Update 3:
Those in or near London, England might be interested that a similar event to take place there on Sunday, July 28, 2013, is in the works. I will post the details as the become available.
UDPATE 2:
Saturday, June 15
Don Mills United Church – 126 O’Connor Dr., Toronto, Ontario M4K 2K7
Click here for directions (at the corner of Pape and O’Connor, see google maps). There is some street parking.
Doors will open at 9:45 a.m.
Orrin Hatch, as you may remember, was one of the first Republicans to speak out in favour of the Ex-PATRIOT Act in 2012; Bloomberg News quoted him as stating, “it always bothers me when somebody renounces his citizenship in the greatest country on Earth just to save money, save taxes” (or save themselves from emigrant-only $13,000 fines on $21-per-year tax deficiencies). Now, not willing to be outdone by the Ex-PATRIOT Act sponsors who are once again proposing permanent exile for people who dare exercise their human right to move to another country and live there until they qualify for naturalisation, Hatch made the following comment in a speech on the Senate floor. At page S4389 of the Congressional Record for 12 June 2013:
When a citizen decides to leave the United States and renounce their citizenship, they often face taxes on income earned in the United States and on any gains from appreciated assets. Is it punitive to apply a similar standard for those seeking U.S. citizenship? Think about that: When a U.S. citizen decides to leave the United States and renounce their citizenship, they often face taxes on income earned in the United States and on any gains from appreciated assets. That is not punitive. The answer, of course, is that it is not punitive.
The context of Hatch’s comments was a speech claiming that his amendments relating to taxation and healthcare coverage for registered provisional immigrants were also “not punitive”. Hatch’s facile description of the exit tax is not accurate, making one wonder whether anything else he says to justify his policy proposals is: under the half-decade-old HEART Act, the tax on ex-citizens is applied not just on “income earned in the United States”, but current unrealised non-U.S. capital gains, including capital gains on a house whose purchase was funded in the first place by non-U.S. wages used to qualify for a mortgage from a non-U.S. bank protected by a non-U.S. mortgage guarantee scheme, all under the laws of a non-U.S. government. I suppose he thinks that punishing people who renounce citizenship to save their mortgages is entirely appropriate anyway. Apparently Hatch hates anyone who dares to leave his birth country and pursue a better life elsewhere, whether they move to the United States or away from it.
http://opinion.financialpost.com/2013/06/14/many-rings-to-the-global-circus/
The G8 will learn about a template devised by the Organization for Economic Co-Operation and Development to globalize tax collection. This will include measures such as transparency, sanctions and sharing agreements between governments.
An estimated $32-trillion is hidden offshore, or two U.S.-sized economies, socked away in numbered or secret accounts in a variety of dirty money capitals. And Canada is being accused of reluctance when it comes to getting information from its banks then sharing it with other governments.
According to a story in The Post this week, tax watchdog groups claim that Canada is resisting Cameron’s efforts to force governments to exchange tax information about known cheats. He also wants governments to collect information from financial institutions about foreign-sourced income and give that information to the foreign countries where the income was made so they know about it and can tax it.
Currently, Canadian laws are lax. Offshore assets must be reported, but the CRA doesn’t pursue leads as aggressively as do the Europeans or Americans. There has been some movement, but Cameron wants more. Under pressure, Ottawa set up a “swat” team to pursue offshore evaders, now requires reporting of offshore transactions of more than $10,000, offers modest whistleblower rewards and just announced that resource companies must report all payments to foreign governments. Resistance is due to the fact that the Canadian banks are a powerful lobby here, but Canadians who pay taxes deserve better management of tax collection.
I personally would like nothing more than to see a TUC general strike.
http://www.taxresearch.org.uk/Blog/2013/06/14/what-we-want-from-the-g8-the-tuc-view/
This is the result of the USA’s new commitment to automatic information exchange with countries all over the world that hold information on the foreign taxable income of US citizens. This commitment was embodied in US law in 2010 in what is called the Foreign Accounts Tax Compliance Act (FATCA). This becomes operational in 2014. This Act specifically only applies to US citizens. All the FATCA agreements made by the USA are bilateral – which means that they are strictly between the USA and other individual countries. But to make FATCA work, any country that wants to hold deposits from US citizens needs systems to provide this kind of information. Once in place, these can be used by other countries to demand the same automatic exchange of information to track the overseas income of their tax residents. Full transparency has become a realistic possibility for the first time. Almost certainly as a direct result of FATCA, together with strong campaigning against tax abuse by unions and others, UK ministers have changed their position on what is called automatic information exchange (AIE). AIE happens when income earned in one country by a person who is resident in another country is automatically reported to the country where the person lives, whether the person involved likes it or not. This can be done bilaterally – that is between two countries – or multilaterally, which happens when many countries sign up to the same system. European countries are already used to the second system as a dilute form of this has been in operation in most EU states since 2005.
IRS FBAR Voluntary Disclosure Program: Taxpayer Interviews –http://t.co/oXpq4MJkCu – article not relevant to #americansabroad
— U.S. Citizen Abroad (@USCitizenAbroad) June 13, 2013
#IRS hates quiet disclosures and they really mean it http://t.co/ZIYvQE4lJC – But, what is "quiet disclosure" within the meaning of #OVDP
— U.S. Citizen Abroad (@USCitizenAbroad) June 14, 2013
The second tweet references a very interesting post by Roy Berg.
What’s the big deal?
Ever since the GAO Report on the IRS and the OVDP program there has been concern that those who came into compliance outside OVDP – meaning through “quiet disclosures” – are headed for trouble.
What is a “quiet disclosure”?
From a Caribbean Business interview with Puerto Rico’s Secretary of Economic Development and Commerce Alberto Bacó:
“We are attracting high-income, well-educated residents,” he said during a forum with University of Puerto Rico business school alumni. The official said the government fielded roughly two dozen petitions in both April and May from rich people seeking to tap incentives for relocating to Puerto Rico. “I have met with billionaires. These aren’t people who go to a bank seeking a loan. These people have their own capital to invest,” Bacó said according to media reports. Bacó cited Nicholas Prouty, president of Putnam Bridge Investments, who is relocating to Puerto Rico …
Law 22 is designed to primarily attract to Puerto Rico high-net-worth individuals, empty nesters, retirees who currently relocate to other states and individual investors from the U.S. and other countries, by eliminating all taxes on passive income that accrues after they relocate to the island. While dividends and interest income earned by Puerto Rico residents on U.S. securities are generally taxed by the federal government, capital gains taxes on their sales are based on residence.
So if you lived your whole life in the Homeland and have millions of dollars in unrealised capital gains from U.S. investments, the U.S. Congress and the Puerto Rican government will cooperate to make sure you don’t have to pay a penny of tax. But if you’re an Australian with an American mother and a Superannuation plan, the U.S. will make you waste 55 hours per year filling out a form even accountants have trouble understanding to tax you on retirement savings which the Australian Parliament voted should be tax-free.
The reason for this, of course, is that All Americans (besides the ones who move to Puerto Rico) Must Pay Their Fair Share for the Benefits of Citizenship in the Greatest Country on Earth, and if you decide that you don’t want those Great Benefits, then you’ll be exiled permanently. I guess because there’s no U.S. embassy in Puerto Rico, those poor deprived Homelanders living there don’t get any of those Great Embassy Services like us U.S. Persons abroad.
Jeffery Kadet (U. Washington), Full-Inclusion Is Better Than Territorial System, 139 Tax Notes 295 (2013) http://t.co/EPmi4xk4lH
— Paul Caron (@SoCalTaxProf) June 13, 2013
Jeffery M. Kadet (U. Washington), U.S. Tax Reform: Full-Inclusion Over Territorial System Compelling, 139 Tax Notes 295 (Apr. 15, 2013):
The territorial system strongly lobbied for by U.S. multinational corporations that stand to benefit from that system is not what’s best for our country or our society. It is bad tax policy for many reasons, including the strong motivation it provides our multinational corporations to continue moving operations, jobs, risks, and assets outside the United States to achieve double non-taxation. A worldwide full-inclusion system would severely curtail or completely eliminate that strong motivation because double nontaxation would no longer be possible because of a current federal tax on all earnings that cannot be eliminated through any tax schemes or creative avoidance. A worldwide system also would increase the tax base and help make possible the lower overall corporate tax rate that both political parties desire.
He seems to think/assume that companies do not pay local taxes on their earnings outside the United States. Unless I am misreading this paragraph, Mr. Kadet is arguing for corporations to be subjected to the equivalent of “citizenship-based taxation”. Should this happen it will be the end of:
1. Any company being incorporated in the United States;
2. Any U.S. person owning a company outside the United States.
http://www.guardian.co.uk/world/2013/jun/13/g8-david-cameron-objectives
The prime minister was meeting continued resistance from his Canadian counterpart, Stephen Harper, over critical plans to require countries to reveal the true beneficial owners of shell companies and trusts. The measure is vital to combatting money laundering, fighting tax evasion and turning tax information exchange into something meaningful.
Cameron laid on the diplomatic red carpet for Harper, giving him the rare honour of speaking to both houses of parliament, a visit to the Queen and a lengthy bilateral meeting at Downing Street. But Harper is worried about exposing private Canadian tax affairs and fears complications arising from Canada‘s federal structure.
In a crucial advance for Cameron, a US Treasury spokesman said: “We view the G8 as an important opportunity to make progress on cracking down on criminal and illicit actors who use shell companies to hide their true identities”.
The US Treasury said “Increased transparency including the availability of beneficial information to law enforcement is an essential element of the US broader effort to enhance financial transparency which also includes strengthening customer due dilligence requirements for US financial institutions with respect to beneficial ownership of legal entity account holders”.
The remarks suggest that Barack Obama is not going to support public registries of beneficial ownership, limiting access to tax authorities.
Here at Brock, we worry – well some of us do – quite a bit about the omnipotence of the IRS and the United States government when it comes to financial institutions and taxes, but should we?
In addition to the many, many corporations and uber wealthy that seem to routinely use tax law loopholes (often written into the tax code by lobbyists they employ) to pay as little tribute to the empire as possible, it seems that undocumented workers in the United States are able to do the exact same thing. And what’s more, the IRS and members of Congress know about it and haven’t done anything to stop it.
Four billion dollars have flown out of the USA’s coffers every year for past several years in the form of a child tax credit that enterprising illegals are claiming for kids who don’t live with them and sometimes aren’t even living in the United States at all.
According to the Inspector General, interviewed in the following news vid, once the IRS issues a refund check to a “taxpayer” that money is nearly impossible to recover.
Which brings me to my point. The IRS, that Americans outside the actual physical boundaries of continental America are being told by various tax compliance agencies and entities to fear more than the Grim Reaper, is seemingly powerless to stop actual fraud – for which they have actual proof – practically down the street from it. What power then do they really have over USP’s who live across international borders and are often citizens of other countries?
In a recent discussion thread on another post, Petros – again – reminded us that those who have no ties to the USA, or need to venture there, should take time and consider the long-term ramifications before back filing any type of compliance forms (before or after) when renouncing US citizenship. He pointed out that for many – duals especially – the IRS doesn’t know they exist. Why feed the USG’s info beast? What can the really do? I mean really do. Not theoretically. What is the actual damage? And what are the real odds? And if the IRS doesn’t care about 4 billion dollars being stolen from it by people they can put their hands on, what do they really care about law abiding duals who don’t owe taxes in the first place?
Yes, FATCA is … probably … coming in some form or other and hiding will do a person no good in the longer run (although truthfully, no one is truly invisible anymore thanks to technology), but allowing fear of an agency that isn’t even able to control fraud and evasion within its own borders be the driving factor behind decisions is something that might be cause for pause.
I encourage you to watch the video. It’s not new news in terms of the hysteria in the US about undocumented workers and fraud, but it puts the dilemma, at least for me, of USP’s who’ve emigrated in another context.
The point of FATCA and the offshore jihad on expats is not about money. It’s about information, and information is power.
http://www.youtube.com/watch?feature=player_embedded&v=3eQZoXAU7X0
Add this item to the list of benefits/disadvantages of U.S. citizenship?
According to the former officials, U.S. cyberspies, most from military units who’ve received specialized training, sit at consoles running sophisticated hacking software, which funnels information stolen from computers around the world into a “fusion center,” where intelligence analysts try to make sense of it all. The NSA is prohibited by law from spying on people or entities within the U.S., including noncitizens, or on U.S. citizens abroad. According to one of the former officials, the amount of data the unit harvests from overseas computer networks, or as it travels across the Internet, has grown to an astonishing 2 petabytes an hour—that’s nearly 2.1 million gigabytes, the equivalent of hundreds of millions of pages of text.
Emphasis added.
Source: How the U.S. Government Hacks the World / Bloomberg BusinessWeek (May 27-June 22, 2013) 36
Full article at http://www.businessweek.com/articles/2013-05-23/how-the-u-dot-s-dot-government-hacks-the-world
