In an article for the Vancouver Sun, Douglas Todd explores the ambiguities of life and self-identity for what he calls “Ameri-Canadians”. I have long maintained that Canadians of American origin are Canada’s largely “invisible minority”. Now, post-FATCA, we are being forced to reconsider not only our relationships with two different nation-states but also within our communities, our families and our very souls. Todd covers an equally wide scope in his thought-provoking commentary:
Millions of Americans in Canada downplay links to Uncle Sam
With the Canadian government’s decision to comply in July with a Washington tax crackdown on “U.S. persons” around the world, many Ameri-Canadians are feeling rising anger, fear and even hatred toward their powerful country of origin.
That said, the self-identities of Americans in Canada have been more ambiguous than they tend to be for members of more visible immigrant groups, long before the U.S. began its notorious attempt to catch tax cheaters through the Foreign Account Tax Compliance Act, better known as FATCA. The U.S. is the only major country to tax based on citizenship, not residency.
Canada has for centuries provided a haven for millions of Americans and their descendants, including the United Empire Loyalists who fled persecution during the 18th-century American Revolution, blacks escaping from slavery during the 19th century and draft resisters protesting the Vietnam War in the 20th century. Such Ameri-Canadians have tended to blend into this northern country.
“The American-born and American-descended in Canada have never felt organized as a self-conscious ethnic group, chiefly because Americans have never felt terribly ‘foreign’ in Canada and can usually find their American identification so easily,” University of Montreal scholar Lise Maisonneuve writes in The Canadian Encyclopedia.
“At the same time, the sense of a vague hostility to Americans within Canadian society has also helped reduce overt displays of American consciousness.”
Now, open displays of American pride in Canada are becoming even less likely as Ameri-Canadians seek shelter from the long reach of FATCA.
Things are about to change even more dramatically now that the US government has waged war on its diaspora. The problem the diaspora faces in conquering the enemy is knowing it’s nature. With a country as bi-polar as the US, that will not be an easy task.
Yes, good way of stating it–the USG is waging a war on its diaspora
The American press does not cover this issue well, and even the Canadian press gives the US government too much of a free pass.
The fact that newspapers always state that FATCA is a law designed to catch tax cheats doesn’t help. When it is labeled as such, people give the USG the benefit of the doubt or even generate support. There needs to be more scrutiny regarding the real purposes behind FATCA.
Newspapers need to use statements like “FATCA, which the US Government officially claims to be intended to catch tax cheats, “…
It does not make sense to me that FATCA’s sole purpose is to catch tax cheats when FATCA only generates $800 million per year according to IRS estimates. (That is enough to run the USG for two hours… Furthermore, the costs of enforcement is several times more than $800 M, which will be passed to foreign banks who will pass these charges onto their customers…) Does this make sense?
In addition, I noticed that my comments to this effect were removed by the webmaster at The Economist.
I received an email claiming my “gross comments” would result in loss of account and right to post if I continued. (I said nothing inflammatory, and did not attack anyone verbally. All I did was question the true purposes of FATCA with logic similar to what I’ve written here.) And yet people defending FATCA were allowed to make their comments in the most inflammatory, name-calling manner. While it is impossible to know what really happened, it is quite disturbing. The natural reaction is to question the extent as to which the US Government is attempting to censor media outlets…
I have to wonder just how widespread knowledge (and accompanying fear) of FATCA is among Ameri-Canadains. Aren’t there supposed to be somewhere around 1 million residents of Canada with (either wanted or unwanted) American citizenship? Even with the upsurge in renunciations, it is still only a tiny fraction of that number.
And then there must also be a large number of Ameri-Canadians living abroad (i.e., neither Canada nor the US). I have a business acquaintance who is a Canadian with US citizenship by birth living here in Japan and who maintains his US passport on the off-chance that he might someday want to live in the US, but he has never filed US taxes and is blissfully uninterested in FATCA.
While there are many here on IBS who just realising that they have unwanted US citizenship, I have to wonder how there must be many, many more who have inttentionally maintained their US citizenship just in case they might someday want to use it, rather like keeping a spare tire in the trunk of your car.
….and I wonder how many people dont even realise they are “US persons” yet- and haven’t even had the OMG moment. I`m sure many dont listen to the news that closely when they are busy working and with families or they live somewhere out in rural Canada with no US ties. They might hear a smidgeon and just not listen too closely because they dont think it pertains to them.
Some years ago (~10-15) a former English colleague of mine acquired US citizenship after living and working there for several years — just before going back to England. His reasoning at the time was, just as you say, that having US citizenship would allow him to go back to the USA at any time should he choose to do so. As far as I know, he wasn’t concerned about filing US tax forms after going back to England. I’ve no idea how he’s getting on now in the wake of FATCA.
Yes, one the one hand there are so many who have no idea, on the other hand these issues (FATCA/CBT) are getting more and more media attention. I strongly suspect that because of this, the IRS/Treasury will, in the not-too-distant future, no longer consider ignorance/non-willfullness to be a valid reason for not filing.
There are thousands of technically dual citizen Japanese who were born in the US while their father was dispatched there by some Japanese company. Many have never exercised there US citizenship, and while they have some faint knowledge of being a US citizen due to being born there, they don’t speak English and wouldn’t even know how to go about getting a birth certificate.
The Japanese press has been completely silent about FATCA, and Japanese banks have been slow to ask new customers opening accounts, so it is going to take a long time for anything to happen here, but does the US really think that it can reach out throughout the entire world and tax every “US person” throughout the world no matter how faint their ties to the US are?
“does the US really think that it can reach out throughout the entire world and tax every “US person” throughout the world no matter how faint their ties to the US are?”
Good question. I suspect that the further removed a country is from the USA (geographically, culturally, with respect to language, etc.) the less likely it is that those governments and their populations are likely to even consider issues of compliance. Japan appears to be a case in point. Mexico may be another; although there are surely hundreds of thousands there with the US taint, it doesn’t appear to be a big issue there.
I think they are already doing that now. There are many many people who had no clue that they owed US taxes, and they are being punished anyway.
Yes they do. They figure everybody else will do the work for them.
Yes, of course. I guess the point I was trying to make is that “US persons” in some countries are much more likely to fall through the cracks than in others. If perhaps in Japan, for instance, they have an IGA, but the FFIs are fairly lax about FATCA implementation, and Japanese “US persons” don’t ever consider that the USA might expect something from them, they may go about their lives without any harm done to them. In countries who are over-zealous in implementing FATCA (e.g. Switzerland), of course it doesn’t matter whether “US persons” there have heard of it or not, they will be thrown to the dogs.
They might think they’ll be able to snare a few US expats who have not been filing, or maybe my friend whose only US connection is his US passport, but those thousands of born-dual Japanese who really have nothing to do with the US are not going to be asked anything by their banks.
In other words, those affected by FATCA will be pretty much mostly those who know they will be affected, such as myself, since I have always filed my US taxes (thank God next year should be the last time). There will be very few “OMG moments” here in Japan, and I think that will also be true of numerous other countries.
And does the IRS think that all those Japanese businessmen stationed in the US for a few years are going to file FBARS for any bank accounts they still have back in Japan, or for their Japanese life insurance?
Does their birth certificate state their place of birth?
Thanks for posting yet another great column by Douglas Todd in the Vancouver Sun. I believe this is his third one related to FATCA and the US tax problem. Finally the awareness of this travesty is beginning to spread. More and more “US Persons” will know that they are under attack. I have a feeling there are many with their heads still in the sand on the FATCA problem. Maybe they will come out and support the lawsuit.
Such a birth certificate is a foreign document in a foreign language; imagine yourself having a Japanese birth certificate in Japanese, with not a single word on it in English.
@ Bob Mills
Interesting comment from the article,
WiseCronein reply to guest-lnanelaJun 29th, 17:07
What I find horrifically fascinating is that in all I have read about this subject not one of my fellow Americans has shown up to put forth a valid intelligent argument for CBT and FATCA. So many are just spouting the party line tax evasion kool-aid, knowing all the while the wealthy fat cats, abhorrent to all, are long gone. (Does anyone truly believe their money is stashed in crappy return bank accounts/mutual funds)? It will never be found. We have to change our tax laws as our legislators are still protecting them. There is a larger discussion to be had here. Just what is America up to? Now that would be a debate.
A family member commented: Shouldn’t it be Canada-mericans?
“Good question. I suspect that the further removed a country is from the USA (geographically, culturally, with respect to language, etc.) the less likely it is that those governments and their populations are likely to even consider issues of compliance.”
I suspect that for the more ‘removed’ countries FATCA really will be used primarily for the purposes it was allegedly intended–for catching real, and wealthy, tax cheats. It will be in the culturally ‘close’ countries that the middle and poorer classes get screwed over. The USA seems to be using FATCA to keep its enemies close and its so-called friends even closer.
Switzerland is the exception to this rule. Because of a different language, geographical distance, and traditional Swiss neutrality, one would not expect Switzerland to be a really ‘early adopter’ of FATCA–yet it seems to have been perhaps the most aggressive pro-FATCA country. And the middle class in Switzerland–not just the stereotypical rich scoundrel with a Swiss bank account–have definitely gotten screwed over.
“Some years ago (~10-15) a former English colleague of mine acquired US citizenship after living and working there for several years — just before going back to England. His reasoning at the time was, just as you say, that having US citizenship would allow him to go back to the USA at any time should he choose to do so. As far as I know, he wasn’t concerned about filing US tax forms after going back to England. I’ve no idea how he’s getting on now in the wake of FATCA.”
Many people became US citizens for this reason. Some knew about CBT, but were IRS compliant at the time of naturalization (it is a requirement for naturalization). Many people thought that CBT was–for all but the very wealthy and/or those living in real tax havens–just a matter of filing a very simple annual 1040 stating you owe no actual US tax. CBT has many more implications that most people didn’t know about. Plus as a green card holder your colleague would have been liable for US tax until he “checked out”–US citizen or not. Plus most people thought they could easily renounce US citizenship if it turned out to be more of a hassle than first thought. Renouncing is still possible but clearly getting both difficult and expensive (but probably still less expensive than dealing w/CBT for the rest of your life).
Living in Asia and having been to Japan many times, I appreciate you comment on how the Japanese banks may not be too energetic in asking customers FATCA compliance questions, particularly in a country that allows only one citizenship. Someone born in the USA is a US citizen under US law even if they were in the US only long enough to be born then left.
Other countries in SE Asia are actively putting FATCA in place – Singapore, Thailand are examples. All customers, regardless of Singapore or Thailand citizenship must complete the FATCA questionnaire to even open any new on line fixed account even if they are a current bank customer. I thought Asia would have tried to follow the Japanese approach but no such luck at least in SE Asia.
Yes, I’m fairly sure my colleage was filing tax returns just like everyone else when he was in the USA, but when he went back to England he simply “couldn’t be bothered” as the Brits say.