buy real estate in Canada where the tax code will not tax your patience and empty your pockets like in the USA.
I like your tag line.
Total cost for investing in the USA:
The legal costs for OVDI is you want a quality lawyer will exceed $50,000. Stay out of OVDI! Accounting costs for 8 years – depending on your level of complexity could be six figures.
It is very important that people understand this.
Some people are lucky enough to not have the money to participate in OVDI.
Also, when people are under stress: some lose weight and some gain!
Finally, if you have a spouse who is not a U.S. person, getting involved in OVDI will guarantee that the “spouse” will become a “non-spouse”.
@renounce: If an immigrant purchases a house and obtains Visa and files tax returns, but unaware of countless forms (e.g. FBAR, FATCA, RESP etc.), he can’t file amend returns. We know that the lawyers would push him in to OVDI. Most likely he must enter OVDI, because after few years he has been living in the USA and have undeclared overseas income.
The facts that you describe are NOT a reason to presume that OVDI is the best solution. There are different compliance options that can be considered. But, the smartest thing would be to just stay away from the U.S.
I like how you think but hate that it’s even necessary to be in this fight. 🙁
And here’s another article trumpeting the US as the best of all possible homes for investors and millionaires from other countries.
‘Citizenship for sale: Foreign investors flock to U.S.’
By James O’Toole @CNNMoney June 11, 2012: 5:48 AM ET ……….”Around 20 countries currently offer residency or citizenship by investment, Major said, a figure that may soon grow with economies struggling in much of the developed world. Major said he had met with five governments in the past eight months to discuss such programs.
Demand shows no sign of slowing down, either. International travel, banking
and communication have become increasingly easy, while Asia, in particular, is minting new millionaires at a rapid pace.
“At no time in human history have we ever been so mobile and has there been so great a wealth effect from China and India,” Major said.”………
Nowhere is there a discussion of taxation and FBAR reporting pitfalls as they relate to any investments and assets pre-existing, and held in original country of origin.
Canada sets to revamp its immigrant investor program by considering upping the price, requiring jobs be created, while dealing with huge backlogs.
Sounds like the US is considering ending theirs?
Apparently there’s some confusion around the US’s immigrant investor program. It’s the EB-5 pilot program which designates regional centres to operate as matchmakers between projects and investors that’s due to sunset in September.