[SEPTEMBER 27, 2016 UPDATE: “The Hill” today picked up on the upcoming House Oversight Committee hearings on FATCA. Obviously the fight will be challenging and there are lots of reasons to complain and be skeptical about an attempt by some U.S. Congresspeople to kill FATCA — note the tax compliance pundit in the Hill article who justifies FATCA because Treasury has spent a lot of money on it — but the FATCA hearing will happen despite the naysayers.]
Recently, Representative Mark Meadows introduced a bill in the U.S. Congress (complementary to a similar bill in the U.S. Senate) to repeal FATCA.
Witnesses are now being sought who have been significantly harmed by FATCA and are willing to testify at the Congressional hearing on FATCA in Washington D.C. Details on timings, length of testimony etc. are to be worked out. If you are interested in testifying please send Keith Redmond an email at: FATCA_Testimonials@outlook.com
Although a focus is FATCA, if you have been significantly harmed by U.S.-imposed citizenship-based taxation, which is enforced by FATCA, please also consider testifying at the hearing.
Norman Diamond – “Do you have evidence of State telling people not to file? I never got their message, even when I renewed passports. Maybe because I was a minnow.”
I also never heard anything about taxes when I renewed passports, nor when I had consular contact for any other reason. Not a dickie bird. Sometime in the 1980s, (it turns out), they started putting it in the passport information pages, but unfortunately for me I never read it.
“Other countries benefit because their expatriates might return some day and contribute to the economies of their homelands.”
That might be a benefit to countries still in the development phase but not for European countries, where thousands of would-be economy-contributors are arriving daily.
If there are no intrinsic advantages to RBT, and the only reason the US is the only country that does CBT is because it’s the only country that can, calling for a switch may be a lost cause. I looked at ACA’s RBT proposal but they don’t pinpoint any specific way in which the US would gain from switching to RBT – just ways in which (according to their proposal) it wouldn’t lose, or needn’t necessarily lose.
Though, thinking about it, maybe you could say that it’s all residence-based. The difference is the way “residence” is defined. The US treats {citizens, some former citizens, and some former residents} as resident in the US for tax purposes, even when they’re not actually resident in the US by any common-sense definition of “resident”.
To those who ask whether I have evidence of State telling US citizens abroad not to file.
Back when i first moved abroad, I filed consistently from the beginning. Then I started a company, because my employees liked my management style, and told me they’d want to work for me. Then I discovered the 5471 requirement, which was frankly insane. I asked advice about how to deal with it, and was told by other alumni of my university that they never filed, because they asked at their embassy and were told “Yes, you have to file, but are you sure you want to do this? It’s a real pain.” So, they never filed, and called me a ‘boy scout’ for doing so (this was not a compliment).
I’ve known others who didn’t file, even when I told them they’d probably feel better about doing so, and they probably didn’t owe any tax, because the exchange rates were favorable. They filed for a while, didn’t owe anything. But then, after they ended their association with me, they lapsed back into non-filing, because ‘it’s just such a pain.’ No-one gave them any trouble.
I haven’t spoken to them since FATCA hit, to see how they’re coping. I’ve continued to file. No-one wants to hire me here once they find out I’m a US citizen. Sometimes I get a contract to help tide me over. Banks are threatening to close my accounts, though I’ve found a way forward (which is not optimal). Were I to get a job at anything like my old salary, I would have to pay a lot of US tax, just because the exchange rate has tanked in the meantime.
@Norman Diamond. My wife worked in public health nursing in the US providing care to the type of folks Donald Trump would like to build a wall to keep out. She found the work very meaningful. When I left the US for Canada, I hoped to be able to live in Canada but occassionally practice in this setting (locum tenems work). I am (was) also interested in doing occassional locum work on some of the First Nations reserves in the US. FATCA, CBT, and the IRS have kept me from following this dream– tax wise, I’d be insane to put myself on the US tax radar after being gone 25 years.
Democrats pillory Trump because he wants to build a wall, and they are right to do so. Obama and the Democrats are guilty of hypocrisy, though– they’ve already built a bigger wall around the United States. This one doesn’t keep illegal inmigrants out, however. It keeps US ex-pats from ever returning back to the US. Insane.
“Most other countries use RBT, and that’s probably not because they love their expatriates more than America loves his.”
Other countries run export economies (exporting things other than war), and depend on their expatriates to work their way into the market economy and pave the way for their goods to get sold. It’s not just a question of salesmen, but people working at customers, people integrating into the foreign economy as they are able. The last thing that the home country wants to do is interfere with this — they realize that its success is key to their maintaining a healthy balance of trade.
The US were able to afford themselves the hubris of believing this wasn’t necessary for a while, telling themselves “We’re the best, we have the best products, etc.” But now that the economy is faltering and the debt is looming, it would seem that the US are dead set on trying to restrict their way out of things and anything other than what works for others. It’s really a bit nuts, I must say.
The
“Most other countries use RBT, and that’s probably not because they love their expatriates more than America loves his.”
‘Other countries run export economies (exporting things other than war), and depend on their expatriates to work their way into the market economy and pave the way for their goods to get sold. It’s not just a question of salesmen, but people working at customers, people integrating into the foreign economy as they are able.’
As Roger Conklin explained to Congress 40 years ago, the US used to do exactly the same thing. Not only exporting war but also exporting goods, with people integrating into the customers’ economies. Congress intentionally put a stop to it, ending the US’s trade surplus.
@Norman Diamond – “Congress intentionally put a stop to [exports], ending the US’s trade surplus.”
Could you explain what Congressional action you mean, or do you have a link to an explanation? The journey from surplus to deficit is conventionally attributed to the end of cheap oil.
The end of cheap oil came about a decade later, because the US pulled back from developing alternate sources for it, due to the misguided ‘Yankee-come-home’ policies pushed by JFK. OPEC saw that conditions were ripe for a cartel, and they wouldn’t get any flak, et voilà!
There were other wrinkles like US mistreatment of Iran that fueled the fire. Even that could have been avoided were the US more open as a society to what was going on elsewhere.
To prop up the ‘Yankee-come-home’ mentality while securing access to resources, the US relied on the use of proxies (like the Shah). This behavior carries over in the way US multis run their in-country subsidiaries. All very effort-intensive undertakings.
CEB – “The end of cheap oil came about a decade later, because the US pulled back from developing alternate sources for it, due to the misguided ‘Yankee-come-home’ policies pushed by JFK. ”
A decade later than when???
Cheap oil ended following the Six Day War, I do remember that much. No doubt there were multiple factors that may have contributed to the shift from US surplus to US deficit but I do remember very clearly the economic effects of the oil crises both at home (in the UK) and in the way it affected my friends and relations living in the US. In any case, the US was already treating non-resident citizens as taxable, long before the Seventies. Chronologically, it really does seem to go back to Cook v. Tait.
Apologies – forgot to close the blockquote after the words “…impose the tax.”
“Congress intentionally put a stop to [exports], ending the US’s trade surplus.”
‘Could you explain what Congressional action you mean, or do you have a link to an explanation?’
I could give you a link to a site where Roger Conklin made a few postings while he was with us (where us doesn’t include me because I found this site too late). Some of his writings concerned his testimony to Congress 40 years ago. If you have trouble finding them, ask again and I’ll search.
Cheap oil ended around the same time as the US decided that exporting should be done by other countries instead of the US. But cheap oil ended for those other countries at the same time. The US’s decision to relinquish (or is it renounce) its exporting activities was not due to the end of cheap oil.
“In any case, the US was already treating non-resident citizens as taxable, long before the Seventies.”
Yes, and only a few idiots obeyed it. Just as I was in a minority of maybe 7% of the US’s diaspora in the 2000’s, maybe I was in a minority of 2% in the 1970’s. Maybe Roger Conklin could have avoided problems if he hadn’t tried to obey the US.
@Norman Diamond – “Yes, and only a few idiots obeyed it.”
Yes, exactly. The USG may tell itself it “has the power to impose the tax”, but collecting it is a different kettle of fish.
Yes, that seems to answer my question. Other countries stick with RBT because it’s easier to collect, that’s all. A situation that could easily change in future, if current Big Data and treaty trends continue, but let’s not borrow trouble.
“Other countries stick with RBT because it’s easier to collect, that’s all.”
No that isn’t all. The US isn’t the only country that called CBT a human rights violation when Eritrea does it. Also some countries figured out that they don’t profit by forcing their diasporas to renounce.
I said: “Hard to see a US Supreme Court overturning [Cook v. Tait], as it’s not based on law but is a mere JustSo story.”
Although the legal precedents aren’t cited by the Court in the Cook v. Tait ruling, an article in the Virginia Law Review (“Income Tax Predicated upon Citizenship: Cook v. Tait”, Albert Levitt, Vol. 11, No. 8 (Jun., 1925), pp. 607-627) discusses the case and the ruling and the lack of citations, and makes good on the latter by citing numerous prior rulings.
“The US isn’t the only country that called CBT a human rights violation when Eritrea does it.”
Can you give an example of Eritrean taxation of emigrants being described by another country as a human rights violation? It’s not something I’m familiar with.
“Also some countries figured out that they don’t profit by forcing their diasporas to renounce.”
To me the situation seems exactly the opposite: the US makes it hard to renounce, other countries make it much easier.
Here’s a UK instance of Eritrea being criticised over attempts to collect tax from emigrants: https://www.theguardian.com/global-development/2015/jun/09/eritrea-diaspora-tax-uk-investigated-metropolitan-police
“Concerns that the Eritrean embassy in London is using coercion or illicit means to collect the tax – such as refusing diaspora members basic consular services if they fail to pay it – have led the Foreign and Commonwealth Office (FCO) to raise the matter with the Eritrean authorities on at least four occasions over the past four years.”
That certainly calls to mind the US FAST law, which denies USCs a passport if they owe US tax. It might well be worth calling the similarity to the attention of the UK authorities.
It’s not a UK objection to CBT in principle though, unfortunately. It’s quite clear, from looking at the DTT, that the UK does not object to CBT in principle.
@Iota
Here’s an article where the Australian Foreign Minister, Julie Bishop, condemns the Eritrean tax. Ms Bishop’s formal statement includes:
“The US isn’t the only country that called CBT a human rights violation when Eritrea does it.”
‘Can you give an example of Eritrean taxation of emigrants being described by another country as a human rights violation? It’s not something I’m familiar with.’
Canada expelled Eritrean diplomats. The US sponsored a UN resolution calling Eritrea’s CBT a human rights violation. Really, should I give you a URL of a site where these things have been discussed? I only found this site a year ago, but I’ve seen these.
“Also some countries figured out that they don’t profit by forcing their diasporas to renounce.”
‘To me the situation seems exactly the opposite: the US makes it hard to renounce, other countries make it much easier.’
A handful of other countries used to have CBT, which essentially did force their diasporas to renounce and/or never reenter their countries of birth. Those countries discovered that this practice wasn’t so profitable so they abandoned CBT. Again, do you need the URL of a site where this has been discussed?
I know some of you are very soured on American politicians but I think there is a chance this time for FATCA to get repealed.
First, Obama, Harry Reid, Charles Rangel will be out and Carl Levin’s already out, and good riddance!
Next, Mark Meadows (R-NC) is not alone, he has two original cosponsors with him—Rep. Jeff Duncan (R-SC) and Rep. Mick Mulvaney (R-SC). Rand Paul has introduced something similar in the Senate.
Furthermore, Repealing FATCA is actually an official part of the Republican Platform:
“The Foreign Account Tax Compliance Act (FATCA) and the Foreign Bank and Asset Reporting Requirements result in government’s warrantless seizure of personal financial information without reasonable suspicion or probable cause. Americans overseas should enjoy the same rights as Americans residing in the United States, whose private financial information is not subject to disclosure to the government except as to interest earned.
The requirement for all banks around the world to provide detailed information to the IRS about American account holders outside the United States has resulted in banks refusing service to them. Thus, FATCA not only allows ‘unreasonable search and seizures’ but also threatens the ability of overseas Americans to lead normal lives. We call for its repeal and for a change to residency-based taxation for U.S. citizens overseas.”
Bottom Line:
IF the Republicans manage to get the presidency, retain their strong majority in the House and hold the Senate, FATCA will get overturned because the Republicans won’t have anyone to stop them from implementing their plan.
IF there is a Democratic sweep, FATCA won’t get overturned.
IF there is mix of power between the Dems and Republicans, there is still hope for change — especially since Obama, Reid, Rangel, Levin, etc. won’t be around to defend FATCA.
Well said, Jan.
Chuck Schumer will still be around, and soon will be the ranking Democrat (Mxxx-ity Leader) in the Senate. For some reason he’s very pro-FATCA and keeping such a heavy regulatory thumb on Americans that they pick up and ‘go home’ (which was never home for many).
It’s really important to figure out why this guy thinks this way — is there some logic to it (which I have a hard time seeing) and he behaves this way out of ignorance and short-sightedness, or does he behave this way because of external reasons, such as for example the lobbying money he receives. If it’s the latter, this person should not be in a position of predominant influence on the progress of legislation to right these wrongs. If it’s the former, I always believe that ignorance and short-sightedness can be overcome through presentation of coherent, reasoned arguments. If they can’t, that person should not be in a position of power. Period.
@Jan – thanks for the link. I was wondering if any countries have spoken out against CBT in principle.
Eritrea’s tax has been denounced by many countries, and declared illegal by the UN, but not because it’s based on citizenship. It’s the collection methods that are condemned by other countries, and it’s the collection methods, plus the purposes the money is used for, that make it illegal under UN Resolution 2023.
@Norman Diamond – “A handful of other countries used to have CBT, which essentially did force their diasporas to renounce and/or never reenter their countries of birth. Those countries discovered that this practice wasn’t so profitable so they abandoned CBT. Again, do you need the URL of a site where this has been discussed?”
That would be very interesting, or if you just mention the names of the countries you’re thinking of.
“Again, do you need the URL of a site where this has been discussed?”
‘That would be very interesting, or if you just mention the names of the countries you’re thinking of.’
It’s OK, Google found two specific pages for me, so I can give more specific URLs than just the site.
http://isaacbrocksociety.ca/2015/07/08/citizenship-taxation-lawsuit-against-u-s-congress-confirmed/comment-page-2/#comment-6278917
http://isaacbrocksociety.ca/2015/05/22/cook-v-tait-26-help-what-does-this-1924-ussupremecourt-decision-really-say/comment-page-3/#comment-6135009
Thanks, I’ll have a look at those.