32 thoughts on “Stated in honor of FATCA: “You [Americans] disgust me.””

1. @swiss pinoy
   Obviously the commentator does not recognize or know that we pay higher taxes than the USA. I went to look at the comments on CNN but you have to join up and the last few years CNN has fallen out of favour with me..So much misinformation from them.Gone are the days of Ted Turner CNN.

2. It’s easy to vilify us when the USG and its representatives make no distinction between us and bonafide offshore tax evaders and ignore, even deny, the detrimental effects of FATCA on its citizens and green card holders.

   For too many people like this commenter “a little knowledge is a dangerous thing”, especially when they have a bias against us.

3. best to speak in the language that an average blog commenter can understand—something like, “go back to doing what you do when you’re not Writing on the internet, you wanker”

4. …or the other thing you wank to on the internet.

5. Most homelanders don’t understand how their own taxes work, so it’s not a surprise that they don’t understand the exempt for expats (which no one seems to remember only applies to people who work for someone. If you work for yourself, it doesn’t apply.)

   There is also a continuing class-ism thing at work too, which the USG openly exploits. Homelanders are sold the idea that any USC living in another country is wealthy and that our lifestyles are movie-star like.

   Couple this with the fact that to a homelander, having USC status means you must have lived here or been born here (they have no concept of duals who’ve never set foot in the US), the surprise is really that more homelanders aren’t spewing this nonsense pov.

   And finally, they don’t, can’t or won’t understand that the way the USG does things is not the way govts in the rest of the world does things in terms of expats and taxes and they have no comprehension of what or how tax treaties work.

   Homelanders are extremely sheltered, generally speaking, and sadder still is that they have no idea how blinkered and brainwashed they truly are. Nor do they understand that for all the talk of rights and freedoms, they might actually have less of both than people in other countries.

   I applaud those here who continue with the outreach education of the homelander but I believe that effort is better spent in one’s country of residence.

6. I decided to write this and get a few things off my chest. This is almost too long for a comment though. Is there any way to have it on the main page as a guest post? Feel free to share.

   A letter to America from the son of an American

   Several million US citizens live in other countries. Some are there as students, some are doing a stint abroad for an American company, and others have married a foreigner and decided to stay abroad with their spouse. Some Americans abroad, like London mayor Boris Johnson never even lived in the US, but were simply born there while their parents were temporarily working in the US. Others, like me, weren’t even born in America, but are American because one of our parents passed on their citizenship to us. Americans abroad are now in a moment of acute crisis, and I want to take a moment to talk about us and expats in general.

   1. Expats are good for America

   Just as it’s great for America to have talented immigrants move into the country, it’s just as great having talented Americans move out. My dad moved to Europe in the 70s working for a US company, selling US made products. Later on, he married my European mother and I was born a few years later. After a while, he got a new job and he opened up his own small business on the side importing and selling ‘made in USA’ hats in Europe. In his small way, he created jobs in America and lowered the trade deficit.
   He became part of the local community, and acting as an unofficial ambassador to his country, and helped a few people go the US on vacation and spend their tourist money in US cities and national parks.

   He died a few years ago, and though his death was very sad for us, at least he didn’t have to see his country turn against him and treat him as a potential tax cheat.

   2. Expats have to compete with other expats from other countries

   Lets stick with my dad for this hypothetical example. Lets say a German expat lives in the same town as my dad, and is trying to sell ‘Made in Germany’ hats. His business (simplified) is:

   import product (10$) => mark up for himself (5$) => Pay local taxes (4$). Total price 19$

   My dad in the same situation:

   import product (10$) => mark up for himself (5$) => Pay local taxes (4$) => pay US taxes (3$). Total price 22$

   Both products cost the same to make, and both expats are making the same amount of money, but the American hat is more expensive. Maybe in the case selling hats this wont make a big difference, but what about on the larger marketplace? Multiply this small example for every American company and you see why America makes so few products these days. Americans need to compete, and we as Americans are doing everything in our power to hinder them on the global market. This is why when country A and country B enter into a free trade agreement, both countries benefit, but when the US enters a free trade agreement, only the other country benefits, and America suffers. The game is rigged to America’s disadvantage, and it’s a disadvantage we’ve foolishly imposed on ourselves.

   3. Not every American expat chose to leave

   I was born in Europe, and have never lived anywhere else. Thanks to my dad though, I’m also a US citizen. I didn’t choose to be American, but the birth lottery made me a citizen of a country I don’t live in. And that’s ok, and I’m not unique in that respect. The US is full of people just like me. For example, many in the US have Irish ancestry, and a few even have Irish passports as well as their US passport. Does Ireland treat these people with suspicion, and assume they are taking advantage of America’s lower tax rate to escape Irish taxes? Does Ireland force them to pay up, or renounce their passports?

   Like I said in the beginning, having expats abroad is a good thing, even if these expats have almost no link to the ‘homeland’ any more and don’t plan on ever returning.

   For Ireland, having all these ‘Irish’ people in America is great! Irish culture is celebrated and promoted, people travel to Ireland and spend their money there, and last but not least (wink), the Guinness brewery makes money selling their product to all the Irish bars in America. And this costs the Irish government nothing!

   What about me, the European with American ancestry? When I was a kid, I thought it was great being half American. We used to visit my grandparents, and bring back things like root beer and peanut butter. My mother once made pumpkin pie for me to take to school, and this was something that none of the other kids had ever tasted. I told my friends about how great it was visiting my grandparents and what a great country America is.

   Now, things have changed. The banks here have started treating me and my family like criminals and lepers. The accounts I inherited from my father were unceremoniously closed, and to open up a new account I must first sign a waiver giving up my constitutional privacy rights, so the bank can send all my information to the IRS various US government agencies. A small volunteer group I’m in was looking for a new treasurer, but I had to decline. Had I accepted, I would have to disclose the charities accounts to the IRS, and the bank would likely not want the regulatory nightmare of having a US person for such a small account balance. No employer here would be foolish enough to hire an American for a job that would give them authority over any bank account.

   Every year I have to fill out IRS forms and a treasury form (FBAR) that threatens me with a minimum penalty of 10’000$ if I make a mistake. Being American or associated with one is now so bad, that most of my American friends are either renouncing, or moving back. Some people in my situation, but who never knew about having to file taxes to one of their parent’s home countries are being treated like criminals, and fear arrest if they ever visit America. A European friend even cancelled her wedding to an American once she discovered the tax consequences for her and her family. I, and many others, feel betrayed by America.

   Some people talk to me about wanting to emigrate to America. Once they find out what it means to be a US taxpayer, most reconsider though. If they were to work in the US for a few years, then decide to move back home, they would still be US taxpayers until they renounce their Green Card, and this might include a prohibitively expensive Exit Tax.

   Congress decreed in 2010 that every bank in the world must report to the IRS, or face consequences (FATCA). Imagine if France decreed that every American bank must report to the French tax service, or be shut out of the European market. America would take that as an act of war!

   4. What does America expect of its expats?

   I sometimes wonder. Americans abroad are for the most part proud of their heritage, and for the most part promote American interests in one way or another. No we’re being told to either come home, or stop complaining and renounce. Fine. It looks like that is exactly what is happening anyway. But who is going to sell American stuff abroad? And when people start badmouthing America, do you think the ex-US citizen is going to stand up for her?

   Do we want Americans to be like Soviet citizens who had to renounce their citizenship when leaving the country?

   What do you expect of me? I never lived in the US, and I’m not about to uproot my life and live there. I thought my US passport was token of my heritage, and symbolises where a part of me came from. It gave me the right to freely travel to my father’s home country, and say ‘I am an American’. It meant that when I found a small (and overpriced) can of root beer in a speciality shop in Europe, I spent that little bit extra to be reminded of those trips to my grandparents when I was young.

   What should I do? Leave my friends and family and go live in the US? Quietly surrender and file taxes to two countries for the rest of my life, with my bank sending all my private account data to a foreign country? Or accept that America was a part of my father’s life, but not of mine, and renounce my US citizenship.

   With the exception of backward dictatorships, no other country forces this kind of decision on their citizens. America needs to wake up and take steps to save what is left of her diaspora before it’s too late.

7. @AJ, the problem is that we’re collateral damage.

8. Human Nature: people believe what they WANT to believe.

9. Pingback: The Isaac Brock Society

10. http://www.nytimes.com/2013/11/04/opinion/krugman-those-depressing-germans.html?nl=todaysheadlines&emc=edit_th_20131104&_r=0

    Just look at the Nobel Beauty Pageant winner’s article about the Germans being too successful, and the sheeple that comment, and you will get a better understanding of what the commenters are being fed with.

11. @Swedish Citizen…
    Why can’t they all be unrestrained consumers like us, eh? This equates to: work and industry is bad, gluttonous consumerism and debt is good. So Germans, quit saving and spend spend spend. It is what America demands, and of course, whatever America demands is good for you. Give us your phone records and your financial data to feed that other gluttonous appetite that we have where No Morsel Too Minuscule for All-Consuming N.S.A.

12. Great explanation of the situation for those living and/or born abroad @AJ.
    Specially like the simple illustration of the added costs of being a small business person deemed US taxable abroad, or just being an individual abroad – who is being double taxed by the US.

    And appreciated Yoga Girl’s reminder that those who are self employed are further penalized because they can’t use the same exclusions as the waged. Also applies to those whose income is NOT traditional wages from an employer – ex. Employment insurance benefits, disability benefits or grants, maternity benefits, retirement income, grants in general, (severance lump sums?), etc. We should not have our NON-US benefits taxed by the US – another area of serious grievance since those benefits were provided from the NON-US taxes we and our fellow citizens abroad pay where we actually live. The US provides NOTHING to us. NO BENEFIT. ONLY JEOPARDY AND INSULT.

    This is why the bill to fund a Presidential Commission to look at expat issues is unlikely to go anywhere. Because anyone in the US with any familiarity with how this all works knows that the grievances are many and serious. Any even half-a–ed Commission would expose these things to the air and light.

13. badger, I agree that the US shouldn’t be entitled to collect tax on what is essential the taxes paid by people who are not their citizens.

    Another aspect that I left out is that the US penalizes stay at home parents whose non-citizen partners are the primary wage earners. When I file “married but filing separately” because there is no reason my Canadian only husband should be handing over his income info to a foreign to him government, the IRS notes that and penalizes me and there is also the not so small fact that the IRS will levy an estate tax on my husband (if I should predecease him) as though he and I weren’t married at all. Their is no right of survivorship, which is the same thing as the USG saying that they don’t recognize the validity of our marriage.

    AJ, what does the USG expect of you? Blind obedience. And for you to recognize its right to tell you what to do and allow it to monitor anything about your life that it chooses.

14. Thank you for speaking from your heart, AJ.

15. AJ, your post was incredible and I thank you for submitting that.

16. @Swedish Citizen…

    Thought you might be interested in what another Economist has to say about Krugman post on this Depressing Germans…

    Another useless “economic” lessons from someone who has never started or owned a business. Is it really so surprising that tenured professors who have life-long guaranteed jobs and income without having to “produce” anything of value at all, and are not held accountable for their cockamamie statements come out with such drivel?

    So, according to Krugman, the whole world would be much better off if we simply spend far more than we take in – or can ever take in! I’m surprised he doesn’t just come out and suggest that the Obama administration send everyone a check for $1 million – that would certainly spur consumption and production in no time. Unfortunately, it wouldn’t last long before there was no value whatsoever to the dollar!

    One of these days – thought I doubt it – Krugman and his fellow navel observers in DC will realize that economics is about long-term competition and the ability to providing sustainable growth – and that the purpose of accounting is to ensure as accurate a level of measurement of that process to ensure we remain on track, instead of trying to ignore the importance of that process. Currencies only provide relative values based on the comparative economic success of your major competitors. This is as true on the micro-economic level as the macro.

    Take 3 different companies all making “widgets” – 2 have strong cash-flows and profits; the other is leveraged to the hilt. Which survives the next downturn? Hands up all of you who said the highly leveraged one – and go to the back of the class.

    Krugman and his ilk have been seduced by the real – but temporary – advantage that America has through its printing press and its attending “dollar dominance”. This will not last! It especially won’t last if we continue down the road he advises because the rest of the world will simply start looking for another alternative.

    Germany – though its conservative economics and export and high-value-added global strategy is providing that alternative because their and the Dutch’s actions are what strengthens the Euro as the better cache of value. At the bottom of the recession, the Euro fell to $1.20; it is not $1.36 despite what has happened in Greece, Spain, and Italy.

    Here is another way of looking at it. Look at the US economy the way we look at the EU. Krugman’s complaint is that if only the entire USA were to run their states the way New York, Illinois (Land of Obama) and California did instead of Texas, Florida, and the Dakotas, our economy would actually be booming. Does this make any sense to anyone with a modicum of common economic sense? Of course not!

    But sadly we have a “professor” of economics at Princeton who can’t quite grasp the simple reality of his own subject. He, like his fellow traveler in the White House, clearly have become blinded to their own sense of “brilliance” by the same college of the Nobel Committee that granted Al Gore a “peace” prize for pseudo-science and Obama the same simply for showing up. (All the while, btw, ignoring Bill Clinton who solved the sectarian violence of Northern Ireland, brought the butchery of the former Yugoslavia to an end, and move the Middle East process substantively forward, for a while, and his Clinton Initiative that is creating real solutions for real people in the world – and I didn’t even like him!).

    This speaks more to the total lack of intelligence at the heart of the Nobel Committee who seems intend on finding liberal fools that mouth nonsense about theories that never work – because then can’t!

    But that’s just me…..

17. It is the first time I post on this site, which I have followed with a tangential interest for some time. I do not have generally much of a contribution to make, since I am a ‘homelander’ with overseas assets that would not meet any of the reporting thresholds. However, I was born overseas and have multiple citizenships due to ancestry, so I feel partially qualified to occasionally say a few things in conversations where I have some basic knowledge..

    The analysis of Germany made by some of the other posters appears disconnected from actual real life data. There are some aspects of economic reality that will surely surprise many ‘Brockers’.

    The first fact is that Germany GDP per capita is about 20-25% smaller than in the United States after adjusting for purchasing power parity (c. $40,000 vs. $50,000), so that Germans are on average materially ‘poorer’ than Americans. And since they pay a lot more taxes than Americans, the differential in disposable income is even greater.

    The second fact is that Germany carries significantly more public debt than the United States, with a public debt to GDP ratio of 82% versus 74%.

    The third fact is that Germans are actually not that thrifty at all, and in fact total domestic demand (spending) has grown faster in Germany since 2007 than in any other Western country (and Japan) including the United States.

    The fourth fact is that Germany is not particularly productive or cost-competitive. A major international consulting firm has calculated that industrial manufacturing costs in Germany are over 15% higher than in the United States, where they actually are now thanks to the exploration of shale gas within 5% of China.

    But the most worrying fact about Germany is that it is a giant demographic time bomb, where catastrophically low fertility rates and a hostile attitude towards immigration are leading to a an explosion of the ratio of inactive to active members of the population.

    Thank you for allowing me on this thread.

18. @Just Me

    Isn’t Krugman a rabid Keynesian? I still remember when you explained Keynes v Hayek to me. I love the stories about the two’s personal lives. Where’s that dramatization you posted at one time?

19. @J.E. Gutierrez, you make some good points. German taxes are too high, the government has too much debt, etc. Every day, I get investment emails which talk about the end of Germany being around the corner. All of this makes it all the more puzzling for the U.S. Treasury to criticize Germany’s trade surplus. Without the bulk of German trade being in overseas markets outside of the EU, Europe would be in serious trouble.

20. @SwissPinoy

    Well isn’t that the pot calling the kettle black!

21. @ J.E. Gutierrez
    A few of the figures mentioned could be looked at lots of ways. Purchasing Power can be adjusted for lots more factors. The first one is that inflation in both countries is quite greater than reported. Debt ratio for US has quite a few issues, I Believe even Wikipedia has it at about 104% or such, when only considering “Govt debt” even without all of the liababilites excluded. Don’t know about Germany, but with USA the debt ratio, if reported honestly, would be frightening.

    Germany indeed suffers all the stagnation factors you mentioned, and Another not mentioned was the spike in inflation when the Euro was introduced.

    But whether Germany is good or bad in its current situation, is less relevant than Krugman’s (and Treasury) advice (demand) that Germany should stop saving and exporting and should begin spending and importing.

    I remember way back sitting through Freshman macro-economics (Keynesian mind Control) and wondering what planet I was on. It took me a few years to realize that the entire discussion relies on a graph where they put the dependent variable on the x axis and the independent variable on the y axis, and then state theories upon things are related to one Another.

    What we know is that USA will continue spending and “stimulating”. 2010 HR 2847 HIRE Act was a stimulus bill and we know where it got us.

22. @Mark Twain

    This would have made your macro-economics class more interesting. Hayek: like “high explosives”.

23. @ Mark Twain

    J.E. Gutierrez is citing statistics for debt to GDP as compiled by the Central Intelligence Agency. I suspect that J.E. Gutierrez has easy access to these figures. He/she, rather than commenting on the subject of the post or A.J.’s heartfelt letter, has used his/her first post to tell us that America is much better than Germany and is citing misleading CIA stats.

    If the figures look wrong, it’s because the CIA uses the US Treasury definition of “public debt” which excludes “intra-governmental” debt (ie US Treasury securities issued but owned by other parts of the government such as Social Security etc.). By a more conventional definition, the US debt to GDP is in excess of 100%. We know the government has borrowed $16 trillion (since they have bumped up against the debt ceiling) and the US economy is about the same size. Of course, if you add in unfunded liabilities, as accounting standards require of all corporations, then you get a figure of about 600%.

24. All in all, I think Germany is doing pretty damn well under these difficult circumstances, healthcare for all its citizens included.
    And as for America- it is one of the oldest tricks to try to focus on other`s shortcomings instead of one`s own.

25. Yeah, we disgust him? I think he at the very least disgusts me. But, it seems my comments there keep getting deleted. Oh, and apparently, I have a sanity issue, too. Go figure. Having a sanity issue because….

    1. I chose to make a better life for myself in Canada, rather than having no real life in the US.
    2. I chose to point out the hypocrisy of a ‘free society’ that would by government policy, force its diaspora to either trade away their heritage, as well as money, in exchange for their freedom from tax chattel slavery – or else to return to the homeland and accept their bondage to the state.
    3. I chose to leave out of protest of US domestic and foreign policy. I mean really. Ridiculous wars for profit on our dime? Bank bailouts on our dime? Warrantless wiretaps, and the NSA spying on everyone? Dissidents fleeing to Russia for asylum?

    It would be a sanity issue to go back and drink the damn Kool-aid!

    Apparently, some homelanders even believe that Americans are supposed to live in the US and no where else. Whatever happened to the nonsense of ‘love it or leave it?’ Now we’re not even free to leave? $450 to renounce, plus an exit tax if you make too much? FATCA making it next to impossible to even live abroad short of renouncing? Sounds a lot like communism to me, or at least a helluva lot of spite.

    The East German SPD used to think that those that committed ‘republikflucht’ from the GDR as having ‘sanity issues’, namely ‘backward and depraved’.

    Borrowing from Wikipedia…..

    “Both from the moral standpoint as well as in terms of the interests of the whole German nation, leaving the GDR is an act of political and moral backwardness and depravity.

    Those who let themselves be recruited objectively serve West German Reaction and militarism, whether they know it or not. Is it not despicable when for the sake of a few alluring job offers or other false promises about a “guaranteed future” one leaves a country in which the seed for a new and more beautiful life is sprouting, and is already showing the first fruits, for the place that favors a new war and destruction?

    Is it not an act of political depravity when citizens, whether young people, workers, or members of the intelligentsia, leave and betray what our people have created through common labor in our republic to offer themselves to the American or British secret services or work for the West German factory owners, Junkers, or militarists? Does not leaving the land of progress for the morass of an historically outdated social order demonstrate political backwardness and blindness? …

    [W]orkers throughout Germany will demand punishment for those who today leave the German Democratic Republic, the strong bastion of the fight for peace, to serve the deadly enemy of the German people, the imperialists and militarists.”

    How long will it be before they start building a wall, and start shooting at those trying to leave? Is it really a ‘sanity issue’ to be looking for the exit door in a bid for survival and self preservation? Is the desire to live in peace and freedom a ‘sanity issue’, too? Is the desire to no longer be associated with a society of self serving warmongers really a ‘sanity issue?’

    Every time I try to think of the logic behind this, I end up coming here….
    
    ….and yet it’s the lunatics that are running the asylum!