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 Why do you feel this new piece of legislation, which aims to catch tax evaders, ought to be repealed?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.
First and foremost, the law simply doesn’t do what it is purported to do, but does what it ‘doesn’t do’ at GREAT COST!
The great events in history, those events that cause massive change and realignment are not recognized until years later.
When the history of the United States is written, it may say something like:
In 2010 under the leadership of President Barack Obama, the United States of American began a series of attacks on the sovereignty of other nations. Some of these attacks were against the people of other nations using drones. Some of those attacks were against the banks, economies and societies of other nations using FATCA.
These attacks united the world against the United States. Soon the resentment toward the United States was growing at a faster rate than the U.S. could defend against it. The United States realized it needed to stop the growth of the resentment and repair the damage.
When the United States realized it’s mistake it looked to U.S. citizens abroad to be ambassadors for the U.S., to repair the damage/resentment it had caused. The problem was that between 2011 and 2014 the Obama administration had completely destroyed “U.S. citizenship abroad” leaving nobody to repair all the damage it had caused. The only U.S. persons left outside the United States were living in terror, hiding their “U.S. personhood”, and were hiding.
Finally, the U.S. bankrupted itself by trying to protect itself against the resentment it had generated against itself.
And that Dear Reader is how the United States as a world power ceased to be. It is possible to visit the United States today on a tourist visa. Make sure that you stop at the “FBAR Museum” in Washington, DC. But, try to stay away from the beggars on the street who are looking for food and shelter.
@USCitizenAbroad,
If the IRS, US policy makers, and other US homelanders are reading here, the scenario you describe should be taken as dire warning that now is the time to stop the self-destruction that FATCA and enforcement of citizen-ship based taxation will inflict upon the USA.
WAKE-UP USA!
@Just Me, being an IT guy, I just joined Zuckerberg’s fwd.us:
For what it’s worth, I shared my story with them:
I’m probably the first of my kind in their group, but an Immigration Policy should consider both directions.
@swisspinoy,
It’s worth a lot!! Good for you.
ok, now we know who will be running the country from here on out. Ignore the headline, just skip to the unlimited dollar amounts and the lobby companies hired.
Bring back the EX PATRIOT act with a vengeance.
Great history story. Loved it.
When Americans are considered to be toxic assets, isn’t the next step be to quarantine them?
If the IRS, US policy makers, and other US homelanders are reading here: I got 7 words for you: GET YOUR HANDS OUT OF OUR POCKETS!!!!
either that or if you want to continue to tax us to support your “illegal immigrants”
KISS MY @$$!!!
President Obama and first lady Michelle Obama reported income of $608,611 in 2012 and paid $112,214 in total taxes, the White House announced Friday.
Tax documents released by the White House show the first family donated $150,034 to 33 different charities, representing nearly a quarter of their gross income. In addition to his federal salary, Obama made $258,772 from book royalties. The president’s effective federal income tax rate was 18.4 percent.
That represents a decline in both income and effective tax rate for the first family from 2011, when the president saw an income of $789,674 and paid an effective rate of 20.5 percent. The Obamas also made a larger charitable contribution in 2011, donating $172,130 to 39 different charities.
Through “creative donations“ their effective federal income tax rate was 18.4%….. that is in serious tax haven territory ! They are for sure paying their fair share ……. NOT !!!!!
here are the details : https://docs.google.com/viewer?url=http://online.wsj.com/public/resources/documents/complete_return_president_obama_2012.pdf&chrome=true
In praise of Tax Havens by Dan Mitchell
The World needs them.
http://www.forbes.com/sites/danielmitchell/2013/04/12/all-the-news-thats-fit-to-print-about-tax-havens/
Even the American ones! 🙂
@US Citizen Abroad
I enjoyed your post.
@Mike
A clever case of tax ‘avoidance’ on the part of the Obama’s. I personally feel it’s a taxpayer’s duty to take advantage of any means there is to avoid (not to be confused with evade) paying tax, after all IT’S OUR MONEY, not the government’s. Of course varying tax rates are going to predispose many taxpayers to manoeuvre to where they receive the lowest one. If you can, why wouldn’t you and why is thought of doing so now somehow become immoral to the masses? It seems that the 99%ers are critical of the loopholes that allow taxpayers to pay less in tax than they would without them, but instead of working solely to close the loophole, moral judgements are being made on the individual who has taken advantage of them. There also seems to be a lot of resentment toward taxpayers who can afford to pay accountants to figure it all out. Maybe this isn’t the best analogy, but it’s like diners who order from the menu being angry with the people taking from the all-you-can-eat-buffet, even though those at the buffet pay a higher price.
Even ‘aggressive’ tax avoidance is not illegal and the IRS and CRA are not entitled to anything over and above what’s due to them by law.
@Mike
@Bubblebustin
Seems to me one could put it this way:
Obama is paying his LAWFUL share but NOT his FAIR SHARE.
The concept of “fairness” must be a relational idea. There should be no unfairness in the effective rate at which people are taxed. Warren Buffet would agree with this idea. He thinks its wrong/unfair that he pays a lower rate than his secretary.
Consider it this way:
MonaLisa is victimized by PFIC rules that destroy her retirement plans – absolutely destroy them. She is a victim of laws that were designed to benefit the domestic mutual fund industry that are unfairly applied to her.
Bubblebusin is denied one of the few lawful tax benefits in Canada (the tax free sale of her home).
U.S. tax laws and reporting requirements as applied to U.S. citizens abroad, when fully understood are close to a human rights violation.
“First Tax Cheat Geithner” is not penalized for “forgetting to include income”, yet innocent minnows are destroyed by the voluntary disclosure program.
http://renounceuscitizenship.wordpress.com/2011/12/22/geithner-tax-penalty-waiver-offends-the-rule-of-law/
Now all of this is lawful. Under this lawful system, Obama pays only 18%. This is the guy who criticized Romney for only paying 15% (an amount that was also perfectly lawful).
Fairness is a concept rooted in morality. In the U.S. of today there is no relationship between law and morality.
http://isaacbrocksociety.ca/2013/03/22/when-law-becomes-a-substitute-for-morality/
And that’s precisely why Americans Abroad need a lobbyist for tax reform. The U.S. is a democracy where votes are bought and sold.
http://isaacbrocksociety.ca/2013/04/08/americans-abroad-need-a-lobbyist-for-tax-reform/
Is Obama paying his “fair share”. Not a chance. Not a chance. Not a chance.
Now that’s fine. He is just taking advantage of laws that were designed to benefit people like him. Most people would do the same.
But, Mr. Obama, don’t be a hypocrite. You are no different from Mitt Romney. Yet your campaign was based on the alllegation that Romney wasn’t paying his “fair share”. Somehow he was taking advantage of “loopholes”. Romney might be about 3% points better at playing the game than you are. But, Mr. Obama you are a hypocrite and you do NOT pay your fair share. If your tax rate is 18% why should MonaLisa pay a much higher rate on her U.K. mutual funds.
Never confuse law with fairness or morality. They are not related. Laws have no moral force whatsoever!
The U.S. is now considering its first major tax reform since 1986. It will be interesting to watch how many immoral concepts become law. How about getting rid of the immorality of citizenship-based taxation?
Never ever confuse laws with fairness!
But, in closing to give Obama the benefit of the doubt:
He never said he wanted to pay his “fair share”. He never committed to paying his “fair share”. So, what would you expect?
@USCitizenAbroad
If the citizenry of a nation wish to have the laws of their land reflect their concepts of morality then they should make/change laws that do so, but is it fair to say someone is immoral because they pay as little tax as they need to under the current laws?
There are people there who may think that Obama did a very moral thing by donating to charities. Granted, he likely wouldn’t have done so without the tax incentive, but only the mind police will know for sure.
Is the US government acting immorally by taxing me on the sale of my home in Canada? If the answer is yes, then the Canadian government has also for allowing this to happen.
With free room and board and free multi-million dollar vacations I don’t see why the Obamas would care what their income is right now. They could donate their entire current income and not miss it a bit. There’s no need for them to worry about their post-presidential days either because there will be millions to be made from speaking tours (have teleprompter will travel) or any manner of other money making opportunities available to those in their position. They will be able to afford the best advice on where to shelter that money too. No, no, mustn’t worry our FATCA whacked little heads about the Obamas. They certainly aren’t worried about us. [insert snarky little “smiley” face here]
WHY DOES BARACK OBAMA HAVE FOREIGN DIVIDEND INCOME OF $2639? DOES HE HAVE OFFSHORE BANK ACCOUNTS? WHERE IS HIS FBAR? ARE OFFSHORE BANK ACCOUNTS NOT A NATIONAL SCANDAL?
Here’s a few of my thoughts. Considering the fact that they are not politically correct, well…I mention to people that this is exactly how I feel and I’m not going to sugarcoat it.
https://fbcdn-sphotos-a-a.akamaihd.net/hphotos-ak-snc6/8023_10151538910005295_1712872135_n.jpg
I’m not a fan of Liberals or Democrats.
https://fbcdn-sphotos-h-a.akamaihd.net/hphotos-ak-snc7/480278_10151312112610295_718616041_n.jpg
https://fbcdn-sphotos-g-a.akamaihd.net/hphotos-ak-prn1/156757_10151312266315295_1042425696_n.jpg
https://fbcdn-sphotos-a-a.akamaihd.net/hphotos-ak-ash3/270016_10151310169320295_1612939083_n.jpg
https://fbcdn-sphotos-f-a.akamaihd.net/hphotos-ak-ash4/304873_10151152290125295_363031356_n.jpg
https://fbcdn-sphotos-e-a.akamaihd.net/hphotos-ak-ash3/544480_10151061435050295_2089120009_n.jpg
I think that pretty much sums it up.
$51,000 OF CARRIED OVER TAX CREDITS. Barack Obama could not have been employed overseas. WHAT OFFSHORE INVESTMENTS DOES BARACK OBAMA HAVE OVERSEAS THAT ARE GENERATING THESE CREDITS?
And this is what I feel about those senators and people who think that what the US government is doing is LEGAL.
https://fbcdn-sphotos-g-a.akamaihd.net/hphotos-ak-ash4/219803_10151137618580295_35272334_o.jpg
CARRIED OVER FOREIGN TAX CREDITS ARE USED WHEN THE US-SOURCED INCOME TAX IS NOT GREAT ENOUGH TO BE CREDITED BY ANY PARTICULAR YEAR’S FOREIGN INCOME. THIS WOULD IMPLY THAT BARACK OBAMA’S FOREIGN INVESTEMENTS HAVE BEEN GREATER THAN HIS US INVESTMENTS. Correct?
And here’s my latest. Harsh words. Not really. Just telling the absolute truth.
https://fbcdn-sphotos-g-a.akamaihd.net/hphotos-ak-ash3/537450_10151556543190295_486276115_n.jpg
Is it not a requirement that Barack Obama specifically lists the payer of foreign INTEREST on Schedule B?
@Mark Twain
I am not sure that is exactly the case on Obama Foreign Tax Credits carry over. I have carried over FTC credits which I have been carrying for years, that a CPA told me, effectively you never get to use. It relates to the percentages of Foreign tax paid related to U.S. tax paid in a given year which means you never really get a dollar for dollar credit for your foreign taxes paid if your U.S effective rate is too low (I think it is) . I see the math on how they calculate it, and haven’t expended the mental power to totally understand the logic of it. It is frustrating, but that is how form 1116 works.
And, as for your question on schedule B, Haven’t had time to digest his return in this regard, but I know I have to!
As for other foreign tax credits, they could be from his Mutual fund investments like those in a Vanguard like Index fund or a Foreign EFT. I used to get more of those too, until I closed some of the accounts.
Maybe there are some other CPAs here, that have time to delve into it more. I am pretty sure there is nothing that questionable there, other than the realization, if you are going to invest money these days, you probably are going to do some risk diversification moves globally which could be very simple inside a Mutual fund, and could be generating what you see. Just my quick thoughts on the subject without really looking… I could be wrong especially when I am talking about something I haven’t fully examined! LOL
One possibility would be that it is credit for work performed while living overseas, and that it could only be used if one was residing in USA and performing work overseas (such as a business trip).
I can’t see any scenario for passive income.