Posted on June 4, 2014 by Tim Posted in Issues regarding US persons abroad 11 Comments Interesting video. Shipping Canadian jobs to America. http://www.necn.com/03/26/13/Canada-to-bring-companies-to-Kendall-Squ/landing_business.html?blockID=835909 Share this:TwitterFacebookEmailLike this:Like Loading...
Every three months they will bring new Canadian companies into the center. Just how will they all be impacted by FATCA and will any individuals of these companies have the U.S. Indicia to deal with?
On the surface , at least, this does not look like a wise move if your job is to protect Canadians and Canadian companies.
Kendall Sq is unique because you’ve got MIT, Harvard, and all the IT and BioMed startups in the area. This seems to be more of a training exercise with the hope of bringing the connections made back to Canada to grow the business there.
However this venture does exemplify how FATCA will act has a hindrance to invest in the US or other countries to send people to the US for fear to getting involved with the FATCA dragnet.
My understanding is that the UK is opening a similar “training” facility in Kendall Square This seems more strange though as I thought the UK elite hate Boston for its strong financial and moral support of the Irish Republican Army. (I can definitely see why Irish companies would invest in Boston).
See article below(This is some pretty strong anti Boston/Massachusetts/New England sentiment from many Brits that are strongly “pro American”):
On another thought I am almost certain that Stephen Harper is a strong supporter of Britain over the Republic of Ireland. Harper just made a big angry speech criticizing countries who did not do more to fight communism during the cold war in order to curry favor from Ukrainian Canadian. I would suspect Ireland would be at the top of Harper’s list.
It sounds like a fabulous idea, however we do know there is no free lunch anywhere anymore. I’m sure they are netting more tax cheats this way by offering good jobs to our biggest and brightest students with great incentives. There is no mention of taxes or how these people will live or eat. They are after all, students. Students have debts so it’s an easy lure. The companies go home after three months and the smart students get the jobs and become FATCA slaves forever. Yikes! I am so cynical now it’s awful.
Yes many are students or recent graduates of Canadian universities, and they will likely end up getting jobs in the US and getting sucked into the US system.
I recently emailed Dr. Kish, a university professor, asking him what role he feels that Canadian universities should be taking in this matter. As I will meet with the President of the University of Waterloo, Dr. Feridun Hamdullahpur, in San Francisco on June 24, I would be interested in Dr. Kish’ thoughts–either privately or in this thread.
Venture capitalists usually want a substantial slice of the company they invest in, so will they want to invest if they can only get less than 10% of the company before the controlled foreign corporation rules kick in? Three months is also a really short period of time, although people involved in technology are usually desperate to get into the U.S. because that is where the action is. Taxation issues are not likely to dissuade them.
Nonetheless, I think that all countries that send large quantities of educated students off to the U.S. should be making very sure that students know about the greencard holder taxation rules, since this might have some very beneficial effects on innovation. It might be that students are going off to America thinking that they will go back home someday and it is very important for them to know that if they stay too long (more than 8 years out of 15?) they will have a permanent U.S. tax liability unless they jump through the renunciation hoops. They can build up more knowledge of innovation and connections in a few years than they ever could develop in three months, but the greencard rules could push them to decide to return. Also, they should be warned that if they go back home after a longer period of time and start up a company, they can get themselves in lots of trouble with controlled foreign corporation rules unless they go through a formal renunciation procedure, even though they are only a greencard holder. Of course, they can also save themselves a lot of grief if they leave before they hit their first two million!
I does annoy me to no end that one of the few intellectual arguments in favour of CBT is that it can compensate poorer countries for the amount they have invested in their educated emigrants, but the only country that practises CBT is quite wealthy and the main beneficiary of brain drain.
Anti-Boston sentiment has subsided a lot over the past twenty years. The Good Friday agreement and changes in Boston, including the weakening of the Irish mafia and dying off of the older generation of politicians and IRA supporters, have a lot to do with it.
I don’t think that the real British elite have much to do with policy making in this area.
“although people involved in technology are usually desperate to get into the U.S. because that is where the action is.”
Well, I’ve worked in hi tech for 30 years, and that statement definitely doesn’t describe my approach to moving from Canada to the USA. Yes, I did eventually after many, many years become a US citizen but I took each step very, very gradually and cautiously. I definitely wasn’t desperate to get into the US because–although FATCA wasn’t on the radar in my youth–I was well aware that there were significant advantages to remaining in Canada.
Of course, I never had the “get rich quick” mentality that so many in hi tech seem to suffer from–and that I think hurts our industry. I recognized that most people in hi tech do not become billionaires and have to–like everyone else in society–put in an honest day’s work for what is hopefully an honest day’s pay. And that’s definitely available in Canada even if the really big success stories (except Research in Motion a few years back) are in the US.
Dr. Kish is WELL aware of the subject of my post and we have discussed this issue many times in the past and will continue. Some of the point of my post was to challenge Stephen Harper that if he thinks Canada is the “greatest” county in the world why aren’t more people flocking to work for high tech companies in Canada.
The US or more particularly some parts of the US do have unique advantages in this regard. California for example is one of the only jurisdictions in the world I know of to prohibit non compete clauses in employment agreements. No other US state does so and I believe no Canadian province does so.
Well your question for Stephen Harper is also my question for the (current) president of the University of Waterloo. The Waterloo area is clearly the logical place in Canada to do something similar to what is happening in the USA in Kendall Square, Palo Alto, etc. So why isn’t that happening? Actually it is happening a bit but it seems to me they are clearly encouraging their “best and the brightest” to move south.
Ironic that Stephen Harper’s boss (ceremonially in name only of course) is the (former) president of the University of Waterloo.
Yes there ARE advantages to the US system (something most Brockers don’t seem to understand) but in most cases I would recommend against a Canadian student going that route as the cost (in many ways) of getting full access to the US system is too high. For a young person who is ALREADY a dual citizen, I would recommend thinking very carefully. Renunciation is definitely going to be the right choice in a lot of cases but if someone is in a field with significant US opportunities it is hardly the “no brainer” many Brockers seem to see it as.
I do, however, 100% agree with fully disclosing to young people the downsides as well as the advantages to US “personhood”.
There is actually quite a bit of back and forth between Boston and Toronto especially since the startup of Porter Airlines. Notwithstanding what some might think Porter’s flights between Logan and City Center are heavily dominated by college students and young adults(Unlike say Toronto and NYC where it is mostly Bay Street suits). On my last trip I kept on bumping into the same two students all the from the shuttle bus pickup in front of Union Station and the Royal York Hotel all the way to the Red Line Station in guess where? Kendall Square
I would argue that at this point Toronto makes more sense as a technology center than Waterloo. Unfortunately with Blackberry shrinking I am not sure Waterloo has enough scale and its transport links are quite limited. Going between Boston/Cambridge and Toronto is quite easy. Going between Boston/Cambridge and Waterloo is somewhat more challenging especially if you don’t want to use a car.
In Medicine Toronto actually ranks closer to Boston in terms of the number of Academic hospitals than most other places in Canada(and for that matter most other places in the US). The challenge Palo Alto/Silicon Valley have is while they have been very successful to date it is still primarily a suburban area in an era where increasingly young people want to live in urban environments. Yes, San Francisco is “relatively” close to Palo Alto but there is a lot of social tension over the tech industry in SF and it is not nearly as welcomed as it is in Cambridge/Kendall Square.
Exactly–it’s the “get rich quick” mentality of the tech industry. University students–instead of focusing on the things that university students outside of tech usually focus on (coursework, putting one’s way thru school, dating–not always in that order)–instead are acting like Bay Street suits. Of course they probably dress a bit differently but their behavior–rushing off wherever they think they can make a quick buck–is that of a Bay Street professional, not a university student. In doing so they are skipping certain stages of life that shouldn’t be skipped–and that is why a lot of men–not all but a lot–in tech have a tough time getting laid.
Correct me if you think I’m wrong but I’d be willing to bet that, to tell it like it is, most of that “back and forth” between Toronto and Boston consists of Canadians travelling to Boston to make a quick buck. Not so much Americans travelling to Toronto to make a quick buck. This is bad for Canada because it results in a brain drain. The Canadians are making business contacts in the USA and not so much vice versa. So even if they don’t get rich quick–and most don’t–the contacts usually result in them getting jobs in the USA and staying more or less permanently. So Canada loses their skills–which is bad for Canada quite apart from all this CBT, FBAR, and FATCA stuff.
Canada is not a prison and if someone has opportunities south of the border, I don’t think Canada should be trying to actively block or thwart them leaving. So a certain amount of brain drain is probably inevitable. But I also don’t think Canadian institutions (governments, universities, etc) should be actively encouraging or facilitating the brain drain, either–and that is what is happening.
I see nothing wrong with a tech center in Toronto. I see nothing wrong with Waterloo or other Canadian schools encouraging their tech grads to move to Toronto. I do see something wrong with Waterloo or other Canadian schools encouraging their tech grads to move to Kendall Square or Silicon Valley.