cross-posted from ADCSovereignty Blog
Strict tax compliance has its innocent victims /via @globeandmail https://t.co/gj1llKnzgT – Bravo @BarrieMckenna for mention of # FATCA!
— John Richardson – Counsellor for US persons abroad (@ExpatriationLaw) April 5, 2016
The above tweet references the following article by Barrie McKenna of the Globe and Mail. The comments to the article include:
Canada has signed an inter-governmental agreement with the US, implementing FATCA in Canada. As a result, more than 155,000 Canadian tax records were delivered from Canadian banks to CRA, which in September 2015 turned them over to the IRS, circumventing Canadian privacy legislation. Most of the holders of these accounts are ordinary Canadian citizens, whose only crime (as Mr. McKenna notes) is being born in the US to Canadian parents or who otherwise have only tenuous connections with the US. Under the agreement, the Government of Canada plans to turn over Canadian financial information to the IRS annually.
This agreement was implemented by the former Conservative government, over the objections of opposition parties, including the Liberals. Now that the Liberals are in power, they reversed themselves and now insist they have no choice but to obey US demands.
The Alliance for the Defence of Canadian Sovereignty (ADCS) has launched a lawsuit against the Government of Canada, opposing this agreement. The plaintiffs are two Canadian women born in the US to Canadian parents and brought back to Canada age 5 years.
For more information, see the ADCS website: http://www.adcs-adsc.ca/
The fairness and integrity of Canada’s tax system depends on authorities doing their best to minimize the leakage. Canadians may grumble about paying taxes, but they’re likely to be more compliant if they believe their neighbours are also paying their fair share.But repatriating all this revenue is not without costs – financial and otherwise. In its recent budget, the federal government said it will spend nearly half a billion over five years to give the Canada Revenue Agency more personnel and resources to combat tax avoidance (the legal kind) and tax evasion (the illegal kind). The CRA will spend cash to collect cash.
There are other inherent tradeoffs in any tax crackdown, including potential intrusions on privacy and individual freedoms.
The extent of those trade-offs depends on how targeted the crackdown is. It’s not unlike the fight against global terrorism.
Authorities can impose sweeping security measures on everyone to stop the few, or it can target suspected individuals through better intelligence.
Just look at the U.S. approach to fighting tax evasion. The U.S. Foreign Account Tax Compliance Act, or FATCA, is one of the most sweeping and intrusive regimes ever put in place. The law is based on the idea that if the Internal Revenue Service can locate every dollar Americans (and dual citizens) have stashed away anywhere in the world, they can also tax it.
And they’ve bullied virtually every developed country to help them in the effort, including Canada, where taxes are generally higher than in the United States.
The crackdown has forced thousands of Americans living in Canada to spend small fortunes to come out of the shadows, even though they owe little or no taxes. They include so-called accidental Americans, whose only crime was being born in a U.S. hospital.
But, we know that FATCA has nothing to do with tax evasion. Sooner or later the rest of the world will realize this too. After all, the United States has used FATCA to turn the United States into the world’s number one tax haven! The United States is NOT obligated to provide reciprocal information under FATCA (read the IGAs carefully). Furthermore, the United States has not and apparently will not embrace the OECD “Common Reporting Standard” (CRS). As some commentators have noted the failure of the United States to NOT embrace this standard means that:
Given the paucity of information that will be given by the US to its IGA “reciprocal” partner, it seems obvious that many non-US persons will continue to feel quite secure in holding accounts at US financial institutions, despite FATCA “reciprocity” with their home countries. This could be a nice boon to the US financial market in the brave new world of financial transparency! Is it possible? Is FATCA actually poised to help the (holier-than-thou) USA to become an even more enticing tax haven?
We know that the United States has a high regard for privacy rights (not) and is reluctant to provide financial information to countries that have inadequate mechanisms to protect information.
Hmmm ….
Would the “Great Panama Data Leak” support the U.S. position that certain countries do NOT have adequate safeguards for the protection of Data?
Fran Hendy thinks so …
In her insightful article about the “Panama Papers“, Ms. Hendy opines that:
So tonight’s PBBC Panarama programme on the Panama Papers was a total yawn.Besides the tepid reporting and comical ‘stings’ on a couple of people whose names turned up in the leaked files there was not much else to recommend it.
However, the post BBC news clip about the leaks which featured the now, well-worn innuendo about independent small state international financial centres, the sound bite by the Director of the OECD Centre for Tax Policy and Administration who has some oversight in the work of the Global Forum on Transparency and Exchange of Information for Tax Purposes, and Automatic exchange of Information (the new standard) did shed some light on what, to my mind, is the bigger question..Why Now?.
The other by-product of the Panama Papers was to perhaps inadvertently provide further support for the US position that it will not exchange taxpayer information with countries that can’t ensure that the information they exchange won’t fall into the wrong hands.
Interesting then how these ‘leaks’ reinforce the post-AEOI competitive advantage of some countries which is not based on secrecy per se but on protecting their taxpayers from inadequate confidentiality safeguards in the state receiving the automatic transmissions of information.
It appears that more than one commentator is of the opinion that:
the United States is not playing nicely in the (international) sandbox.
“If Panama does not change its position on the automatic exchange of tax information, it will remain a home for “dirty money,” said Pascal Saint-Amans, of the Organization for Economic Cooperation and Development (OECD).
The OECD’s director of the Center for Tax Policy and Administration warned Panama that if it does not fully implement the scheme, it will be “exposed to scrutiny that it is a home to dirty money.”
– See more at: http://www.prensa.com/in_english/OCDE-lanza-amenaza_21_4437516206.html#sthash.tpyeuZBr.dpuf
Is Canada’s Ambassador and Permanent Representative to the OECD the Minister of Revenue’s twin sister?
http://www.oecd.org/canada/canada-ambassador.htm
How exactly does being Communications Director for the National Film Board of Canada prepares oneself to be an expert in complex international tax law?
@Tim
It’s 2016.
Don’t you work in the film industry and are somewhat of tax expert too. Maybe she learned about tax in the film industry the same way you did.
@Tim
My shot was more aimed at Trudeau for choosing people based on their gender, vs capability. If I were offered the position as Minister of anything but “Funny Walks”, I’d decline.
And my background is real estate, not film – that’s my husband’s department.
“In its recent budget, the federal government said it will spend nearly half a billion over five years to give the Canada Revenue Agency more personnel and resources to combat tax avoidance (the legal kind) and tax evasion (the illegal kind).”
CRA is going to combat tax avoidance (the legal kind)? Surely they can make so much money that way, they won’t have to bother combatting tax evasion (the illegal kind).
‘Mr. McKenna focuses on the damage to “every day people” that the overreaction to “tax evasion” creates. He likens the war on “tax evasion” to the “war on terrorism”. Regardless of the “collateral” damage, governments in general, and the United States in particular, seem oblivious to the damage caused to “every day folk”.’
Yeah no kidding. It’s not just border babiles any more. There are BILLIONS of people worldwide obeying the law, doing things that are “(the legal kind)”.
“some commentators have noted the failure of the United States to NOT embrace this [CRS] standard…”
Thanks for posting this, Tricia, along with the additional links.
A couple of remarks:
a. The US taxpayer furnishes 70% of the OECD’s budget (unknowingly).
b. The OECD is based in Paris and its members work out of a castle. Not one of them pays tax on their income, bonuses, or other benefits. (They should pay Hollande’s high rates. They don’t).
c. The OECD has been denouncing Panama for not committing to exchange financial information
automatically (based on the CRS model), but to do so based on existent bilateral treaties. (Panama has an exchange of information/tax treaty with Canada, as well as with many European countries, for instance; but not w/most Latin American countries, which it considers unsafe. In Latam, customers and their families are liable to be subject to extortion, kidnapping, etc. Governments are implicated in narco-trafficking, illegal mining, illegal harvesting of protected forests and wildlife trade, people trafficking, etc. They are supremely corrupt and lack transparency/accountability. But the OECD insists of having Panama play by “the rules.”
Let’s put two and two together:
1. The US has instituted FATCA with all its ravages…
2. The OECD is bent on instituting the CRS regime, but the US “owns” the OECD so it could care less
about what this entity wants.
The OECD wants to shut down so-called tax havens like Panama.
(Spain and Holland do not consider Panama a tax haven. Panama believes that the OECD is bullying it
for wanting to play by the same rules as the US and that the intent is to direct business and funds
away from them and to US cities like Miami and NYC. Their financial services business has elevated
per capita income from USD 4000 to USD 11,000 over the last couple decades).
3. Americans (and foreigners) have the option of structuring companies in Nevada, South Dakota and
Delaware and with those structures to deal with law offices like Mossack and Fonseca around the
world. That is, the offices of M+F do not necessarily know who is behind these companies bc they are
protected by US confidentiality laws. Very few names are on the list that was leaked for a reason.
US is the top country that makes use of the services that Panama provides.
4. US has become the #1 tax haven in the world thanks to FATCA…
5. Obama pushed a trade deal with Panama in 2011 that enhanced this sort of thing.
Please see this take on things:
http://www.zerohedge.com/news/2016-04-05/clinton-supported-and-enabled-tax-evasion-
revealed-“panama-papers”-…-sanders-opposed
6. Panama uses the USD. It’s a popular destination for American retirees.
US Navy Seal was caught bringing in drugs from Panama into Miami in 2014.
Coronel’s wife Kay Griggs noted that US Armed Forces are involved in this worldwide.
(Apologies for getting off topic, but if interested see this:
https://www.youtube.com/watch?v=MQNitCNycKQ).
So what is really going on here…
And Canadians whom the US is claiming as Americans are being fleeced (twice) to support what — the OECD?
@Sally
Great comment-full of new stuff to learn!
And just to be clear, I did not write this post, just reposted John Richardson’s post from the ADCSovereignty Blog.
If a pregnant woman is traveling in any country of the world except The U.S. and Eretrea (a great country where I believe a relative of Obama is the dictator) That country has no interest in the baby except they might give free medical attention, but doesn’t view the child as chattel. I thought we fought a civil war over the human chattel question, even after our supreme court ruled in the Dredd Scott decision that humans can be chattel. The courts don’t view the 1858 Dredd Scott case as a viable prescedent. So let’s say humans cannot be chattel, then chasing them around the world, to get double taxes from them should be illegal, but the D.C. Pukes, in their quest for taxes and control of the world’s governments, don’t miss a trick and I mean it in the concept that we all recognize what a trick is. This bunch would be inept at running a brothel as they were when they got the Chicken Ranch for taxes. They can’t make a profit from a business that sells liquor and runs whores. Bad at government, bad at business even if it is a business established in ancient times. They simply cannot shoot straight unless they are stealing money from taxpayers.
@Patricia Moon. It was my comments on McKenna’s article that you quoted. (“Canada has signed an inter-governmental agreement with the US, implementing FATCA in Canada…”)
The article was the most sympathetic by McKenna that I have seen to date, and he got much of it right. The one mistake is to equate FATCA with the OECD initiative (however one may have influenced the other). FATCA, linked with CBT, results in the ambushing of millions of innocent people. The other initiative merely supports existing laws, e.g. Canadian residents must pay tax on their global income; the initiatives should result in better reporting of foreign holdings to Canada and other participating countries.
Why Were So Few Americans Implicated in the ‘Panama Papers’ Leak?
John Gray | April 06, 2016
https://www.conservativereview.com/commentary/2016/04/why-were-so-few-americans-implicated-in-the-panama-papers-leak
More on why lack of numbers of US Citizens / Persons:
https://www.taxconnections.com/taxblog/huge-leak-from-the-panamanian-law-firm-mossack-fonseca/
The IRS is now going to parade around the success of the OVD programs as the reason for so few Americans bring implicated, no doubt. Makes for a great funding drive.
The sky will no doubt go dark with compliance condors over this.
@Bubbles…….you do know you are getting more cynical. The bad news is your cynacism is spot on correct.
Of course you all know this, but it is interesting hearing the Panama papers story on the radio which now has some commentators coming to the realization that Panama and Delaware are two sides of the same coin.
This from Politico tonight…(a little primer for those who have not been following this story)
Why America Loves Being the World’s No. 1 Tax Haven
Forget what we learned from the Panama Papers. The real secrecy problem lies with America’s banks and Congress.
By Peter Cotorceanu
April 08, 2016
Read more: http://www.politico.com/magazine/story/2016/04/panama-papers-america-tax-haven-213800#ixzz45JlRi0rO
I do get a kick out of seeing this in print…
the real reason the United States has not signed up to the global version of FATCA (called GATCA) is that it requires delivery of much more detailed information than the IRS currently collects about accounts owned by foreign residents in the U.S. Again, Congress would have to change the law to make that information available for the Treasury to share it.
Good to hear from you, Just Me! Your “GATCA” is now a household word in the world of automatic exchange of financial information:
https://en.m.wikipedia.org/wiki/Common_Reporting_Standard
Absolutely — glad to have been among those who heard the term, GATCA, first — from you, Just Me. We miss you around here and hope you are doing well. You had that, as so much, Just Right as you taught so many of us from your own experience. My best to you!
Just Me!
So very glad to see you. Missed your input, but glad you were making up for some of those lost LCUs.
Your tutelage in OVDI/P, FATCA and GATCA informed so much of our appreciation of and discussion of the issues here at IBS. I have tried to continue to post OVD info since we have heard nothing more from people either in the ‘VD’ programs, or in Streamlined – but there must be people still not processed.
Your info helped so many people. I passed some on to at least 2 who wouldn’t post here, but needed it.
And it helped me too.
Again, very grateful!
The IRS didn’t know what they would reap and create in terms of advice and information that fuels our resistance and growth in self reliance when they mistreated you.
@Bubbles
No it will not This is at least the third article I have seen which brings to light the inequity issue. We have an opportunity as well to push the truth that #FATCA is for these people, not us.
http://www.thestar.com/news/insight/2016/04/09/panama-papers-make-case-for-a-1-solution-burman.html via USCitizenAbroad
@Just Me
WOW! The GATCA DATCA FATCAnatics creator himself! Very glad to see you post !!(as well as to know you’ve been able to refind your life-trying to do a bit of that myself).
Aren’t all these things connected? The EU pushing a 35% withholding via treaty if US plays dirty about corporate taxation there. Florida/Texas bankers still at it. We are still at it. Bopp suit is still at it. A CBT lawsuit in the works. Maybe the Occupy folks will regroup. These things would not be happening if the wealthier people were not hiding their money. And the US Congress will eventually have to listen. They cannot cut off the whole world and the whole world WILL retaliate once they figure out they can.
FWIW I saw in passing a day or so ago, a comment Carl Levin made when it was pointed out FATCA was being applied to expats the way it is. He said something along the lines of “that’s not what was in it.”
@ Just Me
It’s really you? WOW! Congratulations on completing your long, long trek on the Pacific Crest Trail last year. It would take something of that magnitude to completely flush one’s system of the OVDP bane, I think. I’m not sure you ever get LCUs paid back but you’ve valiantly distanced yourself from their loss and that’s a very good thing. Thanks for all the wisdom you’ve brought to Brock.
This Panama papers fiasco is a bunch of crap.
Does anyone else smell something rotten with no US political figures in the papers???
Dead giveaway this whole thing perpetrated by US gov to serve agenda. Could not be more obvious
“I have tried to continue to post OVD info since we have heard nothing more from people either in the ‘VD’ programs, or in Streamlined ”
Indeed. US citizenship is an STD and ‘VD’ programs are part of the cure.
“And the US Congress will eventually have to listen. They cannot cut off the whole world and the whole world WILL retaliate once they figure out they can.”
The US Congress will not have to listen. The US can cut off the world, from the US’s point of view. UK newspapers know how to do it. ‘Fog in channel, continent cut off’
I do wonder why the rest of the world hasn’t retaliated though. North Korea has one friend (China) but most of the world cuts off North Korea. The US has one friend (Eritrea) so why doesn’t most of the world cut off the US?