Liberty and justice for all United States persons abroad

The Isaac Brock Society

Posted on by Posted in Issues regarding US persons abroad 23 Comments

 

As you know Finance Minister Flaherty will be delivering his budget on March 21, 2013. The above are part of a series of articles in the last few days identifying the need to curb “offshore tax evasion.” As you also know, Canada has NOT entered into a FATCA IGA with the United States. If Canada is going to ink a FATCA IGA it is important that it be done before the public wakes up. If Canada signs an IGA, Prime Minister Harper will be remembered in Canadian History as the Prime Minister who -approximately 200 years after the war of 1812 – turned Canada over to the United States on a silver platter. Canada is one of the few countries that can end this “FATCA IGA” nonsense once and for all. As Jim Jatras said at the FATCA Forum in Toronto: “If the U.S. can’t even get Canada to sign on …” Opposition to FATCA in general and a FATCA IGA in particular is gaining momentum. This week the letter from Peter Hogg to the Department of Finance was published, giving clear reasons why a FATCA IGA is unconstitutional. Both the Green Party of Canada and the Progressive Canadian Party of Canada have voiced their opposition to FATCA in general and a FATCA IGA in particular. Jim Jatras of RepealFATCA.com continues his relentness opposition to FATCA likening FATCA to a “financial drone strike”.

 

Why would the Government of Canada even consider a FATCA IGA? What’s in it for them? For that matter, what’s in it for any country? The answer is nothing. But, for the Canadian banks there is a great deal of benefit to a FATCA IGA.

Why the Canadian banks benefit from a FATCA IGA

1. Under a FATCA IGA all of the Canadian banks would be forced to comply with FATCA. This means that the banks don’t have to worry about some “hold out” which would then draw attention to this injustice and compete against them on the basis of being a “FATCA Free Bank”. For example, TD has a massive US presence and clearly wants to protect its business interests in the US. They would not like another bank claiming to be “FATCA Free”.

2. With a FATCA IGA, the banks would be able pass the buck to the Government and say that The Government of Canada was forcing them to turn over information to the Canada Revenue Agency who would then turn the information over to the IRS. I bet that they wouldn’t even use IRS forms, but would use some “made in Canada” form. I suspect that the banks costs would be lower under a FATCA IGA.

In other words, a FATCA IGA would ensure that each and every Canadian bank would be owned “lock, stock and barrel” by the IRS. Obviously this would be the end of Canada as a sovereign nation.

“He who has the gold makes the rules”.

Furthermore, through the identification of U.S. persons to the IRS, the door would be open to the IRS to loot the Canadian economy. By expanding the definition of “US person” the United States will be able to exercise control over other nations. Just think of how many Canadians invest in mutual funds (“PFICs under US tax law – theft by any other name) and will be subjected to massive fines for attempting to save for retirement. At a bare minimum, one million Canadians would be disabled from effective retirement planning. A FATCA IGA would violate the rights of approximately one million Canadians.

Question: Who would have to pick up the tab?

Answer: The Government of Canada.

FATCA Can Succeed Only Through FATCA IGAs

Common sense dictates, and  Jim Jatras has explained that the only way FATCA can succeed  is through FATCA IGAs. A FATCA IGA downloads “FATCA Enforcement” to the Governments of Canada and the rest of the world. Therefore, a FATCA IGA will have the effect of making the Government of Canada (and others) IRS deputies in U.S. tax enforcement (at their own expense).

So far there are only approximately 5 IGAs but …

 

You would think that that this demonstrates that countries will NOT sign on.  You would think. Canada is the single most important country. If the United States cannot get Canada to surrender its sovereignty to the IRS, what hope is there? But, if the United States does get Canada this will accelerate momentum toward FATCA IGAs. Canada is NOT used to playing such a pivotal role on the world stage. But, the future of the world may be largely in the hands of the Canadian Government. What is NOT clear is whether they realize it.

On a side note, we will see what kind of leader Mr. Harper really is. Leadership includes the ability to make the “hard decisions”. Does he have the courage? Is he he up to the task? Is Canada a country that is to be run for the benefit of the corporations or for the people? Is Canada a country where Canadian citizenship means equal citizenship?

Canada wants the Keystone Pipeline Deal

The desire of Canada for the Keystone Pipeline deal means that the U.S. has something that Canada clearly wants. In the same way that a FATCA IGA benefits the Canadian banks, the Keystone Pipeline benefits Corporate Canada. Therefore, I could imagine a grand bargain where where Corporate Canada gets the Keystone Pipeline deal and a FATCA IGA. Of course the U.S. gets the single most important FATCA IGA that it can get. The losers – the people of Canada.

Funny, I haven’t heard much opposition to any of this from the NDP or the Council of Canadians. Of course they only pretend to be the conscience of the country.

Pay close attention on March 21

I predict that if a FATCA IGA is going to happen, we will see the seeds in some kind of announcement in the budget. This may include the importance of cooperation with the United States and the UK (the first member of the coalition of the willing) to combat offshore tax evasion. Of course an agreement with the United States (our most important trading partner) to do this is important!

What you must do

Get the comments and blog posts ready to go immediately!  I hope I am wrong, but I see these articles as conveniently timed to sell a FATCA IGA to the people of Canada. After all, who could oppose attempts to curtail what Flaherty once called “legitimate tax evasion“. Oh well, that was then and this is now.

 

 

23 thoughts on “Listen carefully to March 21/13 Canada Budget for Support for #FATCA IGA”

  1. I think all this talk about the cracking down on tax cheats is not an accident. Clearly it is meant to rile the public enough to make them initially okay with a FATCA IGA – should that happen. But aren’t the TIEA’s more like tax treaties? We recognize and share this and you recognize and share that in accordance with our respective laws as opposed to running over laws?

    There is a world wide crack down by the various broke and debtor governments in a effort to avoid having to ask their populations to actually have to man up and sacrifice as a whole.

    Cypress, in a stunning move that can only be worlds of bad for everyone in the long run, laid a “tax” on saving accounts this last week and just stole like 6% out of accounts with less than 100,000 euros and 9% from accounts higher than that.

    This is money that has already been taxed! Just hovered up to prop their banking system. How long before other countries try this at home, kids?

    I was reading an expat forum recently (research) and stumbled on an exchange between UK expats in Spain discussing the Spanish govts 2012 move to have all residents report their off shore assets. Just info gathering (never a good thing) b/c they were only applying tax to income earned from assets (rents, interest, etc) but it was new for them.

    We are entering an age, as others here have pointed out, of govts coming up with any and every way to discover what kind of wealth their residents possess, where it is and figure out how to get a hold of us much of it as they can without provoking backlash.

    Brave New World and welcome to it.

  2. Ouch, spelling error “Cyprus”. There were many links on Zero Hedge in case anyone wants to read more about that.

  3. I agree with a lot of what you said. I would though be prepared for absolutely NOTHING of relevance related to a FATCA IGA in the budget. As I general rule I have been pretty successful in betting that any news on the FATCA IGA front will come later rather than sooner.

    Canada continuing to sign TIEAs(as was done with Panama over the weekend) and regular tax treaties is of no relevance to FATCA. In fact there is a case to be made that Canada in its own self interest should be continuing to negotiate treaties and TIEA’s with countries other than the US. I also not with interest that Diane Ablonczy(born in Peoria IL) was travelling with Flaherty to Panama this weekend.

  4. Canada Partners With Panama to Fight International Tax Evasion

    The Honourable Diane Ablonczy, Minister of State of Foreign Affairs (Americas and Consular Affairs), on behalf of the Honourable Jim Flaherty, Minister of Finance, was in Panama today where she announced that Canada has signed a tax information exchange agreement (TIEA) with the Central American country.

    “As part of Canada’s foreign policy priority of deepening engagement in the Americas, our Government is committed to cooperating with our neighbours toward our common interests,” said Minister Ablonczy. “This agreement will help us to build a more transparent, rules-based environment with one of Canada’s key trading partners in Central America.”

    The agreement sets out the legal framework to enable tax authorities in both countries to exchange information relevant to the administration and enforcement of their respective domestic tax laws.

    “This agreement supports our fight against international tax evasion,” said Minister Flaherty. “Our Government remains committed to continuing to implement the international standard for the effective exchange of tax information.”

    The standard, developed by the Organisation for Economic Co-operation and Development (OECD), promotes transparency and fights international tax evasion through the effective exchange of information.

    In support of this standard, the Harper Government introduced incentives in Budget 2007 to have non-tax treaty jurisdictions enter into TIEAs with Canada. It also required that all new treaties and revisions to existing treaties include the OECD standard.

    Canada has so far brought into force TIEAs with 16 jurisdictions and concluded or updated several tax treaties that include the OECD standard. It is also negotiating TIEAs with several other jurisdictions. More information on these negotiations can be found on the Department of Finance website.

    http://www.fin.gc.ca/n13/13-037-eng.asp

    I will also add the NDP has been pestering Flaherty for quite some time to finish up this agreement with Panama so from Flaherty’s perspective it gets the NDP off his back.

  5. Doesn’t it seem suspicious that this article manages to avoid mentioning the US (except once – re the ‘tax gap’, much less the well publicized US war against banks in Switzerland, and of course, – FATCA?

    I don’t see how one can mention this topic and not mention the US attempts via FATCA.

    Deliberate?

    Of course, in this article, it would make FATCA as applied to the > 1,000,000. Canadians deemed ‘US taxable persons’ look entirely ridiculous if after mentioning ‘offshore’ tax havens and secret banking, and ‘tax gaps’ – and then having to explain to Canadian readers that the US is forcing Canadian citizens and permanent residents living right here inside Canada to report their local, legal, post-tax, CRA registered Canadian accounts to the IRS – as if they were ‘hiding’ money in Canada where they happen to live – as if it was the Caymans.

    The article would have to explain how the US ‘tax gap’ can possibly be the responsibility of Canadian citizens and permanent residents who have already paid one full set of taxes to Canada.

    If this happens, I think I might have to gird my loins and take to the streets waving facsimiles of my paid in full Canada Revenue Agency final assessment notices!

  6. As a follow-up to a’s comment about the so-called “one time” wealth tax in Cyprus here’s an article about it in Investment Watch …
    http://investmentwatchblog.com/after-the-banksters-steal-money-from-bank-accounts-in-cyprus-they-will-start-doing-it-everywhere/
    I can see why the USA is so darn obsessed by how much do you have, where are you keeping it and what’s the account number … makes it oh so much easier to steal like in Cyprus. Question is, would the Canadian government refuse to allow the theft to take place or would it take a cut and say have at it boys?

  7. @Em, exactly what I was thinking when I read the article about Cyprus. About the US and FATCA and FBARs. I thought of FATCA and FBARs and how greedy and arrogant the US is. FATCA and FBARs don’t directly relate to assessing taxable income, or to determining taxable interest on the accounts.

    Given the insanity of the US treatment of anyone who lives outside the US, I can totally imagine a scenario where the US decides that in order to tackle the deficit, all expats should pay a ‘onetime’ fee levied on their accounts – just like Cyprus.

  8. There has been an uptick in Swedish TV discussion also. There was some BS about how much Money had been coming back to Swedish banks this year due to their increased diligence regarding bank account reporting.
    Also the finance department had an interview with Dagens Industri where they mentioned all of the information they were going to get from USA in their coming agreement.

  9. I see the G8 is meeting in Northern Ireland in June. I had always wondered why there was so much mass hatred for those meetings, and why all the rioting. I guess now I understand why.

  11. Reading the articles on the Cyprus 9.9% confiscation—–the media is heavy on the concept that there is so much RUssian money from Russian tax evaders and gangsters in Cyprus, that this is why they are confiscating it

  12. @Tim “I would though be prepared for absolutely NOTHING of relevance related to a FATCA IGA in the budget.” I suspected that the few pre-2013 Budget submissions addressing FATCA and the US taxation of Canadians would be a waste of time.
    Yes, I see now how the Canadian government has been working on these TIEA’s for some time.

  13. @Tim

    I don’t expect any IGA announcement in the budget. I don’t even expect to hear the word “FATCA”. What I do expect is a lot of priming the Cdn public on the issue of International cooperation in finding “offshore tax cheats” and bringing them to justice. In other words, the attempt to create a political climate where FATCA is just the natural extension. This “Offshore” language is new for Flaherty. Here are some other references in the last few days:

    https://twitter.com/USCitizenAbroad/status/313454524276817920

    https://twitter.com/USCitizenAbroad/status/313454002044018688

    The general public will understand FATCA to be a tax exchange information agreement like the one signed with Panama and others.

    It will be interesting to watch/hear.

  14. Tax cheats and the infamous “paying their fair share”. Lots of pump priming going on. And people will fall for it.

    Cyprus is supposed to vote on the “wealth tax” today. Interestingly, Putin has been in contact with Cyprus’s president and Russia has sent a fleet of about 5 military ships to the Mediterranean for permanent duty. Speculation is that a Russian base in Cyprus is not far off.

    Also read that Cyprus is a test ground for the wealth tax with Italy next. This kind of idea is not something that needs to spread but if it works once, you can bet that it will.

    And the G8 is evil. That’s why people protest. G8. G20. G anything. Never means anything good for real people.

  15. My personal belief is the party to watch is still the NDP. I believe though the NDP has significant internal divisions on FATCA. I think some of the women MP’s(who are also close to E May) like Megan Leslie, Jean Crowder, and Denise Savoie are pretty anti FATCA. The male MP’s like Mulcair, Dewar, Rankin, Scott etc (who supposedly don’t like E May) I think are still trying to figure out how badly they want to go to the mat on FATCA(That is not at all to say any of them are in any ways pro FATCA). This might be extremely sexist but I think women tend to be more anti FATCA than men do(and fight and die against it).

    I do believe though in the nature of the Canadian parliamentary system the NDP to be united either for or against on IGA. They can’t split like the did on Meech(unless they want FATCA to be the next Meech). Mulcair can’t afford either Crowder or Leslie bolting on this issue to the Greens(where both due to their environmental stances would fit in very well).

  17. @USCitizenAbroad & @a
    Any chance that Flaherty is priming the pump of public opinion toward believing that Canada is dedicated to fighting offshore tax evasion in spite of refusing to sign and IGA with the USG, or has our alpha dog champion who once said that the CRA would not collect US taxes against Canadian citizens been neutered by the banks here in Canada?

  18. @Bubblebustin

    It’s hard to get a read on Flaherty. Remember this: it is rarely a mistake to say nothing. It wouldn’t surprise me either way. That said, it is important to realize that it is truly the banks that are the enemies of Canadians with U.S. connections. Actually, the banks are probably the enemy of everybody. Personally, I think the banks should have to bear the brunt of this.

    There is, by the way, no inconsistency between “approving” FATCA but being unwilling to collect taxes for the IRS. In other words, turning them over the IRS it is not the same thing as collecting taxes.

  19. @USCitizenAbroad
    I know, I wanted to emphasize his bullish stance, but should have added that he also said in response to FATCA that there are already existing mechanisms in place to combat tax evasion.

  20. Just to give one possibility Canada has more tax treaty and TIEA partners than any other country bar two or three. Flaherty could say it is his intention that Canada will have more tax treaties than any other country in the world. It would not be impossible or inconceivable to shoot for this. If Flaherty finished negotiations with the remaining countries I believe Canada would numerically take the tax treaty crown.

  21. Patricia, right. There is an agreement. As USCitizen points out, this is about getting the banks and other financial institutions off the hook. On their own, banks and such can’t make FATCA work or they and the USG wouldn’t have bothered with IGA’s and just have reached agreements btwn them.

  22. Another article in Investment Watch about the Cyprus savings heist …
    http://investmentwatchblog.com/the-great-cyprus-bank-robbery-shows-that-no-bank-account-no-retirement-fund-and-no-stock-portfolio-is-safe/
    Maybe this type of confiscation is what the US government has in mind. Maybe that’s why it needs all those hollow-point bullets. 🙁 Funny just a couple of weeks ago when I was replying to an MPs e-mail I mentioned that it almost seemed like the FATCA data grab might be clearing the way for a wealth tax.

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