This is a post I wrote this morning and put up on the Flophouse. I know that most of you already know all this but I wanted to gather together the links and publish an argument for why FATCA concerns everyone, not just U.S. Citizens or Green Card Holders abroad. It may be obvious to us but not everyone understands what this law will mean for them. I’m still getting way too many people telling me that FATCA is justified to catch those “evil tax evaders” or that it isn’t their problem because they are not Americans (are you sure about that, folks?) This is my answer.
There is a petition up on Signon.org that is calling for the repeal of FATCA (Foreign Account Tax Compliance Act), the U.S. law which has terrible ramifications both for the U.S. and all other countries. It would require foreign banks to report the account information of all U.S. persons (U.S. citizens and Green Card holders) to the American IRS and imposes draconian fines on foreign entities for non-compliance.
Some of the Americans in the homeland I’ve talked to about this argue that this is a necessary evil and how else is the U.S. to find “tax evaders?” Well, that does kind of assume that Americans abroad are criminals and must prove that their checking, savings, retirement and children’s college funds have not been established for nefarious purposes. One would think that the burden would be on the U.S. government to prove that something criminal has indeed taken place and it is very hard to see what an American expatriate is doing wrong when he or she sets up a savings account for a minor child at a local bank.
Some of the Europeans I’ve talked to have said simply that this is an American problem and since they are not Americans it does not concern them.
I hate to be the bearer of bad tidings, my friends, but this legislation concerns everyone in all countries. Jean-Jacques Rommes, head of the Luxembourg Banking Association, explains why in this presentation given to Democrats Abroad not too long ago. Here are the different victims of this law and the impact it will have on them:
European (and all other) countries: It is an affront to national sovereignty because it by-passes local governments. It is nothing less than the application of American law to people living in other countries with all the inconvenience for local citizens and potential conflicts with local law. How would Americans feel if Canada, Mexico or France demanded that U.S. banks report directly to their tax agencies over the head and without the consent of the U.S. government?
Europeans: Europeans (and people in other countries) will have to prove to their banks that they are not American citizens or Green Card holders. Imagine that. A French person, for example, will have to prove to their local bank that they have no connection to the U.S. (not born in the U.S., no U.S. born parent and no lengthy periods of residence in the U.S.) In addition to this, all banks that comply with FATCA must update their IT systems and the costs will be very high indeed. Who do you think is going to pay for this? Certainly not the U.S. government or U.S. citizens in the homeland. No, the cost will be borne by all account holders at that bank (my French neighbor, for example, or my former colleagues) whether it is the BNP, the Caisse d’Epargne or any other non-US bank.
Americans Abroad: U.S. persons will be discriminated against. Their accounts will be closed by banks that do not wish to take on the administrative burden of having U.S. clients. Americans abroad will become “toxic liabilities” to be shed as quickly as possible. American businessmen and women in overseas companies will see their authority over company funds stripped from them. Any American wanting to start a business venture with a non-US company will be gently but firmly told to take his expertise and his money somewhere else.
Americans in the U.S.: The impact on the American economy cannot be overstated. There will be a massive disinvestment of foreign capital and assets out of the United States. FATCA gives foreign companies and investors a very good reason to avoid the U.S. entirely. This means fewer jobs for Americans. This means fewer opportunities for American business. The result of FATCA will be Americans and American companies shut out of the globalization game (which may actually be very much to the benefit of America’s competition, like China or the EU, in the global marketplace).
The Repeal Fatca petition was started by Rami S. who was kind enough to share her motivations with me for getting involved in fighting FATCA:
I am an American citizen by birth, and have had the broadening experience of living most of my life outside of the US. I have many beloved family members still in the US, and a far-flung and international clan, ever more international with each marriage it seems! My roots are deep enough to be a “daughter of the American Revolution”, and, with each generation, there has been in and out migration. To me, this is a fact of modern life — and life long before the modern era!
I value my American citizenship, I identify as an American. I passionately love the geography of my birthplace… I am as active politically as I can be, from abroad, because I think America needs and benefits from the influence of its citizens who contribute an international, global perspective as a check to isolationism and insularity. We are all connected, in every way…
FATCA and FBAR are policies that radically trespass the normal bounds of international tax law and victimize expats, who, appreciated or not, are valuable citizens…
I could not have said it better myself. I urge each and every one of you, U.S. person or not, to sign this petition and send a clear message to the U.S. Congress and President Obama. The petition is here.
Once you’ve done that head over to the American Citizens Abroad site and the Isaac Brock Society to see how you can get further involved.
If you are an EU citizen the following MEP’s and activists are challenging FATCA and trying to get a debate started in the European Parliament. Send them an email: Jan Philipp Albrecht (Germany), Rui Tavares (Portugal), Raül Romeva i Rueda (Spain), Judith Sargentini (Netherlands), Cornelia Ernst (Germany), Miguel Portas (Portugal), Marisa Matias(Portugal), Sophia in ‘t Veld (Netherlands), Sylvie Goulard (France), Sonia Alfano (Italy), Alexander Alvaro, Baroness Sarah Ludford (United Kingdom), Theodoros Skylakakis (Greece), Ramon Tremosa i Balcells (Spain), Philippe De Backer (Belgium), Jens Rohde (Denmark), Stanimir Ilchev (Bulgaria), Giommaria Uggias (Italy).
And, if you are an American citizen, register to vote!
I left America because I didn’t like the wars, the lies, and the general direction things were going. I saw the US as an aggessor that just blows up any country that has what it wants. I wanted to distance myself. So I went to a different country and started a family. Yet the US still considers me to be a “citizen” which makes next-to impossible to open any kind of account outside of America.
It’s completely ridiculous that my Brazilian wife can do anything she wants to, open any account she wants to, but I cannot based on where I was in the USA. I didn’t *ask* to be born there!
I see it as as “a US-fabricated problem” because there are much more practical solutions, one of which is already in place with the EU and Switzerland. When does the US likes doing anything the easy and practical way?? Never. Where I live, I know of a handful of people who have foreign banks accounts, but they just declare them on their tax returns here. There’re NO threats at all, but people do it so they won’t have problems later with the central bank years from now. The key is “there are *NO threats*”. Right now, the only country/entity I have in my life that is threatening me is the US, and I don’t even live there. Why would ANYONE want to deal with US threats and being called a “cheat” in the media when they live in another country, pay taxes in another country, and basically have nothing to do with the US!!?
The US reared its head in my life with the use of this FATCA. But this will be the last time. I’m done.
I doubt the FATCA is going to be a disaster to the US economy because there are too many simple solutions to correct any imbalance. All the US has to do is offer reassurances and preferential trade agreements to encourage the purchase of US assets. But what I think *has* to happen is a mass exodus of Americans abroad from the list of those who have American citizenship. Why? Because the US has been “tightening the screws” every year making it harder and harder to live overseas. Will THIS hurt America? Some people give excellent arguments that it already is hurting their export market. I don’t really care if it hurts America if millions of people renounce citizenship, but at least all of the ex-Americans will be able to live their lives to the fullest in foreign countries without US threats, money grabs or anything else they have in their bag dirty tricks.
That’s true. The burden is called in the Fourth Amendment, “probable cause” and the FBAR/FATCA laws are equal to a general warrant–the gathering of private information with no name or place named on the warrant–but requires the private bank papers of millions of people. Only specific warrants are permitted in the Constitution.
@Petros and Victoria – Almost all protections in the Constitution have been undermined by different legislation. Last night I was watching the movie “Find me Guilty” which is about RICO legsilation that basically amounts to double jeopardy. The Patriot Act kills something like 4 amendments. The Defense Act of 2012, at least 1 more.
I think if anyone looks at the Constitutionality of these US laws, they will go crazy!
@geeeez You are right. But look, I have to evaluate the FATCA and FBAR laws in light of their constitutionality. I am compelled to do this and thus to show how the FATCA and FBAR foist such great injustices upon Americans abroad: First they violate your 4th amendment rights if you comply. Second, they impose unconstitutionally excessive fines if you don’t comply. So both the laws themselves AND the fines are unconstitutional. Then, the IRS uses the mainstream media to depict you and me as tax cheats who need to come clean, violating once again our constitutional right to the presumption of innocence.
You know, given our suffering, loss of American citizenship is nothing to regret–since the freedoms once guaranteed by the constitution no longer exist.
@Peter, they are HUGE injustices, but I’ve never seen too many people argue against the US and win. Ask Sadaam Hussein or Gadaffi 🙂 (that’s a joke!)
No, I totally agree, especially with your second paragraph. It’s sad to say, but the Constitution is just a relic.
@Peter – good point about the constitutionality of this.
@geeez – those countries that have nukes can indeed argue with the US and get away with it. The US only attacks countries without “la force de frappe.”