Senator Paul stirs business ire over blocking of U.S. tax treaties
I had this in a comment to the FATCA thread but think more will see it as a post:
WASHINGTON, April 28 (Reuters) – Senator Rand Paul is coming under pressure from some multi-national businesses to drop his opposition to tax treaties between the United States and other nations.
Citing privacy concerns about Americans’ tax data, Paul, a Republican and libertarian, has single-handedly blocked Senate action on treaties with Hungary, Switzerland and Luxembourg that have been signed by authorities on both sides, but have been awaiting Senate review since 2011.
@Chris
Uh, stuff I can’t make public until it happens . . . (And which seemed imminent at that time.)
One can never be sure anything will happen until it does. But IBS will be the first to know.
@Jim
Many here have speculated that citizenship based taxation may actually serve as an impediment to FATCA, as it will at the very least serve to further disenfranchise its diaspora for little economic return.
@Jim
What’s your opinion of the lawsuit against Treasury and the IRS by the Florida and Texas Bankers Assns?
@Chris
Um, stuff I can’t go into details about right now . . . (You can’t be sure about anything around here until it actually happens.)
Anyway, short, simple messages to the Senator’s office commending him on his stand on the tax treaties and against FATCA would be helpful. No need to say more than that at the moment.
@Tim
It seems to me that the 30% withholding feature of FATCA makes it very difficult for Flaherty/Canada to not accept FATCA in some form if the US insists. Can you speculate on a scenario where Canada tells the US to diplomatically GYU and somehow does not get hit by this withholding penalty?
@All
Sorry, I posted answer to Chris twice. I thought it hadn’t posted the first time.
@bubblebustin
Re “Many here have speculated that citizenship based taxation may actually serve as an impediment to FATCA, as it will at the very least serve to further disenfranchise its diaspora for little economic return.” I’m not sure I understand this, but I don’t think any calculation of economic return remotely figures in the minds of these people. This is about control and submission. They give the orders, we obey. Nothing — especially information — can be allowed to slip out of their grasp. Consider how little revenue Treasury actually recovers when they put an expat or an accidental through the failure to file nightmare, even if you credit the penalties to the public coffers. It’s not about the dollars, it’s about the control.
I think the suit is a very positive development of course. I am trying to get a read on the likelihood of success on the merits, but on my first read of the complaint ( http://www.repealfatca.com/downloads/FIBA_and_TX_complaint_.304.pdf ), it seems plausible. While it doesn’t go to the heart of FATCA — and in fact they deliberately, it seems, went out of their way not even to mention FATCA — it’s a good shot at the one thing Treasury claims it can offer countries in the form of “reciprocity” under Article 2(b) of the Model 1 IGA. If they can’t even deliver on that, much less the additional authority they’ve asked Congress for under Article 6(1), “reciprocity” is a dead letter. Then the ball’s in the court of foreign capitals to either stand up for themselves or capitulate without even a pretense that this is an even deal. I expect it will be a mixed bag, which itself would be a disaster for FATCA.
The 30% withholding is what is going to kill FATCA and what makes FATCA so bad in the first place.
Even if the US switched to residence based taxation, I think the difficulties for American abroad are not going to change until you remove the risk of witholding and penalties. Sure, it will make life easier from tax preparation purposes, but I think the main reason banks refuse Americans is because of that.
@Jim
I don’t want to believe that all of those letters to the Committee on Ways and Means on tax reform were a waste of time, but I suppose I have to accept the fact that the US is like a big drowning kid who doesn’t care who he takes down with him.
Thanks for your point of view. I think I’ll have a martini now.
@tdott
The question is if Canada refuses to comply with FATCA does Obama and the Congressional Leadership have the political guts to impose a withholding penalty. My hunch at they end of the day they don’t no matter how much the officials at the Treasury say they do. Remember at the end of the day Treasury is junior to the White House. We need to stop thinking of this as a legal issue and instead as a “political” issue. As former British PM Harold Macmillian once told future Thatcher era Cabinet Minister Geoffrey Howe, “For Gods Sake Geoffrey do something POLITICAL”. Recounted in the movie below about Thatcher’s forced removal from office.
Look at the end of day the Parliament of Canada will have to approve the application of FATCA to Canada. When that may or may not occur is anyone’s guess. I tend to believe at this point it will be later rather than sooner. Even with a Conservative Majority the approval of FATCA is at the end of the day a “political” decisions by the 308 MPs in Ottawa. When we look at FATCA through a legal and not a political lens we fall into a trap set by the Treasury/IRS. Yes Treasury/IRS has the legal authority under US law to impose withholding on US source income having said that they still need the political will to do so.
Some day in the future all 308 Canadian MPs in Ottawa will have to show where they stand politically on the issue of FATCA.
I’d like to copy this article from Nomad Capitalist in response to every moron commenter there is out there. It links the radio interview he gave with Jim Jatras that Chris referred to earlier:
http://nomadcapitalist.com/2013/04/29/just-how-bad-is-fatca/
“It’s not about the dollars, it’s about the control.”
Exactly right, Jim. They want that Orwellian world in the worst way and by any means possible.
@Jim Jatras,
Re contacting Rand Paul, I can pass the “am I real” test but I can’t pass the reside in the USA test on the contact page – nor am I any longer a US citizen so will have to leave that to others.
Thanks for your continued work on this issue.
I sent off a short comment to Paul Rand. I faked the address information though I gave a legitimate email address. I hope it helps.
@bubblebustin
Thanks for the link to the excellent Nomad Capitalist follow-up article. A great companion piece to the interview with James Jatras.
I just left this comment and would invite others to weigh-in as well. It’s obviously not a tough room, unlike Huffington Post, but it would be good to see us “represent” a little bit:
‘Let us not forget that the biggest lie at the heart of FATCA is this shiny, technicolor dream of “reciprocity” that is intended to entice foreign governments into signing
FAUSTFATCA deals with the US. Of course the US has absolutely no intention of honoring any kind of reciprocity deal and any nation that thinks otherwise is truly just kidding itself.For a country who’s entire creation myth (No taxation without representation) has now been proven, by its shoddy treatment of its expats to be just that – a myth – the lies perpetrated by FATCA are just simply breathtaking in their audacity. Foreign governments are prostrating themselves before a dying god that hardly deserves the pathetic attention. I do believe we are witnessing a kind of mass hysteria amongst nation-states and this may indeed be the harbinger of much darker days to come.”
I suspect the withholding agents will be very, very careful about whom they withhold the 30% from, if they do any withholding at all. I think IRS/Treasury are bluffing and do not have the balls to instigate the political conflict which will surely arise if they withhold 30% as threatened. Time will tell.
@Calgary411
You could just pick any old state from the drop down list on the Paul Rand website. Then if you want to make it clear you are from Canada, type your real address in the street address which has lots of space for free-formatting whatever you want.
Who said we had to live in the USA or be Americans to comment?
OK, I’ll do just that. Thanks, WhiteKat.
Am I missing something or did the WSJ completely mess up the story? They’re calling it “FATCA Treaties Held Up in US Senate”. I thought the ones being held up were ordinary tax treaties or protocols that don’t have anything FATCA-specific in them, while Prof. Christians’ whole point in her recent paper was that the actual FATCA IGAs are not being submitted for the Senate’s “advice & consent”.
http://blogs.wsj.com/riskandcompliance/2013/05/01/fatca-treaties-held-up-in-us-senate/?mod=wsj_streaming_stream
@Eric,
Absolutely.
As an aside, I just came across this opinion:
Global Financial Integrity attacks Rand Paul
http://www.gfintegrity.org/content/view/613/70/
Global Financial Integrity (GFI), a Washington, DC-based research and advocacy organization, urged Senator Rand Paul (R-KY) today to allow the U.S. Senate to vote on treaties negotiated by the U.S. with Switzerland, Luxembourg, Hungary, and other countries to implement the Foreign Account Tax Compliance Act (FATCA), ferreting out U.S. tax evaders. Senate rules allow any Senator to place a “hold” on legislation removing it from consideration, and Sen. Paul has placed holds on bills to implement every tax treaty negotiated since his election in 2010.
calgary411 hits a Nail on the head. Not saying and not reporting are critical techniques in reporting.
so, Rand Paul is still holding out? fantastic.
Hoping it will get picked up by Lawrence O’Donnell and Rachel Maddow tonight on MSNBC.
I just wrote to Rand Paul thanking him for his principled stand on privacy issues. Others should do the same.
http://www.paul.senate.gov/?p=contact