The Economist weighs-in with two new articles about FATCA:
Taxing America’s Diaspora: FATCA’s flaws
Dropping the bomb: America’s fierce campaign against tax cheats is doing more harm than good
These are both great commenting opportunities.
Thanks to Innocente for pointing-out the additional article.
How do you know “A Reasoned Voice” is Michael Kirsch? Some of “us” are in contact with him from time to time. Haven’t heard anything from him lately.
I just left the following comment on both Economist articles. I’m fed-up with Michael Kirsch and his ilk and I wish I had told him exactly what I thought about his ideas at the ACA conference in Toronto. His kind does not deserve the deference we have been extending and I don’t understand why we are continuing to legitimize his position by pretending that we can have a valid academic “debate” about citizenship-based taxation:
Boy- that went down like sugar. Needed to read something like that this morning. Thx!
The two FATCA articles in the influential The Economist magazine can only help the anti-FATCA cause. I was pleased to see that reference to one of the two FATCA stories was on the front page of the The Economist, “The heavy hand of America’s FATCA”. See attached photo of this edition’s front cover:
The print edition of The Economist has a circulation of 1.5 million per week and around 9.5 million unique visitors to its website per month:
Thanks for posting this article.
I am new to this forum and just wanted to thank everyone for their posts and information. I live on the other side of the “big pond” in a country where I find it hard to see any serious pushback against FACTA in the near term.
I was happy to see so many similarly-minded posts on the Economist site that really address the problems we are facing and luckily only a few particularly snarky comments.
I have been trying to think of how to make this issue of interest to more than just the 7 million of us living overseas and how to show why we need to get rid of CBT. Has anyone on this forum thought about using the US’s own residence-based taxation system among the states to point out the fallacy in the federal worldwide taxation policy? Would that analogy perhaps gain some more resonance with Americans living stateside and with politicians? Imagining being taxable in California for the rest of your life because you are born there, but have since moved to another state where you pay taxes, would be something that would get lots of Americans riled up. Any thoughts?
They will not care. For most American the world does not exist.
Very well written Deckard!
Kirsch is just another idiot with a PhD. The scary part is that people in high places listen to him because he tells them what they want to hear.
If it is not Kirsch, it is one of his disciples using Kirsch’s bullshit arguments to defend CBT.
@Petunia, I hear what you are saying.
There may also be another option that could have great appeal to the political class.
While I fully support Residence Based Taxation as both moral and the only model that can make sense in the mobile world, I have grown to support something that I term Retaliatory Citizenship Based Taxation or RCBT.
Just think of the Billions of Dollars that Canada could get simply by adopting what the US has brought to Canada. Ditto in Billions of Pounds for the UK. Think of the Billions of Euros that could be repatriated home to the European Union from those that left the EU to go to America.
Essentially, there is a great big sucking sound and the USA is sucking Billions back from the rest of the world to line its coffers. The European Union especially needs to put a stop to that and recoup the money that Europeans resident in America or using Deleware and Wyoming Shell Companies are CHEATING the EU out of.
I honestly believe that once the rest of the world demands tribute from its diaspora in the USA the US will only then see the error of its ways.
Actually, I think that the ledger would show a huge hole for the US if the world adopted US policies but in retaliation.
That analogy has been posted often by commenters in various publications. The problem is trying to use logic…it doesn’t work. As you will see in the comments sections the apologists for CBT have no valid arguments to present so they just go about name calling and just being rude. They have no rational argument to offer because THERE ISN’T ONE! They are rather like children with their fingers in there ears saying la la la. The highest level of debate is if you leave who will come to get you when you holiday in Tora Bora? So pay up. The only thing that will stop FATCA is when the US gets burned big time from blow-back. I just hope it happens quickly. Unfortunately most, if there are consequences felt by the US, will never relate it back to CBT and it will live on in the hearts of all homelanders.
I think your posting should be the IBS manifesto. For everything that is written anywhere this should be submitted in every comments section and sent to every single legislator on the planet. We need to hire a helicopter blanket the earth with this message. (Maybe they will loan us a black-ops one as those who have renounced will not be entitled to the use of one any longer. They might be many just sitting around seizing up).
I have an idea…for every comment posted we can just keep repasting yours over and over….be real obnoxious and maybe get some attention. (Yes, I am losing it here after slogging it out with A Reasoned Voice this weekend. I just want to punch him…not pretty when old ladies start doing this.)
Deckard, you have captured and put into words why we rage here over citizenship-based taxation being enforced in countries around the world by U.S. FATCA law. Thank you for saying what needs to be said.
Combined with Furious AC’s comment here,I have a lot to think about this morning. My thoughts are there in the comments on the “Harper Government Cedes Our Sovereignty on Canada’s Birthday” thread as well.
Many sites allow you five or ten hits on their site. If you want to read something, you have to get innovative with copy pasting in links or hitting links from other places or such.
Very well said. Thank you.
“Kirsch is just another idiot with a PhD”, just like Richard Harvey.
George, You must have totally forgotten that, although all are created equal, some are more equal than others.
Forget not that the US, by its sheer size and power, understands its sovereignty extends to within the borders of other countries. Just because the US has the right, affirmed by the US Supreme Court, to levy and collect taxes in income earned or otherwise received in another country, does not mean that any other nation has a reciprocal right to do the same thing in the US. Even though the US can send its drones to kill persons in other countries it does not like, or send its commandos to arrest and bring back to the US those who are suspected of having violated a US law, does not mean that any of the other countries have a similar right to do these kinds of things within the US.
What is sauce for the US goose, is not sauce for the foreign gander.
@Deckard and Calgary411:
There are reasons why they do things. The reason the govt put in a ‘bailin’ clause in the 2013 Budget. A reason the IGA has “adheres to OECD guidelines”. Our govt and Canadian banks are making sure THEY get what they want out of what ‘is planned’. A ‘bailin’ for the banks in our 2013 budget? WHY? Confiscation of funds that do not belong to them. Are not the quarterly reports from all the banks in Canada not outstanding enough? Profits in the billions of dollar PER QUARTER and there must be bailin clauses?
The idea that the Canadian banks weathered the 2008 storm is just that: an idea. In fact, our banks were bailed OUT to the tune of over 25 billion dollars. NOT reported widely of course.
Canadian banks are heavily invested in US questionable assets and are vulnerable to this day. IN addition THEY did not want to get hit with a 30% withholding so they throw individual Canadians under the bus. The IGA as many here already know all to well is mere capitulation. And Capitualtion for a reason. Canada does not attend G8 ( now 7 with Russian expulsion) or G20 meetings for nothing. NOSIREE they do not. It is the reason the language is installed in the legislation for the budget and the IGA.
As with our military and veterans, movements afoot to deny them their rights and to deny individual banking and privacy rights are all done for a reason. And it is not a good reason for Canada or anybody else who thinks individual rights and privacy are paramount to living a free existence. Shame on these people who have no shame.
I see Koskinen’s face when I say shame. For his arrogance and air of superiority when testifying in front of the committee on IRS wrongdoing and lawlessness epitomizes what we are dealing with from both governments.
Bravo, Deckard! Just had a chance to read this on Black Canada Day morning and you certainly have spoken for all of us with a powerful voice. Thank you. Amen, to all that you have said!
Mark Mazur, Assistant Secretary for Tax Policy with the Treasury Dept has written a letter to the Editor at the Economist in response to it’s “Dropping the Bomb” article. Thanks to Keith Redmond for posting on the AARO Facebook page.
FATCA and tax evaders
SIR – In response to your broadside against the Foreign Account Tax Compliance Act (FATCA), I would like to point out that the American Treasury has tailored the rules to minimise burdens and costs and has considered hundreds of comments from financial institutions and foreign governments (“Dropping the bomb”, June 28th). As a consequence, many low-risk entities, accounts and payments are exempt from FATCA altogether.
It is also important to note that FATCA’s requirements are the same for all American taxpayers—expats are treated no differently. All citizens are required to comply with United States’ tax laws and FATCA is a tool to enforce them. Tax evaders should rightly worry that FATCA will reveal their illicit activities.
The work by the G20 and OECD on the common reporting standard for tax evasion draws extensively on FATCA’s intergovernmental approach. With more than 80,000 foreign financial institutions registered to comply, the worldwide effort to thwart tax evasion is going well.
Mark J. Mazur
Assistant secretary for tax policy
There’s also a second letter in response to the article:
SIR – I have been an international tax adviser for 35 years and am always amazed that America ignores the normal rules that apply between countries and simply does what it wants. A cynic might view the real reason for this legislation as helping the competitive position of American banks. It would not be the first time. There are other tax rules that make it very difficult for Americans to invest in many foreign investment funds and some regulations that also favour American banks.
The most surprising thing is that other countries just let this happen. Instead of threatening retaliatory measures, such as fining any American bank that opens accounts without requiring proof of identity, many have entered into agreements to accept FATCA, even though reciprocity is not on offer and the United States is not interested in international moves for more transparency. What is good for Swiss banks is not good for American banks.
Rumour has it that many foreigners keep their money in America because secrecy there is far better than most tax havens.
International tax counsel
For those without Facebook this is the link to the letters:
Thanks for posting the two FATCA “Letters to Editor” in this week’s The Economist.
My first impression of Mazur’s letter was that it was rather defensive and showed thin skin although I suspect it was carefully crafted and may even have been edited by a PR firm. The Economist articles were hard-hitting and, being in The Economist, were likely read by influential people. Someone in the U.S. Treasury Department decided the articles could not go unanswered.
The letter also used the term “expats” for Americans residing abroad rather than emigrants or Americans abroad. The term expats, of course, conjures up images of those residing temporarily abroad, whether students, backpackers or corporate employees with housing and tax-equalization packages. Americans abroad are just expats who will return after they’ve had their little foreign adventure, or, at least, there are some in Washington would like to believe that.
Yes, the word “expat” certainly has a vastly different connotation than “emigrant”doesn’t it. The US can more easily justify a claim against us if they can create some sort of tie (other than CBT itself) with us. An expat is leaving somewhere, whereas an emigrant is going somewhere. Do you think maybe Mr Mazur is also be relying on the common misconception that expat is short for the word “ex-patriot”, in an attempt to portray us unpatriot and therefore capable of such heinous things as tax evasion?
This week’s June 26 print edition of The Economist includes an article on the effort by the current US Administration to put a stop to the practice known as inversions whereby an American company, and there have been several lately, acquires a usually-smaller foreign company and then reorganizes to transfer its headquarters to the foreign country where corporate taxes are much lower and which, unlike the US, does not tax the foreign earnings of its companies when they are remitted back home. The Economist article suggests that the solution to this problem is not new repressive legislation, but that the US should set its corporate tax rate at a percentage competitive with the rest of the industrialized nations, and change its policy from world-wide to territorial taxation like the rest of the world.
The writers of The Economist Magazine have a clearer insight into the reasons for and solution to this problem than Treasury Secretary Lew, the president and other members of the current US Administration. Here is a link to this Economist article
I posted the following on-line comment on this article:
“An excellent article: However it unfortunately overlooks the other vital aspect of essential tax reform which is to replace the totally-unique-to-the-US among industrialized nations of citizenship-based taxation with the universally-accepted world standard residence based personal taxation. US citizens residing abroad are simultaneously subjected to taxation by their host countries and by the IRS, as if they never left home. Other countries consider as “patriots” their citizens who relocate abroad and capture the foreign markets that create jobs, economic growth and prosperity in their home countries. But the US treats its citizens who do this as “tax-evading traitors.” FATCA and FBAR legislation makes it impossible for most Americans today to even survive living outside of the US. So Americans stay home and the US continues to lose its share of the export market. It takes feet on the ground to capture business abroad just like it does at home. That’s why the US tops the list of trade deficit nations at $713 billion, while most of our trade competitor nations are racking up trade surpluses. It’s also why the US is at the bottom of the list of nations with respect to the percentage of GDP generated by exports at 13.9%. North Korea and Cuba do even better than the US by generating 15.3% and 24.6% of their GDPs from exports. Is there nobody in Washington who understands this?”
corporate “inversions” are the intersection of Global Market Capitalism and bad tax policy. The companies may have born and grew up in the US, but are publicly traded corporations with global shareholders. the global investment community is asking for a better return on investment through a reduction of taxes.
not all increases will go to the bottom line will go to investors. some will be invested in new facilities and personnel. Given a choice would invest where you can the invest entire dollar, or where the first 35% is skimmed off the top.
I know you’re too busy, but a Brock friend just suggested perhaps a book needs to be written as another way to get the story out.
There is now “Tragedy in the Commons” by Alison Loat and Michael MacMillan, http://isaacbrocksociety.ca/2014/06/26/the-economist-americas-new-law-on-tax-compliance-is-heavy-handed-inequitable-and-hypocritical/comment-page-1/#comment-2107552, and soon: “Irresponsible Government: The Decline of Parliamentary Democracy in Canada” by Brent Rathgeber. (He is a Canadian lawyer and sitting Member of Parliament. He was elected as a Conservative in 2008 and 2011. On June 5, 2013, he resigned from the Conservative caucus to sit as an Independent due to the government”s lack of support for transparency and accountability. He lives in Edmonton.) http://www.chapters.indigo.ca/books/irresponsible-government-the-decline-of/9781459728370-item.html?ikwid=canadian+political+science&ikwsec=Home&ikwidx=10
What recently occurred in Parliament with Bill C-31 and Bill C-24 needs to be told — the media have failed in their duty to do that. Who will be the author to take that challenge?
Am very familiar with the Rathgeber situation. Have a strong interest in the role of independents in Westminster democracies. You might find this article to be of interest.
It strikes me that it would be easier to interest people in FATCA through an argument that it:
1. Was possible in Canada only with a majority government
2. Was possible only in a political system dominated by political parties which demand allegiance to the parties and not to the constituents who elected them.
3. Was guaranteed in a Party system that would not allow or encourage free votes.
I touched on some of these issues in this post:
But, I do think that FATCA could be used to illustrate the “state of politics” in Canada, New Zealand and the other Westminster democracies that signed on to FATCA.
Ask yourself this question. If the issue of FATCA had been a local (municipal election type of issue, could this have been rammed through with so little discussion?)
So, yes the advent of FATCA was possible in a world where politicians were hated to the point of indifference to them and a world where the voters want no part of politics.
Also, FATCA was/is possible in a world where the privacy was no longer considered to be a strong interest/value. I am of the opinion that Facebook and other social media (the eradication of privacy) laid the groundwork to make FATCA possible.
In fact, I once did a post called:
“From Facebook To FATCA”
Thanks for your reply and the link to the Chronicle Herald article.
ties in with the clarity of what you say rearding the climate for FATCA to have been implemented in Canada:
Could it be that FATCA is not of concern to people who no longer deem privacy an important right — wiping out that right slowly but surely with social media.
In this strange world, the social media we use here is bringing us together in a cause against those rights being taken away from us.
The more I think about it, the more I think the time is ripe for a book about the stealth of how FATCA was implemented in Canada. There would then be a trilogy of books about the Canadian Parliament and its ineffectiveness for the people of Canada.
(A thought: if not you because you cannot be cloned, when Lynne is feeling a bit better and if she is healing nicely, she could hone her skills by dictating the contents of the next such book. Dynamite!)