If ObamaCare rollout is the most recent example of U.S. Government (USG) incompetence, then is this what we should expect of FATCA?
I just read this article by Tina Brown of the progressive Daily Beast about the ObamaCare Cock-up. I thought it was the good metaphor (not perfect) for the predictable FATCA Cock-up. The only difference is FATCA is global. Americans don’t know it exists, so don’t know that a Cock-up is in process.
I don’t think I need to expand much on why what she says is generally true, other than to note the opening and closing paragraphs. You can draw your own parallels, as I did mine, but generally this rollout fits the bigger theme, that American government is culturally unable to do these BIG COMPLEX programs well.
The big announcement and lousy follow-through, the technical glitches no one can figure out—not only was the roll out mess utterly predictable, it’s also a sign of our cultural moment.
Obamacare is the wildly complex Rube Goldberg contraption it is because getting the legislation through Congress required so many political trade offs and so many unavoidable deals with so many vested interests. But that’s no excuse. Lost in the raucous cable noise are the voices of desperate people shut out yet again, this time by incompetence. And that’s tragic, not uncool. That’s obscene, not a juicy partisan spin for Ted Cruz. How ironic if Obama’s signature accomplishment becomes instead a metaphor for his presidency’s signature problem: big pronouncements and lousy follow-up, the curse of our times.
Governments have never learned the KISS Principle, and/or never devote the attention to detail necessary to make the complex work! They don’t know how to “sweat the small stuff”, and instead take on the hugely complex and expensive instead. And if you are a U.S. Person living abroad, the predictable Cock-up consequences will fall on you!
Every despot in history had these things in common. They were all good speakers, charming personalities, a loyal following of basically unintelligent, malignant narcissistic personalities, ideas that are only half thought out, and worst of all no conscience.
Mostly they are lazy and only want adoration for who they are, not their accomplishments. Every failure is someone else’s fault and have no end to their pathological lies. They can think up a new one as soon as the old one fails.
Does anyone recognize this person? Is it a modern day public official? Is reincarnation a reality? Is there only a few of these people and they keep coming back every time one is swatted down by the right thinking world? Oh well!
The points made in the original article sadly are true of virtually every piece of US legislation passed by the US Congress for decades, under BOTH political parties and a whole range of leaders and presidents. The problem is “log-rolling,” allowing unrelated amendments to be slapped onto complex legislation and voted on with virtually no one, other than the originator and his/her staff, having read them, never mind analyzed and debated them. Then an agency like the IRS comes along, starts trying to draft regulations which start at (what was that number on another post?) about 60-70 pages, then as they keep working on it, they find more exceptions, more leaks to try to plug, and suddenly you have 600 or 700 pages of confusing, contradictory, unreadable regulations, and it keeps getting worse. Even before the January 2014 “roll-out.” Never mind the IGAs, and whatever happens in FFIs and government departments world-wide.
And our current government in Canada under Stephen Harper thinks this omnibus approach to legislation is a smart idea. It’s a lousy idea, also profoundly undemocratic and contrary both to Westminster Parliamentary democracy not to mention “good government,” the last part of what we Canadians used to be proud of (“peace, order, and good government”). It’s not democracy to play these stupid games, and it makes for lousy government and even lousier, even impossible, implementation and administration.
All of which is further support of the position that the US government, under any of its political parties, is terminally dysfunctional and doomed to massive failures like these. At the expense of the taxpayers and citizens, sadly and outrageously in the case of FATCA not only in the US but potentially world-wide.
Someone should put the entire US, or at least its entire political system and establishment regardless of party or party faction, into permanent quarantine from the rest of the planet.
The IRS “conveniently” did NOT heed the Presidents Executive Order 12866 requiring a comprehensive cost-benefit analysis of #FATCA.
I took that statement from my twitter feed this week. It’s astounding. So no cost benefit analysis has been done yet the entire world is lumbering forward with FATCA under the threat from a bully.
WHAT are our law makers thinking here in Canada to even discuss something with this much impact on our country without seeing a cost/benefit analysis done by the country demanding it and then doing their own in depth cost/benefit analysis to compare it. They need to see exactly what all this uproar is worth or not. I wouldn’t go to a meeting anywhere for any reason without having my i’s dotted and t’s crossed to propose we turn our organization upside down based on “take my word for it, this is good.”
I’d laugh at the way this has been done if it were not so ominous. What do I know? I have only sat on school boards as a volunteer and run parent councils for average sized schools. I’ve chaired a small arts program for gifted middle schools in our area. That’s it!! Yet even I can see you do NOT propose something, nay bully others into doing something without bringing your “facts and figures scrawled” *h/t. Joni Mitchell.
I spoke with a Senator who was all for this and yet was sheepish about why the U.S. can’t start with Delaware instead of Canada or the U.K. she then said “Maybe I should invite you into the Senate to speak about this.” WHAT? You mean to tell me you cannot explain it yourself but, you are “for it” because it fixes “tax evasion” How do you know it does Canadian government if you have no numbers and facts to back up those numbers. This is a fluster cluck as my grandfather used to say.
Perhaps Canada will ‘delay’ its decision in view of a Swiss referendum. At the end of the day if the world says ‘NO’ FATCA fails.
@ Don
To me it’s quite simple. One word “NO” could beat 544 pages of FATCA and save the world a trillion dollars. As for the losses to the compliance industrial complex? Frankly, my dears, I don’t give a damn.
There’s a good reason why the US is bad at implementing complex laws. It lacks a proper civil service. Major countries like the UK, Germany, France have professional civil services that take top graduates and train them for a civil service career. These people know how to run a country. For example, Belgium kept running without a government for a year recently because civil servants kept the ship on course.
In contrast, it takes months after a presidential election to change the government because all the top posts are taken by political appointees. It takes time to recruit them all. Furthermore, many of these appointees have no particular talent for administration since they lack the relevant experience. What you get instead is crony capitalism where operators rotate out of private industry to set the rules for their benefit. FATCA is a good example of this.
I wouldn’t be surprised if the compliance industry was behind this. After all, when a big law is passed in the US you have to look at who gets the money. I bet they were feeling like their dicks were looking a bit small next to those of the tax evasion industry, who hold an academy award ceremony for themselves every year.
For those of us living abroad, do we need/contribute to ObamaCare as well? Is this just another “benefit” that we cannot never use?
Also will the new tax form has a place for people abroad to show that we have insurance or a way to opt-out, so we don’t get charged for the minimal fee and/or the penalty? My guess is we cannot count on IRS to take care of us.
the talk is of some more IRS papers like the foreign exclusion and foreign credit. I for one am looking forward to see how many papers that will be.
Again, the impetus will be that you have to prove to the IRS that you are not required to participate, and that is checked by a FATCA like regime where the Insurance companies have to report or not-report that persons are insured or, actually, they will report those that are not proved to not be not insured.
Al1, here is a blurb from the US government on your question. Unfortunately, that is not the whole story. The 3.8% tax on, for example, capital gains, is still payable by US citizens abroad although they cannot benefit from Obamacare.
“U.S. citizens living outside the U.S.
U.S. citizens living in a foreign country are not required to get health insurance coverage under the Affordable Care Act. If you’re uninsured and living abroad, you don’t have to pay the fee that other uninsured U.S. citizens may have to pay.
Generally, health insurance coverage in the Marketplace covers health care provided by doctors, hospitals, and medical services within the United States. If you’re living abroad, it’s important to know this before you consider buying Marketplace insurance.”
@qm
The 3.8% surtax on unearned income isn’t about paying for healthcare for yourself. It’s about buying it for a whole bunch of other people. I have healthcare but will have to pay this tax. It’s going to cost me way more than my health care costs.
Hey you’re rich. That’s Obama’s money.
A good technical discussion of the fundamental ACA Web design flaw which explains to me at least, typical government approach which is different than how a business looks for and answers the core question that people want… “What does it cost?”
http://www.npr.org/templates/story/story.php?storyId=239534289
@All
Suggestion for a Brocker who has already obtained their CLN write to major city newspapers letter to editor page. Their letter could relate FATCA to ACA, since many Canadians find the implementation and resistance of ACA fasinating. I do not often read the “southern” newspapers but I got the idea reading The Sun (yesterday’s) today.
It should be short and it might alert others who are unaware of FATCA. It might even pique the interest of columnists.
@Moose, now that’s an interesting thought.
@Neill, I gladly and thankfully pay my taxes here in Canada and I”m glad I have healthcare here and a system though not perfect *none is* that has taken care of my family when needed for so long. I didn’t envy the private insurance industry style care in the U.S. nor do I want to pay for them to fiddle around and switch to some other type of insurance industry boon called “Affordable Care Act.” This is just another ridiculous problem with citizenship based taxation! We HAVE health care in the countries where we live.
I don’t know why the U.S. thinks all expats are “rich” and feels it perfectly normal for them to attack our savings or have us pay for things we’ll never use back there but, the fact is they are not going to change. They can’t look around and see that no other country with any sense taxes on citizenship. No, they want to copy Eritrea.
Just reading yesterday’s Business section in Toronto Star.
One article about banks doing Big Sell pitches to shore up profits. There are incidents of misinformation about “OFFERS” and free products end up having charges.
Another article is about mutual fund documents often are complex. I found this quote sooo true. “One of the reasons people make long forms is you won’t read it and you’ll just agree to it.”
I wonder how many of our lawmakers reading on FATCA actually read all information given to them.
Just my thoughts.
The biggest battle for the US will be apathy.
If I worked for the HMRC or the Bundeszentralamt for Steuren and had a choice doing work to satisfy FATCA or collecting tax for my own country, it’s a no brainer which is going to win. Even if countries pay lip service to FATCA, the IRS’ business will always be on the back burner.
The management will probably tell staff that their foreign tax service benefits very little from FATCA – just do your own work.
If an IGA is signed and the foreign tax service puts little or no time for FATCA business, what is the IRS really going to do about it?
If they starting hitting banks with a 30% withholding, it defeats the purpose of signing IGAs.
Apathy will be a major headache for the IRS along with data integrity. What really is in it for a foreign tax authority – zero. The US has attempted to put a gun to foreign country’s head and only giving in return relief from the withholding tax. Not much of a bargain.
The US will think the foreign tax authority is only acting as a postbox, but why should they spend resources for the benefit of the US. What manager is going to be fired putting their own country’s needs ahead of the US’ – answer nobody.
Having lived about over 20 years and dealing with foreign governments, the boys at the US Embassy should get out more and ask whether apathy will slow FATCA in its tracks.
@johnson
Excellent diagnosis.
Something else that occurred to me about FATCA is how our government’s (not US) must from here forward consider the effects any proposed tax related investment scheme benefitting it citizens will complicate their and the bank’s reporting requirements under FATCA, leaving fewer potential options for ALL citizens when it comes to tax deferment. Would Canada roll TFSA’s out today? FATCA tail wags the government poodle!
IRS Made $133 Billion in Improper EITC Payments in Past Decade
http://taxprof.typepad.com/taxprof_blog/2013/10/tigta-irs-made-.html
So, if you believe the estimate of $8.7 billion in increased revenue from FATCA over the next decade, if that remains constant then by the mid-22nd century FATCA will have brought in enough extra taxes & penalties to cover the screw-ups in one single US government program. 🙂
@ Eric
so this means FATCA will be good for the USA…oh great.
FATCA is a boondoggle of epic proportions that will produce revenue no other revenue but through CLN’s and a lot of bad will.
Eric…
Sigh… It was just a personal stimulation package for the recipients.
On a technical note, for the Programmers amongst us, this on Slate might interest you….
http://www.slate.com/articles/technology/bitwise/2013/10/healthcare_gov_problems_what_5_million_lines_of_code_really_means.html
Does anybody know if all you need is an OLN or I-407 to show you are not subject to US taxes or do you need the form 8854?
Harry,
A CLN (I don’t know what an OLN is) is Certificate of Loss of (US) Nationality after your claim of relinquishment or your renunciation of US citizenship at a US Consulate in a country outside the US. The I-407 is the form you file when you turn in your US green card so you will no longer be treated as a ‘US Person’ and subject to US tax. Form 8854 is filed with your last US tax filing to confirm that you are in compliance with US taxes for a certain number of years. Unfortunately, there is no form to fill out to tell the US the you are not subject to US taxes. What is your relationship to the US?
@Harry…
I am not familiar with that, but I bet you can get the answer here…
http://hodgen.com/green-card-received-in-2006-give-it-up-in-2013/
Or ask your question here, as some that monitor that thread might know…
http://isaacbrocksociety.ca/expat_tax/
@bubblebustin,
AND, the Harper government is very fond of their PRPP as a top up in lieu of additional contributions to the CPP.
But, just as our RRSPs, RRIFs (only exempt with annual treaty election) and all other Canadian registered accounts are treated by the US as taxable ‘foreign trusts’ – so too will Flaherty’s PRPP.
That leaves over 1 million Canadians and their families without that opportunity to save for old age and retirement.
What is the projected cost of that to Canadian society?
Add in our inability to use RESPs, TFSAs, and RDSPs, and (Canadian mutual funds) and we are basically left with only Canadian savings bonds and our piggy banks and mattresses to save for disability, the end of life, and anything we hoped to pass on to our children.
But, apparently, NO price is too big for Canada and Canadian citizens, taxpayers and residents to pay in tribute so that our government and the CBA banksters and their cronies can RESPECT US RIGHTS to enact US laws in order to TAX EVERYONE living outside its borders it deems a ‘US taxable person’.