Prologue – The Context of FATCA, FIFA and U.S. Extraterritorial Laws:
— U.S. Expat Canada (@USExpatCanada) May 17, 2015
The above tweet links to the following comment at this blog:
With respect to your comment here:
which I will reproduce.
This is clearly a Republican-rant organization and fully misrepresents the Dems Abroad which has been working on FATCA issue much longer than Repubs who only recently jumped on it for political purposes. DA favors country-of-residence-exemption because it is the approach that will get the the quickest real results . . . rather than the full-blown Constitutional attack which will take years, but get their right wingnut lawyer Bopp maximum press.
Further the Republicans dirty little secret is that the REAL tax avoiders putting funds overseas are Republicans residing in the US. Republican position appears to be that tax evasion is OK while Dems Abroad is working to get relief for regular overseas Americans (of both parties) who are not the purpose of FATCA in the first place.
And lastly, before castigating the Obama and Dems for this law for political purposes, last I saw McCain is a Republican.
Let’s consider the “same country exemption” for what it is rather than drifting down the non-productive road of partisan politics. In other words, what does it mean. Not, who is it from.
Starting from first principles.
The Democratic Party (I don’t know them and don’t care about the label) is clearly in support of FATCA. They have made this very clear. Democrats abroad has made it clear that they are in support of FATCA. (Furthermore, in its recent submission to the Senate Finance Committee Democrats Abroad did NOT advocate for the repeal of “citizenship taxation”.) That’s all fine, everybody is entitled to support what they want. That said, (and I recognize that this is my opinion) FATCA is one of the most egregious examples of extra-terriitorial overreach in the history of the world. It is also absolutely immoral for many reasons including the following:
The U.S. dollar as the primary reserve currency
At the end of the World War 2 – in Bretton Woods, NH, the U.S. was trusted to the extent that the U.S. dollar became the primary reserve currency of the world. In practical terms this meant that there would be a constant demand for U.S. dollars because it was the commonly accepted currency. In other words, the U.S. was trusted with the great responsibility of it’s currency becoming the currency that all countries, people and financial institutions would need. Along with this agreement and responsibility, comes the assumption/trust that the U.S. would continue to make the U.S. dollar available. Since Bretton Woods, the U.S. dollar has become the “oxygen of the world financial system”.
FATCA is a law that the U.S. is attempting to IMPOSE through threats of economic sanction on ALL countries of the world. Why all countries? Because, of the status of the U.S. dollar as the world reserve currency. All the world conducts business in U.S. dollars. (This is why the rest of the world will move quickly to create conditions where the U.S. dollar will NOT be the primary reserve currency.)
Through FATCA, the U.S. is saying:
1. If you don’t do what we want (hunt for those we define as U.S. persons)
2. When you access the world reserve currency USD
3. We will deduct 30% of what you are entitled.
In other words, the United States of America – is in effect cutting off the oxygen supply to the rest of the world. In my view, this is in complete violation of the spirit of the Bretton Woods agreement which allowed the U.S. dollar to become the primary world reserve currency. I also believe that is an outright violation of International law.
Furthermore, FATCA is the “enabler of place of birth taxation” which operates to impose U.S. taxation on the the residents and citizens of other countries and ultimately on the country itself.
Now, I have a simple question for you and all others (including I suppose the Democrats) who as a matter of principle support FATCA.
My question is this:
Do you think it is immoral to cut off the oxygen supply of the world financial system just because you think you can get away with it?
As President Clinton once implied:
“To do something because you can is the least morally defensible reason for doing it.”
FATCA is not only an egregious violation of the sovereignty of other nations, but the assumptions it is based on (cutting off the world oxygen supply) is immoral in the extreme. But, it gets worse. Because under the FATCA rules, the United States alone defines who is a “U.S. Person”, FATCA can (and will be used) to extend U.S. taxation to more and more people who are citizens and residents of other countries. The effect of U.S. taxation of citizens and residents of other countries is that the U.S. can use “citizenship taxation” to remove capital from other nations. (For example London Mayor Boris Johnson)
Now, let’s move on to the FATCA “same country exemption”.
To promote the “same country exemption” is:
1. To clearly accept the absolute immorality of FATCA and principle of imposing U.S. taxation on the citizens and residents of other nations; but also to
2. Beg the United States Government to tweak the law so that this unconscionable act of immorality does NOT apply to one specific group – that is a subset of U.S. citizens abroad. And for the record, that specific group is NOT Americans abroad as a group. Rather it is Americans Abroad who are U.S. tax compliant. (The latter condones the immorality of citizenship taxation and does NOTHING whatsoever to assist the millions of Americans abroad who never even knew about citizenship taxation.)
Therefore, those who support the “same country exemption” (whoever they may be) are actually:
1. Supporting immoral laws in general and FATCA in particular; and
2. Saying, well please exempt me from this immorality and we will “wink wink” and NOT call your attention to the fact that you are immoral in the extreme.
Individuals and groups who support the “same country exemption” are actually enablers of immoral laws that are a breach of the spirit of the Bretton Woods agreement, are designed to impose taxes on the citizens and residents of other countries and extract capital from those countries.
I have not even mentioned the absurd and unfair costs that FATCA compliance impose on non-U.S. banks and on the residents of other countries. As one of many examples see:
FATCA is one component of U.S. policies which Juan Zarate would call part of “Treasury’s War” (google the title) and Ian Bremmer (google) would call the “Weaponization of Finance”. It’s really the U.S. saying to the rest of the world:
It’s our world. Get used to it.
A previous comment on these issues included:
The time has come to send the U.S. home where they can worship their FBAR Museum, PFIC Memorial and House of FATCA.
What follows are three video/audios.