Last year Laura Snyder asked visitors to the Isaac Brock website to participate in a survey about FATCA and the taxation of US citizens living overseas.
In addition, in early December the report will be the subject of a presentation at a conference in Prague on the subject of diasporas. Snyder’s conference paper that specifically addresses the myth of the wealthy American expat is available here .
The survey report corroborates and complements the results of other surveys demonstrating that US citizens and green card holders living outside the United States experience a wide range of hardships as a result of US non-resident taxation and banking policies.
Further, as discussed in detail in Snyder’s conference paper, the new survey data dispels the myth of the wealthy American expat whose principal purpose in living overseas is to avoid US taxation.
Notably, among the 602 survey participants living in 47 different countries:
– 67% have an income of less than $70,000 per year and 90% have an income of less than $150,000 per year;
– 39% left the United States to join a romantic partner in another country, 28% left to pursue professional opportunities, and 2% were born outside the United States and have never lived in the United States; just one participant reported leaving the United States in order to avoid US taxation;
– 48% of those with annual income of $21,000 to $40,000 and 41% of all participants pay significant fees for professional tax preparation despite owing nothing in US taxes;
– 32% of those with annual income of $1 to $20,000 and 38% of all participants are unable to reconcile the US tax system with the system of their country of residence, with the result that their investments and retirement vehicles are harshly penalized by the US system;
– 37% of those with annual income of $41,000 to $70,000 and 30% of all participants have been unable to open one or more bank accounts because they are a US citizen or green card holder;
– 19% of those with annual income of $1 to $20,000 and 13% of participants overall have been removed from one or more joint accounts with their non-US citizen spouse because the survey participant is a US citizen or green card holder. With respect to unemployed participant, the number experiencing this problem jumps to 26%.
Perhaps especially telling are the number of participants who reported not having any problems. Just 12% of the survey participants gave this response with respect to US taxation and 15% gave this response with respect to FATCA. This means that for the overwhelming majority of the survey participants—88% and 85% respectively—US taxation and FATCA create multiple hardships.
The survey included a small number of open-ended questions to which participants could respond as they saw fit. Many survey participants took advantage of this opportunity. The survey report collects their comments into a full 92 pages.
Anyone engaging in just a quick perusal of these comments cannot help but be struck by the strong emotions the survey participants, and notably those with low incomes, experienced and expressed. Examples include:
– Fear and worry: “[When I first learned of my US tax and banking obligations] I was in shock and have been operating since then in a state of extreme anxiety.” (American woman living in Australia, annual income $21,000 to $40,000).
– Stress, frustration and confusion: “I am faced with either destroying my livelihood or becoming a tax violator.” (American woman living in Canada, annual income $21,000 to $40,000).
– Vulnerability: “I have been removed as a joint holder from my husband’s accounts […] I pray that I die before [him]. I know that if he dies first, my life as a US citizen living outside the US will become a living hell.” (American woman living in France, annual income $1,000 to $20,000).
Please don’t hesitate to share links to the survey report and the conference paper on social media and with policymakers in the United States and the country where you live.
Great report, and well written too. I hope that it becomes part of any submission to US political parties and candidates. And it will, to the candidates in my alleged voting district.
Though of course I can guess the response from Elizabeth Warren and her ilk: “What, only 602 participants? Not surprising! The other 8,999,398 American billionaire terrorist-financing child-sex-trafficking drug-smuggling tax evaders hiding their vast wealth overseas wouldn’t have wanted to identify themselves on such a survey!”
@ Barbara
Your suppositions about how Elizabeth Warren might respond have no place in this discussion unless you also provide specific evidence to support them. Biased comments like this reduce your credibility.
@fnO
Who says comments like Barbara’s have no place in this discussion? I concur entirely with every word of what she wrote and will add that her remarks about candidate Warren in no way reduce her credibility; at least not with me.
As far as the main topic goes, it is right on. More than once I and a few other long-term expats, have posted on this site about how few filthy-rich expats they have actually met, I am in Switzerland since 1985. Of all countries you might imagine this would be at the very top for billionaire American tax evaders. I’ve never met a one.
Not that I run in those circles of course, but this is a small country with a very active press.No one here goes unnoticed, so to speak. In addition to that, I think it is entirely accurate to say that Swiss banks are afraid of “rich” Americans and rich Americans are presently petrified of Switzerland.
The days of the Mark Rich’s of this world are dead and gone, a distant memory now. Sure, you’ll find chalets jn Gstaad, or Verbier, owned by US billionaires but those are vacation properties. The owners live in the US and fly in a few weeks a year to ski. America’s super rich live in the US, and you’d be a fool not to.
He fn0: Considering that the last sentence of the main post encourages us to share this report with US political figures, I venture to say that speculations about how one of the two Democratic front-runners for the presidency might respond to such a report are pretty relevant.
I base my suppositions on her (or her staff’s) responses to my numerous past e-mails to her office about FATCA and CBT, as well as remarks reported by others on IBS and the American Expatriates Facebook forum who have tried reaching out to her: no matter what evidence she is presented with, her or her office’s response always ignore the question or testimony and instead lecture us about the necessity to catch wealthy tax cheats and terrorist financiers hiding their assets abroad and thereby depriving poor people in America of needed services. If hearing the same tired response from her office over and over again makes me biased toward her, blame her not me.
So, yeah, my remark may be cynical and hyperbolic, but I assure you that I am non-partisan. In fact, if it weren’t for her shrill antipathy toward American expat issues, Warren’s policies come pretty close to mine on many other issues.
Unfortunately, no amount of painstaking research or provable facts will ever convince those who believe this myth to change their minds. This a religion and those who subscribe to the myth are true believers. Its politically expedient for US politicians to attack expats because its a safe, easy way for them to appear to be tough on wealthy tax evaders even though the real problems are right at home.
Until the US system totally collapses CBT will not be abolished and FATCA will not be repealed. The best we can do is to figure out how to arrange our affairs so we can live with it. Those arrangements will, of course, vary according to where you live. The good news is that CBT is inherently unenforceable so by now it is well known how to avoid becoming ensnared. Our job is to spread the word.
Wow! This report is indeed a huge contribution to our arsenal. Laura Snyder has my deepest gratitude for her work. I am nowhere near finished reading the enormous number of testimonies, but the ones I have read speak to the absolute imperative of the world being rid, once and for all, of CBT. This MUST happen and we’re going to need to think about how to step up our visibility and increase the volume of our protest despite the great disadvantage of our wide-flung distribution across the globe. This survey provides us with some magnificent armament. Let’s use it!
Yes, a lot of influential people have chosen to believe (and spread) lies about us which is one reason we’re not getting anywhere. Laura has titled her survey “I feel threatened by my very identity.” That’s the truth.
@fn0: Elizabeth Warren is pretty clear advocating doubling down on FATCA and imposing greater penalties on foreign banks that have the temerity to provide banking services to US citizens. This is laid out by her own campaign in this very recent statement: https://medium.com/@teamwarren/ending-the-stranglehold-of-health-care-costs-on-american-families-bf8286b13086
That seems like a bit more than supposition.
Here’s the specific wording that Biscuit above is referring to:
There’s also more exciting news in there for corporations that dare to work and sell overseas as well.
Sorry, don’t know why that went missing….
Strengthen enforcement of the Foreign Account Tax Compliance Act (FATCA). FATCA requires foreign financial institutions to report the holdings and income of U.S. taxpayers, but the IRS is generally not systematically matching these reports to individual tax returns. We also don’t hold foreign financial firms truly accountable for ignoring their reporting obligations. Automatically matching FATCA reports to tax returns and instituting sanctions for non-compliant foreign financial institutions would help narrow the tax gap.
” FATCA requires foreign financial institutions to report the holdings and income of U.S. taxpayers, but the IRS is generally not systematically matching these reports to individual tax returns.”
Gee… I wonder if that might be because the lions share of expats don’t file returns and often don’t have a SSN?
” We also don’t hold foreign financial firms truly accountable for ignoring their reporting obligations.”
Right…. Congress waves a magic wand in Washington DC and suddenly financial firms around the world have “reporting obligations”. F-off. Pay for your own services, don’t expect the rest of world to pay for US stupidity.
Wish we all had Trump’s money to fight the Canadian government like he has to fight the US government to hide his tax returns. Clearly corrupt man, The injustice continues as the rich just keep going like nothing happened!
Has no one else noticed the lie in Warren’s statement?
”FATCA requires foreign financial institutions to report the holdings and income of U.S. taxpayers, but the IRS is generally not systematically matching these reports to individual tax returns.”
Banks don’t report income, only end-of-year balances. What, then, is meant to be “matched” to individual tax returns? At best, FATCA reports serve as circumstantial or supporting evidence when a financial crime is suspected. In fact, it’s FBARs with their maximum balance reporting which the IRS can use as red flags. Seriously, I’ve wondered from the start who FATCA is meant to catch, and how.
Either the staffer who penned her statement is ignorant, or they deliberately inserted a lie in order to propose a “get tough” proposal. I prefer to think they’re ignorant, while Warren is a stupid barking dog.
Half wrong. FATCA reports annual interest or dividend income per account, I believe.
Ron, I’ve just pored through the USA-Hong Kong FATCA agreement and there is no mention of reporting interest or dividend income, only “the balance or value of an account shall be determined as of the last day of the calendar year, or in the case of a Cash Value Insurance Contract or an Annuity Contract, as of the last day of the calendar year or the most recent contract anniversary date.”
Going through this 47-page densely worded document made my blood temperature rise to boiling point again. The arrogance of the US government dictating in the smallest detail what the Hong Kong government is obliged to do, and not a single word of what the USA is obliged to do!
Barbara is correct – the banks are NOT (at least at present) reporting income information.
But, the real point is this:
Elizabeth Warren’s position paper contains significant inaccuracies. It is very clear that she has no real concept of what FATCA is or how is works. She (and this is extremely dangerous) simply sees it as a weapon to go after those who she believes should be targets for her tax/asset extraction program. And we know who is impacted by the weapon that FATCA has become.
On the other hand, now that FATCA is part of the Presidential campaign (although not front and centre) this may be an unexpected opportunity to educate Homelanders about what it really is.
The IGA may vary from country to country of course, but for Canada interest reporting is detailed on page 10: https://www.fin.gc.ca/treaties-conventions/pdf/FATCA-eng.pdf
I’m aware of the broader point but wished to correct an inaccuracy. Some types of income may be reported under FATCA.
The banks are reporting the income earned in your account (interest, dividends, gross proceeds from securities sales). Given current interest rates, this is essentially nothing.
The banks are NOT reporting income from other sources that is deposited into your account (salary, business income, etc.).
Aggregate amounts reported from Australia are detailed at http://fixthetaxtreaty.org/2018/02/08/what-did-we-learn-from-our-ato-foi-request/
Thanks for the clarification, Ron and Karen. Interesting that the IGAs differ.
I remember reading (but I don’t remember where) that Elizabeth Warren believes that pumping up FATCA will lead to recovering “lost” tax income of $2.5 trillion to help pay for universal healthcare. If the income reports from FATCA–that is, interest income–are what she is talking about, then at current interest rates (I earn around 0.1 percent currently), there would need to be deposits totalling 2.5 quadrillion dollars “hidden” in non-US bank accounts. Which comes to $278 million in cash assets for every one of the alleged 9 million American men, women, and children living abroad. Which also comes close to Elizabeth Warren’s fanciful idea of the typical US expat financial profile.
So even if she’s technically correct about FATCA devulging unreported income, she’s nuts.
Hello everyone,
Thank you so much for your kind words about the survey report.
I’m really appreciative of everyone who participated in the survey.
I want to be sure you know that John just posted on Tax Connections a discussion of the survey and links to the full report.
If you are up for it, I’d like to encourage you to leave comments on the page. Note that your comment might not appear immediately after you submit it – there may (or not) be a delay.
Here is link to the page: https://www.taxconnections.com/taxblog/survey-dispels-myth-of-wealthy-americans-abroad-and-why-middle-class-americans-abroad-are-forced-to-renounce-u-s-citizenship/#.XcVlLDNKjIW
Again, thank you!
Yup, she’s nuts alright, and its funny how history is repeating itself. Back in the beginning, FATCA, and the projected additional revenue that it was supposed to rake in was the “pay for” slipped into the back pages of the 2010 HIRE act. Of course, that revenue never materialized because it was based on a total fantasy. (I seem to remember the inventor of FATCA, when asked how he calculated how much revenue it would produce, smiled and admitted it was nothing but a wild-ass guess.)
Now, almost 10 years later, Elisabeth Warren is proposing to use that same imaginary revenue to pay for her universal healthcare scheme. Nobody gets elected by proposing to raise the taxes of the voters whose votes are needed to get elected so she has to propose taxing somebody else. The myth lives on….
” Elizabeth Warren believes that pumping up FATCA will lead to recovering “lost” tax income of $2.5 trillion to help pay for universal healthcare.”
That’s not what she said at all. She actually said.
“The federal government has a nearly 15% “tax gap” between what it collects in taxes what is actually owed because of systematic under-enforcement of our tax laws, tax evasion, and fraud. If that 15% gap persists for the next ten years, we will collect a whopping $7.7 trillion less in federal taxes than the law requires. By investing in stronger enforcement and adopting best practices on tax reporting, withholding, and filing, experts predict that we can close the tax gap by a third — generating about $2.3 trillion in additional federal revenue without a single new tax.”
i.e. the additional revenue is derived from better enforcement of existing law. Almost all of this is domestic . very little would depend on FATCA. Just as well as we know FATCA is useless except to frighten the unwary.
Mrs. Warren may be dreaming but we needn’t distort what she proposes
I’ll come in defense of the one person in the survey who left the US for tax reasons.
A US citizen is free to move from a high-tax case such as California or New York to a zero-income tax state such as Florida or Texas and legally stop paying state income taxes. It is incredibly inconsistent hat this should not be the case for a US citizen moving abroad.