Republicans, Expatriates and FATCA

fatca wordle

Last week I posted about the possibility of renouncing my American citizenship due to the onerous requirements the US government imposes on expatriate Americans. That post broke the record here at Rachel’s Ruminations: the most “hits” ever.

And, in the process, I’ve learned a lot more about the situation from the many people who responded, reposted, and generally informed me about it.

FATCA

What I didn’t know was how far the FATCA law goes. (FATCA stands for Foreign Account Tax Compliance Act.) It requires foreign banks to report Americans’ private bank balances to the IRS, the US tax authorities. This seems incredibly unfair to me: banks in the US are only required to do so if there’s a reasonable indication that a crime has been committed. All they normally report is interest income or dividends, etc., not balances.

Also, through the FBAR form, we are required to report our account balances as well, presumably so that the IRS can compare the two reports. Again, residents in the US don’t have this requirement.

This implies that we expatriates are assumed to be criminal tax cheats unless we prove ourselves innocent. Sounds a bit backwards, doesn’t it?

And never mind any right to privacy! Not only do I end up revealing my own finances, which are none of the government’s business, but I also end up revealing my husband’s finances. He’s not a US citizen, but if I have signing power on an account, I have to report it.

Republicans and Democrats

But here’s what has surprised me more than anything this week: it’s the Republicans who are fighting FATCA.

If you’ve read this blog before, you know that I’m a Democrat through and through: a “bleeding-heart liberal” even. I’ve always voted for Democrats (and, very occasionally, Independents) in the US, and generally vote Green in Holland. It’s extremely rare that I agree with Republicans on anything! Yet, here I am, siding with them.

Apparently, the Democrats in the House and Senate are the ones who voted FATCA in. The idea, and a great vote-getter, is catching the fat cats who move their money overseas. The problem is: they’re victimizing the small fry like me at the same time. The $10,000 fine for failure to file the FBAR form, for example, won’t matter at all to a multi-millionaire, but for me it would be hugely excessive and unreasonable.

Catching tax cheats

That multi-millionaire they’re trying to catch will have no trouble finding citizenship somewhere else: many countries encourage people with money to move in. Then he could move all his assets and businesses out of the US and renounce his US citizenship. The $2350 fee for renunciation is a night at a chic hotel for him. So the IRS won’t get the tax money it wants from him, and the US will lose the advantages of having his assets and businesses reside there. No one wins.

The rest of us are struggling with trying to comply. The Republicans Overseas are bringing a lawsuit on our behalf. A group of Canadian citizens is suing the Canadian government for signing a FATCA agreement because of the requirement to report private bank accounts. And the number of renunciations is rising steadily as people move their accounts out of the US, fed up with these onerous requirements.

It’s a mistake. If you want to catch overseas tax cheats, find some other way! Don’t punish the rest of the more than seven million expatriates, most of whom just want to live our lives and don’t owe US taxes, or, if we do, we pay them faithfully.

In any case, as I pointed out last week, only two countries impose taxes on worldwide income: the US and Eritrea. Country of residence taxation is the norm, and the US should join the rest of the world. People the US is defining as tax cheats are more than likely paying taxes where they live, as I am, which makes sense, given that taxes are meant to pay for the services we receive from the government.

If any Democratic Senators or Representatives read this: you’ve actually managed to push a dyed-in-the-wool Democrat to the Republican camp on this issue. There are more than seven million expatriates around the world. We are also your constituents, and it’s time to listen to us!

Please feel free to comment below, or to share this post!

My whole US citizenship series:

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Hi, I’m Rachel!

Rachel’s Ruminations is a travel blog focused on independent travel with an emphasis on cultural and historical sites/sights. I also occasionally write about life as an expatriate. I hope you enjoy what I post here; feel free to leave comments! Read more...

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Well done Rachel. Thank you for writing this follow-up on your research into FATCA. Republicans Overseas released a video about FATCA. The sound quality is poor and they muffed the part about form 8938 but their effort is appreciated.
http://www.youtube.com/watch?v=zUism7KaqQ8&feature=youtu.be

Hi Rachel,

Welcome to what I call the American Diaspora Tax War of 2012 – ???

I encounter the same phenomenon as you – whenever I write about FATCA the traffic on my blog just explodes.

This is one that unites American abroad EVERYWHERE, regardless of political affiliation. It’s been a tough fight even getting heard in the “Homeland” (their term, not mine). It’s taken over 3 years (and a lot of people working and writing) just to get their attention and that’s primarily because people are willing to renounce over this. I don’t care if it’s the Repubs leading the US fight. Hell, in Canada it’s the Green Party that’s against FATCA. We have so few friends, that we have to take what we can get. 🙂

Good luck to you and if you’re interested here’s what I’ve written over the past couple of years about it. http://thefranco-americanflophouse.blogspot.fr/p/the-diaspora-tax-war-of-2012.html

In the U.S. this is seen as supported by Dems because it was hidden in Dem legislation but, here in Canada FATCA was opposed by the Liberal party, the NDP, The Green Party and the Canadian Civil Liberties Association. The left in Canada pushed back HARD against this craziness which here appears to be very right wing in it’s dogmatic approach as well as the fact that it violates the laws of Canada. So to me it’s indefensible. Yes, its odd to find yourself on the side you usually are vehemently against but, that’s only once you cross that border and look at it from the view of someone doing anything to prop up a party position right or wrong. Things tend to be viewed that way in the U.S. a lot lately so hard to deal with facts.

Here in Canada you’re still on the left if you vigorously oppose Bill C-31 that shoved an American law over our border with zero regard to the fact that it violates the Charter of Rights and Freedoms as well as our privacy laws. The law suit in Canada says that Harper does not have the right to trump the Charter of Rights with this so called IGA. Btw, no party in Canada wanted this thing as all knew it did violate our laws but, the U.S. knew this so threatened us with sanctions if we didn’t sign. In past times theatening friendly nations with sanctions like this well, it wasn’t viewed very kindly and I dare say most Canadians are not very happy this was done by the U.S.

The U.S. press has been painting this situation as if all these nations are gladly jumping into signing these so called “agreements” It’s not really an agreement if you are threatened into it you know but, it’s certainly not protrayed that way south of the border.

At any rate I share your shock. My entire family going back at least 3 generations are all dems in the U.S. I vote NDP here in Canada or Green. Like you I have a Canadian spouse who objected to having all his banking data going to the U.S. just because he had married me with the assumption that we must be criminals since he shared a local checking account with a “U.S. person” A sharing I might add which was in violation of his rights as a Canadian citizen living in his own country. FATCA is just a bad way to go about doing what the stated goals says it would. Extensive coverage is being given in the U.S. to the fact that the government is scooping up emails and phone calls on everyone, innocent or not. Well, they’re taking our bank account information with zero evidence or even suspicion of wrong doing and with no warrant. Glenn Greenwald is speaking in Ottawa in October. I’m going. I intend to ask him about this FATCA business as I see it as far more open to being used for nefarious purposes than phone calls or emails. BTW U.S. government this week I bought a large carton of eggs, some bread, dog food, and paid my regular bills. FYI since I paid them in Canada where I live and therefore might be “up to something”

The U.S. needs to go to RBT. Too many low and middle income expats simply won’t be able to keep their citizenship and other collateral damages due to FATCA…And you are right, the very wealthy will not be the most impacted.

In 2008 I was called a “medical exile” and in 2010 I was called a tax cheat. Both positions were taken to drum up votes with little care for the people actually living as targets. Enough already. FATCA is NOT the way to do this and it IS harming exapt families who have done nothing wrong at all.

I am agonizing. Exactly 27 years ago that I left a professional career in the US, moved overseas and married a non-American. I became a dependent of my husband while raising a family. Being a Democrat myself, I continued to give support to the Democratic Party and even hosted garden parties for expatriates during Presidential campaigns. I’d voted for Mr. Obama during both Presidential elections and that was a serious mistake. The President and his administration are increasingly blind and deaf. It’s very clear that FATCA is criminalizing American citizens living abroad. In my case, after receiving repeated demands to report our joint bank accounts to the IRS, my angry husband removed my name from the accounts, asserting that all of the money earned was his and he’d already paid taxes. My US passport is a big problem. Two banks in our area have already refused to open an account in my name. Currently I have no bank account, no credit card or debit card. And I can’t drive (following eye injuries in 1975, I became partially blind) How can I continue living in this modern world? My husband’s resentment is hurting me and our marriage is deteriorating. My family in the US had written to a D Congressman on my behalf but the Congressman replied that he had voted for FATCA himself and instructed me to do my tax duty. I’ve concluded that the people who understand the expats’ dilemma are the Republicans, especially Senator Rand Paul, who leads the campaign to repeal FATCA. Members of my family in the US and I are no longer supporting the Democratic Party. All of us are becoming Republicans.

Thank you, Rachel! I will definitely vote for the Republicans at the next presidential election. Voting for the Republicans means joining their camps, and the person would be labeled as a “Republican” by the old political camp. Not all those labeled as “Republicans” endorse the full range of Republican policies or ideology. I’ve disagreed with a number of Republican positions. But I now find myself disagreeing even more with the Democrats.

Hillary will win 2016, if she say she will destroy this stupid law.
If not, any republican candidates will win as this is such a lousy law. Anyone with some oversea business or estate will think twice before marrying an american now.

“Republicans Overseas” are preparing a law suit against FATCA. You may read the the law suit’s outline in their website.

You may also read a good article in “The New American Magazine” published this week, with good arguments against FATCA

So angry, I’ve just written a comment following the article below. It’s about another secret deal between the Democrats and the IRS.
http://www.thenewamerican.com/usnews/politics/item/19429-irs-sued-for-withholding-info-on-shaheen-targeting-conservative-groups

On FATCA Repeal, Americans living abroad are receiving more support, from inside as well as outside.

Inside the United States:
– Senators Rand Paul, Jim DeMint, Mike Lee, Saxby Chambliss (see their Repeal website)
– Congressman Bill Posey
– Members of the RNC. At beginning, there were 6 members. In July the number went up to 16 (see names on their website). More members of RNC will join the Repeal but haven’t signed up yet because they think while President Obama is still in power, he will veto it. Therefore, they are waiting and will include FATCA Repeal in their agenda during the next presidential election in 2016.
– Top US Credit Union group with their own compelling FATCA Repeal proposal.
– Leading tax lawyers calling for FATCA Repeal, including James Jatras, Scott Michel, David Rosebloom, Roy Berg.

Outside the United States:
– Nigel Green, founder and CEO of the world’s largest independent financial advisory organizations, De Vere Group.
– Republicans Overseas.
– American Chambers of Commerce (protecting American businesses overseas).
– Other groups and individuals.

FATCA Repeal efforts in Canada:
– Maple Sandbox (A gathering for people fighting FATCA, FBAR, and US citizenship based taxation).
– Leading institutional law scholar Peter Hogg.
– The current law suit by two Canadian women.
– And other groups.

Currently, they have discussions:

-The Republicans are receiving advice “not to govern” yet. Repealing Obamacare and FATCA before the presidential election may be seen as being too aggressive too soon. It’s very likely that Obama will veto those two proposals and that would weaken the Republicans’ chance of winning the presidential election in 2016. The Republicans are told to concentrate on the big win – taking over the White House. Then repeal.

– There is another option if the Republicans want to repeal early: 1/ to repeal part of Obamacare, and 2/ to repeal part of FATCA. Obama may be willing to give his approval.

The pressure on FATCA Repeal is mounting. The wise men in the US have great fear that FATCA will cause huge damages to the American economy and lead to the destruction of the US dollars as an international currency. I’m back home in Asia and every day I hear people talk about FATCA and the unbearable costs to banks and other financial institutions to comply. Those banks who have paid huge sums of penalty to the US for non-compliance are very angry. Meanwhile, wealthy Asian people with bank accounts in the United States continue moving their money out of the country, which may trigger a financial crisis in the US (given the current large US national debt). In Texas alone, the foreigners have already moved at least half a billion US dollars out of the banks this year. I was in Singapore and Hong Kong in September and noticed that several countries in the region had already begun to use their own currencies and gold taels in trading (to avoid the US ruling in New York). Some global banks and financial institutions are now actively looking for a new currency to replace the US dollars. Killing the US dollars may take a long time, but the US can’t afford such risk.

So, let’s hope the Republicans will choose to repeal FATCA sooner, even just part of it.

Senate Leader McConnell says he will back Rand Paul for President (article by Jack Kenny in TheNewAmerican, November 9)

More than a year ago, Rand Paul had expressed his interest in running in 2016. He is a leading figure in FATCARepeal.

Hi Rachel,

Have you checked out Victoria’s site.

http://thefranco-americanflophouse.blogspot.com/

If this FATCA menace goes on, the biggest losers are the US citizens and eventually USA.

FATCA has been a serious concern in this Asian region. I think more people talk about it here than inside the US. Two of my friends in Hong Kong have already renounced their US citizenship. When I told them the Republicans have a plan to restore US citizenship for American victims of FATCA, my friends replied that they would no longer care.

The President and Ms. Susan Rice just made a brief visit to Singapore during their Asian tour (I only had a bird’s eye view). What he’d signed in Beijing during their three day visit was another shock to my system. The President had said during a press conference after the midterm election that he was going to use his executive power to introduce a series of new laws before January (when the Republicans take control of both Senate and Congress). They are happening.

I am embarrassed that I keep expressing my opinions here. But writing about what I am not supposed to know is risky. Unless I have some great news on FATCA Repeal, it’s better that I shut up, at least for awhile.

Senator Leader McConnell has announced that he will try to reform various types of taxes inside the US before the presidential election in 2016. No mention of FATCA yet.

You may read:
Will FATCA affect 2016 presidential elections?

http://www.artiopartners.com/fatca/republicans-expats-taxes-2016-elections/

We all need to email and call our congressman and senator about this FATCA .

Thanks

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