This post appeared on the RenounceUScitizenship blog. This is a great article. Opposition to FATCA is getting traction! This article should be read with the Georges Ugeux article posted above.
Trust = Currency Of Leadership http://t.co/vEbqB76lc1 and Americans are NOT alone in distrusting the US gov http://t.co/9nvrhb44ih
— U.S. Citizen Abroad (@USCitizenAbroad) October 1, 2013
"And it comes down to the fact that no one trusts the #USG anymore, and really, why should they?" http://t.co/1Nu1Sn6kHB
— U.S. Citizen Abroad (@USCitizenAbroad) October 1, 2013
"Americans are NOT alone in NOT trusting the U.S. Government" http://t.co/9nvrhb44ih – which presents a huge problem for #FATCA
— U.S. Citizen Abroad (@USCitizenAbroad) October 1, 2013
Which brings me to another – hot of the press – incredible article about FATCA written by Professor Denis Kleinfeld, Of Counsel to Fuerst Ittleman David & Joseph PL, Miami, Florida:
FATCA – Predictions of Implementation Failure Proving True
The article is well researched, well organized and well thought out. It is the perfect antidote to Robert Stack’s FATCA Myths coming from Treasury.
Leaving the technical aspects of FATCA, the article includes:
Americans are not alone in not trusting the US government. The current Administration is mired in scandals of momentous proportions. Various people at the IRS have raised their constitutional right (taking ‘the Fifth’) to refuse to testify before Congressional committees about targeting political groups, Benghazi, Rosengate (involving news reporting), Fast and Furious (where the Attorney General has been held in contempt of Congress, Solyndra, and a long list of other disputes which also includes Congressional actions all of which impacts the overall credibility of the administration of the US government. The FATCA anti-privacy offensive has been linked to the US surveillance operations being conducted by the National Security Agency (NSA) and its wide-ranging covert operations. This is part of the collective atmosphere and environment that will influence the operations of an FFI when they agree to participate in the FATCA regime.
There has long been a battle over the income taxation of domestic and foreign related transactions. FATCA appears to be only the latest. Prominent commentators have stated that the United States is in an income tax crisis which has now reached new depths. They have pointed out that the federal tax base is under ‘widespread assault.’ For nearly the 100 years of the existence of the income tax in the United States Congress has been unsuccessful in reforming it. The spectacle of politicians pledging to overhaul the tax system is the recurring theme of every election. It is not tax evasion that has created the need for offshore tax havens. Tax havens exist because of the income tax system. Whether the totality of events of which FATCA has become a prominent feature will finally result in adoption of a more efficient and effective tax system world-wide remains to be seen. What can be said for now is that predictions that FATCA could not be implemented are proving true.
As I wrote in response to Calgary411’s post of this article on another thread:
That article is maybe the most in depth look at FATCA and the political landscape that surrounds it that I’ve ever seen.
This line in particular is a lightening rod, at least to me:
”Tax havens exist because of the income tax system”
Lack of trust in the US is what it’s all about. Let us count the ways.
This piece was passed to me by another with interest in all of this — so I can’t take credit for the find. (I would likely never have stumbled across that.) I had not seen it before and wanted to bring it to light.
It is dated January.It is dated October 1, 2013 so no one, including me, will have seen it.Perhaps some have already seen it, but not me —Isurely would have rememberedwill remember such a brilliant writing.I have sent it along to my Canadian government representatives. I hope they take good note of all it says.
@Calgary411
Are you sure that the article’s date of 01/10/2013 doesn’t represent October 1, 2013? In the article Professor Kleinfeld writes:
“Legislation has already been entered into Congress to repeal it. The Treasury Department has declared a second delay of FATCA.”
As far as I know, Rand Paul didn’t introduce legislation to repeal FATCA until May of this year, and FATCA’s second delay was announced in July of this year.
You’re much more observant than I am. Thanks, bubblebustin.
…”This same sort of staged hearing was repeated in establishing the legislative justification for the enactment of the Foreign Account Tax Compliance Act of 2010 (FATCA).
Witnesses before the Senate Subcommittee holding the hearings had a witness testify under oath that US$70 billion – over 10 years in tax revenue – is lost due to offshore personal income tax evasion. The problem with the testimony was that the witness had no methodology or any evidence at all to support the claim and the Subcommittee never asked for any. (When asked during a later conference where the number came from he said he “guessed.”)
The Senate Subcommittee issued its report based on its hearing saying the tax evasion figure was US$100 billion over 10 years. The support for this US$100 billion appeared in a footnote which referred to six magazine articles. Those articles, however, similarly to the testifying witness, had no methodology or evidence to support the quantification of the estimated lost tax revenues. Nonetheless, the Senate Subcommittee Report declared as a fact that US$100 billion of US income tax revenue is being lost due to tax evasion facilitated by offshore tax havens. The United States Congress Joint Committee on Tax estimated that FATCA would raise US$792 million additional tax a year for the next 10 years…”
The lack of methodology and the lack of ANY robust source for the figures being tossed around to support the imposition of FATCA, and the cost to the entire globe, the taxpayers of every other country to implement an IGA, and all the other costs – with little or no benefit – event to the US, is absurd.
If what this article says is literally true, then it should be fairly easy for a willing scholar to go back to the records, track the comments by the witness/es, track the supposed citations and sources and thoroughly discredit and disprove the figures that the IRS, Treasury and FATCAnatics cite.
I suspect that TIGTA and the GAO know this well. The only reason that the IRS and Treasury have not been forced to provide a cost-benefit analysis, and to supply robust sources for their claims is that this is a pet political project at the highest levels. And one wonders how the father of FATCA, Richard Harvey is able to exist in academia if the basis for some of these figures is such that an undergrad would fail if they attempted to submit an academic paper with similarly flawed and unsubstantiated figures and claims.
And are any of the FATCAnatic papers submitted to actual peer-reviewed journals? Or is the international tax area not subject to the same rigours as other academics are?
Thanks for posting this — it is an excellent summary of all that’s wrong with FATCA, and I’ve already passed it on to my own bank manager. Good timing because he phoned me yesterday (this is North Shore Credit Union a.k.a. Blue Shore Financial — they just changed their name) to tell me a week ago, at their quarterly financial advisers meeting, they had an invited guest speaking to them about FATCA. Apparently this person passed around my BC Business article from a year ago as reading material to give them an understanding. Roy Berg will be furious.
Anyway — my manager has now had his consciousness raised and I sent him the Kleinfeld piece this morning. He is now passing it on to his CEO and the credit unions team of financial advisers. I think they are now in a big sweat. I’m going to try to find out if they have done anything to prepare beyond kick it around in meetings.
On the same score, my bank contact on the IGA negotiations sent me a note over the weekend saying that talks are ongoing and Finance still hopes to have an IGA signed in time to get something before Parliament this fall — either in the budget implementation bill or hidden in something else. It’s unclear what the US govt. shutdown will have on this process — might slow it down considerably.
Anyway — I’ve been out of the picture for the last month in UK/Europe but trying to stay on top of this. Lots of a really good articles coming from Lynne, Victoria and others on this. Keep it up.
Victoria and I pointed out in two of our articles (Simple Premise and Losing Its Way) that there has been no cost-benefit analysis. We also pointed out many of the FATCA Fallacies.
If she and I could do that with no accounting of financial management training, the only reason I can think of that the Treasury and IRS professionals haven’t done an assessment of their own to counter the global “myths” is for one reason. They don’t want to because they know what it would reveal.
I have an Open Letter to Obama, Lew, Werfel and Levin at The Money Guide today.
http://themoneyguide.ca/open-letter-president-obama-us-treasury-secretary-jack-lew-irs-acting-commissioner-daniel-werfel-senator-carl-levin/
Not really, Calgary. It just felt a little more current than the early year, so I went looking for evidence 🙂
@Blaze
Of course they don’t want to discuss this. I suspect there are two reasons:
1. As you point out in your article on the Hill “Premise gone wrong” the purpose of FATCA has changed. Whatever it was, FATCA is now about:
A. Control and collection of DATA
http://maplesandbox.ca/2013/carl-levin-fatca-for-law-enforcement-national-security/
B. Confiscating the share of Canada (and other countries GNP) based on the excuse that U.S. citizens live in those countries.
http://renounceuscitizenship.wordpress.com/2012/06/12/how-citizenship-based-taxation-steals-from-the-treasury-of-other-countries-pfic-edition/
The U.S. is a nation of laws. The problem his that law has become a substitute for morality.
http://isaacbrocksociety.ca/2013/03/22/when-law-becomes-a-substitute-for-morality/
Still another ramification of FATCA discussed in Keinfield’s article.which should cause a big sweat as Arrow has alluded to.
“While director and officer liability has not been given any consideration by government or financial industry advisors, it is hard to get around the fact that not only may there be institutional liability but also personal liability on the part of the institution’s officers and directors. The risk exposures to possible liability due to FATCA should be reviewed closely to determine if insurance coverage is available and at what premium cost.”
@ USCitizenAbroad
Thank you so much for leading us to Professor Denis Kleinfeld’s article. It’s magnificent!
Another interesting aspect of the article is the direct link between the cost of the HIRE Act and a means to fund it —FATCA.
“FATCA was then enacted to serve as the revenue enhancement to the Hiring Incentives to Restore Employment Act of 2010 (the HIRE Act). Essentially, FATCA was put into law so Congress could justify a US$100 billion increase in spending”
As if it were possible to trust and respect the IRS any less:
http://uk.reuters.com/article/2013/10/02/usa-fiscal-tax-delinquents-idUKL1N0HS18F20131002
….”…”The IRS can levy, but we can’t get the help to stop the levy,” said Diana Leyden, a tax lawyer and director of the low-income taxpayer clinic at the University of Connecticut. “This is a real problem.”
Leyden said her group assists as many as 140 people a year in fighting IRS disputes.
Asked about the situation, a U.S. Treasury Department spokeswoman referred questions to the IRS’s shutdown-contingency plan, which says the agency is continuing activities “necessary for the protection of government property,” including “seizure cases.” She declined to comment further.
An IRS spokeswoman said the agency’s “shutdown plan is consistent with (its) legal requirements.”
Under tax law, the IRS can seize property from Americans who have not paid their taxes. Known as levies, such seizures can target bank account balances, real estate or other assets.
With the shutdown two days old and continuing, other parts of the IRS are closed, including its customer-service phone lines and its staff of full-time taxpayer advocates. IRS walk-in taxpayer assistance centers are also closed.
The U.S. Tax Court, which handles about 90 percent of challenges by taxpayers to the IRS, is also closed.
Despite this, tax levies are still being mailed automatically and enforced by IRS agents who were not furloughed….”
http://intltax.typepad.com/intltax_blog/2013/10/famous-tax-quotes-the-irm-holds-no-legal-significance.html
Another reason to sever any connection with the US, where the ‘US taxable person’ abroad has no rights, representation, no access to justice;
“The following is a quote from the U.S. District Court in Northern California regarding a taxpayer’s reliance on the Internal Revenue Manual:
“[T]he IRM holds no legal significance.”
Hom v. U.S., U.S. District Ct., N. Calif. No. C 13-02243 WHA. Dated: September 30, 2013″
and, also, consider this story from The New York Times – International Weekly for today has on the front page an article called;
“When Trust is Broken” by Peter Catapano, October 13, 2013
It opens by saying;
“You may have heard that love makes the world go round. But more likely it’s trust……..
…”But what happens when trust is broken? As a psychiatrist at Weill Cornell Medical School in New York, Anna Fels has seen the fallout while treating patients “who had suddenly discovered that their life, as they knew it, was based on a long-term falsehood,” she wrote in The Times. ……”
“…….In the crises that follow, she wrote, it is the betrayed, not the betrayer, who has the tougher time. “The emotions they feel, while seemingly more benign than those of the perpetrator, may in the long run be more corrosive: humiliation, embarrassment, a sense of having been naive or blind, alienation from those who knew the truth all along and, worst of all, bitterness.” ”
…”Much of the American public may be feeling this. First, there are the reports of personal data gathering and the invasion of privacy conducted by both government and business. Most recently, The Times reported that the National Security Agency was creating “sophisticated graphs of some Americans’ social connections that can identify their associates, their locations at certain times, their traveling companions and other personal information.” …”
Here is the link to the article, which also appeared in the China Daily
http://www.chinadaily.com.cn/sunday/2013-10/13/content_17028457.htm
We have explored the deep feelings of betrayal, distrust, resentment, and anger we feel towards the US in being treated under FBAR and FATCA as if merely living outside the US suspends all rights, and allows the US to treat us all as criminal suspects in need of minute annual inspection – despite the fact that we are all law abiding taxpaying residents with legal savings in the non-US countries where we live, and where many were actually born.
Many of us at IBS have said that any trust of the US we had has been broken, and vestiges of our regard for the US are swept away by the fact that it refuses even to consider a commission to examine our concerns, while punishing us via the BSA and FATCA, and grinding up minnows and krill who tried to resolve things as instructed by the IRS via the OVD programs. What was our ‘crime’? To live outside the US, with a US parent, or a US birthplace or an expired greencard.
The US is busy burning all its bridges in the world, alienating all those it defines as ‘US taxable persons’ and citizens abroad.
There is no relationship where there is no trust.