Just noticed this article published last week by the Jamaica Gleaner:
Gov’t moving to reach FATCA agreement
A couple of interesting points:
“A senior manager with Ernst & Young quoted a price tag of US$30 million for each local financial institution to implement the requirements of FATCA.”
and
“The US, the law [sic] is expected to affect about 614 firms in Jamaica when it comes into effect. Those institutions include insurance companies, licensed securities dealers and collective investment schemes such as unit trusts and mutual funds.”
The Gleaner’s numbers ($30 million x 614 firms) seem to suggest that the implementation costs for FATCA compliance in Jamaica could reach as much as 18.42 billion dollars. Using a 2011 population estimate of 2,889,187 means that every man, woman and child in Jamaica can theoretically expect to pony-up $6375 to pay for the FATCA Follies in their little corner of paradise where the per-capita GDP in 2011 was $9100. Anyone care to check my math?
Especially for poorer nations, there can be little doubt that a FATCA IGA amounts to nothing less than a suicide pact.
So much for the U.S.’s heavily publicized generosity towards poorer countries. This is foreign aid in reverse big time. The poor Caribean countries paying to help the U.S. track U.S. citizens. Makes a lot of moral sense.
*FATCA will bankrupt Jamaica. According to a very detailed study of the Major Economies of Latin America and thje Caribbean published in today’s Miami Herald, Jamaica’s economy is already in such serious trouble that it can’t possibly survive an expenditure like this to to be able to accept subservience to the exraterritorial tax laws enacted by the Congress of the United State What’s in it for Jamaica? Zulch. Zero. Nothing. Nada.
http://www.miamiherald.com/2013/02/03/3215384/bright-spots-in-latin-america.html.
Last year Jamaica’s GDP shrank by 0.2%, placing it in in next to last place among the 26 countries included in this report. Onlyh Paraguay did porrer with a GDP shrinkage of 1.8%. By comparison the GDP growth in Panama, Chile and “basket case” Venezuela was 10.5%, 5.5% and 5.3%, respectively. Hard hit by Hurrican Sandy, Jamaica’s economy is forecast in the report to grow bvy a tepid 0.1% this year, and that is super optomistic. Jamaica is not a country where foreigners hide thier wealth but a country from which Jamaicans try to protect their savings by taking them out of the country. Why Jamaca is so anxious to embrace FATCA, when it has a $8.4 billion foreign debt already, which is almost as high as Cuba’s stifling $8.9 billion debt, makes one wonder. If it spends $18.2 billion for this purpose it presumably will also have to borrow from abroad to obtain FATCA comliance certification from the IRS. That certification, together with about US$1.00, will just about pay for a cup of coffee. Bu the way, mountain-grown coffee in Jamaica is among the best in the world.
Jaamaica’s imports of $5.6 billion were al most 6 times greater than its $1.8 billion in exports last year.
@ Deckard 1138
I think your math is correct. The Gleaner’s Take-Jamaicans-To-The-Cleaners number is simply mind boggling. Perhaps the poor native Jamaicans should consider throwing American expats right off their island paradise and confiscating the bank accounts of all US homelanders who exploited their generosity of having previously been a “tax haven”.
It’s not just America’s citizenship-based taxation of its expats that’s immoral, is it? This is why the ordinary citizens of ALL countries need to fight this and not let the world’s financial institutions, in a desperate bid to save their own skins, lobby their host governments to capitulate to U.S. demands that will only hasten the destruction of an already-teetering global economy. The expression “rats leaving a sinking ship” was never more apt.
The world must begin to collectively wean itself from the American economy – a huge challenge for many, to be sure (for example, the TD Bank’s ludicrous 1300 U.S. branches), but it simply must be done. The Greenback will eventually no longer be the world’s reference currency, American T-Bills and bonds will soon be worthless, and a fully-depressed American economy will offer little incentive for foreign investment. The world can survive without the U.S. and ultimately, out of self-preservation, it must.
The U.S. is digging a gigantic grave for itself and it shouldn’t be trying to drag every other nation into it. The only thing more unconscionable is those countries which willingly jump-in of their own accord.
*It appears, by going on-line and reading what the Gleaner is saying about this, is that that there are probably few Jamacians resident in the US who do not have joint accounts in Jamaica with family members still living in Jamaca. Like in many countries joint accounts, rather than wills, are the means whereby parents, for example, pass on their assets to their children when they die. It is highly probable in my opinion that very few of a very many Jamacians living in the US are reporting and paying US taxes on their joint accounts in Jamaica, capital gains when property in Jamaica is sold or US inheritance taxes when an aged parent dies with which they have joint title to their home or to a bank account in Jamaica.
Jamaca is a poor country by any measure, so this brings into focus an aspect of US citizenship-based taxation and FATCA which has received little attention: The rape and pillaging of the economies of such countries that will result from the IRS claiming its “share” of the spoils because a Jamaican resident in the US has his name on a joint account with an aged parent in Jamaica..
Jamaica has a severe shortage of hard currency with which to meet its foreign obligations, including being abe to cover its large trade deficit. Taking dollars out of Jamaica to pay US taxes on money earned in Jamaica by Jamaicans who happen to have a son or a daugher with their name on a joint account or a property deed is pillaging the economy of that nation just as much is if troops and tanks were sent in to tak it over in the name of the United States of America.
*@EM, probably 99% of the persons with US citizenship in Jamaca are Jamaicans who have dual US citizenship.There are are virtually no “US-only” citizens living in Jamaca. Jamaica is an extemely dangerous country, except for places like Montego and a few other nearby places on the beautiful north coast, where there are beach resorts that cater to foreign tourists. I used to travel there often on business and was in fact stuck there for 5 days, in the capitol city of Kingston when 9/11 occuurred and all foreign flights in and out of the US were banned for sereral day. My traveling companion suggested to the local telephone company official we were visiting that, with time on our hands, perhaps we could rent an automobile and drive over to the north coast for a day. He wwas absolutely adamant in advising us not to do it, because we would be taking our life into our own hands. It was far too risky, he told us. So we waited it out in the hotel and took the first flight to Miami when flights were resumed 5 days later.
Yet the US has been among the first and the loudest to criticize the exploitation of weak underveloped nations by dominating and powerful foreign powers, but I can think of no greater demonstration of this exploitation than to demand that taxes (perhaps it would be better to call it tribute) be paid to the United States on the income of persons who happen to be accidental dual US citizens in those countries, or whose relatives living in the US happen to have joint accounts and joint title to property that belongs to their aging parents in those countries who have never even been in the US in their whole lives.
@Deckard1138
Living abroad for more years that I had previously lived in my homeland, albeit having moved just north of the border, has given me a vantage point that I doubt I would have gained had I remained “within the US borders”. Every day I am deeply grateful for the events in life that lead me to this place.
This northern vantage point affords me the opportunity to stand separate enough from my origins to feel an overwhelming sense of sadness and shame for what my homeland is foisting on the poor of this world and on even those with global wealth. This is not the first time that I wanted to distance myself from my roots as the US has looked after it’s own interests at the expense of others. Today, in response to the above post I began to feel how that this is so exceedingly more than just about “us” and our loved ones. Many of you have arrived at this place long before today, perhaps many months ago. But, today is my day of being truly awakened to the damage that FATCA will unleash on the poorest of the poor. And, I care….it matters not just for the expats but for the others. I am being shaken out of my own ego-centric thinking and my shame for my nation of origin has seldom been deeper.
@Roger Conklin: very important point re; “Jamaca is a poor country by any measure, so this brings into focus an
aspect of US citizenship-based taxation and FATCA which has received
little attention: The rape and pillaging of the economies of such
countries that will result from the IRS claiming its “share” of the
spoils because a Jamaican resident in the US has his name on a joint
account with an aged parent in Jamaica.. “
This is all about the US greedily and arrogantly trying to grab all the assets for itself – regardless of what that does to poorer countries, dual citizens outside the US, and entirely legal assets. It is not about any tax ‘fairness’ or ‘tax justice’. It is about securing more advantages for the US – no matter how.
How does the CBA feel about the fact that even with an IGA, they’ll have a burden that US banks will not. Their collusion will not level the playing field.
*
@ Roger Conklin
Thank you for that personal insight into Jamaica. I will admit that my only awareness of Jamaica as anything other than just another vacation spot I’d never see came during the ’88 Olympics when I fell in love with the Jamaican bobsled team.
*@Em, I personally know many Jamacians who live here in Miami. Manyh of them attend the same church that I attend and I count them among my closest friends. TYhey hod responisble positoins as deacons Sunday School teachers, etc. Every week my wife, who has Alzheimer’s receives a telephone call from a lovely Jamacian lady in her late 80s, a shut-in herself, who faithfull calls her to cheer her up. And another Jamaican lady regularly helps me part time in taking care of my wife.
But Jamaican society, like many others, has undergone many changes for the worse. Drug and criminal violence are chronic probems now whereas they were unheard of 30 years ago.
Jamaca was never was a tax haven. In fact it was just the opposite. Thirty years ago it had among the tightest and strictest foreign exchange controls of any country in the world. You had to count and declare all of the foreign currency you were carrying in as a visitor to Jamaica and when you departed you had to present receipts for all of the foreign currency you had exchanged for Jamaican currency while there, and you absoolutely were not not permitted to leave the country with more foreign currency, less what you had olegally changed in Jamaica. Exchanging currency at other than banks or authorized hotels was illegal. If you attempted to carry out more foreign currency than you had declared when you arrived, you would be arresrted, tried and found guilty and given a stiff fine and time in prision as well. And it did happen to foreign visitors who agreed to carry out black market dollars as a favor for someone they met in Jamaica.
But those controls were eliminated some years back..
@ Roger Conklin
I rather suspected Jamaica was not a tax haven which was why I used the quotation marks. It just seems like the FATCA FATWA is all about assuming that anything outside the US borders is a tax haven, whether true or not. I love what my perception of the Jamaican spirit is and wish I was as fortunate as you to know Jamaicans. They sound like a joyful and caring people as a whole and I suspect whatever darkness has spread over their homeland came to them from overseas.
Perhaps Jamaica could implement a FATCA that meets their budget. THe lower level persons in the bank could write up all of the customers they know are US persons, according to their memory. They could take all the papers home with them at night, and ask their neighbors and work on the papers in their home.
THey could take those papers around with them in the neighborhood and write down how much money each one of those persons have. THey could get help from their friends and family, who could copy those papers and go around with them and talk about those numbers with other people.
THen, when the lists become wide enough, they can be used to determine which US person is the easiest and most profitable to rob.
This is truly depressing. But a very good insight Deckard. In addition to all the grief it will cause, I still fail to see how the US intends to collect from anyone abroad. So what is the bloody point?
I am reading the not-so-current book “The Post-American World” by Fareed Zakaria. Almost every paragraph brings to mind some aspect of the effects of FATCA, exceptionalism, etc. It is interesting that he does not view the “rise of the rest” as threatening or unnatural, which I am sure few Americans could even begin to imagine. But as Therapist604 says, this sort of ignorance, of the damage their policies cause, is a real cause for shame. Oddly enough, even though renounced, I still feel that guilt. Maybe one can never totally stop being an “American.”
*I can tell you right now that if the Gleaner’s figures are correct then Jamaica is dead as a country. There is no way that Jamaica can pay the level of cost that the math says that it will need to. The argument comes down to one of degree; I suspect that the figures are mistaken BUT the point of the additional burden being unaffordable by the Jamaican people is absolutely correct.
The other point made that Many Jamaican’s have joint savings accounts, joint investments in Government Bonds, joint investments in all classes of assets so as to aid their poorer family (in the broadest sense since in many cases “your daddy ain’t your daddy but your daddy dont know” and like at a recent funeral I attended there was the first wife and children, the second wife was deceased but her children were present and the girl friend and her children were also present and participated in the service) – many of these accounts facilitate remittances from overseas family to support their poor relatives and friends.
The Gleaner and the Jamaica Observer however do NOT seem to understand that FATCA will be bad for Jamaica and bad for the USA – too many people, in love with Obama’s skin color, buy into the Democrat propaganda about “tax cheats” and vomit it endlessly whenever the topic can be inserted into conversation.
I suppose that on another level, the local Democratic Socialists like the concept of Government having full information on ALL financial transactions and balances so as to better empower themselves to hinder capital flight to the US (mainly), Canada, Britain and to a lesser extent other countries as happened in the 1970s when it was made illegal for a Jamaica resident to own currency other than Jamaican dollars and when it was made illegal to travel abroad with more than US$50.00 per year (yes- that is Fifty dollars per YEAR). Of course, when the foreign currencies became illegal most Jamaicans then sought to acquire same and to hoard or export said currency in every manner imaginable – the major laundry for said cash was the US of A.
@nervousinvestor: The 30% withholding on US payments for recalcitrants under FATCA is nothing more that a currency control and will backfire as it did in Jamaica, and I think the UK as well.
*When my job responsibilities changed and I was first responsible for the account of the telephone company in Jamaica, one of my first tasks was to try to collect several hundred thousand dollars owed to us. My company had been doing business on an open accout net 30 days payment basis when foeign exchange controls were established. From that point on we sold on the basis of an irrevocable and confirmed letter of credit where the US dollar payment was in effect allocated before the goods were shipped. But the prrior outstanding balance took almost 2 years to finally collect because dollars were scarce and extremely hard to obtain to pay old debts. The phone company management spent many hours at the Central Bank ever week trying to obtain dollars to pay us.
When I would visit Jamaica I would take my customer out to lunch. He requested that I allow him to pay in Jamaican currency and asked that I deposit the equivalent amount in a bank account he had in Miami. He had a son in college in the US so this was one of the devices he used to be able to help pay for his education. His monthy bank statements used our Miami office as his address. Once I carried an accumulation of these statements to him when I traveled to Jamaca and gave them to him when I entered his office. He immediately closed the door and quickly lit a match and burned them in his ashtray, begging me to never bring them to him again. Customs inspected the luggage of persons arriving at the airport and had these been discovered he would go to prison because residents of Jamaica were forbidden to have bank accounts or to own assets outside of Jamaica. After that we just accumulated his bank statements as they arrived at our office.
So fragile was that economic situation in Jamaica that every dollar coming in was needed to pay for the nations requirements for imported foodstuff and fuel. Jamaicans traveling abroad could only obtain US$50 once per year from the bank and everyone,Jamaicans and foreigners alike, was thorougly searched in Airport security when departing – even to the point of removing casts to confirm that no dollars were being smuggled out inside of the cast. Women wearing wigs had them removed to check Can you imagine how a US citizen in Jamaica could pay US taxes in US dollars on his Jamaican income? They had to decide which country’s prison system they would be most likely to survive.. And so it is in Venezuela and Argentina today where similar foreign exchage controls are in place.
*@Roger Conklin
Your account of traveling to and doing business in Jamaica is absolutely accurate. Many devices were invented for transferring value around the world in the 1970s – to anywhere outside the purview of the financial police (the Financial Intelligence Unit – “FIU”). Just as from locations once behind the Iron Curtain and those subject to Central American or South American dictatorships (of both sides of the political spectrum) or elsewhere – people have sought to preserve their families with whatever little funds they could organize outside their countries of residence – much of this is now considered “money laundering” a US invented crime and so on – yet they are nothing more than acts of self preservation and for the preservation of people’s families. In Jamaica, should the police find a person in possession of large amounts of cash (by Jamaican standards – not US standards) that cash is likely to be (inappropriately) seized and then only a few skilled lawyers are out there able to successfully fight to recover the funds (or at least some of it) from the police. Of course, in the meantime, poor people are not allowed bank accounts if they do not have an employment letter testifying to their gainful employment and proof of their address like a utility bill (an impossibility for most people who live in small wooden shacks erected often on “captured” land or informally “renting” a bed space in someone else’s wooden shack). Net result is that that person has no choice but to save his or her “proceeds of hustling” in raw cash – which of course makes them a target of both the criminal elements and also of the police. The extra territorial imposition of these banking and financial laws on a culture very different to that of North America and Europe is serious oppression. All in a misguided attempt (at least publicly) to control some alleged crime; in the case of drug smuggling – then go deal with the consumers in N America and Europe – don’t oppress the small people elsewhere struggling to make a living – in terms of so called “money laundering” then go deal with the source of the “dirty” money in N America and Europe – and in terms of “tax evasion” then catch the tax cheats at their source in N America and Europe where they live (or stop taxing them so heavily that they have an incentive to hide).
and then along comes FATCA to make matters even worse …. so now the poor person with a family member overseas who opens an account for them in their joint names so funds can be transferred in from “foreign” and then drawn out locally by the poor relation …. even they are now to be oppressed. These so called “Remittances – whether done in the described manner or through Money Transfer companies like Western Union – are now Jamaica’s largest source of hard currency – exceeding Tourism , Bauxite, Farming and Manufacturing. Jamaica is said to have a diaspora as large as or larger than the Island’s official population.
As one leading Jamaican politician famously said a decade or more ago “If you play by the rules, you get shafted”.
*@ Jefferson Thomas – yes indeed that 30% withholding may well become a currency control mechanism – and it may well cause people outside the US to find a bank somewhere that does NO business with the US and move their business there – that bank may end up in the future being a Chinese or other Asian bank if the west caves in to the FATCA foolishness. The end result will be that Wall Street will no longer receive the flow of savings dollars from around the world ….. this would be good business for Canada to position itself to receive … but to do that Canada must stand firm against FATCA.
*@nervousinvestor, The Jamaican diaspora is large indeed. One of the eldery Jamaican members of our church was recently killed in a tragic acciddent where a youth driving a All Terrain Vehicle – ATV, failed to stop at a stop sign and slammed into the side of the elderly gentlemans truck with such force that it was propelled sidways across the street into a utility pole. Both the elderly gentleman and the youth died instantly. The funeral was delayed for 10 days so that relatives and friends from Jamaica, Canada, the UK and elsewhere could obtain emerlgency visas from their resppective US consulates to travel to Miami for the funeral. They church was overflowing with many who had traveled from abroad. There are large Jamaican communities in London, Toronto and elswhere in British Commonwealth countries, as well as in the US. Their remittances from abroad are indenspensable to the economic survival of that country.
I well recall in the 1970s after these exchange controls were instituted that the Jamaican Prime Minister, who was by the way an admirer of Fidel Castro, publicaly stated “If you don’t like it there are six daily flights to Miami!” Behind the Cubana de Aviacion counter at the Kingston Airport there was a giant photograph of Michael Manley and Fidel Castro, with broad smiles on their faces, embracing each other.
The Cuban Embassy in Havana was the second largest foreign embassy in that city back in the 1970s, and there were several daily flights to Havana. There was and still is a large Jamaican community in Cuba that dates back to well before the Castro Revoloution, when Jamaican workers immigrated to Cuba to work in the Cane fields, and settled there. There is also a large Jamaican diaspora in Panama and Nicaragua. One of our Jamaican friends here in Miami was born in Cuba and another in Panama, so having beome US citizens they now hold citizenship in 3 countries.
@Roger
These are fascinating and insightful stories, Roger – thanks for sharing them with us. I had no idea that you were so connected to Jamaica and had such a wealth of experience in that country. You have provided vivid and heart-breaking context to my original post.
Deckard — thanks for your post and your figures on what it would cost each Jamaican for FATCA implementation in their country. Thanks, Roger, for your excellent, personal stories of Jamaicans in your life, highlighting the incredulity and immorality of FATCA for poor countries. I’ve appareciate what I’ve learned from this thread. It should be an example of further injustice that we can use in this fight.
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