Imperialistic FATCA is here – and it’s a dark day for U.S. expats and firms operating globally

01 Jul

Today, July 1 2014, is a dark day for the 7 million Americans living overseas and for U.S. firms that operate globally.

Under FATCA, all non-U.S financial institutions are required to report the financial information of American clients who have accounts holding more than $50,000 directly to the IRS.

It is claimed by its proponents that this new tax act is designed to catch tax evaders who illegally shelter money offshore.  This is a noble aim.  But FATCA cannot possibly tackle this important global issue effectively due to its dragnet, untargeted approach.

Instead what it does – because of its plethora of serious unintended adverse consequences – is to brand Americans who choose to live and/or work overseas as financial pariahs.  U.S. expats are now routinely rejected from foreign financial institutions (FFIs), such as banks in their country of residence, because FATCA’s costly and onerous regulations mean Americans are now typically deemed more trouble than they are worth.

Similarly, American businesses working in international markets are now often branded with a leprosy-like status.  Clearly, this can only be detrimental to their global competiveness and could, in turn, hit American jobs and the long-term growth of the U.S. economy – which would then, of course, have far-reaching consequences beyond the U.S.

All this to ‘recover’ an estimated $1bn per year, which is enough to run the federal government for less than two hours.

Thankfully, there are ways qualifying U.S. expats can mitigate FATCA’s adverse effects.  One such solution is for the U.S. taxpayer with assets abroad of more than $50,000 to create a tax-efficient, supplementary overseas pension contract.

There are other important questions to be asked too about the wholly imperialistic nature of FATCA.  Countries and FFIs have been coerced into complying with FATCA’s expensive, burdensome, privacy-infringing, sovereignty-violating regulations by the U.S. – or have to face heavy penalties.  In effect, these countries and FFIs are now working as de facto IRS agents.

Nigel Green deVere Group

Blog written 1st July

20 Comments

  1. Nigel, thank you for writing this piece. It is nice to have you on our side. The IRS has made no effort to advise Americans abroad of their tax responsibilities and it is frustrating to us that they seem to only want to collect the penalties associated with any unpaid tax we might owe. FATCA is indeed a draconian law, I have no idea how countries are skirting their own privacy laws to sign this. This law needs to be repealed or defunded.

  2. FATCA is the illegitimate spawn of America’s peculiar system of citizenship-based taxation, whose only other practitioner is the failed-state dictatorship of Eritrea in Africa – good company.

    Distressingly, apologists for CBT treat it like some esoteric academic theory, the same way supposedly learned men, who should have known better, once opined about eugenics.

    In fact, it’s really very simple: citizenship-based taxation is America’s own Apartheid system. CBT discriminates against a particular group of people on the basis of their place of birth – a characteristic as immutable as the colour of their skin. It labels them, tracks them, intimidates them, criminalizes them and forces them into virtual prisons from which escape is nearly impossible. Worse, the architects of CBT are now co-opting the rest of the world to implement this discriminatory regime for them. It is astonishing and disheartening how quickly and easily this is unfolding.

    Far too many countries, cowed by the 30% withholding stick that the U.S. threatens to beat them with, like the FBAR and OVDP sticks they already beat their CBT victims with, simply refuse to challenge America on fundamental moral grounds and it is wrong.

    The U.S. does not deserve a free pass on CBT and FATCA any more than the old South African government deserved a free pass for its heinous apartheid policies. Yet several ostensibly modern and enlightened nations have rationalized their acquiescence to FATCA by publicly exclaiming that America has the inherent right to tax its citizens in whatever manner it chooses. Well, in a just world it does not, for CBT represents a clear denial of basic human rights and dignity.

    Yes, the global hypocrisy is staggering, especially from countries like Canada. Last year, our Conservative government expelled the consul-general for Eritrea for that regime’s tax extortion efforts against its expats in Canada. Two weeks ago, the same government enthusiastically ushered-in America’s FATCA laws to override our country’s own Charter of rights and freedoms, discriminating on the basis of national origin, gutting federal banking privacy laws and setting the stage for a massive legal challenge which will be fought in our Supreme Court.

    Beneath all the technocratic language about forms, compliance, jurisdictions and enforcement, there is a fundamental truth: these American policies are morally unjust and the world must not condone them any longer. FATCA will be a global disaster unless it is stopped now.

    It is indeed time for the world to say no to the U.S. practice of citizenship-based taxation and to force it to adopt residency-based taxation like the rest of the world. If not, then the world better find a more deserving reserve currency in a hurry – the United States has abused its position of trust for far too long and it needs to be reminded that it is just one nation in a community of nations. The breathtaking audacity of FATCA is simply a bridge too far.

  3. Excellent article, Mr. Green; we need more voices of sanity and foresight such as yours in the national and international media presentations on FATCA to counter all the jolly and blindly determined PR postings from the IRS.

    As well, I concur wholeheartedly with Deckard1138’s articulate comments here. I would add only that there indeed is a group of committed citizens in Canada who are are pursuing a Constitutional Challenge to FATCA and the Canadian IGA.

    Check out the Alliance for the Defence of Canadian Sovereignty (http://www.adcs-adsc.ca/).

    This, of course, will be a lengthy and expensive process; any financial (or other) assistance that can be offered (even from abroad) would be greatly appreciated. If successful in Canada (a known close national ally & the major trading partner of the US, with a US expat population 2nd only to Mexico), bringing this illegal extraterritorial extortion to the courts could provide a profound encouragement and momentum towards efforts to confront this US economic tyranny elsewhere in the world.

Your comment

Your email address will not be published. Required fields are marked *