Shadow Raider made the following comment:
Rand Paul responded to my email! Clearly this was not an automatic response and he is aware of the issue. Here is his response (my emphasis in bold):
September 26, 2012
Dear Mr. —,
Thank you for taking the time to contact me regarding the Foreign Account Tax Compliance Act (FATCA). I appreciate hearing your thoughts on this issue.
During the 111th Congress, Congress passed and President Obama signed into law, the Hiring Incentives to Restore Employment (HIRE) Act of 2010 (P.L. 111-147). This legislation drastically expanded government involvement in the financial goings-on of Americans who live and work abroad. FATCA, the tax evasion provision in this bill, requires all foreign financial institutions (FFI) to provide a detailed report on American account holders to the Internal Revenue Service (IRS) beginning in 2013, or be subjected to a 30 percent withholding tax on income from U.S. assets. American account holders with more than $50,000 who fail to file a report with the IRS would also be subject to a 30 percent withholding tax. As a newly elected member of the 112th Congress, I did not participate in the debate of this law and would have voted against it if I had been.
Not only does FATCA allow the government to obtain a wide array of international banking records without evidence of such tax evasion, but the outrageous cost of compliance with this requirement has been estimated at $30 million per FFI. Rather than comply, many banks have refused to serve American clients and have begun shutting down their accounts. I have serious concerns with FATCA and that is why, along with my Republican colleagues, Senators Saxby Chambliss (Ga.), Jim DeMint (S.C.) and Mike Lee (Utah), I wrote a letter to Treasury Secretary Tim Geithner questioning the implementation of this onerous mandate.
I have long been a critic of government intrusion into the privacy rights of Americans. As a lead opponent of the May 2011 extension of the USA PATRIOT Act, which allows the federal government to engage in warrantless searches, I believe the right to privacy is critical to the preservation of other rights. We have to be very careful not to continue down the slippery slope that our current and previous Administrations has taken us.
Rest assured I am fully aware of the effect FATCA is having on Americans overseas and will continue to keep a close watch on this issue. As I represent the Commonwealth of Kentucky in the United States Senate, I will remain committed to defending the proper role of the federal government, as outlined by the Constitution, and defending the rights of all Americans citizens.
Again, thank you for sharing your concerns with me. Please do not hesitate to contact my office in the future regarding federal issues.
Sincerely,
Rand Paul, MD
United States Senator
That is outstanding. Put that man in the Hall of Fame!
Well at least someone is listening!
*Certainly, these are heartening words, but they are just words…
*No commitment to do anything about FATCA, but he is at least listening. A lot more damage will have to be done before he will take any action. Certainly more positive than the average automated “I will keep your concerns in mind” reply that usually flow out in response to letters received by US legislators.
What I like about it (as Roger says it is above and beyond the form letters that simply saythank you for writing which is all I’ve ever received) is that someone took the time to actually demonstrate that he has a clue about what FATCA is and what the impact has been. Granted, he may do absolutely nothing about it (he’s a politician, not an archangel) but I will still write him a letter saying how much I appreciated his words.
Ron Paul is a true hero of the American people. Too bad the Republicans did not see it this way. I was hoping he would run as an independent…but it was not to be. Get ready for another 4 years of ‘change’, damaging legislation and supporting the top 1%.
I am one of the top 1%. I live outside the country. I don’t have much money, but I am obviously a tax evader and have foreign accounts. What am I doing with those accounts? This needs to be explained to the American people.
I got similar comments from a staff member of Senator Kay Bailey Hutchison, who answered my letter with a private phone call.
She also wrote Treasury Secretary Tim Geithner.
Here’s the answer she got.
Unfortunately, she won’t seek reelection in 2012. Hopefully, her successor will have the same opinion on the issue.
“only interest and not account balances”” ?
@Christophe, Wow, the response you got was much better than mine.
@Mark Twain, It seems to me that this whole frenzy over foreign tax enforcement is not organized at all. Different agencies are doing different things, with different purposes, sometimes contradicting each other.
Although initially I got excited when I read Rand Paul’s response to my email, I admit that later I felt a bit disappointed. I wrote to him about citizenship-based taxation, FATCA was only one of the points. He didn’t say whether he agrees with taxing foreign income of nonresident citizens. Still, opposing FATCA is a step in the right direction.
All administration activities are under the responsibility of the Executive Branch. Tells you about the quality of its leadership and the leader’s visions.
Agreements with foreign entities are to be validated by the legislature. Tells you something about what the administration is trying to jam through on its own.
@Mark Twain:
Re, ““only interest and not account balances”” ?” , I know – it doesn’t seem to directly address FATCA per se. I think it only refers to the domestic cousin/add-on (?) of FATCA that Just Me calls DATCA – the US offering up some kind of limited domestic-US bank data – in a pseudo-reciprocity – to lure other countries into signing on. http://www.risk.net/operational-risk-and-regulation/feature/2207380/fatca-igas-causing-concern-in-us
http://www.reuters.com/article/2012/04/17/usa-tax-irs-banks-idUSL2E8FHKDU20120417
http://news.investors.com/economy/031011-565595-florida-banks-lawmakers-fear-irs-led-capital-flight.htm It is fake reciprocity because the data offered up isn’t automatically exchanged or equivalent in scope.
If I understand it correctly, the non-resident alien accounts in the US banks weren’t reportable if they earned under $10. interest, which is why they were opened by the alien non-resident owners as non-interest bearing accounts. So the benefit to the US banks are that they get to hold (and invest) large amounts of deposits without having to pay any interest out. In return, the US held accounts are not reportable to the IRS or to the home country of the alien non-resident depositor. I think the letter is only referring to the effects of DATCA on US banks – because Florida, Texas, etc. are opposed due to non-resident aliens closing the non-interest bearing accounts in the US for fear they will be reported to their home countries (ex. Mexico, etc.) – meaning the loss of that foreign depositor money from US banks – e.g. ‘capital flight’ – and the owners moving their assets to other places like the Caymans. The US is only offering a fake reciprocity currently, and keeps stressing that the asset information will only be reported under certain circumstances to certain countries. For example, they have asserted that they won’t report to Venezuela no matter what. This has still spooked some alien non-residents, who have already pulled their assets, closed the US accounts and found some other country to ‘hide’ the money. http://www.reuters.com/article/2012/07/31/idUS209655+31-Jul-2012+PRN20120731 http://www.fsitaxposts.com/2012/08/03/senate-questions-g5-fatca-joint-statement/
@badger, Just to clarify, it’s not just noninterest bearing accounts that are not reported. Currently, US banks don’t report ANY amount of interest or capital gains earned by nonresident aliens, because this income is not taxed by the US (if earned in a bank; capital gains on US real estate, for example, are taxed). It may be surprising to some, but yes, nonresident aliens earn interest in bank accounts and capital gains from stocks tax-free in the US. This makes the US a tax haven for foreigners, and it’s precisely this anomaly that creates absurd situations like the tax implications of Eduardo Saverin’s renunciation of citizenship. If the US taxed US-source income regardless of the person earning it, like most countries do, Saverin’s case probably wouldn’t make the news.
In the proposed regulations, banks would report the interest earned by nonresident aliens over $10 to the IRS, but it would still not be taxed by the US. (The $10 limit is not new, interest earned by US citizens and residents is also reported only if it’s more than $10, and subject to US tax.)
@shadow raider – wouldn’t the home governments be able to extrapolate from the interest paid and more less determine how much is in those accounts? Also I wonder if, since those accounts are NOT taxable in the US, the home government would not have a mighty powerful argument to put before the voting public in favor of taxing that money. I’m thinking more and more that this (modest as it is) is going to expand the reach of local tax authorities into money invested in the US.
@Victoria, I hadn’t thought about that, governments could estimate the value of the accounts based on the yearly interest. And there are some countries that may be interested in the value of the accounts too, for example France and Argentina have a wealth tax, and many countries have estate or inheritance taxes.
I don’t like the idea of governments knowing what people earn or own, but if governments really want to exchange information for tax enforcement, they should create a standard. It could be something simple, as banks reporting the name, some kind of ID number, country of residence, value and income of the bank accounts only to the government of the country where the bank is located, then that country would take care of informing other countries on a reciprocal basis. If each country had a rule like FATCA, with different types of information to report to tax agencies in multiple countries, and multiple languages, no bank in the world would accept any foreign customers. If the US is really interested in fighting tax evasion through foreign banks, it should be trying to create an international sharing system, perhaps with the help of OECD, or something similar to the EU savings directive.
In any case, I agree with you. As things are currently going, I expect that governments’ reach over people’s money everywhere will continue to increase in the near future.
*Shadow Raider, I got the same letter response from Rand Paul. The only difference is that it has my name on it rather than yours. Like with you, it didn’t really address the issues I mentioned. It’s just a template that he sends out to anyone abroad who writes to him. However, this is more for Americans abroad than most US politicians are willing to do. I’m a simple individual who is easy to please, so I’ll write in Rand Paul to be the Florida’s Senator, given that he’s done more than Nelson and Mack.
@Petros, Thanks for making my post a new thread.
@SwissPinoy, What?! Man, I thought that Rand Paul had actually read my letter, but probably it was just his staff that send the standard response then. Still, he has a standard letter specifically about FATCA and addressed to Americans abroad, and it’s understandable that he would use the same letter to respond to the same issues.
Since he didn’t say anything about citizenship-based taxation, I was thinking that he really agreed with it and that he was only against FATCA. But it’s well possible that he would agree with abolishing citizenship-based taxation, and that he didn’t mention it in the letter just because it was a standard response about FATCA.
My hopes are up again, and I’m more convinced that I’ll have to go talk to congressmen in person. Do you all think that I should schedule a meeting myself already, or should I wait for ACA to come to DC?
*
Shadow Raider, it’s probably better to wait for ACA because then they might take you a little bit more seriously. It would be nice if you had a petition signed by millions of Americans abroad.
@shadow raider
Maybe we should all write to Rand Paul about citizenship based taxation, which he could then make a nice form letter to respond to them with! We could give him special recognition for being the 1st legislator to do so 😉
A form letter ought to mean that there are so many inquiries he needs a copy machine to reply. Could only be a good thing.
I learned a way to get a response from Connie Mack’s organization—just put “donation” in the headline of the email and someone will read it within days.
A form letter could mean nothing more than an intelligent response system that defaults to reusing prose even if only a second inquiry is received on the “same” topic. Do not overread the tea leaves!
I am watching CNBC and they said that Rand Paul was going to make the case for Teaparty and Ron Paul supporters to fall in line behind Romney. That is the quid-pro-quo: Rand Paul suckers the Teaparty/Constitutionalists/Libertarians and expats into supporting Romney and he gets full Republican backing for his political career and/or perhaps a position in the Romney administration.
Rand Paul sold out. If you think he is going to put his political capital on the line to repeal FATCA like his father would have done, you are barking up the wrong tree.
Well, here is one I got from Ryan’s foe Bill Nelson, 2.5 years after FATCA was passed and 7 months after I began writing letters.
Dear Mr.
Thank you for contacting me regarding the Foreign Account Tax Compliance Act (P.L. 111-147), also known as FATCA, which established new reporting requirements for foreign banks with accounts held by American citizens.
FATCA was enacted to reduce offshore tax evasion by American taxpayers hiding assets in overseas accounts. I understand the Treasury regulations issued under FATCA raise legitimate concerns about the effect of the new rules on the availability of financial services for American citizens abroad, as well as the costs and administrative burdens of compliance. As a member of the Senate Finance Committee, I will be monitoring the implementation of these rules as they go into effect to determine what exact changes, if any, may be necessary.
Hundreds of tax proposals are offered in the U.S. Senate each year, and the Congress is considering a number of proposals to simplify our tax system. I have supported past efforts to reduce burdens on ordinary Americans, and I’m open to new ideas that facilitate the proper enforcement of our tax laws while ensuring taxpayers are not needlessly encumbered by Federal regulation.
I appreciate hearing your views on this issue. If you have any future concerns, please don’t hesitate to contact me again.
Sincerely, Bill Nelson
“if any”
re; “I have supported past efforts to reduce burdens on ordinary Americans“
We aren’t accorded the same rights as ‘ordinary Americans’. I doubt this will be any different.