Realizing the only thing that USA acts upon is money, they need to know that they are going to have less of it. The heck with voting, and pleading with congresspersons and media for favorable treatment. Since 2010, there has been little effect. Now is the time to show the US extra-territorial tax system (with FBAR, CBT, and #FATCA) for the Loser it really is.
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The intention of this post is to share information about how money has been and will be leaving USA as a result of Citizenship-Based Taxation, the FBAR requirements, FATCA, and the US media’s negative image of its own citizens overseas. The information can be classified as to whether it is directly attributable to those actions, or to some level of “probably” attributable to the actions of one of the above. This post can be a reference and any info can be used to show FATCA, FBAR, and CBT and their authors as true Losers.
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I can note a few items. Firstly, the US induced a huge problem upon the world’s financial systems. With its greed for $8.5-$8.9 billion, it unleashed a $200 billion compliance program upon the world. A huge global loss created by a bunch of zeroes. These costs are directly attributed to FATCA and are quantified.
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In the short-sided FATCA greedy grab, the expectation is for millions of useless FBAR forms to be processed by FINCEN and the IRS. None of these forms are meant to collect IRS revenue. Each additional form probably creates 0.5 to 1 working hour. And with the IRS attributing each hour up to $200, the amount of money being sucked up by the IRS paper-pushers must add up to far more than the $8.9 billion. And the IRS is warning the public that its FATCA and Obamacare systems are going to sink their already incompetent, corrupt, and overloaded system. This is money directly lost by the imposition of FATCA and FBAR and CBT.
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Recently, Singapore and China signed a currency deal to further bypass the US-reserve currency system and trade their own currencies directly to up to $470 billion. This cuts out the US currency middleman. The decision to do this was a combination of factors, with the US FATCA system likely being a final straw and creating encouragement for these countries to make this deal, which is obviously much smarter than having to use US financial systems and the burdens of their FATCA system.
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Another personal item, is that I looked at FBAR requirements and FATCA, and I determined that the US is a very unsafe place to invest. Whereas, in the first part of my life, I had been investing my savings and retirement funds in US financial institutions, I decided to eliminate these US investments and move over to other avenues. Everything that I had gained and saved until I was 40-some years old is now removed from USA. This amount represented 1/4 to 1/3 of my investments. For reasons of security versus certain NSA tracking, I won’t further quantify this.
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Not only have I consciously removed these items from US products, the US’ has consciously decided to bar myself from investing in US products. Shortly after removing myself from Fidelity, Fidelity informed me that they don’t want any of my investments. I have been happy to oblige them. As soon as I am able, I will also divest myself of the IRA investments which are stuck in the USA. Perhaps I must wait a few years or perhaps I must decide to take the IRA penalty simply to get my assets outside the reach of USA. Soon, all of my US retirement income will be gone and outside of USA and all of my investments will be fully removed from USA. Soon, the definitive number for my investments in USA is ZERO.
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Another US self-induced problem is a law equally stupid as FATCA—the Securities Act of 1933, which disallows US citizens from purchasing US financial products from their local bank in their country of residence. Since this stupid law has not been addressed during the last 81 yrs, the US itself has lost its own money. Now with the awakening of FATCA and FBAR, all the banks of the world will certainly be required to enforce this stupid law and make absolutely certain that none of the 7.6 million US citizens and countless other US persons do NOT invest in US products wherever they are located. More money draining out of USA. No doubt, there is much more than $8.9 billion of US investments wrongly held by US persons overseas. FATCA will make sure that the stupid law is followed and that these US investments are eliminated.
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What is critical for the US to realize is that it has already lost more than its greedy $8.9 billion grab. This should be made obvious to them. Where have you seen money leaving USA?
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How can the US be informed of this exodus of investments from USA?
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How can you make absolutely sure that your investments are as far away from US as possible.
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How much more future investment is likely to move out of the US system?
Links used in the hyperlink:
http://samuelclemmons.wordpress.com/2014/01/28/laws-equally-stupid-as-fatca-securities-act-of-1933/
http://isaacbrocksociety.ca/2014/10/20/fatca-global-implementation-costs-revealed-cross-post-guest-post/
http://dilemma-x.net/2014/10/28/china-launches-direct-currency-trading-with-singapore/
Yes- money makes the world go round. But in a country where judges of the supreme court rule that unlimited funds can be used to endorse a political candidate – which really boils down to bribery/greasing palms made legal – what can we expect in the way of logical decisions? It is like a money grab on a sinking ship and a democracy gone bad because those in charge are voting for the financial benefits for themselves- to save themselves in these uncertain times. People voted for the democrats to stop this – I think. But the democrats are also a part of this system. Everybody loses. Turns out the republicans are more logical than the others on some very important issues. It would be so good if America got back to logical thinking. But right now, the money grab has them all in a stranglehold. They think: get while the getting is good- and they dont think about the future.
Shortlink for this post is below. Shortlinks are handy for twitter or other sharing.
http://bit.ly/1tOKfM6
Looking in to any report of the 2012 election, it can’t be found that Obama got any less money than anyone else. Unless the kettle can get off calling the pot black, I can’t see his cronies as the savior. But it can bring up a question as to how many campaign donations he lost from devoted overseas Democrats as a result of FATCA & his FBAR jihad? That would be an even tougher pill for him to swallow.
Money taken away in the form of double taxation means less invested in the US.
Money siphoned off through professional compliance fees from complexity of FBAR, CBT, FATCA means less invested in the US.
Fidelity says no, others say no, yet no everyone says no.
Some opportunities for campaign contributions?
http://www.washingtonpost.com/blogs/monkey-cage/wp/2014/10/31/are-non-citizens-following-american-election-laws/
FATCA is helping China to become the first world power faster and India will soon be second. Bravo USA. Hope the americans will mentally manage the fact of not being first anymore in a country where being second is badly seen.
But, being first often makes one arrogant and stupid. FATCA is one proof of that.
@Mark Twain
About a year ago when I went to a free estate planning talk by a company that mainly deals with high-net worth individuals (not middle-class people like me, but the only way I could find to figure out the law), an expert on trusts stated that most of the high-net worth individuals worth less than $5.3 million were just handing over cash to their non-U.S. citizen spouses rather than establishing a qrops. I am not sure that all of this money is leaving the U.S., but it would be leaving the tax system.
At the time I thought it was a tax wheeze, but now with so many options being cut off, I would imagine that lots of people are having to have their spouse do all of the investing due to a lack of reasonable options (in the UK, mutual funds have long been impossible and the offerings are just getting worse and worse). One mass-market company was offering U.S. ETFs a year ago, but now they seem closed to U.S. persons (including stocks and shares in non-reportable accounts).
As I understand it, the maximum is a little over $140,000 USD per year and it is safer to cash things out and move the cash over rather than stocks, since the IRS can charge CGT on appreciable assets given to non-U.S. spouses. I believe there is a form (maybe because there is always a form).
Of course, with this money no longer being reportable on the FBARs, there will be less U.S. person money “offshore” and the Treasury Department will declare its policies to be a great success.
@Publius,
My understanding is that there is no form required to give annually the approximately US$140,000 (this can include part of your principal residence) to your non-US spouse.
—But, for those wishing to renounce from IRS obligations, form 8854 requires a statement of explanation on any “significant” changes in your assets during the five years preceding filing of the form. The word “significant” is open to interpretation.
The line-ups at US consulates around the world is proof enough that the US is winning the war on offshore tax evasion – one citizen at a time.
I totally agree. The main beneficiaries of FATCA and the US jihad on its expats will be the nations that compete against the US in export markets.
Germany, China, and India will especially benefit.
It is becoming impossible for US citizens to live and work abroad. The world’s banks and financial institutions are embargoing US citizens unless they renounce or provide proof of relinquishment. How can this possibly benefit the ability of US companies to compete globally? In reality, US companies themselves are now “expatriating” as well.
The vast loss of good will is inestimable. How many Canadians who were forced to renounce or document relinquishment of their US nationality would ever consider retiring, snow-birding or even vacationing in the US? Mexico, Costa Rica, Belize, and the Caribbean will be the beneficiaries.
Despite the current euphoria in public markets, the economic future of the US looks grim. Its massive public debt, much of which is actually held by Social Security and other similar US agencies, is an inescapably reality. In terms of debt, the US is its own best customer; a kind of Ponzi scheme.
Blend into the equation:
– the coming bankruptcy of many US state and local governments under crushing burdens of entitlements and pension obligations
– the hollowing out of the middle class and the manufacturing sector
– the vast cost of of the military / industrial / national security complex (the US spends as much on defense as the next 13 countries combined)
– the ongoing chaos of Obamacare rollout
– at least 20% of US households rely on Food Stamps (SNAP)
– more than 11 million illegal migrants live and work in America (equal to entire population of Ontario)
– the epidemic of homicides and injuries caused by a pathological gun-entitlement culture
I’d like to see Canada forging stronger ties to east and west – with the BRIC nations and the EU. Imagine if Canada negotiated to join the EU; that would be good for business and an antidote for our over-reliance on US markets!
FATCA and CBT are resulting in the loss of significant Canadian source investment in US real estate, retail shopping and tourism dollars. Ironically, two of the Senators who have been boosters of FATCA and of punishing those abroad who have US status are also Senators of border states – Michigan and Florida – with large Canadian retail, tourism and other Canadian source spending.
Snowbirds:
Once Canadian snowbirds get a better grip on the dangers of becoming a ‘US taxable person’ http://business.financialpost.com/2014/03/11/border-shakeup-could-have-tax-consequences-for-snowbirds/ http://www.thestarphoenix.com/health/Snowbirds+need+consider+medical+implications/10287319/story.html etc. , will they want to grapple with keeping track of the rules and threats, or will they just decide it isn’t worth the hassle?
I personally know Canadians (without the US status burden) who have chosen to sell their US property because of this, or are reconsidering their plans to buy a retirement or vacation property, or even just a small place to spend extended time near US family.
Crossborder Shopping/Retail/Tourism:
Crossborder shopping is a common practice all along the long long common border between Canada and the US. In some border communities it is very common to go across and shop, dine, be entertained – even just for a few hours or a day. The more Canadians who are hassled by the US because of US status as in a US birthplace and pushed to get or use only a US passport (with all the US compliance problems that is associated with), the fewer will decided to travel to/through the US. Crossborder shopping will not be so convenient or desirable. As understanding of FATCA and CBT spreads here, fewer will decide to take the risk of US border harassment. Those of us who have renounced/relinquished and are ‘compliant’ may minimize our US travel in protest. I will not be proposing any US shopping or travel destinations to my Canadian-only family and friends even though I have formally expatriated and can travel only on my Canadian passport. I do not want to give any of my Canadian income to the US. Never forget that it is the border state of Michigan that has Carl Levin as Senator. New York has Schumer. Detroit and Niagara are two of the busiest crossings between the US and Canada.
Try letting the US National Retail Federation https://nrf.com know that you won’t be shopping in the US – they have a strong advocacy arm and if their border state members are concerned, perhaps they will start to realize what a potential loss that will be for them. Stats Canada pegged Canadians’ crossborder retail spending at “….$4.7 billion shopping in the United States in 2006. Apart from a decline in 2009, the total has increased every year since then, hitting $8 billion in 2012…..”. From http://windsor.ctvnews.ca/cross-border-shopping-is-a-small-fraction-of-overall-retail-statscan-1.2044838#ixzz3HwEJgWKI And here is some idea of the size of the Canadian tourism dollars spent in the US http://buildthedricnow.com/2012/03/26/canadian-tourism-to-u-s-on-the-rise-reaches-record-level/ http://travel.trade.gov/outreachpages/inbound.general_information.inbound_overview.html
Someone please correct me, but I think a covered expat who is not 59 1/2 is not hit with the 10% early withdrawal penalty.
I recall reading that some people intentionally became covered expats to avoid the 10% penalty.
Despite his warning me against it, because I’d “lose out on the gains in the US markets”, I told my investment advisor to withdraw any of my RRSP money that was invested in US funds and put it into Canadian, Asian or European funds instead. The loss of my little investment for the US may be small, but multiply that by 7,000,000 and it would add up to a fair sum. I hope all citizens of US origin living outside the US will do the same.
George What 10% early withdrawal penalty?
It felt good for me to do the same with my RRSP and other investment, GwEvil!
@StephenKish You mean $14,000, right?
You, being a yankee, can give 14 K per year to anybody and as many different people as you wish. You could give it to the man in the moon if you wanted to.. No reports required
You can give 145K (145,000) per year to your non resident “alien” (love that word) spouse. No report required. You can gift up to 5.25 million which reduces estate tax exemption by an equal amount. Gift tax return required .
For 2013: http://www.irs.gov/instructions/i709/ch02.html#d0e1122
For 2014: http://wills.about.com/od/GiftTaxes/fl/When-is-a-Gift-Tax-Return-Required-to-Be-Filed-for-Gifts-Made-in-2014.htm
Unless US institutions start feeling real pain and start paying their lobbyists to change the situation, nothing will change.
The average US politician in Congress needs to raise $10,000 a day in campaign contributions to have a chance of re-election. That says it all.
@Dukeof Devon, the 10% premature withdrawal penalty on IRA, Pension Plans/401K, modified endowment contract life insurance policies and annuity policies to persons prior to age 59 1/2.
@GwEvil, I too got rid of all US stocks and all companies that a majority presence in the US even if located outside the US. I now no longer buy US products and actively shun them to include all US agriculture.
@Duke of Devon @George
Seeing as you are discussing IRAs, does anyone know this answer to this little puzzle? Imagine someone has a Roth IRA funded 40 years ago by earnings in a job as an American summer camp counsellor, and has left it to grow. Brilliant investing has turned these $1,000 earnings into $1,000,000 (hypothetically). The tax treaty will protect withdrawals from tax, by either the US or that person’s resident country. But would the tax treaty still apply if the person were to expatriate? If not, should this person withdraw it all before expatriating, while the tax treaty still governs? If the person is over 59.5 can the whole sum be withdrawn tax free?
They don’t want the tax money. It’s about power and control.
In 1933, President Roosevelt invoked a federal statute and required that all gold be turned in at $20.67 per troy ounce. Then he devalued those dollars to $35.00 per ounce, robbing the people of 41% of their money. The feds want FBAR’s so they can coerce people into handing over the money in those accounts. First they want to tally it up, then impose a U.S. law requiring the depositor to hand the money over so USA can spend it on wars; and if the depositor hesitates, then the FFI will be required by US law to seize the funds and send the money to US Treasury.
In the early 1930’s, some banks were failing and prudent investors saw the most secure option: Draw out all your money in $20 gold pieces, lock them in a safe deposit box and then buy an insurance policy in case a burglar breaks into the box. Roosevelt’s goons required that no safe deposit box could be opened except in the presence of an IRS agent, and also used insurance records to find people guilty of “hoarding” gold. Saving and investing are good words, hoarding is a bad word. It’s all PR.
@ Tom Alcere
You’ve got that right. THEY actually don’t need our tax money as much as THEY need to drive everyone into debt slavery. A surefire way to do that is to confiscate savings (by hook and by crook); in addition to the usual means such as enticement (borrow to buy a shiny new something), unemployment (borrow to survive), inflation (borrow to maintain a lifestyle). FATCA/GATCA are the data collectors which place a homing beacon on the new target — our savings. When people are targeted, captured and then controlled by debt slavery, THEY can then use their slaves’ labour and assets to acquire real wealth which THEY will then hoard and use for their own nefarious purposes. THEY are particularly fond of waging wars for ghoulish pleasure and ginormous profit. It’s all about control and power for sure. Now to be perfectly clear, THEY are not governments per se (governments are a tool); THEY are a worldwide banking cartel. But I’m just a befuddled observer so what do I know.
I was in Croatia last week, and learned of some recent history. During the crises related to post war and also bank crashes, a number of people with loans on their homes lost everything to their creditors. The state stepped in to help them out. They built some projects housing for which people pay the rent via lifelong “government service”