Farhad Manjoo has a piece over at Pando Daily entitled “What Eduardo Saverin Owes America”. He gives a list of five specific items: his safe childhood, his erstwhile friendship with Zuckerberg, Harvard, the Internet, and the justice system. This made me think of the obvious counterfactual scenario: what if Eduardo Saverin’s family had moved to Europe instead to escape the threat of kidnappings in São Paulo, and he’d come to Harvard as a visa student? Four out of Manjoo’s five points still apply, but Saverin would face a far lower tax bill. Would Saverin owe any less of a moral debt to America? And what does the resulting tax situation have to say about the justice of the U.S.’ peculiar practise of taxing overseas citizens wherever we go?
Author Archives: Eric
Technology entrepreneurs giving up U.S. citizenship? A U.S. tech startup webforum reacts to one case
On Hacker News, a tech entrepreneurship community that both Phil Hodgen and I frequent, there was a discussion a couple of days ago about one entry in the Q1 2012 loss-of-citizenship list which matches the name of a well-known entrepreneur. (Edit: to clarify, I’m not talking about Eduardo Saverin, the news of whose renunciation just popped up on Bloomberg; I wrote this post before that news came out. This is about another guy, follow the first link in this post if you want to know his name).
Regardless of whether or not that name is indeed him, the news sparked some interesting comments. This should serve as a reminder to us: the Isaac Brock Society is not the only collection of people out there who object to the United States’ citizenship taxation policy. There are many others, most of whom are just going about their daily lives while trying to grin and bear it, and who may never give us “extremists” more than a passing glance — but whose overall silence should not at all be taken to imply acquiescence to this unjust state of affairs, as the mainstream media do every time when they say “1,800 renunciants is such a small number compared to the six million Americans abroad”.
Tax justice and tax compliance
After Bill McGurn’s WSJ article last month about American citizens becoming “economic lepers” (and the associated video — thanks Joe Expat), a number of prominent bloggers and journalists have been popping up to say that U.S. tax laws aren’t a problem except that they’re not restrictive enough. In particular, a post by the Tax Justice Network, riffing off of Bruce Bartlett’s New York Times piece, claims that there is no evidence for the fact that Americans are becoming “economic lepers” — because rich people are not moving out of the U.S., and because lots of people are moving into the U.S. Both of those latter facts may be true, but they are non sequiturs. The real question that McGurn was addressing is summed up in these paragraphs: Continue reading
Recent media coverage: one entry for the Hall of Fame, lots for the Hall of Shame
Ms. Atossa Abrahamian’s article last month about U.S. persons abroad giving up citizenship has really opened up the floodgates to a deluge of reporting on issues of interest to us here at the Isaac Brock Society. It’s hard to keep up with all of it, let enough find the time to comment on everything. Here’s a roundup of recent coverage. Thanks to FromTheWilderness and others who left comments pointing us to these articles.
U.K.'s Association of Investment Companies suggests members not comply with FATCA
Financial institutions have generally fallen into two categories in their reactions to FATCA: some seem to be leaning towards trying to qualify under “deemed compliance” exceptions, while others have urged their governments to shred privacy laws so they can dump all the costs and harms of compliance onto the public. But as far as I know this is a first: an industry body suggesting that its members ignore FATCA entirely. A couple of different links to the story, in case one or the other ends up trapped behind a paywall: IFAOnline.co.uk and Investment Week. Quotes below. Continue reading
Taiwan banks having second thoughts about FATCA?
The latest FATCA news from Taiwan and mainland China: Taiwan banks are busy worrying about the mainland’s attitude, but Beijing is still not releasing any details besides confirming the fact that FATCA discussions with Washington are underway. On the bright side, the lack of confirmation about the mainland’s final disposition towards FATCA seems to be spooking banks in Taiwan. They certainly seem less confident in their original “bright idea” of solving all their problems by shredding Taiwan’s consumer data privacy laws in order to reduce their costs of complying with FATCA — because they realised they might also face issues in other major markets where they have far less lobbying power to encourage similar “solutions”. Translations below.
Your U.S. Financial Crimes Enforcement Network: hard at work Enforcing Crime
By any reasonable estimate, there’s millions of U.S. persons living overseas, while only 400,000 FBARs get filed per year — but in 2011, the Financial Crimes Enforcement Network (FinCEN) had the audacity to pretend they were getting nearly 100% compliance. The surprisingly-humourous Federal Register has the full story: “Amendment to the Bank Secrecy Act Regulations — Reports of Foreign Financial Accounts”. 36 Federal Register 37: 10234–10246, 24 February 2011. Relevant section begins at page ten thousand, two hundred and forty-four:
It wouldn't make sense if you could see it anyway
Today I happened to run across the IRS’ list of tax forms provided in Braille format for the benefit of blind and visually-impaired taxpayers who are filling out their own returns. All the forms that an ordinary Homeland taxpayer might need are there. But quite a number of forms that ordinary overseas taxpayers might need are not: Form 8621 for your “foreign” ETFs, Forms 8858 or 8865 if you’re self-employed through a “foreign” sole proprietorship or partnership entity (for example, a blind husband running a business jointly with his sighted wife), and Form 926 if you form a “foreign” corporation and invest money or property into it so it can actually do business, for example.
Of course, even if you have 20/20 vision, it is not reasonably possible to properly fulfill all your reporting requirements as a U.S. Person abroad and still lead a normal financial life in your country of settlement. Whether or not you can see, more likely than not you’ll need professional assistance to properly comply with the punitive U.S. filing requirements. But the absence of Braille versions of those forms is just another small symptom of the same problem we all face: no one in the IRS even understands how many ordinary non-resident taxpayers are supposed to be filing these ridiculous forms, and no one involved in implementing the insane system is interested in making it easier to become compliant.
Dutch Finance Secretary sidesteps hostile questions from lawmakers on FATCA
Mondaq.com is running the headline “The Netherlands to join Joint FATCA Statement”. This appears to be lifted from an English-language newsletter issued last week by Amsterdam-based law firm De Brauw Blackstone Westbroek. Don’t get the wrong impression, though — no agreement has yet been negotiated. The most recent news is that Finance Secretary Frans Weekers stated last week (link available in Dutch only) that the Netherlands is open in principle to joining FATCA. But the cross-border services providers have managed to miss (or to bury) the real news. Last week some Second Chamber members submitted written questions to Weekers (also in Dutch only; see here for Google Translate’s rendering). I’ve manually translated some of the interesting bits. I am disappointed by many of Weekers’ responses, both for their attitude towards the democratic process and their apparent lack of understanding about FATCA’s effects on bona fide residents of his country who have no financial connection to the U.S. besides their passports.
460 people lost U.S. citizenship in Q1 2012, claims government; various names missing
Contrary to the expectations of Isaac Brock Society voters, the “name and shame” list for the first quarter of 2012 showed up in Monday’s edition of the ever-fascinating Federal Register; you can view it here. It contains 460 names, more than in last quarter’s list which had 360, but fewer than in the Q1 2011 list which had 499 (see our discussion of last year’s statistics here). Thanks to Rick for letting us know. I guess we won’t have to arrest Timothy Geithner. Or will we? Several names which were expected to turn up in this quarter’s list are missing, including Belizean politician Yolanda Schakron who renounced in February, South Korean politician Nam Moon-key who renounced last September but still hasn’t shown up in any list, and our very own Peter Dunn. Continue reading