Frustration, exhaustion, and a sense of impending disaster appear to lurk among those Brockers and Sandboxers who have had FATCA on their minds more frequently in a day than teenagers think about sex. We are at a crossroads here in Canada. Our Conservative government is about to make history; we all feel it here in this place we call the Isaac Brock Society, which is much more than just a website. We all hope that the history our government is about to make is the ‘right’ one.
Many citizens of the world, not just Canadians, have contributed their individual talents, and personal attributes in countless ways to educate those who do not understand FATCA, which is no easy task! It is not my intention for this post to name them all, or describe what they have done, but we know, and they know, and everyone reading this who values human rights and freedoms knows.
Sadly, we are not there yet. Most Canadians have never heard of FATCA. Most people in the world have never heard of FATCA, nor have they heard of citizenship based taxation. Intuitively, almost everyone gets it that it is unfair to tax people who do not live in the taxing country, and do not earn income there. Unfortunately, most people don’t connect the dots between the bad, unfair things that happen to ‘other people’ with the bad, unfair things that could happen to them.
Our job is to educate the masses, so that our voice becomes much LOUDER. We have been trying, but people in Canada, and the USA are easily distracted with things such as the antics of Rob Ford. How sad is it that little media attention was paid to a group of Canadian citizens who spent 2 days in the cold demonstrating on 18 inches of curb outside a meeting held by Canadian bankers who were discussing how to smoke out the ‘US Persons’ among us?
It is not over people. We haven’t lost. And we are not going to. We have accomplished too much to give up now. However, Mr, and Mrs, Joe Canadian are still asleep in front of their computers and TV sets. If they could hear us, they would be on our side, and at our defense. We have a voice that Canadian politicians and bankers, and US politicians and bankers, have definitely heard. They fear us, as they should, and they hope we will go away so that Mr and Mrs Joe Canadian don’t ever wake up. We won’t go away!
So, how do we get the critical mass that we need to effect change? I don’t have the answers, but I am confident that the group does. Every day, as the ripple of knowledge spreads, more and more individuals discover the group of people at IsaacBrockSociety and come to us full of passion, and talent to offer in this fight.
For example, someone whose name I won’t mention because I am not sure if he/she wants me to, took our Canadian FATCA fact sheet and used his/her graphic design skills to transform a bunch of words into something eye catching and alarming. Check out the PDF version of the Canadian FATCA fact sheet linked to on our side bar. Maybe someone else can come up with a WORD version. Imagine if everyone across Canada saw it! Imagine if 10,000 people saw it, and .01% of those decided to participate in a public demonstration against FATCA. Imagine 100 people in a public demonstration at Parliament Hill. Do you think anyone would notice? I think they would.
@Crystal London
1. My first point is to explain FATCA and what it is, ie. the US unilaterally imposing their law on foreign soil. Then explain why the IGA is deemed necessary, to get FFI’s out of trouble for breaking privacy laws by allowing the government to transfer confidential data on Canadian citizens to a foreign jurisdiction. I’ll mention constitutional expert Peter Hogg’s letter to the Ministry of Finance warning against the IGA and explain how it is a violation of the Charter of Rights and Freedom which risks class action law suits in Canada.
2. My second point will hit on all of the negative tax implications for all Canadians, especially those with a US connection. Even though we pay higher taxes in Canada, that does not mitigate IRS tax debt. The US taxes many things that Canada does not. All of the registered tax deferred/exempt accounts like RESP, TFSA, RDSP are fully taxable by the IRS. So is the sale of a primary residence in Canada. Taxes are a two way street. I pay higher taxes in Canada, the flip side to that is I get to partake in all of the benefits and programs and tax incentives that Canada has to offer. Turn Canadians over to the IRS and we have no flip side. Just high taxes in Canada, taxed by the IRS on everything that Canada does not tax and no programs to tax incentives to benefit from. Touch on the gift/estate tax which prohibits my Canadian husband from from withdrawing his/our money from our joint account because the IRS considers it a gift to a non-US person??? Can’t put my Canadian kids through university, help them buy their first car or first home (if someday I’m fortunate to do so) because a Canadian deemed “US person” can only gift up to $13k per year to a NON-US person????
3. If time permits, I may hit on the prohibitive costs of having a professional prepare and IRS return from Canada.
I’ll leave him with one of the FATCA fact sheets as well as Peter Hogg’s letter to the Ministry of Finance. My MP is a Conservative, so I don’t expect him to start pounding his fists on his desk during Question Period regarding FATCA. However, I hope is initiates a conversation between him and Minister Flaherty.
@Crystal London – You say that you’re going to contact your British London MP, you do mean the UK?
If the IGA is going to stick in the UK, I have wondered with the IGA could be considered discriminatory. Should each UK resident’s data be treated in the same manner as another regardless of their place of birth, other nationalities, etch.
I hammered this drum over and over and it hasn’t resonated in anyone’s ear as yet. The UK IGA is legal ‘data discrimination’ and to make matters worse, if a dual US / UK citizen has a foreign place of birth they will avoid detect all together because UK banks will simply put them down as British.
Someone needs to mount a legal challenge in the UK. At least if the legal challenge was successful, it would force Parliament to change yet more legislation for FATCA.
I have talked to lawyer Avery and Hogg, they do not seem especially helpful to getting answers.
Once the EU agreed with FACTA IGA it became extremely difficult for other Western countries to decline. We have better guaranty of non collection of USA taxes in Canada then the EU
The problem with no IGA is that the vast majority of Canadian will be negatively effected by it.
1)The majority of Canadian-US person can still hide in the rule. So it more like less than 1% of Canadian population will be effected.
2) Besides Canadian not being able to own US assets it will increase interest rates in Canada because you can not access US capital market.
I think a more reasonable approach is to have the Canadian government preventing banks and brokerage from releasing info on recalcitrant Canadian $ accounts and closing Canadian $ accounts for Canadians.
@GeorgeIII,
Others have Avery on standby for a class action lawsuit, so I do not understand why you think he is not helpful. Also, Hogg has already written the government a long letter outlining why an IGA is unconstitutional. Are you saying Avery and Hogg changed their minds??
As for your comment that ‘the problem with no IGA is that the vast majority of Canadians will be negatively effected’, this is only true if USA is dumb enough to enforce FATCA AFTER CANADA SAYS NO. You do realize that enforcing FATCA on an unwilling country is suicidal to the USA right?
Regarding your comment about a more reasonable approach, could you explain that a little more. Are you saying that Canada should sign an IGA, but then ignore the rules?
Petros has already said that Hogg will not do a constitutional challenge. When I talked to both lawyer they did not seem to want to answers questions or sign up.
The USA has a tax treaty with USA. but the CRA will not collect USA taxes on Canadian citizens at the time it occurred. At the present time all the USA can do is collect 30% on US income.
What has changed from this post
http://isaacbrocksociety.ca/2012/02/13/3200/
If no country signed up for an IGA, then the USA, would have difficulty enforcing FACTA. THE EU is too significant a block to sign up. If they resisted FACTA would be dead.
US economy is over 10 times the size of Canada and we depend much more on them then the other way around. Oil, mineral, lumber (Canadian exports) are expensive item to shipped long distances, I phones copyrights and financial services are much easier to move.
If you include all the provinces the Canadian government debt is as large as US debt. This does not even consider the high personnel debt in Canada. There is a lot of talk about the housing bubble in Canada. The US Federal Reserve buying long bond in USA, keep interest low in Canada as well as America. American and other investor search for the best yields and will buy Canadian debt for the slightly higher yield and the expectation the currency exchange rate will be favorable.
I think it is better to make reasonable demand on Canadian government, that we are protected in Canada. Opposition parties can say anything but that they will not implement what is best for the majority of Canadian.
It is also apparent the the more socialized the government, the more it will allow USA to collect taxes. Sweden will collect from Green Card holders. New Zealand seems to be a pushover.
This is an explanation why USA has the advantage because it is the reserve currency.
http://conference.nber.org/confer/2013/SI2013/IFM/Maggiori.pdf
c’mon brockers. let us pound the blogosphere with comparisons of FATCA to OBAMACARE
http://buzz.money.cnn.com/2013/11/21/obamacare-insurers-stocks/?section=money_topstories&utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+rss%2Fmoney_topstories+%28Top+Stories%29
cant you just see the headlines?
“FATCAcare…… Financial Health Law looming disaster…..USG Overreach an issues morph to global financial privacy standards” or suchlike…….
go go go! Brockers rock!
correction
Opposition parties can say anything but that they will implement what is best for the majority of Canadians.
I was wondering…… if we cannot influence Canada and other foreign countries to go against FATCA, perhaps they would band together in a common effort to tell America that they are against CBT? I mean- CBT steals from their own coffers. What if Canada et al said “OK…. We`ll do FATCA but we want you to change to RBT like all civilized countries in the world.” Couldnt this be a line of argumentation that would work better? Canada has incentive as do other countries to stop monies from leaving their own country, and they could go along with FATCA at the same time to ward of economic retaliation (withholding) by USA.
Canada will not collect USA taxes from Canadian citizen (at time it occurred) and will not collect FBAR. This is even better then the RBT you suggested, Am I missing something, but at the present time the only thing FACTA can do is collect 30% on US source income on recalcitrant accounts. Europe is another matter.
Hey guys,
I’m working very hard in Switzerland to kill FATCA, and it would be nice to contribute some articles directly to Isaac Brock. Who would I need to contact?
Thanks!
@ GeorgeIII
You are missing something. It is not simply a matter of whether or not the CRA collects whatever from whomever, if ever. It is a matter of private financial reports being sent to the IRS via the CRA, if an IGA is signed. This singles out a subset of of the Canadian population and makes them less than equal to the rest. Whereas the “pure” Canadians will be able to retain their financial privacy, the “U.S. tainted” Canadians and Canadian residents will have their financial privacy violated.
@Em
Financial privacy gets a bad rap – most folks confuse it with secrecy, just as they confuse tax avoidance with tax evasion.
You’ve got that right, bubblebustin’,
And then there’s “our” financial privacy and “their” financial privacy. One needs to put oneself in another’s shoes. Perhaps the non-discrimination thing of handing over the financial privacy and account information of all Canadians to the US IRS would solve that and the problem of rights under the Canadian Charter. George gets to volunteer to turn over all of his financial privacy and maybe then others, including all the bankers, will follow his example.
Now that’s some creative thinking, Calgary411, LOL!
@GeorgeIII,
Just because the Canadian government says it won’t collect taxes or penalties incurred when a ‘US person’ was also a Canadian citizen, doesn’t meant that down the road they won’t be forced to ‘change their mind’.
This is where privacy of financial information is of paramount importance. Once the IRS knows where the gold is, what is to stop them from putting another law out there to collect the gold, with equally devastating implications for non-compliance?
In addition, those whose private information is sent to the IRS, are at heightened risk of identity theft. We know IRS has problems with this issue now. I sure would not be comfortable knowing my information was floating around god knows where in the USA, even with a GUARANTEE of never having to deal with the possibility of confiscation of any monies from the IRS.
@GeorgeIII,
P.S. I don’t mean to be rude, and I know that when I first heard of FATCA I did this a lot (and still do it sometimes), but FACTA is not the same thing as FATCA.
Privacy is essential to the health of the human soul. Financial privacy should be as precious to us as medical privacy. Without financial privacy people are not free to order their financial lives according to their own best interests. They will constantly be trying to second guess their observers as to whether or not something in their financial record will appear suspicious, even though it is completely legal and done for reasonable motives which simply do not translate into numbers on a spreadsheet. Without medical privacy, patients are reluctant to completely confide in their medical care givers, never being quite certain what other eyes are gazing at their medical file and for what purpose. This is not conducive to the practice of good medicine. I would not want to pull the entire population of Canada into the rabbit hole of financial reporting which goes far and beyond what is necessary to calculate taxes owed to Canada. I want to make sure nobody has to go down that rabbit hole.
You’re absolutely correct, Em. How do we put into our shoes all the “thems” that aren’t US Persons to hopefully have them realize how important financial privacy is and why it should not be handed over to a foreign power? FATCA affects us right now; will it or something similar affect “them” and their own financial privacy further down the road?
Today an email from a former work friend (we’re both now retired) that I no longer meet for lunch or some laughs over coffee, said “I do try and read what you send me, but find I get lost in some of the info.” This doesn’t affect her; i.e. she can’t put herself into my shoes, so it’s hard for her to understand where I’m at. It is the same, unfortunately, with all but one in my own family. It’s easier to just not talk to them about this, which is what so many of us are doing (or not doing).
So many of us affected; many who don’t yet realize they will be affected; so many in denial. But, where are all those who do realize their situation and can’t convey to their friends and loved ones what it would be to be in their situation? This is really a small number of us here. There is just a big disconnect. I don’t have any answers — as well others may have a very different experience than mine.
Hopefully there are enough “thems” married to, partnered with, and spawned from “us” to get their attention!
This is one of the best presentations I’ve come across about the “surveillance state” and near the end Mr. Hypponen talks about privacy in a way that resonates perfectly with my own views.
Living in a surveillance state: Mikko Hypponen at TEDxBrussels
Re Polly’s comment of November 21 at 6:45, I agree 100% that the focus should be on getting the US to switch to RBT instead of on repealing FATCA.
The tide has already turned in terms of information exchange: the OECD will be presenting its new “global” standard for automatic exchange of information for tax purposes next February (confirmed at the Global Tax Forum currently under way in Jakarta) and the holdout countries will be forced to go along at some point.
Also, as despicable as FATCA is, US persons are in fact already self-reporting all this information with FBAR and Form 8938. So even in the very unlikely event of a FATCA repeal, those of us wishing to keep US citizenship will still have to hand over the info to the IRS.
On the other hand, if the US were to join the rest of the world and switch to RBT, our problems would be solved.
I am pretty pessimistic about the US seeing the light any time soon, but we could try to pressure our governments to put the US on the spot, particularly in the OECD. Depending on the number of US persons in a given country, the amount of taxes paid to the US – and thus “stolen” from the local economy – could be significant. We need to highlight that aspect with our governments.
Any thoughts on a possible joint effort on this?
@Jane Doe belge:
1) Although I do not think that the FATCA battle is over, I agree with you, Polly and others that we need to increase our efforts to change CBT to RBT.
2) According to the IRS Data Books, the amount of Individual Income Tax, FICA (SS) and SECA (self-employment) taxes paid by “International” US taxpayers to the IRS* is:
2012: $6.8 billion
2011: 6.9 billion
2010: 6.6 billion
2009: 8.5 billion
2008: 7.0 billion
2007: 5.5 billion
2006: 4.0 billion
2005: 3.5 billion
For perspective, for 2012 taxpayers in nine US states paid less than International taxpayers paid to the IRS.
http://www.irs.gov/uac/SOI-Tax-Stats-Gross-Collections,-by-Type-of-Tax-and-State,-Fiscal-Year-IRS-Data-Book-Table-5
I have not seen data showing payments by international taxpayers by country to the IRS. Perhaps a FOIA request would bring that.
* – Keep in mind that there would also be income taxes paid to individual states by International taxpayers.
Thanks to those thinking along the same lines as I am. What with the NSA, information exchange is a whole other bag of worms. So maybe we shouldnt mix up issues. And I also agree that the information being exchanged is already being asked for.
What really matters is CBT/RBT- and I also think that if we made a BIG fuss about this in the media – we might find more sympathetic ears among the general population. I do believe that this should be the main focus. And we should try to get this injustice out into the media as widely as possible. Havent we all read papers here by law experts who say that the problem is really CBT? I think that all around, we would have a much STRONGER stance with an argumentation against CBT than against FATCA because this is also more easily understood by others. And as Jane Doe mentioned- the worst part of our nightmare would actually be over with such a change. And perhaps we could find more allies- because what we need is allies (especially in high places but also in the general popuation because they generate votes) – with this line of argumentation. I mean if we were to ask a normal canadian or frenchman or german what they would say to CBT for themselves- they would all balk. And there is the added advantage that all civilized nations use RBT. I just think we have a stronger argument based on this fact alone.
@Jane Doe belge
I agree that the root of our problem is CBT. However FATCA, even with RBT would still pose a threat to our nation’s sovereignty. If the US really wanted an international consensus in an effort to fight offshore tax evasion, they wouldn’t have devised something so one-sided and extortionate in nature as FATCA. They are clearly not being team players, and as someone once said here ” “If the camel once gets his nose in the tent, his body will soon follow.” Every nation has a lot to fear from FATCA.
Unfortunately, many who are affected by CBT are afraid to get involved in meaningful ways for the real fear of being outed as a “US person”. FATCA, once enforced will “smoke em out”, but it’s unknown whether the ensuing mayhem will elicit enough sympathy from the US government to make a switch to RBT. Spin doctors like Robert Stack will undoubtably pedal it as a screaming success! FATCA no doubt will produce some revenue, but there is something that it will be most successful at – the unprecedented numbers of US citizens renouncing citizenship – which will continue until the’s a switch to RBT, legislation passed that restricts renouncing even more than currently exists, or there are no more US citizens living permanently abroad to speak of.
Although I believe that US persons abroad were responsible for the majority of the International submissions made to the Committee on Ways and Means for Tax Reform, there were relatively few compared to the number of people living abroad. As those submissions were seemingly brushed aside, I suspect there will be even fewer made to the US Senate Finance Committee. I too am tired of slogging up that hill, but I still made a submission there also. Thank goodness for the tireless efforts of political organizations such ACA, AARO and others who will never give up!
They know that the best way to get your voice heard by the US government is to speak directly to them, and you can do so by writing to the US Senate Finance Committee. They are requesting submissions on International Tax Reform as we speak. You can read more here:
http://isaacbrocksociety.ca/2013/11/19/us-senate-finance-committee-comments-requested-on-international-tax-rules-addressing-individuals-by-january-17-2014-todays-report-addressed-only-corporations/
@Polly,
I think most of us agree that if CBT went away, we wouldn’t have a problem with FATCA. However, when we argue this point with our Canadian politicians, they say they cannot dictate US taxation policy. Our politicians CAN do something about implementing FATCA in Canada. This is why we are going after them on FATCA – because it is something they DO have power to say NO to.
Yet, you are right, that efforts need to be made to end CBT. The way to save our skin is to attack this whole beast from many angles. However, the immediate threat to Canada is FATCA. We were able to deal with CBT when there was no FATCA because those who identified as American taxpayers voluntarily chose to do so, and those who identified as Canadians and/or knew nothing about CBT, were not harmed.
Kill FATCA in Canada first. Then kill CBT. Otherwise we will end up with both FATCA and CBT, with no voting power to get rid of CBT. That is just my take on things anyway.