Can move this discussion further, after the little interesting budget thing in the Senate:
badger says
The FATCA-Mythspinning machine leaps into action:
http://thehill.com/blogs/congress-blog/economy-budget/237110-endorsing-tax-evasion
March 27, 2015, 03:00 pm
‘Endorsing tax evasion’
By Rebecca J. Wilkins
“..The U.S. loses an estimated $150 billion in tax revenue each year to tax haven abuse – a revenue shortfall that honest taxpayers have to make up. About $40-70 billion of that revenue loss is from individual tax evasion…”
.”To oppose FATCA is to oppose transparency and cooperation and take the United States out of its leadership role in combating tax evasion. The United States Congress is faced with a choice. It can stand for openness, transparency, and honesty – or for tax evasion, secret bank accounts, and subterfuge.
In the geeky tax world, we often refer to FATCA as FATCATS. It helps us remember the acronym. The FATCATS are the ones with those offshore bank accounts. Will members of Congress protect them? Or will they stand with American people?
Wilkins is the executive director of the Financial Accountability and Corporate Transparency (FACT) Coalition.”
Same old bullshit numbers pulled out of someone’s, er, pocket. And this deliberate lie makes me sick; “The United States Congress is faced with a choice. It can stand for openness, transparency, and honesty – or for tax evasion, secret bank accounts, and subterfuge.”
Right, that’s why the US Treasury signed IGAs that they have no authority to enter into, and why US banks do not and will not be providing EQUIVALENT RECIPROCAL information to other countries on all accounts held in the US. And why the US hasn’t and won’t sign on to the OECD CRS. No mention of the dirty secret of US extraterritorial taxation based on who your parent was or the geographic location where your mother gave birth…..
Let us remember those US resident homelanders who I am sure want a more transparent system – as long as they have the inside track on jiggling the rules for their own benefit:
ex. Take the Pritzker family trusts:
“……President Barack Obama’s nomination today of Chicago businesswoman and Forbes 400 member Penny Pritzker to be the Secretary of Commerce, her family’s legendary use of hundreds of offshore trusts to protect its wealth from taxes and the prying eyes of the Internal Revenue Service…..”……
http://www.forbes.com/sites/janetnovack/2013/05/02/pritzker-family-baggage-tax-saving-offshore-trusts/
‘Pritzker Trust Dodges Illinois State Income Tax’
http://www.forbes.com/sites/peterjreilly/2014/01/02/pritzker-trust-dodges-illinois-state-income-tax/
Plenty more material where that came from.
Yet, local legal everyday accounts in Canada – held where we live, to hold post tax wages, pay bills, save for education, disability, retirement, etc. are to be reported to the FINANCIAL CRIMES ENFORCEMENT NETWORK, because the US treats the education savings of a child in Canada with a US born parent as so much more likely to be ‘offshore’ assets belonging to a tax evader than say, the US resident owners of the family trusts like those of the current Commerce Secretary.
http://isaacbrocksociety.ca/2015/03/23/37922/
the referenced report has a list of lots of destructive things they can enact upon US expats to make sure they don’t escape the cage
@Haydon
Yes, FATCA barely passed. A few switched votes in the House would have killed it. It passed in the Senate easily, but that would have meant nothing without the House’s approval.
This is hardly the first time in the history of U.S. taxation that U.S. citizens abroad or greencard holders have ended up as the funding mechanism for something completely unrelated. That little game seems to have started in the 1980s. For real nastiness, see the Heroes Earnings Assistance and Relief Tax Act of 2008.
Of course, when they passed HIRE, they didn’t know that they would need to sign IGAs to get everyone’s data. They never figured that foreign governments would want to protect their U.S. citizen taxpayers and their tax expenditure programs or their little financial institutions. For its part, the U.S. slipped in language into the IGA that expresses that it will try,not that it will deliver.
After Obama goes, it will be up to his successor to decide whether the U.S. will continue to abide by the IGA: there is no binding commitment because it was never ratified by Congress. Unratified IGAs are nothing new, by the way. For example, Carter and the Soviets continued to follow the SALT II nuclear weapons agreement, even though Congress did not pass it. Presidents in general have trampled over Congress’s power.
Good time to revisit the work and comments of Prof. Allison Christians about the IGAs :
All downloadable fulltext available via SSRN:
http://papers.ssrn.com/sol3/cf_dev/AbsByAuth.cfm?per_id=348301
Submission to Finance Department on Implementation of FATCA in Canada
Christians, Allison
McGill University – Faculty of Law
Cockfield, Arthur J.
Queen’s University – Faculty of Law
16.
What You Give and What You Get: Reciprocity Under a Model 1 Intergovernmental Agreement on FATCA |
Cayman Fin. Rev. April 2013
Christians, Allison
McGill University – Faculty of Law
17.
The Dubious Legal Pedigree of IGAs (and Why it Matters) | Show Abstract | Download This Paper |
Tax Notes International, Vol. 69, No. 6, 2013
Number of Pages in PDF File: 5
Christians, Allison
McGill University – Faculty of Law
25.
Taxpayer Rights, On and Off-Shore: The 2013 Taxpayer Advocate’s Report to Congress
Tax Notes International, 2014
and,
from her blog
http://taxpol.blogspot.ca/search/label/FATCA
@Publius
Do Americans realise that the CRS already exists without them and that if there is no reciprocity then the IGAs can simply be rescinded?
Other countries have had enough time to absorb the intentions (or otherwise) of the US and can choose to leave the US market in an orderly fashion.
The only card the US has to play is its market, but FATCA was incepted in 2010, more than enough time to make other plans.
Why not just let FATCA fall over – what would be the downside?
By Americans, I mean the IRS and Treasury, not the individual.
So let me get this straight…Talking points for discussing FATCA:
1) FATCA proponents describe the law as having to do with tax evasion. Yet it has absolutely nothing to do with taxes. It’s about non-US bank account reporting. Assets in a bank account have no specific correlation with taxes paid or owed. Thus, FATCA was never intended to be about taxes or tax evasion.
2) FATCA is, at best, revenue-neutral for the USA. Estimated income of $8.7 billion is based on 30% withholding on foreign assets. But the IGAs in fact eliminate such withholding. So, FATCA in its purest implementation produces zero income for the US government.
3) Meanwhile, FATCA costs the government, foreign financial institutions, and US expats hundreds of millions in accounting and enforcement costs.
4) Er…what was the purpose of FATCA again, please…?
Thanks, bubblebustin. I think Lynne and I need to get together and start writing again. I’m more or less adjusted to Japan and feeling frisky again. 🙂
Lot of good comments in this thread. The point that FATCA is about reporting and not really tax evasion is a good one. Thank you. I remember when Romney was asked to release his tax returns which he did and there was no smoking gun, folks. He had dotted every “i” and everything was reported and squeaky clean. And one could hear the disappointed sighs from across the Atlantic. Failing to catch him doing something criminal the issue turned from the legality of his financial affairs to a morality play. It wasn’t right that he paid so little. Fine but he didn’t do anything illegal or suspect and was in fact compliant.
And that brings me to an idea I stumbled on while I was doing research on the sociology of taxation. One tax writer had a definition of “compliant” that had me thinking about it differently. “Compliant” he said was paying EXACTLY the right amount of tax – not one penny more and not one penny less. So someone who doesn’t take the deductions he or she is entitled to and pays too much is just as “non-compliant” as someone who pays too little. Interesting way to look at it.
@Barbara Yes, you have it straight.
Haydon –
Take a look at this. I’d love to hear your commentary on it:
http://www.swissinfo.ch/eng/crackdown_tax-dispute-brings-us-banking-hassles-for-researchers/41322224
“As a result, the foundation is trying to find makeshift solutions such as paying into Swiss accounts maintained by researchers’ parents, who can then wire the money to the US, or sending it directly to the labs where the researchers work…”
1. Isn’t this EXACTLY what you want to avoid doing when it comes to preventing money laundering. Isn’t sending funds to a relative or 3rd party instead of directly to the intended recipient simply the first layer or money laundering.
2. Won’t such actions have exactly the opposite effect of FACTA/CRS by obfuscating the funds in accounts that then don’t get reported to their intended competent (ha!) authorities?
@Haydon Perryman CRS may not be opposed by the US, yet neither is it approved for adoption in the US.
@Orwell – great catch. Very interesting article and exactly one of the consequences of FATCA that many of us have been predicting. This is but one consequence. This may result in fewer researchers traveling to the US to do their thing. This may reduce the US’ standing as a location for research. The friction starts. Enough friction results in flames. Sufficient flames clears deadwood and forests are rejuvenated. Mother nature is wonderful and for that I thank God. No empires last forever; they always bring about their own fall.
@Orwell – to be clear. Contrary to the KYC / AML nonsense that has cost the world so much already, I do not consider routing money to a relative or friend or cashing of third party cheques as money laundering. I consider such action normal everyday survival necessity in many locations and cultures around the world. A major part of the population of the world has NO bank account at all. A major part of the population of the world are, under current rules, un-bankable for reasons including No Letter Certifying Employment, No Fixed Employment at all, No Independent Accountant to Certify Income, No Regular Source of Income, No Fixed Address, No Title to any Real Estate, No Lease on Accommodation, No Utility Bills in Own Name to Prove Address and so on and so forth.
@nervousinvestor –
Robert told me it was all a myth:
http://www.treasury.gov/connect/blog/Pages/Myth-vs-FATCA.aspx
Myth No. 1: Some claim it’s overly costly and burdensome due to complex regulations and difficult to meet reporting requirements.
Haydon,
“US” Congress doesn’t think about it. The forthcoming trainwreck is irrelevant in comparison to the work necessary to take over bankrupt Ukraine, to unseat the leader of Syria and replace him with something worse, and to make Iran into a nice place where westerners would want to vacation in their 2 piece swimming suits on the beach.
“US” administrative branch is ecstatic. They’ve got ever-blooming budgets, a president that helps them implement anything they want, and a future in private practice as soon as they’ve implemented new accounting regulations needing consulting services. And they’ve got chat sites on Linked in where they can share all information necessary about how to find US persons.
The media is ecstatic, domestically and globally. They’ve got a steady stream of press releases and interviews where the government is telling people that tax evasion is going to be stopped once and for all.
How much better could it get?
@Orwell – sounds to me like Robert needs to be staked and stacked in the style of Genghis Khan’s era. According to that infamous purveyor of dis-information most of the Brock Society are Myths too.
https://www.evernote.com/shard/s270/sh/cf34c9d6-c91d-459c-bcf8-a0713b399518/a27df1f547514b77fbc07c68f2c399b3
I’m not sure why the rest of the world should care if the FATCA IGAs collapse and if the US does not sign the CRS.
America has its market, yes, but if the rest of the world has to get by without America’s 22% of world GDP, that, whilst regrettable is not impossible.
@Orwell. Respectfully, I can’t comment on the link – I have clients and a conflict of interest.
At last an article which specifically links the rush to join AIIB with FATCA. I wish such linkage would make it into more mainstream media, as a means of myth destruction about the benefits of the foreign account witchhunt under FATCA.
http://anonhq.com/us-allies-join-anti-dollar-alliance/
This is one of the Anonymous outlets.
They are closer to the Young Turd crowd, but more radical. Left wing anti disestablishment.
This is a good segment to bring on board.
Folks may wish to comment at http://jamaica-gleaner.com/article/lead-stories/20150402/phillips-lead-caribbean-charge-meeting-g20
Haydon – your respectful inability to respond due to a conflict of interest is a response in itself. Thanks!
I never know where to post these things. It seems that the IRS itself is now proposing some mild changes in the FBAR, most significantly raising the reporting threshold from $10,000 to $50,000, and putting the burden of proof back on the IRS to prove willful noncompliance (wow, they’re actually recommending abiding by the Bill of Rights). It’s namby-pamby steps, but it also indicates there must be some arguing about the whole issue going on behind the scenes.
http://www.taxpayeradvocate.irs.gov/Media/Default/Documents/2014-Annual-Report/FOREIGN-ACCOUNT-REPORTING-Legislative-Recommendations-to-Reduce-the-Burden-of-Filing-a-Report-of-Foreign-Bank-and-Financial-Accounts-FBAR-and-Improve.pdf
Thanks for the link, Barbara. This is from the most recent Taxpayer Advocate Report to Congress, http://www.taxpayeradvocate.irs.gov/2014-Annual-Report/full-2014-annual-report-to-congress/. Nina Olson has been recommending changes in FBAR amounts and on other issues affecting US citizens living overseas (and in the homeland as well) for many years. Her comprehensive and meaningful reports, mostly, have been ignored. Here, for example, is a 2012 post and discussion (and includes some earlier work of Just Me).
Hopefully, Nina Olson’s continuing yearly recommendations will be taken note of by the Senate Finance Committee as they look at tax reform.
The submission of the Republicans Overseas to the Senate Finance Committee is an excellent rebuttal to Ms. Wilkins nonsense. It summarizes just how foolish and uninformed she happens to be.
If Haydon is still around and following this, I would like to understand what happens with the CRS data.
When the birthplace and nationalities of every bank account are collected in Sweden (for example), and the address is Swedish. Does the data stay in Sweden?
Or is the data of French or Croatian (when Croatia signs) people in Sweden automatically sent from Sweden to Croatia or France, regardless of their place of address?
What triggers the data sending? is it protected to stay in the country unless France or CRoatia is proven to have a need for it?
Or, does Croatia and France know about everything that their citizens are doing in Sweden?
(all countries are examples)
Is there any CRS explanation (or any topic) that you would like to write and have posted here?