February saw a massive number of legislative attacks on American emigrants and their children by ignorant or malign (un)Representatives which are only now coming to light as the Government Printing Office finishes typesetting and publishing the hundreds of pages of proposed laws. We’ve already discussed the various recent bipartisan attempts to repeal the Foreign Earned Income Exclusion, but another frequent theme is increasing the tax and compliance burdens on so-called “Controlled Foreign Corporation owners” and “outsourcers”, including people who have lived outside the U.S. all their lives but got the inherited genetic disease of U.S. citizenship from their parents. So here’s an overview of the latest proposals to make your life more difficult, whether you’re an employee or a boss.
Category Archives: Issues regarding US persons abroad
Children of immigrants to America denounce children of immigrants to Canada as tax “loophole” abusers
The Government Printing Office has finally published the 284 pages of the Congressional Progressive Caucus’ bill we discussed earlier this month. For those who don’t recall, this bill includes provisions, as the CPC put it, to “Close Exclusion of Foreign-Earned Income Loophole”. I won’t bother quoting this bill at length since there’s nothing surprising in its the contents (aside from the hilariously non sequitur title: “Smarter Approach to Nuclear Expenditures Act”), but the list of sponsors is rather interesting in one regard: a third of them are children or grandchildren of immigrants.
The US has become the most disfunctional democracy in the world
Sequestration: How is it, the world might ask, that the US with its brainpower and creativity can be so stupid? http://t.co/SMUUXDkqj2.
— U.S. Citizen Abroad (@USCitizenAbroad) March 1, 2013
How is it, the world might fairly ask, that the United States with all its brainpower and creativity can be so, well, stupid?
Not stupid in everything, of course; indeed, perhaps not in much at all. But when it comes to governing themselves, Americans are making matters harder by a resolute determination not to face real facts. And those of us who live nearby will feel the effects of this unfortunate determination.
Those who are not Twitter literate can read the article here.
The answer is that the U.S. cannot get anything done. Why can’t it get anything done? Answer: Because the founding fathers did not anticipate the formation of two private clubs (the Democrats and Republicans) that would monopolize the political process for their private purposes. George Washington hated the concept of political parties and foresaw the result if they came to be.
Now that the Republican Party has ceased to exist as a political force (they couldn’t even beat the Obama Democrats) the Democrats have no reason to be. Prediction: 2016 will be the first year of a strong and credible independent candidate for president. It’s the only way to bring the American people back into their political process.
Gold Vaults are now rejecting Americans too!
Where to go as Swiss are Shutting out U.S. Taxpayers
By: Julian D. W. Phillips, Gold/Silver Forecaster – Global Watch – 28 February 2013
…even the leading Swiss Vault in Switzerland, Via Mat, is taking action to take themselves out of the firing line of the IRS, etc., by no longer accepting private customers with a potential U.S. tax liability. The letter sent by Via Mat to customers who fall into this category states:
“We are currently experiencing rapid and substantial changes in the general regulations within this business. The changes mainly relate to the tax structures and taxation systems of various countries. As a consequence of these changes VIA MAT INTERNATIONAL has taken the decision to stop offering this service at its vault [sic] outside of the U.S. to private customers with potential US-tax liability…”
http://news.goldseek.com/GoldForecaster/1362085200.php
NDP Response to FATCA
Dear ______:,
Thanks for sending the Green Party announcement regarding the U.S. Foreign Account Tax Compliance Act (FATCA). I have asked our National Revenue Critic, now Murray Rankin, to fill me in on the latest.
The NDP is very concerned that the Harper government is currently participating in negotiations with the US over an Intergovernmental Agreement (IGA) for the implementation of FATCA in Canada. As you know, such an agreement would likely require Canada to enact laws and regulations that would require Canadian financial institutions to comply with FATCA. The NDP has serious concerns both about the lack of transparency and consultation during the negotiation process and the potential infringements on the rights of Canadians.
If implemented, the IGA would likely require Canadian banks, investment funds and other financial institutions to disclose annually to the U.S. Internal Revenue Service (IRS) accounts held by American Citizens, which includes dual citizens in Canada. Failure to disclose account information could result in a withholding tax applied to U.S. income earned by the institution or by account holder. The US’ stated policy goal of FACTA is to aggressively target American citizens who are improperly shielding assets in offshore accounts, with no consideration of the nature of existing Canada-US tax cooperation and the fact Canada is by no means a tax haven for Americans.
Essentially, FATCA would allow the United States to bypass the exchange of information between the IRS and the Canada Revenue Agency and instead get information directly from Canadian financial institutions. Apart from the extraterritorial enforcement dimensions to FACTA referenced above, there are widespread concerns that this exchange of information could potentially violate existing Canadian privacy laws.
New Democrats have repeatedly raised concerns over FATCA with the Conservatives and demanded that the government act on its responsibility to protect Canadian citizens from this improper and unreasonable intrusion of a foreign government.
New Democrats have also been fighting for the Conservatives to finally get serious when it comes to tax havens. But this does not mean rolling over and playing dead in the face of a misguided effort of the US to, in effect, treat Canada as a tax have. Just as we believe the Canadian Government has a responsibility to protect Canada’s tax base, we understand the United States’ desire to protect their own tax base — but this cannot come at the cost of the rights of individuals in our own country. We are demanding answers and transparency from the Conservatives on FATCA, and will not support an agreement that violates the privacy rights of individuals.
Again, thanks for contacting us on this. Please be assured that my New Democrat colleagues and I will continue to stand up both for fair taxation and for privacy rights, as well as for an approach to tax havens that is both aggressive and, unlike FACTA, reasonable.
All best,
Craig (Scott)
MP Toronto-Danforth
Obamacare tax on unearned income cannot be offset by foreign tax credits!
Although I would never take the words of our friends the cross-border professionals at face value, I am getting more and more confirmation from unrelated sources that the Obama 3.8% tax on unearned income cannot be offset by the Foreign Tax Credits of U.S. citizens abroad. To put it simply:
U.S. citizens abroad, who via taxation in their country of residence, pay for health care in their country of residence, are now required to pay for health care for U.S. residents. Oh well: I guess that’s consistent with the definition of citizenship that Obama gave in his State of the Union address.
We are citizens. It’s a word that doesn’t just describe our nationality or legal status. It describes the way we’re made. It describes what we believe. It captures the enduring idea that this country only works when we accept certain obligations to one another and to future generations; that our rights are wrapped up in the rights of others; and that well into our third century as a nation, it remains the task of us all, as citizens of these United States, to be the authors of the next great chapter in our American story.
U.S. citizens abroad must accept their obligations to those remaining inside the U.S. Hmm. Would that mean that Homelanders have obligations to U.S. citizens abroad? What has the U.S. government done for you lately?
While Canada considers FATCA IGA with US, it resists similar pressure from Europe – What gives?
Financial services has become the latest stumbling block as Canada and Europe try to put the finishing touches on a sweeping free-trade agreement.
Canada is resisting pressure from Europe to allow its financial institutions and investors to directly sue Ottawa for measures it might take to protect the stability of the financial system or market players, according to a leaked draft of the services and investment chapter of the deal obtained by the Council of Canadians.
Read the complete article here which was written by Barrie McKenna. Fascinating that he doesn’t see certain aspects of this (although it is not a direct anology) to be the same as the issues resulting from a possible FATCA IGA. The other thing that occurs to me is that one must rethink the argument that FATCA may be a violation of NAFTA. (The NAFTA argument is one that has been suggested/developed by certain legal academics.)
Finally, the above quote implies the concern of the Council of Canadians over Canada’s international agreements. This group, that claims to be the guardian of Canadian sovereignty, appears to be silent on FATCA while complaining about the Harper Canada/China deals. Somebody should pick up the phone and get Maude Barlow’s take on FATCA.
Explain it to her like this:
Once the US gets control of the banks, they will get control of the economy, which means they will get control Canada, which means (to address her concern): the U.S. will get control of Canada’s water. Maybe this would get her attention.
Cisco CEO says Harper “Gets It” Obama: “Doesn’t Get It”
The chief executive officer of Cisco Systems Inc. appears to love Canada, so much so that he’s considering investing in what he calls “the easiest place in the world to do business.”
“The easiest place in the world to do business is Canada. Their prime minister gets it. They make it easy for me to invest and do acquisitions there; they have a great education program and they have a great immigration policy.”
Globe and mail: Cisco eyes Canada investment: ‘The easiest place in the world to do business’
Financial Times: Cisco eyes Canada investment
Cisco actually has a pretty neat office in downtown Toronto if anyone has ever been there:
Shall We Join Overseas American Groups Uniting to Support HR 597?
Deckard1138 recently received a reply from Democrats Abroad which he wanted to share. His comments precede the letter. Perhaps we should give a letter/email blast another try?
I am thinking of adapting the letter to my Rep/Senators indicating that these harmful effects were damaging enough that I had to renounce my citizenship. Given the fact that this is due to the threat to my non-US family, perhaps it would be shocking enough to at least cause curiosity and hopefully, get past the “offshore tax cheat” label.
*******
Well, here’s something new from Democrats Abroad. While I do not agree with their premise that “To date, many of the harmful effects of federal laws and policies on Americans abroad have been unintentional”, I am heartened to hear that they are at least attempting to reach out for support from both parties, trying to “…get another dozen sponsors this year, including a few Republicans.”
If a critical mass of House sponsorship can be gathered then there is a chance that Congress might begin to wake-up and respond to the monster they’ve created. It’s been a terribly long time since that Carter-era commission looked at Americans abroad, so I think every effort should be made to bring that attention into the present where it is needed more than ever.
*******
Dear ————-,
There is legislation just filed in Congress that could be a game-changer for Americans living abroad.
That bill, House Resolution 597, the Commission on Americans Living Abroad Act, would require that the US Congress to systematically study the impact of government policies on the 6 million American citizens living abroad.
To date, many of the harmful effects of federal laws and policies on Americans abroad have been unintentional. With the passage HR 597 lawmakers would be much better informed about those unintended consequences. Congress would have a better idea of who we are, where we live, and the impact of Federal law on us on issues like taxation, immigration, voting rights, and access to financial institutions.
Our good friend in Congress, Representative Carolyn Maloney (D-NY and Chair of the Congressional Americans Abroad Caucus) said Americans living and working abroad “are our country’s informal ambassadors around the globe and help strengthen the U.S. economy and promote American influence. Their concerns about how their government interacts with them deserve to be heard — and paid attention to — here in Washington.”
Representative Maloney just introduced HR 597 with Reps. Honda (D-CA) and Napolitano (D-CA) as co-sponsors. The bill was first introduced in the last Congress, but it did not get on any Committee agenda for lack of multiple co-sponsors. A reasonable strategy for Democrats Abroad would be to get another dozen sponsors this year, including a few Republicans.
Congresswoman Maloney is now seeking co-sponsorship for the bill from other members of the House — on both sides of the aisle! We need your help. Contact your representatives to help in the cause. A letter from you now, asking your Representative to sponsor HR 597, will help move the bill through the legislative process.
A short letter will be enough to draw attention to this important bill. Here’s an example:
“Dear Mr./Mrs/Miss ___________: As one of your constituents, I ask that you co-sponsor bill HR 597, the Commission on Americans Living Abroad Act, to examine the range of issues faced by the 6 million Americans who live outside the United States. Such a Commission would be extremely helpful in recognizing our contribution to the American political process and the U.S. economy. I am a proud US citizen living in ________ (your country).” It’s always a good idea to add a personal appeal, if you have time.
If you do not know the name of your Representative or his or her address, please go to http://www.house.gov/ and submit your U.S. voting address. Address the letter to The Honorable ___________, United States House of Representation, Washington. DC 20515
Help us get HR 597 passed. It’s our time to show who we are as U.S. citizens abroad.
Best wishes,
Kenneth Sherman,
International Chair.
EU Tax Chief Urges U.S. Support for Transactions Levy @BloombergNews
EU should just unilaterally impose this Financial Transaction Tax (FTT) on all US financial Institutions (USFIs for short) just like the US does with FATCA FFIs (foreign Financial Institutions) . It would be a fully justifiable “tit for tat” action, and have just as much legal standing as FATCA does.
They are such wimps to only hope ” that things can evolve,”
Just force it. That is the American way! That is the model they have been shown by the U.S of A.
If the USFIs want access to the EU financial markets, they have to collect the FT tax. Impose a 30% penalty on all EU source revenue if they don’t? That is a nice little tool, as we have learned, to force willing and enthusiastic compliance.
Then roll out an FTT IGA and call it a “bi-lateral” agreement. The FATCA Compliance Industrial Complex (FCIC) will report as that, and tell the world and the USFIs why they must comply. Journalist will just repeat the EU press releases about how the two governments have worked together in a mutually beneficial way to implement a FTT Treaty! Treasury will call it a Competent Authority Agreement (CA) and Congress will be told to mind it own business, as no input desired or needed. 🙂
Great idea indeed.