In a new article for International Advisor, David Howell, Director, Guardian Wealth Management, explains in plain language how the untold human suffering to follow in FATCA’s wake will provide boundless opportunities for FATCA-ready wealth advisors. Every cloud indeed has a silver lining, perhaps millions of them…
Monthly Archives: September 2013
CBT versus RBT – a Counter Offer
UPDATE: September 7, 2013:
Interestingly, Mr. Harvey’s paper has been removed so the original link that Victoria provided no longer gets you to his proposal. You also must now register for the site, which I did. Luckily, Em has come to the rescue as she saved it before it was removed.
May I draw your attention to this interesting article by J. Richard Harvey called:
World Wide Taxation of U.S. Citizens Living Abroad – Impact of FATCA and Two Proposals.
In a nutshell Mr. Harvey has seen that there are “issues” with the perfect world of citizenship-based taxation. He admits that many Americans and Green Card holders abroad are adversely impacted by the marriage of CBT and FATCA. However, he is not willing to let us off the hook and he has a few criticisms of ACA’s Residence-based taxation proposal.
He has two proposals of his own that are worth examining – not because I think they are good solutions but because I think they represent a kind of counter-offer. “You folks want X? Will you settle for Y?”
Here they are:
1. Keep the current CBT system with modifications (increase the FEIE, for example)
2. Move to RBT with “safeguards”. I did not like what I read at all – he is proposing to restrict visits to the US for anyone who expatriates and he wants to create a true “departure tax regime.”
He is also suggesting some relief for certain categories of Americans abroad. This doesn’t go far enough in my opinion. I would like to see a definition of “significant percentage of their lives” spent abroad. What does that mean exactly? His opinion is that only in a few very sympathetic cases (accidental Americans) all others (people who have lived abroad for 20 years, for example) should NOT be entitled to any relief at all.
What is encouraging about the paper is that he acknowledges the problems (a kind of progress). However, he is still in the mind-set of punishing those “rich tax evaders” and does not take into account the high price the US will pay if it continues along this path of trying to enforce CBT. And though he admits that there is a high percentage of middle-income expats that are being harmed because of government actions to demotivate the 1% from expatriating, he still feels these measures are justified. Mitigation, he says, is the key but I don’t think he goes far enough and I think he completely misses a very important motivation for middle-class expatriates – getting out from under all that paperwork and the associated costs for cross-border experts.
What do you folks think?
2011 Message for #americansabroad in Canada – how does it look two years later?
#Americansabroad in Canada driven to divorce from their country http://t.co/7Z8NrFZIs3 – Revisit this article and comments from 2011
— U.S. Citizen Abroad (@USCitizenAbroad) September 4, 2013
The article referenced in the above tweet was published in the fall of 2011. At the time it had 809 comments. Comments have been disabled.
Looks like things have gotten a lot worse for U.S. citizens abroad.
FBI reverses one denial of renunciant’s firearms purchasing privileges
The FBI is generally quite timely with their monthly reports on the National Instant Criminal Background Check System, and this month is no exception: the latest report shows 23,186 people in the “renounced citizenship” category, up by 278 from last month and 2,540 since the beginning of the year; this is roughly 91% higher than the 1,333 recorded in the same period last year. However, the real amusing news comes from the federal denials report: the number of people ever found ineligible to purchase firearms after hits in NICS identified them as renunciants decreased from the 58 reported earlier this year down to 57. My guess is that someone was misidentified and had their denial overturned on appeal.
This serves as a reminder that even the best-maintained systems are only as good as the data that goes into them. The FBI takes its mission of gun control seriously, and due to the oddities of 1960s politics that mission includes maintaining a database of renunciants. The IRS, in contrast, does far sloppier work with their own list of ex-citizens in the Federal Register. But of course, both agencies ultimately rely on CLNs forwarded by the State Department, which has never been very happy with any outsiders getting a view into statistics on loss of U.S. citizenship (as we saw from their denial of Global News‘ FOIA request). The poor coordination between the FBI and State shows up in the statistics: in some months the FBI seems to have received only a trickle of CLNs, or none at all, whereas in others the State Department sends over a huge backlog relating to some unknown period.
Recently, Shadow Raider came across a 1990 report from the Bureau of Justice Statistics which sheds some light on the early history of NICS and the role the State Department played in identifying renunciants; the relevant section starts at page 71. This goes some of the way towards answering the question of why twelve thousand renunciants were added to NICS in 2000, though it doesn’t explain other large additions like the three thousand last October.
Renouncing U.S. Citizenship – Second thoughts
Renouncing U.S. Citizenship – Second thoughts
You better be careful what you wish for, you must might get it!
The internet is abuzz with discussion about U.S. citizens wishing to expatriate.
So, far the comments have been dominated by:
– those who desire to to renounce U.S. citizenship
– those who are desperate to demonstrate that they lost their U.S. citizenship when they became citizens of another country
– those who are basking in the glow of knowing they are no longer U.S. citizens
But, there is anther side. Are there people who renounced U.S. citizenship and are now regretting it?
I received the following message from somebody who recently renounced U.S. citizenship:
I renounced US citizenship for a variety of reasons (a year ago) and am feeling more and more like did I make a mistake. I think things are horrible in the US but it seems so hard to find a place that is both open to immigrants and that offers me some of the opportunity I definitely experienced in the US. My family wants me to go back so much, but I really am opposed to so much of what the US is doing both in the US and without. But I am really struggling with doubts and fighting depression over my situation.
Any advice for building a support network? Thank you so much.
What are your thoughts on this? What advice would you give this person? Should there be a support group for those who have renounced U.S. citizenship? Many believe that renouncing U.S. citizenship will be the end of their problems. Will it be the beginning of a new set of problems?
Your thoughts?
Food fight breaks out over FATCA in British Virgin Islands(No Confidence Vote Threatened)
http://bvinews.com/bvi/premier-julian-fraser-is-irresponsible-the-bvi-is-not-a-us-police/
http://bvinews.com/bvi/early-elections-may-be-prompted-by-fatca-maduro/
The US Foreign Accounts Tax Compliance Act (FATCA) continues to fuel heated discussions here in the British Virgin Islands, and social commentator Edmund Maduro is now asserting that an agreement would be a constitutional breach that warrants a call for early elections.
Under FATCA, the United States is trying to collect taxes from its citizens and companies here in the BVI and elsewhere around the world.
The BVI Premier, Dr. D. Orlando Smith, has hinted that his government may sign a related Inter-Governmental Agreement with the United States, adding that such FATCA approach would be the best option for the territory.
Opposition member Julian Fraser and Maduro think otherwise. Fraser has maintained that a FATCA agreement would result in the BVI government ‘trading’ the liberty and private information of some citizens to the United States.
The BVI citizens and residents likely to be affected are those holding US citizenship.
More:
Premier Dr. D. Orlando Smith on Tuesday dismissed claims that his government has been conspiring with the United States to collect sensitive information on its citizens.
The information is said to be linked to immigrant status, citizenship, property ownership and income.
“The BVI government is NOT collecting information on the citizenship and immigrant status with the United States on its citizens, nor is the government diving into their property ownership or income,” Premier Smith noted in a brief reference to the matter.
He was responding to Third District representative Julian Fraser who last week told a public meeting in his constituency that the BVI government has been ‘volunteering to do the United States policing of its citizens’.
Such policing, he said, has nothing to do with the topical issues of ‘Tax Haven’ and Tax Information Exchange Agreements.
“The United States in its decision to hunt and tax its citizens and permanent residents across the globe on property and savings interest is now allied with the NDP Government in the Virgin Islands,” Fraser told his constituents.
Note: The NDP party of the British Virgin Islands has nothing to do with the NDP Party of Canada.
Finally, a reasonable newspaper article on why people renounce citizenship
And not one from 1974, either, but from last Monday. Read the whole thing here. Some excerpts:
Thousands of Americans are renouncing their citizenship and are taking permanent residence in foreign countries. Some analysts associate these developments to what they term “America’s uncertain future” … Wages in the United States are low and many hard working people struggle to afford life’s basic necessities. Other burning issues include a degrading public health system, a half-dead retail sector and an arguably chaotic political environment …
Americans who have relatives and friends outside of the United States are choosing to renounce their U.S. citizenship and relocate to countries with better economies. It has emerged that Americans are forced to renounce their citizenship as a way of circumventing the stiff legal requirements on foreigners in countries where they seek employment or business opportunities. “They then take the tough decision of renouncing their U.S. citizenship for a foreign one in their quest for a better life” …
How many immigrants renounce their prior citizenships after naturalising in the U.S.?
“I hereby declare, on oath, that I absolutely and entirely renounce and abjure all allegiance and fidelity to any foreign prince, potentate, state, or sovereignty of whom or which I have heretofore been a subject or citizen.” That’s the end of the story, right?
Not really. U.S. law does not apply in the other 190-odd countries and territories on the planet; other legal systems have no obligation to take notice of an oath to U.S. authorities unless their own laws tell them to. And the U.S. government, in practice, does not care if resident U.S. citizens hold other citizenships. (It cares very much whether non-resident citizens hold other citizenships, and demonises it as a method of evading taxes, but that’s another story entirely.) However, some countries of origin do care: their nationality laws prohibit dual citizenship, and require emigrants to report when they have acquired another citizenship so that the loss of their original citizenship can be formalised and recorded. Up until the 1980s, the U.S. also prohibited emigrants who naturalised elsewhere from retaining U.S. citizenship.
What’s the rate of compliance with these single-citizenship laws? Not very high; perhaps half at most, judging from Japanese and South Korean data. In a minority of cases, failure to report your new citizenship to the government of your country of origin may indeed represent an attempt to game the system. However, in most cases, it’s simply due to benign neglect: you are no longer under the jurisdiction of the “old country”, and have no future intention of exercising any rights there, so you don’t bother with the rules of their system. And of course, civilised countries do not presume guilt in such cases, nor impose life-altering fines on emigrants for failure to comply with obscure paperwork.