A recent poll conducted jointly by the Associated Press and GfK Custom Research finds that 53% of Homelanders are in favour of raising taxes and raising the retirement age in an attempt to save Social Security, against 35% who would prefer cutting benefits. There was a big split along partisan lines, with 65% of Democrats and 53% of independents agreeing with higher taxes, against 38% of Republicans.
GfK conducted the poll in English and Spanish in an effort to be inclusive, but of course there’s one demographic group they didn’t bother to survey: U.S. Persons abroad — this despite the fact that many are subject to FICA taxes.
Social Security is a divisive issue among U.S. Persons abroad, likely far more so than among Homelanders. Americans who worked all their lives in the U.S. and then retired abroad are both more likely to depend on Social Security (and U.S.-source dividends) for their day-to-day expenses, and also less likely to have local bank or investment accounts that might be affected by FATCA. Often, they are living in developing countries in Latin America or Southeast Asia and do not trust or understand the local banking systems. Their main concern is the ability to maintain bank accounts in the U.S. into which they can have their Social Security checks deposited, and to have U.S. brokerage accounts so they can hold and trade the U.S. stocks with which they’re most familiar.
The gap between the attitudes of the average Isaac Brock Society reader and members of this group can be quite large, as is best illustrated by this comment responding to this Slate article from last month in which Andrew Leonard accused FATCA opponents of being “Tea Partiers” and expressed disbelief that anyone outside the U.S. would have more than US$50,000 in a bank account:
Beauzeau, Saturday, Jul 28, 2012 02:13 PM GMT: I became an expat when I retired eight years ago and have never once needed a bank or financial account of any kind where I live. All my accounts remain in the USA and I use local ATMs for my cash needs and easily negotiated wire transfers for large sums.
The only American expats I know who MUST have local accounts are looking for one of two things: a. they have a criminal past in the US and are trying to hide their whereabouts and protect their funds, or b. they’re trying to cheat on their US taxes.
Big crooks, little crooks … no difference except the big ones rarely ever get caught and prosecuted.
U.S. Persons who were born abroad or emigrated at a young age for study, career, or family reasons are typically expecting to rely on their own savings and local pensions for their retirement, and many have little knowledge or attachment to Social Security. Contrary to how Homeland journalists like Andrew Leonard try to paint it, this attitude has little to do with one’s overall philosophy on taxation: naturally those who prefer lower taxes and small government will not welcome higher taxes either from the U.S. or their local government, but even those who support a higher level of taxes and a larger government are concerned first and foremost with their friends and relatives in the communities where they live and work, rather than people across the sea in a foreign country they have not known for many years.
U.S. Persons permanently resident abroad stand to suffer from, for example, the extension of U.S. FICA taxes to what the IRS calls “passive income” — including appreciation inside non-U.S. tax-free retirement savings plans (which already face onerous and expensive IRS reporting requirements) and direct social assistance payments by non-U.S. governments. Even if FICA taxes were to remain restricted to “earned income”, raising them will still have a negative effect on those who take jobs with U.S. companies, as well as the self-employed — both groups are also likely obligated to pay into local retirement systems, and could find themselves double-taxed if their country of residence does not have a “totalisation agreement” with the United States.
Worse yet, after a lifetime of making full FICA payments as well as full payments into a non-U.S. system, many U.S. Persons abroad who qualify for Social Security will receive their benefits only at a reduced rate due to the “windfall elimination” provision because they are receiving non-U.S. retirement payments as well. And of course, the Medicare portion of the FICA tax is a complete loss to them, unless they plan to hop on a plane to the United States every time they get an infection. From a public health perspective that would not be the optimal outcome, to say the least — maybe the Centers for Disease Control and Prevention should be paying me every time I decide not to make a trip back to the Homeland. (Of course, American tax professors like Hale Sheppard have argued that one of the benefits of citizenship-based taxation is that it discourages Americans from going abroad in the first place and thus prevents them from becoming vectors for spreading SARS and other exotic foreign diseases to the back to the Homeland.)
Americans who are working abroad for a few years and plan to return to the U.S. share some of the concerns of both groups. They rely on local bank accounts in order to be able to cash paychecks and pay the rent. However, they are also expecting to depend on Social Security in their old age. As a result, they see paying into local retirement systems of the countries in which they are expatriated for a few years as a hassle, rather than as a right which is worth fighting to defend. Also, this group is often shielded from the added complexity of filings abroad by their corporate expat packages, which usually include tax equalisation payments as well as paperwork assistance from KPMG, Deloitte, or some other Tax-Industrial Complex member. Finally, this group has been filing 1040s all their lives and often sees the added complexity of filings from abroad as something temporary and even understandable that they will leave behind when they return home.
Anyway, for those looking for more information, American Citizens Abroad and the Association of Americans Resident Overseas both have useful pages about Social Security and U.S. Persons abroad.
@WhoaIt’sSteve; bear in mind that Switzerland that borders on Germany and Austria did quite well during the Weimar collapse. It is very possible that money from China will be directed to Canada, benefitting the Canadian economy. Actually this is already happening to a degree. China has already greatly helped me in my personal investments which are all here in Canada. So we are getting the unwanted US dollars that the Chinese have to spend somewhere. Eventually, these benefits will increase to the point where Canadians will be visibly much better off than Americans, just as the Swiss suffered little during the Weimar collapse, whereas Germany and Austria saw utter financial destruction. Then H… came to power and then H… began to annex all of Europe and to round up certain people into camps, and the rest is history. Economic collapse in the US, which is pretty much around the corner, will come and it leaves open many different solutions, including a demagogic despotic regime that could commit mass murder. This is why it is important to govern with sound fiscal policies–and that hasn’t been done in the United States.
@bubblebustin & Petros Not being sarcastic, I’ve known that we’re
not as altruistic and the stereotypical “good” guy since college and my
first History of the US 1865 – Present, class I was a freshman and the
Professor was an awesome guy, he’d lead us in to discussions about what
the real motivations were behind our actions and foreign policy’s.
WhoaitsSteve, it’s **ALWAYS** about the money. Always has been and always will. They sugar coat everything you’re taught in school so everyone can sleep well at night. The US uses the military to protect [and expand] US commercial ($$$) interests. This hasn’t changed since 1776. Every country that ever had enough power to do the same thing did it, such as England, Japan, Portugal, Spain, and the Netherlands. To me, it’s as clear as the sunny blue sky.
Historical methods of the money trail were much more direct. One country would defeat the other country and the loser would pay dearly ($$$), usually through increased taxation and looting of its citizens. Nowadays it’s much more complex because you have commercial rights going to some companies, a large war industry in the US that milks the government, thereby US Citizens, and usually the installation of US-friendly governments, including the central banks. So we don’t know “how much” is actually being paid, and through what means. My bet is that they are told to buy US debt.
All that being said, I’m NOT for the collapse of the current system. The reason is that what we have gives the appearance that it works, or is working. If the system collapsed, a lot of people would lose everything. And even though I’m far away, without many financial ties to the US anymore, it could possibly make my life more difficult. I don’t know how, but I wouldn’t want to risk it.
@Petros I respect you, I think you have lots of talent, and knowledge, but I don’t see the system that is set up to favor the US, ending or crashing the way you do. The video is interesting, are these guys commodities speculators or what? I guess plausible in their scenario, but US consumers haven’t been shown to panic buy when trading is halted, we panic buy over stupid weather forecasts (or as I like to call them weather psychics) but most people don’t know or even care about Wall Street, and the news will talk about “the markets” for 45 seconds at the end of the hour between the third forecast and the sports segment.
Now China precipitating a dollar collapse is an interesting idea, and I could see that happening should their be some kind of major dispute, disagreement, or flap between us, but as of right now China is weakening, and their future is also dimming. I’m not sure they want to rock the boat too much and at least not if they don’t see something they can exploit and end up benefiting them. The video mentions OPEC refusing USD in favor of Euro’s, Yuan, or Gold, if anything instigates military action this would be it. Already, it’s a conspiracy theory albeit but some people believe Iraq was all about that very issue.
I can surmise ways and methods of the demise of USD, or the country, but none are as dramatic or take place in 12 hours. If there is an American decline it will take place gradually and not be publicized precisely because we have a bunch of aircraft carriers stocked with planes and missiles, and a government that doesn’t care about collateral damage.
ahh.. <again>.. I think my comment went to the SPAM queue.
@all- interesting clip and very dramtic clip. I can’t say that I buy into it at all because it is rather exremist. It reminds me a lot of what comes from extreme Right wing survivalist camp.
One thing that I do agree with though is that the exclusive reliance of the world economy on the U.S. dollar is indeed problematical. If the U.S. were smart it would be able to see just how dangerous it is to have the U.S. dollar as the world’s only reserve currency but the U.S. is too vain to acknowledge this fact since it enjoys being number one.
It only goes to show why U.S. persons need to be able to diversify their asset holdings outside of the U.S. But U.S. asset flight is what FATCA, citizenship based taxation and Sen. Schumer’s bill to prevent renounciation for tax avoidance purposes is designed to prevent.
Hi, geeez,
I just went through 46 spam items and there was not one from you among them.
@recalcitrant, The US benefits immensely by exporting its inflation to the rest of the world. That is what the trade deficit is all about. Trading partners accept US dollars for real goods. As I told my young Chinese friend, a commerce major at U of Toronto, China pretends to sell us products that work, and we pretend to give them money that’s worth something. It is a mutually beneficial exchange, that Niall Ferguson calls, “Chimerica”. But the relationship is in the process of breaking down. China could devalue the US currency in the manner of the video, overnight, by flooding the market with US treasury notes (they have about 1 trillion) and putting in a large market bid for gold with their reserve US cash. That would flood the market with about 3 trillion worth of US dollars and treasury notes, and the dollar would die in a day. They won’t do it–unless the US continues to devalue the dollar with monetary expansion; it is a QE 4+ scenario. If the US does that, China will have nothing to lose.
@WhoaIt’sSteve,
Re:
You are entitled to you own homelander perceptions of the USA. Most of us here have come to other conclusions and will never go back and will not take such superficial advice.
As geeez pointed out on another thread:
I agree 150% — As a Parent / a Guardian / or a Trustee, I am denied the right to renounce the supposed citizenship of my son who has a developmental disability and does not understand the concept of citizenship or the consequences of retaining or renouncing such. As far as I am concerned, he is a Canadian — and by the actions of the US, my son is discriminated against in many ways in comparison to any other Canadian without a US component. I have never registered him with the US and would prefer to go to HELL than do so at a Canadian US Consulate.
Perhaps you don’t have a child and cannot walk in the shoes of someone in such a scenario. Our decisions are based on much more than American exceptionalism (…it’s the best country on the Earth!) you have been raised with. I will never be taking your condescending advice. (But, thanks for hanging in here ith us.)
@all
In defence of Whoaitssteve, I believe he was being happy-facetious in this statement that we should move back to ‘the best place on earth’, right Steve?
Steve – I’m curious as to what brought you here? It’s good that you’re happy with the US because if you weren’t happy and you moved overseas, you would have to face the same problems that we do! I think it’s definitely important for people to like where they live, whereever it may be in the world.
@ bubblebustin
WhoaIt’sSteve wrote: “As for transformation, it’s more like I think that some of you, most of you aren’t bad people, and shouldn’t be punished for just trying to live your lives inexplicably 😛 outside the US. My first choice and advice will always be if you can come here, do it, it’s the best country on the Earth! But you all are good people and don’t deserve to be punished.”
It looks to me like he was being happy-facetious regarding the “inexplicably” in the first sentence, not regarding the second sentence — unless it’s a case of a misplaced happy-face. But only he can tell us. Until then I stand by my statement:
Practically everyone here at Brock has been there (USA) but you may have noticed we are not flocking back there, especially to live there. (Some, like myself, will not even visit the USA anymore.) There is no “best country on the Earth”, only one country which is constantly throwing its “exceptionalism” out there for everyone else on earth to shake their heads at.
Well sort of, the most honest thing I can say is that I love the United States, and to me it is the best place in the world, if someone asked me for my honest advice I’d say pick the US over anywhere else.
Of course that’s just my advice, and I do understand that for some people other places hold their curiosity, interest , and maybe even loyalty for whatever, any or no reason at all that is their choice. If Canada is what you like, be in Canada, Switzerland, Brazil, wherever, I can’t begrudge someone with an endeavoring spirit, who enjoys another place more than here.
I think it is wrong to punish someone for making the choice to choose to live outside the US, that’s not right at all. My comment was simply an expression of my true feelings, not meant to offend, and certainly not meant to spark an argument.
@geez I don’t remember exactly, it could have been a number of things, my sister was engaged to a British guy at the time, and was going to be moving, or that I’ve had an interest in Canada since high school, especially the Quebec situation, and when I get in Google-y moods I just start searching for random crap and end up all over the web.
@Em
I’m just guessing here, but the pro-Americanism Steve once displayed has been tempered with humour, but perhaps I wrongly assumed that it also applied to his feelings about the master nation. It bothers me that he and many others still think of us as “you all”, when citizenship based taxation hurts everyone, including him.
@WhoaIt’sSteve, and others
Consider this information and contrast the treatment of our ordinary legal post-tax accounts via the FBAR fundraiser under the Bank Secrecy Act, with the treatment of Wachovia http://gangstersinc.ning.com/profiles/blogs/mexican-drug-cartel-s-link-to-american-banks http://www.aljazeera.com/indepth/features/2012/06/201261515312418850.html and HSBC http://www.reuters.com/article/2012/05/03/us-hsbcusa-probes-idUSBRE8420FX20120503
Wachovia got to settle several times – in huge identity fraud and money laundering scandals without anyone going to jail http://en.wikipedia.org/wiki/Wachovia#cite_note-67 http://www.guardian.co.uk/world/2012/jul/21/drug-cartels-banks-hsbc-money-laundering?INTCMP=SRCH . It even benefited from a large tax benefit given to it by the IRS without the approval of Congress. http://www.bloomberg.com/news/2010-09-01/former-wachovia-chief-steel-says-fdic-s-bair-sought-to-avert-systemic-risk.html under the watchful eye of the ‘tax gap’ rhetoritician Geithner http://www.pbs.org/wgbh/pages/frontline/oral-history/financial-crisis/tags/tim-geithner/ who also sees no reason to work on the problems the IRS and US have created for those of us living outside the US trying to hold entirely legal and taxed bank individual and household accounts http://maloney.house.gov/video/rep-maloney-questions-sec-tim-geithner Even the non-US accounts of our employers, business partners, voluntary associations and local children sports teams are not exempt from the US Bank Secrecy Act, and FBAR reporting if one of us has any signatory power on the accounts – yet US banks like Wachovia – who were serial offenders get huge IRS tax breaks and continue to profit by not having to reciprocate under FATCA.
Reciprocal reporting requirements required under FATCA by domestic US banks like Wachovia, are being blocked and at the very least, delayed to some unspecified “better time for the US) economy” http://www.miamitaxlawattorney.com/2012/07/bill-could-harm-irss-efforts-to-stop-overseas-tax-evasion.shtml http://articles.orlandosentinel.com/2012-07-26/news/os-congress-bank-vote-20120726_1_irs-rule-offshore-tax-evasion-foreign-deposits
Geithner and the US have stonewalled efforts by Mexico to get assistance with massive flows of Mexican sourced money by drug cartels and those evading taxes from Mexico http://www.scribd.com/doc/55599619/REV-Carstens-Letter-to-Geithner
But, whereas “All 25 members of Florida’s U.S. House delegation — Republicans and Democrats alike — wrote President
Barack Obama to say that the proposal could cause “irreparable harm to
the U.S. economy” by scaring away foreign capital.” http://www.publicintegrity.org/2011/05/18/4638/irs-crusades-against-americans-hiding-money-offshore-latin-american-tax-cheats-flock , we have almost no representative willing to stand up for us inside the US, Democrat or Republican, other than Carolyn Maloney http://maloney.house.gov/video/rep-maloney-questions-sec-tim-geithner .
And those of us living legal lives abroad are continually labelled criminals, evaders and money launderers? And must pay thousands to annually prove that we’re not? Too bad we’re not US banks http://ctj.org/ctjinthenews/2011/11/the_street_how_wells_fargo_won_the_tax-dodging_trophy.php – then we could get the IRS, Treasury and the DOJ to give us a break http://www.publicintegrity.org/2011/05/18/4638/irs-crusades-against-americans-hiding-money-offshore-latin-american-tax-cheats-flock .
http://blogs.miaminewtimes.com/riptide/2011/04/wachovia_now_off_the_hook_for.php
Where was the real source of that storied US ‘tax gap’ again?
And we’re going to wait for the unlikely possibility of a Presidential commission being funded and struck to study our plight and maybe make some recommendations that won’t change a thing? President Carter tried to do that – and the opposition to making any real changes doomed it to failure. Non-US families have paid substantial ‘compliance’ money (sounds like ‘protection money’ doesn’t it? ) – to prove that we don’t owe the US a goddamn penny. That was money saved for a child’s university, or replacing the roof, or in case of emergency. And we didn’t get to wait for the economy to improve first.
Instead, we’re STILL waiting for that ‘commonsense’ approach to proving that we STILL don’t owe the US any tax money, and hope not to be wiped out by the application of layers of incomprehensible forms, draconian laws, and confiscatory penalties levied on our legal post-tax money registered and transparent where we actually live, work and were born – in Canada and other countries outside the US. And that is IF our returns are considered ‘simple’? I move that the definition of ‘simple’ be compared with the benefits received by Wachovia and HSBC, and other US banks. Who’ll second it?
Funny, how the US works – its methods for spreading freedom and democracy abroad are so very hard to appreciate.
@badger
What is the likelihood that a DATCA failure will derail FATCA? I thought that DATCA reciprocity was a carrot being offered to other nations by the IRS, not Congress. Is the IRS going a little rogue, and need to be stopped by legislative means? Congress could block DATCA, and leave nothing short of ‘bait and switch’ for other nations. The IRS could find themselves between a rock and a hard place, or just ram FATCA through without reciprocal agreements. I guess we’re going to see how nice they are.
Simon Black’s latest post deals with the budget deficit. He makes the point that yearly interest payments for the debt owed to China is greater than their annual military budget. This was the interesting bit:
@whoaitssteve
How do you explain my husband’s ‘choice’ to live in Canada vs the US when he was born and raised in Canada and has never lived or worked a day in the US, or Calgary 411’s developmentally disabled child who has the inability to renounce US citizenship, yet both are obligated to all the responsibilities and few of the benefits of US citizenship based taxation because of their ‘choice’ to live outside the US? This has not been a matter of choice, I assure you. Our obligations are tantamount to slavery.
@bubblebustin- In his defense I think that WhoaitsSteve has made it pretty clear that he is sympathetic to our position and believes that the U.S. is behaving unjustly.
@recalcitrant
I agree and I’m pleased, but homelanders need to differentiate between the different types of USP’s if we are to make any progress there.
@bubblebustin, re DATCA carrot for participation in FATCA… Just Me might speak to that better, as he coined the ‘DATCA’ term, and followed its progression. Seems that in the case of Mexico, reciprocal data exchange is something Mexico has really wanted since before FATCA passed, and banks in US don’t want to give up the info on their drug cartel and money laundering clients because they profit from the deposits. Since Mexico has the largest # of US persons/citizens/duals, you’d think that would be a US priority – plus it fits into the ‘war on drugs’. So how to explain why the US dragged its feet on giving up the info? See my other posts on the US banks and Mexico, Wachovia scandals, IRS bailout and *tax breaks issued for Wachovia (*NOT endorsed by Congress – so IRS can and does make significant decisions for leniency on its own – except for expats!).
It’s good to see that all Americans do NOT suffer from exceptionalismitis and particularly good to see a young mind venturing into the arena of reality …
http://studentsforliberty.org/blog/america-is-not-the-greatest-country-in-the-world/
@Em
By contrast, there’s people with minds like this roaming the American landscape:
http://www.complex.com/city-guide/2012/09/florida-man-loves-fox-news-a-little-too-much-for-comfort