The Centre for Freedom and Prosperity (CF&P), a US-based organisation which seeks to “promote economic prosperity by advocating competitive markets and limited government” is one of the high-profile critics of America’s soon-to-be implemented Foreign Account Tax Compliance Act (FATCA). This controversial new piece of legislation, say its opponents, will be financially detrimental to the vast majority US citizens living abroad.
Here the President of the CF&P, Andrew F. Quinlan, shares his FATCA concerns in an exclusive interview with iexpats.com.
You, and the Center for Freedom and Prosperity, have been vocal opponents of FATCA. Why do you feel this new piece of legislation, which aims to catch tax evaders, ought to be repealed? Why are you lending your support for the anti-FATCA campaign?
First and foremost, the law simply doesn’t do what it is purported to do. Rather than target actual tax cheats, it burdens all Americans living and working abroad as if that were tantamount to criminality. As a result of FATCA’s sweeping new burdens, American expats are now toxic assets. Unwanted by foreign banks and financial institutions, and hounded by a government that has scapegoated them for problems created by the profligate spending of politicians, it’s not a good time to be making a living as an American abroad.
Overall, FATCA is just an affront to the principles and mission of the Center for Freedom and Prosperity. It violates the fundamental financial privacy of millions of Americans, eviscerates the most basic and long standing concepts of national sovereignty, and seeks to limit tax competition by controlling the free flow of capital. Furthermore, the economic harm to the US in terms of lost investment, and just to the world economy as a whole, may far outstrip the minimal “revenues” expected to be collected by the government.
Simply put, it is not properly the responsibility of the entire world to chase down every last potential dollar for US politicians to waste, all the while footing the bill for the pleasure.
@ShadowRaider,
This is ironic in the English language. I know that when I decided to change from American to Canadian years ago, I actually did think of citizenship as membership in a club or community and that’s how I see it. That turned into a real irony 30+ years later, because while I’ve been thinking of citizenship as belonging to a club (membership), suddenly in 2011 I got the sense that the US today thinks of citizenship as belonging (as a piece of property).
@Shadow Raider
Thank you for your suggestion. Unfortunately many American’s feelings of exceptionalism (irrational patriotism) would be fed by the idea of the US being some kind of exclusive club where you have to pay a premium to be a part of. The elitist Diane Francis describes her dual-nationalism as an “expensive perch”. A perch is where one looks down on others.
It feels more and more like conscription to me. Perhaps we should examine how the tactics used by conscientious objectors could benefit us…
@shadowraider, pacifica and bubblebustin. In the same vein; I was stunned by the realization of how toxic my inadvertant membership in the US citizenship club is. I was struck by how unfair and unethical the rules of the club are.
You might say I feel like I’ve been clubbed.
@But we are their property, even after renunciation, unless we officially (and correctly) log out with 8854. Plus, they’ll still have several years of open statutes of limitation. Yes, I may have cleared the single biggest hurdle by receiving a CLN but am not quite out of the woods yet! One thing I’ve learned from all this is to never fall into complacency.
And while we who’ve recently renounced should wind up OK, I still wouldn’t be surprised if it becomes more difficult within a few years to make a clean break. Property indeed.
The old pay your “fair share” argument doesn’t hold a drop of water for long term expats who don’t use US roads, highways, bridges, dams, schools, hospitals, fire, police, courts etc. They are not able to receive unemployment benefits or Medicare.
Question: What do expats receive when they work to pay for the benefits and services only homelanders get to use?
Answer: involuntary servitude
http://en.wikipedia.org/wiki/Involuntary_servitude
@But we are their property, even after renunciation, unless we officially (and correctly) log out with 8854.
IRS Disbars CPA for Charging High Fees and Giving Bad Advice….. I could name a few in my “Homeland“
http://www.accountingtoday.com/news/IRS-Disbars-CPA-Charging-High-Fees-Giving-Bad-Advice-66348-1.html?ET=webcpa:e6958:430732a:&st=email
The American Institute of CPAs has sent congressional leaders a set of legislative proposals for reforming the civil tax penalty provisions of the Tax Code, arguing that some penalties are disproportionately severe and punish innocent conduct……… oh realy ! Well finally something but no mentioning of course of OVDI/P or VD`s because these taxpayers are all criminals and they do dereve disproportionate and servere life changing penalties.
• The trend away from voluntary compliance as the primary purpose of civil tax penalties;
• The lack of clear standards in some penalties;
• The fact that some penalties are disproportionate both in amount and severity;
• The fact that some penalties are overly broad, deter remedial and other good conduct, and punish innocent conduct;
• The trend toward strict liability;
• An erosion of basic procedural due process;
• Inconsistencies between penalty standards and the role of tax professionals;
• The increase in automated assessment of penalties that can lead to unwarranted assessments;
• The need for better coordination and oversight of penalty administration;
• The bias in favor of asserting penalties;
• The need to improve IRS guidance and training; and
• The need for the IRS to increase its efforts to educate taxpayers and tax professionals.
http://www.accountingtoday.com/news/AICPA-Tells-Congress-Lighten-Civil-Tax-Penalties-66347-1.html?ET=webcpa:e6958:430732a:&st=email
Why does it seem to me though that there’s an industry set up around this whole international compliance thing that benefits the tax preparers and attorneys, which is why they’ll effectively want the complexities and headaches for the average expat to remain so we continue having to rely on them? While I feel I was relatively lucky, I understand that some of the accountants have been below par and that some of the attorneys have been predatory?? Thus, worse than the IRS in some respects.
I’ll be so relieved to finally be clear of all this after filing 8854 next year!! I feel sorry for those who may not be able to resolve all this like I will have done.
@Shadow Raider…………sorry but as expected your line of argument is not shared even with Sen. Chris Murphy (D-Conn.) 🙁
Sen. Chris Murphy (D-Conn.) said Monday that President Obama’s effective tax rate of 18 percent was too low, arguing wealthy Americans like the president needed to pay more.
“We can’t collect 18 percent from people making that much money and be able to afford to build roads and bridges and educate kids and do the medical research we used to,” Murphy told MSNBC’s “Morning Joe.”
“We just sort of need to make a fundamental admission that this nation can’t run on collecting 17 percent of GDP and that largely needs to come out of the pockets of the people making that kind of cash.”
Murphy added that “we can’t run this country based on the amount of revenue that we’re collecting today,” and knocked the “mythology” by which the wealthy would be unwilling to invest or create jobs if they were taxed at a higher rate.
“The fact is that if a hedge fund manager is going to have to pay 5 or 10 percent more in income, it’s not going to change their decision-making and it’s not going to stop them from making risks,” Murphy said. “They’re still going to make billions of dollars, even if they’re paying 20 or 25 percent. I think we have to step back and say that this mythology of people only investing money by getting a 15 percent tax rate just isn’t true.”
Tax returns released by the White House on Friday showed Obama reported income of $608,611 in 2012 and paid $112,214 in total taxes, good for an effective federal income tax rate of 18.4 percent. The first family donated $150,034 to 33 different charities, representing nearly a quarter of their gross income.
In a statement from White House press secretary Jay Carney accompanying the release of the returns, the administration reiterated its call for a rule that would put a floor on the deductions the wealthiest Americans could take on their income taxes. Under the president’s plan, no household making more than $1 million would pay less than a 30 percent income tax rate, with exceptions for charitable donations.
“The president believes we must reform our tax system which is why he has proposed policies like the Buffett Rule that would ask the wealthiest Americans to pay their fair share while protecting families making under $250,000 from seeing their taxes go up,” Carney said. “Under the president’s own tax proposals, including limitations on the value of tax preferences for high-income households, he would pay more in taxes while ensuring we cut taxes for the middle class and those trying to get in it.
http://thehill.com/video/senate/293827-dem-sen-murphy-obama-paid-too-little-in-taxes#ixzz2QnzJxTE3
I like to add to this that too many people now see the tax code as a (legal) tool for directly taking money from others (government).
I’m not talking about the fiscal illusion that results when some people over-pay their taxes and then are happy to get a refund. …I’m talking about a different crowd. There are now millions of Americans who benefit from redistribution programs that are laundered through the tax code. …“refundable” credits allow people to get checks from the government even if they didn’t pay any tax. …
The metropolitan DC area is now the wealthiest region of the nation; it includes 10 of America’s 15 richest counties. …One of the main sources of that unearned — and undeserved — prosperity is the tax code… many people make big bucks manipulating the tax code. Lobbyists obviously would hate a simple and fair flat tax… Many of these insiders are former politicians and former Capitol Hill staffers — particularly those that worked on the tax-writing committees. They make big bucks, and the current staffers look forward to the day when they can cash in on their “government service” and start “earning” huge salaries. Needless to say, these people are not exactly advocates of reform.
GenevaLunch article today on Swiss PostFinance’s review of 6,000 Americans with accounts:
http://genevalunch.com/2013/06/11/postfinances-6000-americans-could-feel-us-heat-too/
PostFinance is a business unit of the Swiss Post but will become a licensed bank in late June. As a “Service Publique” entity, by law it has been required to maintain accounts with anyone resident in Switzerland (and previously anyone who a strong connection to Switzerland, e.g., Swiss living abroad).
The Handelszeitung has a similar article headlined “PostFinance could become a target of US authorities”:
http://www.handelszeitung.ch/unternehmen/postfinance-koennte-ins-visier-der-us-behoerden-geraten
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