10 Feb, 2013, 10.12AM IST, AFP The Times of India
US tax rules sour life for Americans abroad: Expats
GENEVA: Scott Schmith is a patriot and a US military veteran but he is no longer a US citizen: Sick of complex tax rules making his life in Switzerland miserable he recently handed back his passport.
“It was a pretty big decision and there was a bit of anxiety,” said the 50-year-old photographer who served in the 1990-91 Gulf war and has been living in Switzerland since 1993.
But once he received his Swiss passport and handed back his US one last September, “it was like a load of weight off my shoulders.”
Schmith is one of a growing number of American expats who are opting to give up their citizenship rather than deal with the increasing difficulties imposed on them by US tax authorities, observers say.
Wait a minute, this is new:
There are some signs that relief could be on the way.
A Senate Finance Committee aid told AFP that chairman Baucus was preparing proposals that might affect the taxation of US citizens abroad.
The senator, he said on condition of anonymity, “is committed to improving the US tax laws to ensure that US competitiveness is not hindered by unnecessarily burdensome tax rules.”
@Shadow, wouldn’t that be wonderful if there were FINALLY reform for bona fide expats abroad…and thanks so much for all your hard work in trying to make it happen!! 🙂
I’ll believe it when I see it. More likely it’s just more lies and typical propaganda.
The purpose of FATCA, in my view, is to know how much money Americans abroad have and earn so that when the FEIE is nixed, Americans abroad will have to pay the double-tax on their entire income to avoid their bank accounts being closed.
Senator Max Baucus probably just wants to make it less complicated for expats to be double-taxed:
“Comprehensive tax reform can make the code simpler, fairer and easier to comply with, all of which can lead to families having more time, energy and money for what matters most – their families,” Read more: http://thehill.com/blogs/on-the-money/domestic-taxes/280657-baucus-could-release-draft-tax-reform-plan-in-spring#ixzz2KVqSPrzp
On territorial taxation, House Ways and Means Committee Chairman Dave Camp has made “little visible progress over the past year” with Sen. Baucus: http://www.reuters.com/article/2013/01/24/us-usa-tax-financialinstruments-idUSBRE90M1MV20130124
This OP has also been posted here:
http://www.globalpost.com/dispatch/news/afp/130210/corrected-us-tax-rules-sour-life-americans-abroad-expats
http://www.japantimes.co.jp/news/2013/02/10/business/tax-rules-called-bane-of-u-s-expats/ (got deleted)
http://news.asiaone.com/print/A1Business/News/Story/A1Story20130210-401331.html
“There are some signs that relief could be on the way.”
Yeah right, wishful thinking when Uncle Sam’s policy towards ex-pats has been one of “molestation and vilification” since the days of Abraham Lincoln.
I have to agree with the cynics. There is no way that Baucus or anyone in Congress is going to give up anything of substance. The only power that can make the U.S. capitulate on citizenship based taxation that which is exercised by the sovereign countries of which U.S. persons are legal residents. The other governments of the world will have to stand up for themselves and protect their treasuries, their sovereignty over their immigration policy which citizenship based taxation nullifies.
What we need are foreign leaders with guts.
“Obama has backed sticking with the current “worldwide” system, where companies are taxed on all profits earned.”
http://www.reuters.com/article/2013/01/24/us-usa-tax-financialinstruments-idUSBRE90M1MV20130124
“But Mr. Baucus stopped short of advocating that the U.S. follow the rest of the developed world and switch to a territorial tax system – one that taxes only a firm’s domestic income”
http://blogs.wsj.com/washwire/2012/06/11/sen-baucus-sketches-his-vision-for-tax-overhaul/
Senator Baucus is actually a hardcore advocate of double-taxation:
Baucus was joined by Chairman Chuck Grassley in sending a letter to Treasury Secretary JohnSnow highlighting their concerns with the current lack of enforcement of tax rules for Americanexpatriates.
“We are writing to bring to your attention a matter of mutual concern involving taxpayers whorelinquish their U.S. citizenship and long-term resident status with the purpose of avoiding U.S. taxes,”Sens. Baucus and Grassley stated in the letter. “In a study published in 2003, the Joint Committee onTaxation (JCT) concluded that there is virtually no enforcement of the special tax and immigrationrules applicable to tax- motivated citizenship relinquishment and residency termination. Further, astudy conducted by the GAO in 2000 concluded that the IRS does not yet have a systematiccompliance effort in place to enforce the present law alternative tax regime.”
http://www.finance.senate.gov/newsroom/ranking/release/?id=f0de2fb7-4e36-41e2-b973-c90e10bc5acc
there are no foreign leaders who have guts—-or there are no foreign leaders who have both acquired understanding of the issue and guts
Gotta love this one, US policy for dummies:
“It’s just common sense to tax those who are giving up their citizenship before they leave the country,” Baucus said. “By definition, an expatriate has little intent to return to America and will have little incentive on paying any taxes owed to America once they’ve left the country.”
http://www.finance.senate.gov/newsroom/ranking/release/?id=f0de2fb7-4e36-41e2-b973-c90e10bc5acc
This is where FATCA comes into play. FATCA creates a punitive “incentive” for expats to be double-taxed on the same earned income.
Taipei Times has the best introduction to the topic:
“BUREAUCRATIC BLIGHT:The US is the only country besides Eritrea that taxes people based on their citizenship rather than on residence or the source of their income”
http://www.taipeitimes.com/News/biz/archives/2013/02/11/2003554695
“There are some signs that relief could be on the way.”
Yeah right. This will only affect giant multinationals such as Apple and Starbucks. They are trying to figure out how to encourage them to repatriate foreign earnings
I agree with the Duke of Devon. Any relief will be for multinational companies and those who are super wealthy and still desire their US citizenship enough to out source their accounting issues and deal with the double taxation. It won’t help the average working person, the retired person, the stay at home spouse of a foreigner or their children cursed with hand me down USpersonhood.
But, I don’t doubt that weasels like Schumer haven’t realized that there are sticky PR issues afoot and that some rewording and other shady things need to be implemented to keep other countries from balking or out right rebelling.
Does anyone know where Canada’s IGA stands at the moment? The impression that it was a done deal is about two months old and still there appears to be no signed deal. I don’t find this particularly encouraging but it is curious.
This website for young ex-pats in the making is wonderful but heartbreaking as well.
These young idealistic kids have no idea of the minefield they will be stepping into, particularly those who decide to relocate abroad permanently.
The fight for justice for ex-pats is not only about those suffering today. It is also about the ex-pats of tomorrow. Damn you Uncle Sam! Keep your hands off our children.
http://atlassliced.com/
@FromTheWilderness Damn you Uncle Sam! Keep your hands off our children.— the worst part is, on “moderate” expat sites the advice I most commonly see people giving to would-be renunciants is to renounce only after your kids are born and to make sure they’re registered with the consulate. Why? Because it would be “unfair to force your choice on your children” and “they might not share your political views”.
That is an interesting comment by Baucas if true. Not sure what it means. I just posted this, but hasn’t showed up yet…
Here is the shorten link if you haven’t read it yet. http://bit.ly/V6Aee7
Also tweeted Max, but don’t expect a response… (however, he started following me a week ago. Not sure that means anything, but it is the only legislator I have that is following me on twitter, for what it is worth.)
https://twitter.com/FATCA_Fallout/status/300697490917842948
https://twitter.com/FATCA_Fallout/status/300697784561061888
Hummm. I seem my comment posted, but it doesn’t like spaces apparently, so need to keep that in mind for the future.
@ Just Me, maybe he only means US ‘corporation’ people. And I don’t trust him, when he says;
“proposals that MIGHT affect the taxation of US citizens abroad”. What kind of effect? For the better?
Does a leopard change his spots?
Re; ..”unnecessarily burdensome tax rules”, he and his colleagues seem to have believed so far that all the burdens were not only necessary, but eminently desirable.
And no matter what they propose, taking Phil Hodgen’s advice still applies for those who can ‘get out while the getting is semi-good’. All the evidence we’ve amassed here so painstakingly, points to only US residents and US politicians negative views towards those living outside the US. ‘Our’ president remains silent. We are of no interest or concern to Obama. The only attention we attract is the punitive enforcement of the IRS and Treasury – and they only value us for the purposes of taxes and scapegoating.
That won’t change.
Interesting recent article about Baucus here:
http://washingtonexaminer.com/tim-carney-baucus-rewards-ex-staffers-with-tax-breaks-for-their-clients/article/2517635?custom_click=rss#.UOrQGqwhaBN
The above news story is now in the Japan Times under the title, “Tax rules called bane of U.S. expats.”
Comments are still open.
http://www.japantimes.co.jp/news/2013/02/11/business/tax-rules-called-bane-of-u-s-expats/#.URgXBpbU7xI
ACA added this to their links page…
http://americansabroad.org/issues/fatca/aca-and-fatca-in-the-press/
I see that the New York Times business section yesterday (Sunday, Feb. 10, 2013) had a six-page “Special Section” devoted to “Your Taxes”:
http://www.nytimes.com/pages/business/yourtaxes/index.html
In it I haven’t been able to find ANYTHING about how US tax laws apply to or affect ordinary US citizens and ex-citizens living outside the US. However there are nice pictures of Senators Baucus, Hatch, Levin and Schumer, and more stuff about thwarting “tax-avoidance schemes” (like having the temerity to live outside the US and having to give up US citizenship to stay sane and solvent, perhaps?). If the NY Times claims it has “All the News That’s Fit to Print”, what hope is there for the rest of the US media to cover the story?
There’s an article in today’s on-line newspaper Local.ch called “Americans fall out of favour with Swiss banks”.
Two worthwhile statements in the article:
1) ““For American citizens abroad, life is going to get even tougher,” Martin Naville, chief executive officer of the Swiss-American Chamber of Commerce candidly tells The Local. “For U.S. persons living here, there are still solutions but it’s very, very complex,” Naville says. “For most of the banks, the easiest thing to be FATCA compliant is to just send a letter to the IRS once a year saying we have no US persons here. Any US person gives you additional work.””
2) “Indeed, if FATCA kindles anti-American feelings at all, it is from US citizens living around the world. Bugnion says normally the American community overseas are the “best ambassadors” for the US. But when expats feel like they’re being flattened by a “steam roller”, she says, they’re not being so diplomatic about their home country. “That’s very, very bad for the United States.””
http://www.thelocal.ch/page/view/american-expats-fall-out-of-favour-with-swiss-banks
BTW: Mr Bloomfield in the article said he renounced in October 2012. No sign of his name in the 4Q 2012 Federal Register list:
https://www.federalregister.gov/articles/2013/02/14/2013-03378/quarterly-publication-of-individuals-who-have-chosen-to-expatriate-as-required-by-section-6039g
@Innocente
Thanks for the alert to that article…
Here is the bitly link for it too..
http://bit.ly/ZyiTpO