If Congress set out right now to craft a law to sabotage the global competitiveness of the US economy, they’d have trouble coming up with one better than what they passed in 2010 in the Foreign Account Tax Compliance Act (FATCA).
The law is ostensibly aimed at combating tax evasion and requires every foreign financial institution in the world to act at their own tremendous expense as deputy US tax collectors. They must report to the IRS information about financial accounts held by US citizens. FATCA will instead turn the US into an economic pariah and Americans citizens into toxic assets.
FATCA will divert untold billions of dollars per year away from productive activities in order to pay lawyers to comply with a law optimistically expected to raise less than $800 million in tax revenues per year. The US government is also looking to saddle our own domestic banks with the same costly requirements, making a crazy and destructive law even worse.
Lawmakers imagine they can avoid making the hard choices over spending by finding an untapped pot of tax evasion gold overseas, but it’s a fantasy. In the real world, FATCA will compel institutions to flee the US market in hopes of avoiding its heavy costs and exact a heavy toll on all Americans.
Banks Turning Away Americans
FATCA threatens American competitiveness in several ways. Americans living and working overseas are reporting being turned away by local financial institutions. Americans have had their bank accounts closed and have been denied mortgages and unable to participate in pension funds simply because they are American citizens. FATCA has turned them into toxic assets.
Excellent article. I went to work abroad instead of collecting food stamps and unemployment checks. As a result, I became specialized in my field and my income tripled. While I was a US citizen, enjoyed buying American products, may have helped to introduce Beef Jerkey to Switzerland, successfully promoted US technology, defended America from hostile views and even got a mortgage to purchase a house in Florida at the peak of its housing crisis while most stateside Americans were being denied loans.
To return the favor, America made it near impossible for me to have a local bank account, pressured local banks to refuse to refinance my mortgage in Switzerland, threatened my ability to find work in the local job market and advised me that it doesn’t represent or help Americans living outside of US jurisdiction.
Thus, I found that I had no other choice than to renounce US citizenship since I don’t want to collect food stamps and unemployment checks in the states. I now no longer have any national reason or motive to purchase or promote US products or to help Americans with economic or political difficulties.
In response, the US government says that it might prohibit me from spending tourist dollars in the US and that I won’t be allowed to choose to live with my offspring in the US if they don’t renounce their US citizenship. To this, I’d say that I’m a “good riddance”, because I don’t need to live or work for a nation which doesn’t appreciate my efforts.
@Swisspinoy Good to see another web site, from the Heartland no less, (does that mean Kansas?) is reproducing Andrew Quinlan’s articles which we have posted here
Good comment, and I see you also have a response. The more places this article gets produced, the better!
From the FATCA tax perspective, I recommend reading Herman B. Bouma, 11 Reasons Why FATCA Must Be Repealed, Tax Planning International Review, Volume 40, No. 1, January 2013. “With all due respect, FATCA is sheer idiocy…”
Thanks for reminding us of that good article….
That link is …
and we have posted it here.
The Heartland Institute is a libertarian think tank whose stated mission is “to discover, develop, and promote free-market solutions to social and economic problems.” (Source: their website)
Their solution to tax evasion is to lower domestic taxes to the point that there is no advantage to moving money off shore. Some libertarians (not necessarily Heartland) support moving money to tax havens insofar as that furthers the low tax agenda.
I personally find their values and their objectives odious, however that is neither here nor their. I am glad they are opposed to FATCA. But you don’t want to hitch your star to any particular part of the political spectrum because you will then have no traction with other parts of the spectrum. Opposition from Heartland is more or less to be expected; the breakthrough will be when liberal/left thinkers take note of the unfairness of going after “US persons” living outside the US.
@Just Me, sorry for the double-post. I’ve been focusing on enhancing my news feed with more languages and subjects, while neglecting the past. But, as you say, the more that this article is published, the better. 🙂
Not a problem for the double post, as far as I am concerned. Each new post creates a tweet which spreads the message from another source, so doesn’t hurt.
Re “you don’t want to hitch your star to any particular part of the political spectrum .” Unfortunately, at least so far, there hasn’t been any on the progressive side of the equation willing to speak to the issues. I think there is some natural alignment between Libertarians and Progressives in the civil liberties side of the argument, even if they will disagree on taxes, but so far, no Progressive has found his voice, that I have seen. Have you?
I agree. I think Allison Chrisrians would qualify as a “progressive” and she has a lot to say about the effects of FATCA and citizenship based taxation on overseas American. She is not a politician, and doesn’t live there anymore, and nobody who counts seems to be paying any attention to her.
The conversation in the US right now is all about rich people and taxes, and unfortunately, they are not going to care about anything unless it affects them directly. The progressive argument has to be that we need to have taxes and prevent tax evasion, but it shouldn’t apply to genuine long term residents of other countries, who are not “bad actors” . But no American politician will make that argument because it is too complicated, and besides, no one in the US actually cares
So , while it can be tempting to hang on to the arguments that seem to be helpful to us, at least in the short term, I am not willing to support the argument that “tax is too high” even though those are the people who are making the anti FATCA argument.
Sounds like we are on the same page for the most part. Thanks for the comments.
As to influencing progressives, I have joined the Canadian Civil Liberties Association and Canadians for Tax Fairness. I mean to write to both of them.
In the case of the CCLA, I would say that I have long supported their agenda. The current issues around FATCA have served to bring them onto my radar screen. I am grateful for that work, I do not expect them to compromise other important issues for this one, keep up the good work.
As to Canadians for Tax Fairness, I can say that I totally endorse their agenda, but I also insist that tax fairness includes protecting innocent persons from a predatory and opportunistic US government.