In its latest attack on the Foreign Account Tax Compliance Act (FATCA), the Wall Street Journal describes in ominous tones the “record” number of individuals who renounced their U.S. citizenship in the last quarter, supposedly driven by FATCA’s reporting requirements, which are designed to prevent tax evasion.
What scary headlines about a “surge” in expatriations leave out, however, is what a miniscule number it really is. Even the six-fold increase this quarter compared to the second quarter of last year meant that only 1,130 people renounced their citizenship in the second quarter of this year. To give some context, this number represents less than 0.02 percent of the estimated six million Americans that live abroad.
“Surge in Expatriations to Avoid Taxes!” “US expatriates renounce citizenships at record rate!” Pretty alarming headlines. News coverage of what complying with FATCA actually entails has been misleading and would make you think that the rise in renunciations is driven by the “overly burdensome” rules that are financially crippling US citizens living abroad. The fact is, the primary component of FATCA affecting individuals is the requirement that U.S. citizens with $50,000 or more in foreign financial assets (which does not include housing or other basic non-financial assets) simply have to attach a disclosure statement about their accounts in their yearly tax return.
Whatever inconvenience is caused by these requirements is far outweighed by the benefits to the U.S. and its law abiding taxpayers. According to the Congressional Joint Committee on Taxation (JCT), FATCA’s anti-tax evasion measures are estimated to raise $8.7 billion (PDF) over their first decade of implementation (and JCT has a history of underestimating such tax enforcement measures, too.) Considering that the U.S. loses an estimated $100 billion (PDF) annually due to offshore tax abuses, rather than seeking to curtail FATCA, Congress should expand on these efforts through legislation like the Stop Tax Haven Abuse Act in the House or the CUT Unjustified Loopholes Act (PDF) in the Senate.
While the emigration of every single wealthy person abroad is makes big news (see, for example, coverage of Facebook billionaire Eduardo Saverin or singer Tina Turner), the reality is that the number of renunciations is negligible – especially compared to the number of new citizen naturalizations each year. In fact, 503,104 people have been naturalized in the US since the start of Fiscal Year 2013, which means well over 250 people embracing US citizenship for every one person renouncing it over the past several months.
Asking the few and largely wealthy Americans with substantial offshore financial assets to do a little extra paperwork is not unreasonable when we know that cracking down on offshore tax evaders will bring in revenues to invest in things like roads, schools, healthcare and a quality of life that make the US so attractive to aspiring U.S. citizens.
Few and largely wealthy? What are they smoking?
Propaganda and disinformation is the name of the rebuttal game where FATCA and US increases in citizen renouncing is concerned. No surprises here.
Here are some interesting numbers. “Citizenship Canada could not immediately say how many Canadians give up their citizenship each year. But in 2012, the Canadian Broadcasting Corp, citing departmental data, said the number was about 140 a year”.
The population of the US is roughly 9X that of Canada’s, so given that many Americans consider the US to be the “greatest country on earth” to live, you’d expect the US’s renunciation numbers to be no more than 9X that of Canada’s: 1260 per year. The US had nearly that in it’s last quarter alone! So unless Q2 2013 was just clearing a backlog, this is a deluge. My personal opinion is that the renunciations will continue at a pretty steady pace until there are no more Americans abroad to speak of, unless something miraculous happens, like RBT. Obviously a thriving expat community isn’t important to the homelanders at Citizens for Tax Justice when you’re on a crusade.
In other words, ordinary Americans living outside the US are expendable as long as some taxes are recovered?
Maybe they should go to Dick Harvey for sensitivity lessons.
I already knew they were taking this position and it is USELESS to deal with them. Once they take a position that’s it. Citizens for Tax Justice is a mean spirited hell hole of group think and I want nothing to do with them whatsoever. For any organization with any ties in Canada to take this position is absolutely sickening. It’s not just about the renunciations. “A little extra paperwork.” Would THEY like to PAY for the paperwork for us?? Boy! This makes me MAD!
The reason I mentioned AFL-CIO is that they are the main financial sponsor of Citizens for Tax Justice. I look more to AFL-CIO(the main US trade union) not Citizens for Tax Justice.
AFL-CIO is just wrong and I notice no one can comment on their propaganda.
If anyone has good contacts at ACA it would seem appropriate for that group to issue a press release or rebuttal to this nonsense. It is truly sickening to read.
Sit tight. US is >$15 Trillion in debt, and more divided and dysfunctional than any time in recent history. And is facing a possible government shutdown and limits on further borrowing.
When Congress returns in September, expect a fight over the government’s budget, leading to a possible government shutdown, and a bigger fight over the debt ceiling. At present, the US government does not have a an ongoing operating budget to fund continuing operations. Some Republicans plan on using using a government shutdown as leverage to defund ObamaCare.
Extending the debt ceiling is more serious. The US government borrows about 40% of every dollar it spends. It’s hitting the legal ceiling of how much it can borrow ($16.7 Trillion) next month. When Congress reconvenes, it has nine working days to keep the government funded past Sept. 30, and an additional seven working days after that to ensure the country can meet debt service obligations beyond mid-October. There are bitterly and utterly opposed sides in this matter.
for more facts see:
Add to that the pressing need to decide whether its OK to attack Syria, and bomb and kill people in Syria, so as to demonstrate disapproval about how the Syrian Government is killing people in Syria.
I don’t expect Canadian issues to get a lot of attention.
We are better off lobbying our own leaders and preparing to protect our own interests in Canadian Parliament and Canadian courts.
For what it’s worth I sent a mail to ACA asking then to consider a response.
I agree with Wondering – Canadians need to lobby, sue and protest in Canada. That’s the best shot.
How I wish I was Canadian
It is always interesting reading how eager and excited America is to replace ist patriots with unknown immigrants. The American citizen is expendable and replaceable. America has no respect and no loyalty to its citizens.
Citizens for Tax Justice makes it clear that no cost or burden is too high for those abroad to bear “…Whatever inconvenience is caused by these requirements is far outweighed by the benefits to the U.S. and its law abiding taxpayers…”
and, apparently no amount of deliberate bullshit is too large to shovel in the service of their propaganda;
“…Asking the few and largely wealthy Americans with substantial offshore financial assets to do a little extra paperwork is not unreasonable when we know that cracking down on offshore tax evaders will bring in revenues to invest in things like roads, schools, healthcare and a quality of life that make the US so attractive to aspiring U.S. citizens….”
So, it is stated very clearly that those ‘abroad’ must pay for the things that only ‘aspiring’ US citizens and US residents can enjoy.
It is apparently not necessary to mention or acknowledge that there are millions of us living outside the US who are subject to not only FATCA, but the FBAR and all the other onerous reporting rules and US double taxation. We are all dismissed as a few ‘largely wealthy’ individuals trying to ‘evade’ US tax.
Exactly, @Badger, like having to file a minimum 80-90 page tax return (and up to 280 pages one year!!!) Plus pay an accountant a minimum of $2000 in annual fees, even though I’m on a below-average income. I will have had to pay over $25,000 in professional fees to come into full compliance.
It true that I faced a lower five- figure sum in double taxation because I’d been unaware of PFIC tax treatment on local mutual funds; but after getting out of these, I was able to bring my tax bill down to zero after seeking help from a certified financial planner who moved my investments into a US -compliant portfolio run by a boutique firm specializing in US expats abroad. But going forward, I still would have had to budget up to $3000 for my annual accounting fees just to prove to the IRS that I over them no more taxes. I found this burdensome plus I really reseted it so decided to renounce.
But what scares me is that the US, spurred on by propagandists, may decide to go on a witch hunt on many of the recent people named on the latest federal register of renunciants. I just pray that my recent decision won’t create even more difficulties than what I was suffering from before…all I can do is take comfort in knowing that my tax returns are all squeaky clean.
I could see more expatriates being audited (especially 8854) or more questioning at the border, etc.
This article lays out why the US is hammering individuals in Canada and elsewhere – because they can, rather than pursuing US corporations with more means to pushback or find loopholes. Makes some good points.
..”…The IRS can’t do anything against legal but morally questionable corporate tax practices. It can, though, slam individual taxpayers who commit forgivable, and often unintentional, infractions. And it has to get the money somewhere….”…
“…anecdotal evidence suggests the IRS’s tighter net is trapping lots of small fish, average-income taxpayers who simply missed the fine print. And there are many of them among the hundreds of thousands of Americans living in Canada and Canada-U.S. double citizens.
Eliminating loopholes and opportunities for legal arbitrage by international corporations might reduce the pressure on tax agencies to go after people who were obviously unaware they were breaking the law….”
from; Canadian Business
‘How the G-20 agenda on corporate tax affects you: Erica Alini
Sep 5, 2013
The US deficit in the running govt is about $17 trillion, don’t forget that Social Security has “unfunded liabilities”of more than $15 trillion, and Medicare more than $30 trillion, totally well above $85 trillion total debt for the whole mess.
Unions like AFL-CIO always talk about how tax dollars fund “schools and roads”. Actually, US Federal tax dollars mostly support retirees – via Social Security and Medicare – and fund a massive military-industrial-security complex. Most of the US Federal budget goes to Defense, Social Security, and Major Medical Entitlement programs. A very small % is infrastructure and education. And only half of this budget comes from tax revenues – about 40% of every US Federal budget dollar spent is borrowed.
The biggest % of the US budget goes to military expenditures: in 2011 the US spent about $718 billion on defense and international security assistance. That’s 20% of overall Federal spending.
It’s also more the next 13 countries combined military spending in 2011.
The combined 2011 military spending of China, Russia, UK, France, Germany, Japan, India, Saudi Arabia, Brazil, South Korea, Italy, Australia and Canada was $695 billion. The US alone spent more than all those countries together.
Cui bono? Follow the money. The so-called “Back Budget” that funds the CIA, NSA and similar intelligence agencies was recently reported by Washington Post to be $52.6 billion and employes more than 107,000 people.
Another beneficiary of this largess is military manufacturer Raytheon. In 2010 this 72 thousand person company had $23 billion in arms sales, which accounted for +90% of its revenue. Raytheon makes the Tomahawk cruise missile; news of a possible attack on Syria sent its stock soaring to a 52 week high.
The AFL-CIO and all its US affiliates are owned lock, stock and barrel by the Democratic Party. The Republicans in many states are undermining or destroying labour unions, and the Democrats aren’t, so whatever individual members of AFL-CIO might think about the FATCA/Jihad issues (if they think about them at all), the top brass in AFL-CIO are going to support Obama and the Democrats, if only in a desperate attempt to save their own skins.
I’m a great believer in labour unions’ activities to protect workers’ rights and benefits, but I get nervous when they start endorsing political parties carte-blanche or skating on the communist-inspired ice of “soak anyone who I think has more money than I have and give their money to me instead.”
The leaders of AFL-CIO should give their heads a shake, but they won’t.
They obviously are sensitive to the negative feed back FATCA is getting in the press on unintended consequences or collateral, so take this expected Op Ed as a good development. Maybe they are worried, or why bother with taking such a position unless they feel a little bit threatened.
I don’t know if CTJ has a FACEBOOK page that any of you could comment on. (I don’t do facebook). I see the link that Tim provided doesn’t have any ability for comment, so they are not interested in feedback, or dialog, but maybe Facebook? They need to see or hear some of these good comments, as they obviously never read any of the comments on the WSJ.
Bingo! There’s also Fb pages for our friends at the Tax Justice Network, who wrote such lovely pieces as:
Defenders of financial secrecy line up to stop U.S. Fatca project
Taxjustice sounds so good just like “Hire” did. After all no one is against tax justice. Too bad their name is the exact opposite of their mission. How many of them are there? I’d wager not more of them than us even now. I suspect there will be more and more of us as people around the world understand what FATCA actually is and will do. If asked to prove their claims they can’t do it because they don’t have the facts about FATCA on their side. We have the truth and they will look awfully foolish when it comes out that indeed those most harmed by FATCA are not uber rich tax criminals at all.
With all due respect, I’ve pored through the entire article and, indeed, the entire CTJ web site and could not find a single direct reference to the Isaac Brock Society. Am I looking in the wrong place?
The CTJ obviously has a well-meaning but terribly misguided “Democratic” agenda which blindly (or perhaps deliberately) conflates individual US Persons abroad with US Corporations abroad (and their 1% masters who may, or may not, themselves live abroad). However, I simply don’t believe that our humble blog has even yet shown up on their radar screen, let alone become the direct target of their scorn. The headline to this post, however, might just change that, so I hope you’re prepared to defend your statement that the CTJ has “attacked” the Isaac Brock Society.
While we all like to dabble in hyperbole at IBS, I believe we should always ensure that there’s an underlying modicum of truth to what we say. I don’t think we want to be accused of descending to the level of so many of our opponents and manufacturing propaganda, especially when we’re trying to enlist the support of other long-standing and well-respected organizations like ACA. We must strive to stay on the high road. If we’re going to accuse someone or some organization of saying something, then we’d better be telling the truth.
Here is what Wikipedia says about Tax Justice Network. It is just a well connected group of activist. I do think they feel a bit threatened by the resistance of average folks like IBS. Their good intentions, like our wars, have many negative consequences, and they want to minimize that as much as possible. They have been good at it, and like all FATCAnatics, you can NOT underestimate them.
I tend to agree with you. I know what Tim is trying to do with Hyperbole, heaven knows I engage in it, but this is more the case of the CTJ types attacking those who think like many average Citizens and participants of IBS. That is what he probably meant to say imply.
This is not a direct attack at IBS per se. I kinda wish it was. It definitely is an attack on the WSJ and those who are pointing out the unintended consequences of misguided actions, like FATCA who would round up all, to catch a few.
It is important that they minimize that which they had not considered when they all rushed to support it. The very Rich that they hate so much will find their ways to escape this drag net, and frankly, good ole DOJ work and John Does is doing an admirable job of prosecuting actual evaders and deterring others.
You don’t need FATCA/DATCA/GATCA to do that, but as their nature, the CTJ types love things that control others. That is the liberal mindset. Government has to control you.
I’m mentioned in WSJ, so if it is an attack on WSJ, then is an attack on me and thus also an attack on IBS, indirectly.