This post appeared on the RenounceUScitizenship blog and was motivated by the included brilliant and insightful comment of Badger.
— U.S. Citizen Abroad (@USCitizenAbroad) October 5, 2013
If #FATCA becomes fully operational, it will result in the following:
Step 1: Non-U.S. countries will (at their expense, whether IGA or otherwise) identify those people who the U.S. defines (a possibly shifting definition) as U.S. persons;
Step 2: Once identified the U.S. will use the existence of those “U.S. persons as the excuse to transfer a share of the GNP of that country to the United States on a permanent and increasing basis. In other words: FATCA is to enforce citizenship-based taxation which is a “forced tribute to the U.S.”
The reasons include:
1. There is nothing to stop the U.S. from expanding the definition of U.S. person, and you can be sure it will do so;
2. U.S. citizenship-based taxation operates to impose
penalties taxes on things that are NOT taxable in other countries. Examples: mutual funds, Canadian Controlled Private Corporations, PFICs
penalized taxed by the U.S. mean a permanent transfer of wealth out of the country, which results in a gain to the U.S. and a loss to the non-U.S. country. Example: Sell your principal residence. A portion of the gain goes to the U.S.
5. This will result in the rest of the world paying a permanent share of its GNP – a forced tribute – to the United States.
6. FATCA negotiations are focusing only on the banks and not on the true effects and operation of U.S. citizenship-based taxation, resulting in a situation where, because they don’t truly understand how U.S. citizenship-based taxation works in practice:
The rest of the world doesn’t have a clue what is coming!
And this doesn’t even discuss the FATCA transfer of data!
The following comment from Badger explains why and how this is so and includes some additional brilliant commentary. I have bolded the portions which are most relevant.
Considering all the work it has taken all of us to really understand CBT and FATCA, and it’s import, as well as Just Me’s DATCA and GATCA, I think that many of those here at IBS know quite a bit more about all this and how it fits together than many politicians, journalists and authors.
It is possible that once forcibly confronted with this letter from Mulcair, and from Rankin, and more public debate, some who embrace FATCA unquestioningly will see that as designed and intended, it will really hurt only minnows and krill abroad, while US residents deliberately hiding money, and US corporations with specialty US accounting and US tax law firms on retainer will find other ways to get around US taxeshttp://www.ips-dc.org/reports/corporate_tax_dodgers .
I would like to ask Linda McQuaig and the Tax Justice Network what they think of the US Ambassadorships for sale to the highest bidder – rewarding all the big political fundraisers http://taxpol.blogspot.ca/2013/09/how-to-buy-us-ambassadorship-and-how.html . And, all those political appointees who were Goldman Sachs executives? What does she think of having had a previous tax cheat for a Treasury Secretary – Geithner,http://blogs.telegraph.co.uk/news/alexspillius/8174427/Tim_Geithners_tax_evasion_/presiding over the FATCA and FBAR persecution of Canadian minnows, and now, his successor Jack Lew with offshore investments in the Caymanshttp://billmoyers.com/2013/03/08/jack-lew-citigroup-and-the-ugland-truth/ , and Penny Pritzker new Commerce Secretary http://en.wikipedia.org/wiki/Pritzker_family with that huge offshore family trust?
There are ‘none so blind as those who will not see’http://www.bartleby.com/100/204.html that FATCA is NOT at all what the US pretends it is, and it is NOT designed nor intended nor going to help the rest of the world, including Canada, because the US is trying to make ALL the world ‘US taxable persons’. FATCA will not bring Canada and the rest of the globe rainbows and unicorns.
Those who are NOT US politicians (with US vested interests and worldview), who laud FATCA as a way of attaining some kind of ‘tax justice’ for the globe should study up on the inherent conflicts between the US system of taxation and the systems of the rest of the world. The US wants to rake in all the global chips – while still allowing loopholes to favour US corporations, and any other US persons who can afford their own personal lobbyists.
I cannot believe that Linda McQuaig truly understands what is at stake for Canada and over 1 million Canadians if Harper enables the US extraterritorial system via FATCA, overlaid on top of the many serious and unresolved problems that we have already identified with the US treatment of our ordinary legal local post-tax Canadian accounts, registered savings, sale of our principal residence, Canadian mutual funds as PFICs, punitive treatment of our estates which pass to non-US spouses and family, and refusal to allow minors and those deemed incompetent to renounce, etc. We are NOT protected from double taxation by the US, nor are the rights of our Canadian-only spouses, family and employers under the BSA FBAR. I want Canadian FATCAnatics confronted with this – and forced to debate it in public here in Canada.
‘A wise man changeth but a fool never will’.