A great FATCA backgrounder from John Richardson, published in American Expat Finance yesterday. FATCA articles aimed at the general public often focus on the impact on individuals, but this one primarily covers the macroeconomic impact. It packs a lot in a short article, good for sending to people who want to know more about FATCA (friends) or who should know more about FATCA (policy makers).
American Expat Finance Editor’s introduction below, article itself continues next page. Reprinted with permission of American Expat Finance.
Over the last few weeks and moths, more media attention than usual has been paid to the 2010 Obama law knows as the Foreign Account
Tax Compliance Act (FATCA). And invariably, we have been noticing, journalists from respected media organizations like The Guardian and Financial Times newspapers in London keep referring to it as a “tax evasion law,” no doubt because that was its original purpose.
That may well have been true in 2010, says Toronto-based expat lawyer and expat rights campaigner John Richardson…
But, he argues here, as anyone familiar with FATCA’s massive impact on individuals who don’t live in the U.S. now – and indeed haven’t for decades and possibly never did, and are tax residents of other countries – it has evolved into an all-but- impossible-to-avoid “extra-territorial money-sucking machine.”
It has also made it very difficult for such individuals to engage in normal financial and retirement planning – or even to get, and keep, a local bank account.
And while it may remain a disincentive for Homeland Americans to attempt to hide their wealth (the way some used to) in Swiss banks, FATCA (along with the Common Reporting Standard, as the OECD’s global version of FATCA is called), is now playing a role in enabling the U.S. to act as a tax haven to wealthy individuals in other countries who are seeking to keep their personal wealth from their own tax authorities.
The fact that the U.S. hasn’t signed up to the CRS, arguing that it has no need to – because FATCA gives it all the information it needs to know about its own citizens – helps to make this possible, Richardson points out. Continue reading
I’d be very motivated to go buy a CLN for US$2350 and solve the banking problems. If I wasn’t dual I’d be very motivated to get another citizenship pronto. If that wasn’t possible then I’d be screwed. There are indeed a small number of people who fit this criteria and are very vulnerable, US citizens with one passport only living in Switzerland and a few other countries. But again, that’s FATCA.
I believe this aspect of FATCA was briefly mentioned at the last trial but unsure if due attention given it. Is it useful empahsizing (and maybe help impress upon non-dual Canadian citizens the extent to which FATCA overrides Canadian law) that FATCA requires tax info of non-dual Canadian citizens, married to US-dual Canadian citizens, without their knowledge or consent, be forwarded to CRA for transmission to the IRS which considers that n-dCc tax information their right.
Don’ blame the US for our FATCA problems. Like all 800 lbs gorillas,they always do what they like. But do blame our native politicians, especially those who hold US dual citzenships and when questionned about it ,hide under a rock , or meekly go around the issue. Don’t you think that Scheer, May, Boris don’t know about these issues . Do you hear any outcry,even a recognition ,even a public mention ,even if fruitless for the moment.
@Maple Leaf Forever
The “tax info” you refer to is limited to year-end balance and interest/dividend income for any joint accounts to which a non-US spouse is a signatory. Nothing further. This info would only be sent on to the IRS without the knowledge or consent of the non-US spouse if (a) the US spouse identified himself or herself to the bank as a US person, and (b) the US spouse was a complete dick and failed to inform the non-US spouse of this situation. It’s very bad from a privacy standpoint but it creates no US tax obligation for the non-US spouse, of course.
@RR
While your points are valid , don’ you think there is there still a problem here,. Paying extortion, doesn’t eliminate extortion. As for a non infected spouse having signatory rights ,that is just stepping away from a fire but the fire is still there. For others,meaning europeans, the issue is even more intrusive. What is regrettable is that the introduction of CRS has made FATCA more palatable and any court challenge more difficult.
Actually I have a better extortion metaphor. CBT is like those scam emails we all receive claiming that your computer has been hacked and video showing you wanking to porn sites will be sent to all your contacts unless you pay someone $500 worth of bitcoin. Sure it’s extortion, technically, but is it a realistic threat? Just ignore it.
FATCA is a very bad thing for privacy rights but it doesn’t lead to anyone with citizenship in their country of residence facing enforceable tax obligations. Luckily for Canadians, FATCA is very easily avoided with a simple two-letter one-syllable word beginning with “n”, but yes it’s a serious problem in a number of other countries.
“But do blame our native politicians…”
Thank you for your comments.
That is EXACTLY the point.
And the reason why Arvay brought it up in the last trial.
Suggesting it may be a good idea to bring it up more forcefully again.
Full stop.
FATCA struck me, since OMG day in 2011, as a situation similar to an occupying government taking money from the people of the occupied country. Then, in 2014, our politicians helped them along with the IGA, which IMO corresponds to collaborating with the occupiers.
Sure, we’re not at war with the United States. But FATCA shares the characteristics of an occupying force in that, as in the case of a wartime occupation, the foreign country makes a law to affect this country; and our government turned collaborator. Rather than defending its territory, the Canadian government helps them by passing and defending an IGA that overrides our laws in order to to facilitate discrimination against Canadians of a particular national origin and to siphon money into the US Treasury.
@ JR, Great turn of phrase, “An extra-territorial money sucking machine.” No two ways about it! and I love the vivid image.
My issues with the money-sucking metaphor is that no money gets sucked out of the country until Canadians open their wallets and feed bills into the vacuum. US tax compliance is voluntary.
People get bullied by the compliance industry, or get scared of nonexistent consequences if they don’t file, but at the end of the day they are choosing to let that money be siphoned out of the country.