Now that “the Bernank” has announced QE III, a.k.a. Unlimited QE (I prefer “QE Infinity”), Marc Faber says that it will destroy world. Zero Hedge estimates that the Federal Reserve’s new money base will increase to 4 trillion from 2.8 trillion (=43%) by the end of 2013–that’s because Bernanke is going to add at least 40 billion to the money base every month, with no limit, no specified target. If you are lucky enough to be in a jurisdiction that doesn’t debase its currency at the same rate, then you better renounce your US citizenship quickly: pretty soon the average home in Vancouver, Calgary or Toronto will be worth two million US dollars, while the Loonie threatens to rise to unforeseeable levels against the Greenback, unless of course Mark Carney debases Canadian currency in this race to the bottom.
A couple more items: Joel Bowman asks the question why it is that if a man rats on the US government to the people, they lock him up and throw out the key, but if he rats on the people to the government, he gets a nice cold $100 million: The Tale of Two Whistleblowers. Also, apparently the US marines protecting the US embassy in Cairo don’t have bullets in their guns, at least until they officially denied the rumour.
Finally, I think I am the first Canadian resident whose FEIE (Foreign Earned Income Exemption) has been officially denied. In the on-going saga of my 2009 taxes, I’ve tried to send the IRS four times my Form 2555, which they say that the first time, I did not fill out correctly. So I sent 2555 via e-mail around in early May. Then they sent a bill for $3294, including fines and interest. Then I called them up and the IRS form nation representative said that I just had to send properly completed Form 2555, and she gave me a fax number. I faxed that off 27 July. Then I received two identical letters on the same day that said that they had not received page 3 of the Form 2555 (which is the least important and just repeats information that was on the original tax return in the first place). We checked the fax and sure enough one of the pages must have jammed. So on August 27, 2012, I faxed page three of Form 2555, and this time, the IRS received all pages. Then on September 10, 2012, they have sent letter insisting that send them $3356 immediately. Earlier today I experienced a slight fit of rage with numerous four letter words and you can see the result below–Tertia hid under the bed.
I have to say that this bill has really upset me. This is now four times that the IRS has received my 2555 and has tacitly refused my right to the FEIE. But I suppose that there is really nothing that they can do and I’ll go back to life as usual, in my idyllic existence as a DIY investor, shorting the US dollar in favour of gold and oil, a trade that can hardly go wrong.
So this is what I think. I will not pay this. I am not going to contact the geniuses that work for the IRS again. I might, however, take my case to the Tax Advocate Service. If the US tries to have the CRA collect it, they won’t get very far because they have disallowed my FEIE. And besides, I have charitable donations and Foreign Tax Credits that I haven’t even claimed. You see, I paid my taxes in Canada in 2009. I am not a tax evader. Since I no longer an American, I will never need to renew my US passport, just in case they lower the limit for getting a passport to an amount under $50,000.
In the meantime, high inflation will eat away this bill–likely faster than the fines and interest will accrue. There are some benefits to ZIRP and QE infinity. Living in Canada it is unlikely that an armed IRS agent will come to my door, though I bet they would have live ammo in their guns if they did. “Good-willed people at the IRS” my foot. It is not a benevolent organization, except when it comes to rewarding stool pigeons.
*@Petros, that recent notice was probably merely computer-generated. I fear that you are only going to be making yourself a scapegoat if you keep goading them like this! I’d just be grateful to have the CLN if I were you and try to get through the SOLs as smoothly as possible, simply as a matter of personal survival.
I’m almost cynical enough to think that for peace of mind some people would just pay the bill just to shut them up, especially as it’s just a one-off (and not a life-altering amount). Sometimes it’s not worth keeping complete score…
If I ever decided to renounce, I would certainly be doing it very quietly. But I admire your unwavering stance even though I see lots more shades of grey. I could expect it to increasingly become a very murky process with lots of nasty twists and turns along the way…I wouldn’t expect the US would want to let go of us that easily, especially if numbers shoot up alarmingly!! They’ll almost certainly want to make it as awkward as possible, especially in the current climate. I could even see the day when they’ll start claiming that people renouncing are not in a fit frame of mind to even know what they’re doing and thus decline their renunciations, etc.
I do, however, definitely share your alarm over their decision to have indefinite quantitative easing…it will no doubt rapidly increase the rate of the dollar’s sinking. I fear your predictions could come to pass!!!
Been there, done it. Your exclusion won’t be processed until at least 6 months have passed, however the bills will.
I had the same experience with Norway, 10 telephone calls, 8 letters, and fixed after about 8 months.
I had the same experience with IRS form 1116, about 6 months, 3 letters, one phone call, still waiting.
Any of them could generate a tax lien at any time, especially if it is a business form such as 1120s.
If you had made the same mistake each year, the amount could easily go over $50,000 and then Bill Nelson will come and get your passport.
@Mark Twain, As I said, I’m an ex-American. The US can no longer hold me hostage.
If a US citizen had made the same mistake each year, the amount could easily go over $50,000 and then Bill Nelson will come and get that citizen’s US passport. Bill Nelson is even more interested in obtaining the passports of the recent citizens in his district that align themselves with Marco Rubio.
*Mark Twain, I was shocked to see that Marco Rubio responded to my PopVox letter in a single day. He never responded when I posted to him directly and his email pointed out that letters to Washington DC are delayed by one month.
Bill Nelson has not responded to anything. Connie Mack‘s Staff stated that they won’t do anything for Americans living abroad while campaigning. Yet, aren’t they supposed to be campaigning for my vote? How am I to know if Connie Mack will do anything less damaging to expats?
*monalisa1776, if stateside Americans claim or believe that I’m insane, I can live with that. Many people argue that I’m insane for still being a US citizen.
If QE does indeed become a permanent economic policy, the US Dollar will collapse. At that point, all USPA’s will be among the 1% and will be subject to capital gains taxes on those false gains as well as the top income tax rate and well into AMT. On the upside, I can’t wait for Forbes magazine to interview me on my incredibly clever investments in my government pension fund and buying an apartment. I will be labeled a “the king of the contrarians”.
@Swisspinoy, what did the response say. I did not see it in the link you provided.
*Christophe, I’m a bit hesitant in posting responses without asking for approval first, but this one might just be a standard, automated response that everyone gets:
Quick response appreciated, but Blah, blah, blah, blah, blah. Yadda, yadda. (Truly an honor; input much appreciated; welcome the opportunity to address your concerns?)
@Petros. Our only conversation we had with TAS was pleasant and helped alleviate quite a lot of the frustration we felt at the time, perhaps it will do the same for you.
TAS has recently changed some of the criteria they use in accepting cases “so that it can focus on cases “where we can add the most value.” Notably, a couple of the instances they’ll continue to accept cases are:
‘Where the IRS does not recognize a taxpayer’s unique facts or issues or its need for new guidance to address them.’
or
‘where “the taxpayer specifically requests and insists” it do so.’
http://www.journalofaccountancy.com/News/20126385.htm
I have sent letters to editor to Miami Herald, Orlando Sentinel, my university newspaper, the regional newspaper, focusing upon persecution impact upon immigrants and tying this rider to FATCA. Waiting.
Telephone calls to Rubio (Orlando, Miami, Wash, Nelson (sorry Billy boy if I lost my cool with your helpers), and district’s Congressman. Followup letters sent via email or their web method.
Rubio helpers in Florida never have time to actually pay attention to what you are saying they are just there to occupy the telephone lines. Rubio Washington was surprised my 4 previous letters had no response and promised to call or email (they didn’t). Rubio Wash often recommends to call Rubio FL offices instead. District’s Congressman-helper listened on telephone and was surprised that passport revocation was in the bill and promised to bring it to attention of Congressman—this was the only promising thing.
Bill Nelson’s office is the only one which has responded previously, with things such as “thanks for your interest in farm subsidies bill HR 2487.
Waiting for response from reporter from state’s NPR station to return from vacation and respond to my FATCA inputs. I have low expectations as to her response.
Seriously behind in my PhD homework.
*
@Zulu, your comment,…”If QE does indeed become a permanent economic policy, the US Dollar will collapse. At that point, all USPA’s will be among the 1% and will be subject to capital gains taxes on those false gains as well as the top income tax rate and well into AMT...” is completely valid! While I believe the QE will stimulate the economy for the near future, it’s the longer or even mid-term effects that this could have… I’ve concluded that its inevitable that the dollar will indeed eventually collapse (perhaps five or ten years hence) and thus push most of us into the highest tax bands and into AMT.
So while someone in the UK would be paying income tax at 20%, she’d still face double taxation because the highest US rate will by then be close to 40% (if not even higher!!). And as the personal exemption and standard deduction in the US would also be much lower compared to her personal exemptions for UK income tax, she could even wind up having to pay the upcoming Obamicare tax on any passive income over $200,000 (which may not even amount to average income locally due to the dollar’s sinking).
America has historically had lower income tax rates compared to most European countries but this would change with major devaluation, as the foreign tax credits would no longer be enough to cover the higher US income taxes, even if they appeared nominally lower on paper. Not to mention the nightmare of PFIC taxation; possible removal of the Foreign Earned Income Exclusion; or even possible removal of foreign tax credits, themselves!!! (especially if AMT became involved.)
Who’s to say what nasty new laws may be eventually passed, even retroactively??
I really hit me last night when I heard about how they’ll be printing extra money, perhaps forever!! Yikes, yikes, yikes…
Seems fiat currency will be sent to the dustbin of history very soon. It is very difficult to avoid printing money like crazy when other countries are doing it, and this includes Canada.
For US passport holders abroad, renounce/relinquish fast! The US passport is fast becoming 54 blue pages of toilet paper!
I suspect it will be more convoluted than that though somehow…after all, if the dollar plunges, then people will be able to travel and buy things very cheaply there, exports will become very cheap from there if I’m understanding it correctly…tourism would flourish?? Crazy times we live in
Am going to start buying silver and gold coins, me thinks
@monalisa1776
In theory, a plunging dollar will push exports up and attract tourism; however you risk having currency wars as other major countries will start printing like crazy (Japan, China, Canada, Eurozone) to protect their economic competitiveness. The end result is we will have a comprehensive drop in the purchasing power of fiat currency worldwide (and the economic contraction that accompanies it)
It’s quite similar to what is going on with Swiss-Euro; Swiss have to print francs like crazy to keep trading competitively with the plunging Eurozone, despite Switzerland’s pristine fiscal and economic health.
Gold and silver would be great options, however beware that governments could put controls in place which could potentially limit or outright ban private ownership of precious metals or hard assets (from the 1930s until the 1970s, it was illegal for Americans to own gold bullion without a license). These are simply strategic assets that government will always want to get their hands on because if currencies are debased everywhere, we may end up going back to a gold or other hard asset standard and these assets will be king in international trade and settling balance of payments.
If you are going to buy physical gold, buy it and store it in Switzerland. It is the most democratic and civilized government and society in the world. If gold confiscation becomes the norm in the world, the Swiss will probably be the last to do it as the people (via referendum) will have the final say on it (the Swiss Franc was the sole major currency that was freely convertible during the late 1930s and throughout the 1940s, when capital controls and trade barriers were the norm of the day).
Ok, I had to ask myself what Queen Elizabeth living forever has to do with the demise of the US and found this:
“If the nominal interest rate is at or very near zero, the central bank cannot lower it further. Such a situation, called a liquidity trap,[20] can occur, for example, during deflation or when inflation is very low.[21] In such a situation, the central bank may perform quantitative easing by purchasing a pre-determined amount of bonds or other assets from financial institutions without reference to the interest rate.[5][22] The goal of this policy is to increase the money supply rather than to decrease the interest rate, which cannot be decreased further.[23] This is often considered a “last resort” to stimulate the economy.[24][25]“
*Gulp*
From the Wikipedians at: http://en.wikipedia.org/wiki/Quantitative_easing
*I trust the Queen far more than any US politicians! I often wonder what she thinks of all this…the UK also has ptoblems though have the impression they’ll be able to pull back from the brink. Great Britain goes back so muc further, after all…it will be intriguing to see if they maintain their ‘special relationship’ or diverge. Just because they’ve been such close allies since the Second World War doesn’t mean that they always will be! England’s history goes so much further back; could be that the US will have turned out to be a failed experiment!
@monalisa1776
America and its people have been viewed as having a ‘slobbering love-affair’ (US media phrase) with the Brits. Canada has much stronger ties with Britain and although Canada is independent from Britain, the queen still considered our head of state.
America, having long ago ostracized itself from Britain still longs for its company, but like any runaway can only look longingly through the dining room window at those sharing a common(wealth) meal. For some Canadians, it’s just another boring afternoon with the relatives, lol.
“He cites the government’s recent move to raise GDP 3% by including items never calculated before and that “no other country on the planet counts.” These include such intangibles costs and royalties from books, magazines iTunes song and movies.
The Financial Times reported this strange maneuver as the “U.S. Economy’s “Hollywood Makeover.”
http://moneymorning.com/ob-article/schiff-washington.php?code=117833
@bubblebustin, when will the US start claiming the GDP of other nations based on the number of those it claims as ‘US taxable persons’? So, if there are >1million of us in Canada, then the US can not only aggressively assert a right to tax and stripsearch our Canadian sited and earned income and assets, but also the right to count our labours in Canada as part of the US GDP?
@badger
Very good point. You scare me sometimes. I’m glad you’re on our side.
@badger
I just saw this post at the WSJ:
“The US switched from GNP to GDP in 1991. Overseas taxation should have stopped at the same time. You don’t tax economic activities which don’t count as your GDP.”
Here’s a comparison of the two:
http://www.diffen.com/difference/GDP_vs_GNP