Who is the criminal? You–because you live “offshore”–or the media and politicians because of their “truths” ?
http://www.nestmann.com/government-stats-strike-again#.VQ0LgU1_lMt
“Here’s another big, fat, hairy lie being trotted out right now by President Obama, Congress, and the mass media: ‘Offshore tax evasion costs the US Treasury more than $150 billion annually.’
That’s today’s number. In 2001, it was $70 billion annually. By 2010, the number was $100 billion. According to a recently published Senate report, it’s now $150 billion.
That’s one hell of a jump. Either the rich are totally sticking it to “the man,” or someone has been massaging the numbers just a tad.
Let’s look at the history, shall we?
The $70 billion figure originated with Jack Blum, an attorney and former congressional researcher. Blum cited this figure in 2001, when he signed an affidavit in support of an IRS summons for records from MasterCard and American Express.
He never explained how he arrived at this number……….”
Sadly, the article is from 2014. It is still relevant though- it should be published in mainstream media again and again! But the world believes what they want to believe, and when faced with such debt – even more so and a feeding frenzy ensues.
The writer of the article arrives at the hypothetical figure of 9.4 trillion dollars being hidden in foreign banks to account for 150 billion in “lost” US tax revenue. Add another figure to the equation: 7.7 million US citizens living outside the blessed Homeland. 9.4 trillion divided by 7.7 million, means that on average each and every one of us has 1.25 million dollars in hidden assets.
I wish!!! Can’t wait to spend my “hidden” $1.25 million, and I bet my ESL teacher neighbor can’t wait to spend his (my God, teachers sure are overpaid!), just like those government agencies can’t wait to spend our phantom “lost” tax revenue. For once I wish that the government figures were true!
Actually, the analysis he makes is a bit of apples and oranges. All of the govt whoppers make the assumption that the money going “offshore” is principle that was never taxed as income. The analysis ignores that and calculates on missed taxation of interest upon the principle.
Those govt/media assumptions are what is scary and is the prejudice that is built into FBAR and OVDP.
The source of this rhetorical gibberish is the sleazy ‘Nestman Group’ Financial advisors for those wishing to ‘dodge’ US taxes by relocating their residence for tax purposes. Tea-Party blather is highly featured.
Mark Twain:
These folks might help – maybe drop them a line?
http://www.factcheck.org/about/contact-us/
https://factcheckeu.org/static/about
Makes you realize how insignificant numbers and facts are when a government has an agenda. How do we hold them accountable?
Some Brockers might recall Victoria’s story of appearing before the U.S. Joint Committee on Taxation. She felt she needed to have hard numbers proving that a switch from CBT to RBT would be revenue neutral.
Well, it seems that providing hard numbers is the wrong approach. All that’s needed is someone to successfully launch a rumour that a CBT-RBT switch would produce a tax windfall.
So a U.S. switch to Residence Based Taxation would bring in an extra $250 billion, wouldn’t it?
I think that if the IRS thought it was a real revenue generator, they would have worked harder to enforce it long ago. FACTA forces them to deal with it.
The joining of the AIIB is a reflection of how other countries view their relationship with the US. The US’ only trump card is troops. South Korea is in the process of considering the AIIB, but it obviously has 28,000+ US troops still stationed there.
For South Korea, would China ‘control’ North Korea for South Korea to join the AIIB and get the US out of another part of Asia?
The rest of the world doesn’t seem to be bothered about US troops stationed there, and the costs of not trading / participating with China are greater than any additional military expenditure they may face if the US walks.
They may also feel the US is going to walk in any event in future, because the US can afford to keep spending on the military as it did in the past.
That’s the position the US is in now.
I hope someone on Facebook will post the Nestmann link on Republicans Overseas where they are discussing the Warren form letter …
https://www.facebook.com/republicansoverseas/posts/362501500600318
@Embee
Makes my stomach drop that this is still going on. One would think that slowly they would become more discerning.
Very valid point. 1 What is the source/breakdown of that $150 billion cost of tax evasion via overseas accounts?
2 To properly view this “evasion” figure then the baseline for “evasion” from US source accounts should be subtracted/taken into account. $150 billion sounds like a lot but may be a small fraction of US account source evasion – it would benefit our cause to get this number for homelander account source tax evasion to help deflect attention from offshore evasion.
3 Also would be nice is a figure for the cost of US Government services for US people living overseas. We may from the start exclude social security as people paid in for that, and it gets reduced if you live overseas. So then please help me with a figure for this, $0. A common come back is the US wants $$ to pay for global defence; and my come back to this is that the US should tax the countries of the world for global defence and not disadvantage/burden US citizens living overseas with this. And perhaps for some countries like Australia the US should pay them for support in every conflict the US is in.
We may challenge claims of savings from FATCA. 4 We must insist on separation of tax savings claims for individuals and companies. Most is probably from companies.
There is this report that FATCA will save $8.7 billion over 10 years: http://www.fas.org/sgp/crs/misc/R40623.pdf
5 So the “savings” is only a small portion of the “evasion” and are expected to come 6mostly from “tax havens.”
6 There also are reports that FATCA compliance costs of all the banks of the world could be over $200 billion over the time period. So not very efficient on a global viewpoint. http://en.wikipedia.org/wiki/Foreign_Account_Tax_Compliance_Act
Here is my thought about this, trying to dissect the US homelander psychology (or lack of any thought about US persons overseas):
Key in the mind of the homelanders is the case of Eduardo Saverin, who dumped the US citizenship before the float of Facebook, and switched to Singapore citizenship which has much lower tax rates. The thinking is that he did it for tax reasons and he saved an extraordinary amount of tax/tax liability.
Is this a way forward?we differentiate between relatively low and relatively same/relatively high tax jurisdictions. RBT yes but if a relatively low tax jurisdiction is involved then there are more “hoops”/ more years of residence required. Alternatively, if you live/move to a realtively high tax country extra recognition must be that you are not doing it for tax evasion.
So lets say you live in a relatively high tax jurisdiction such as Canada, UK, Australia, New Zealand, Europe etc. then you must be resident there for two years before RBT, but if you live in a relatively low tax jurisdiction then you must live there for 5 years before RBT would apply.
Then we may say that we are addressing tax evasion, and helping to thwart the Democrat/Homleander argument that if you want repeal of FATCA/you support RBT then you support tax evasion. This angle may help the Republicans, yet they have a major organisational group in Hong Kong. Five years for low tax countries to RBT is better than no RBT.
I am going to e-mail the above to the Senate Finance committee excluding any mention of the lightning rod Eduardo Saverin.
This may be the legislative angle toward RBT. There is always the legal way to challenge it on constitutional grounds. Cook v Tait circa 1924 needs to get superseded.
I’m with you until here:
What are the criteria for low vs. high tax jurisdiction? I think this is indefinable. I can see a flat number of years, as someone somewhere suggested, of continuous residence abroad in order to trigger RBT. For example, USC is responsible for filing IRS forms for the first 3 years residence abroad (while still getting the 2555 and foreign earned income exemptions), and thereafter is free of US filing requirements. This can be construed as reasonable to some, since expats on 2-year contracts are generally only temporary in their intentions and their thinking, and those staying longer are generally more committed to remaining outside the US longer-term. I still believe NO US person should file or pay US taxes when living abroad, but I think redefining a “bonafide foreign resident” as someone abroad more than 3 years might possibly be palatable to certain fence-sitting politicians. I’m wavering as to whether to suggest this in the letter I’ll be sending to the Senate Finance Committee.
@Barbara- Who decides relatively high tax country? I imagine a comparison of individual tax rates between your country and the US. This could change from time to time and there are deductions. Another way of doing it is a list of relatively/clearly low tax jurisdictions and then require the extra hoops on these. I would say Singapore would be included so as to derail the broken record playing of the Eduardo Saverin story.
I had never seen that report JC mentions
http://www.fas.org/sgp/crs/misc/R40623.pdf
Tax Havens: International Tax Avoidance and Evasion
Jane G. Gravelle Senior Specialist in Economic Policy
January 15, 2015
Congressional Research Service
It has quite a history of Obama’s proposals in it. Together with a record of the known things such as Ex Patriot Act.
Has that report been discussed someplace where I missed it?
Regarding the proposal to “ease” into RBT, and the same with the exit tax methodology proposed by ACA, is to not give them any bad ideas.
It’s never a good way to sell a car if the seller answers to the question on the phone “what’s your lowest price you’ld go down to?”
And the author is fixated on Tax Haven research
http://www.goodreads.com/author/show/1033449.Jane_G_Gravelle
http://academic.research.microsoft.com/Author/1251056/jane-g-gravelle
And here is the branch of govt that publishes that doc.
http://en.wikipedia.org/wiki/Congressional_Research_Service
@JC: So under your proposal, if I live in Australia (high tax) for 5 years, then move to Hong Kong (low tax), I get hosed? Or if I move every two years, from Brazil to Dubai to Taiwan, which tax rate do I report? I frankly don’t see how such a proposal would be at all measurable or enforceable. What’s more, such an idea seems to validate the misconception that we all go abroad primarily to dodge US taxes, and we want to be rewarded for living in a place that’s less of a so-called dodge than another place. I’m not implying that is your intention behind the proposal, but I’m looking at how it might be interpreted.
I tend to agree with Mark Twain, that we shouldn’t be putting half-way measures in their heads. On the other hand, I think these Senators, and Homelanders in general, would respond with horror to the idea of a straight switch to RBT, an all-or-nothing approach, and that they might not even imagine any inbetween measure. Hence, I am trying to convince myself that an easy-to-quantify, objective criterion such as RBT after 3 years abroad (whether in low tax, high tax or some nebulous inbetween place) might actually be considered a ‘compromise measure’ to these dinosaur-brained politicians.
By the way, I glanced through that January 2015 Gravelle report. I feel dirty after looking at it, pure toxicity, with such chapters as “Place the burden of proof on the taxpayer”. With passages like “create a presumption that the funds in foreign accounts are large enough to require an FBAR”. So when my kids had their local accounts with no more than US$60 in them, they would be presumed guilty of hiding funds unless they can prove otherwise? Makes me want to track down this person and tell her to “F— off”.
She also fabricates an unfootnoted $40 billion for tax evasion offshore. She’s a low bidder in the auction.
http://isaacbrocksociety.ca/2014/11/16/the-american-public-sold-on-the-auction-block/
If that Congressonal Services report is confirmed newly found, it would be worthy of its own post.
I was looking to provide a source for the estimate that FATCA would bring in $8.7 billion over 10 years. And I was lead to that one. Wikipedia>FATCA>Footnote #72. I have not read in full, yet there seems like lots of emphasis on US residents with accounts in tax haven countries.
I would like to use numbers to our advantage.
If we may get RBT while ignoring Eduardo Saverin that is best. The three year rule sounds good to me – perhaps 3 years outside the US so that may include 1 or more countries.
Brazilian born Saverin moved to US in 1992 and became a citizen in 1998. Moved to Singapore late 2009, renounces in May 2012- so it sounds like in Singapore about 2.5 years before renouncing. Sounds like only a US citizen for 11 years.
@JC
Will fbars still be needed for those under their 3 yr probation?
How will the banks deal with the reporting, will they include the question “are you a US person and how long have you lived here?”
I used to be a frequent traveler to the United States who, over the years, has spent thousands of tourist dollars in that country. I am two and a half weeks away from the 4th anniversary of my last day as a visitor to the US with no plans to ever return unless the sword of CBT is lifted from my head. I know for a fact that I am not the only person who is taking this defensive action. Have any analysts bothered to include such lost revenue into their calculations?
Why does Warren think FATCA is a great idea? Please remember she was a professor at the Harvard Law School before being elected. The same institution that Schumer, Levin and Obama hail from. Is there really anymore to understand?
Warren is also the same person alleged to claim ‘tribal status’ to increase the odds of being appointed as a professor at Harvard. Essentially she was accused of using her 3% of American Indian blood to her advantage.
If Senator Warren thinks FATCA is such a good idea, why doesn’t she board a plane, fly over to Canada or Europe and face some of her ex-Massachusetts voters and explain it and gauge their reaction?
@MuzzledNoMore The US will use the strength of their dollar as blame for any drops in tourism. At least for the last year. I am another who will not be entering the US anymore as long as CBT is in place, We would have been looking at increasing our travel to the US since we live in Canada and are now retired. Not now, the world is a big place, we will spend our tourist dollars elsewhere. I cringe when I see the advertisments for US vacation property in our local newspaper. Do these people really know what they are getting into?
Is the IMF going to act as the US’ proxy with regard to the AIIB?
http://www.bbc.co.uk/news/business-32007090
The US has really no choice but get involved even at arms length. You can be sure the IMF will promote any US agenda in regard to the AIIB’s development.
The US dollar’s influence wanes everyday.