FATCA a stage too far

23 Oct

It is easy to see why for some expats FATCA may be the straw that breaks the camel’s back as the U.S. is the only developed nation in the world which taxes its citizens on income they earn abroad.

Many international observers believe that FATCA is a step too far.Some foreign governments and foreign financial institutions have hinted that they are not prepared to do the work of, or act as ‘de facto’ agents for, the Internal Revenue Service for many reasons.

The fact that a growing number of the six million US citizens who happen to live overseas are being refused bank accounts outside America, or that they are being turned away from jobs as that will mean opening up firms’ accounts to US bureaucrats, or because it could very well discourage foreign companies from doing business with American ones, is clear evidence that this legislation has serious, unintended negative consequences.

It is easy to see why for some expats FATCA may be the straw that breaks the camel’s back as the U.S. is the only developed nation in the world which taxes its citizens on income they earn abroad.

FATCA is overly complicated and far too onerous for both the individual and the foreign financial institution. A simpler and fairer tax system for US expats is required as these people are, to all intents and purposes, global ambassadors for America.  With a staggering 95 per cent of the world’s consumers living outside America, expats play a vital role for the US economy, especially when it comes to promoting the exports of goods and services.

As a company deVere can help Americans plan their finances but do you think the US government have gone too far? Put your comments below.

UPDATE: It’s interesting to see the American press pick up on this major issue.

http://www.theblaze.com/stories/heres-a-major-issue-that-shouldve-been-addressed-during-the-foreign-policy-debate/

I’m also interesting in people’s comments.

 

4 Comments

  1. “A stage too far” is a declarative, and not a question for a reason. It is the understatement of the century…

    Thanks for your thoughts and contributions on this subject. I trust you have seen the recent WSJ story here; “Wary Swiss Banks Shun Yanks” http://on.wsj.com/PNOoxY

    At 500 plus comments, you can see a new divide is opening up between Homelanders and Americans abroad. Call it, the FATCA fracturing. How does one simple good intention to stop homeland offshore evasion get so distorted to this monster that it has become? Who are these FATCANATICS that are so determined to create a global GATCA, that they are willing to cause so much collateral damage to do it. This FATCA drone strike left the precise missiles on the tarmac, and loaded up with carpet bombs instead.

    One small correction to your statement: “the U.S. is the only developed nation in the world which taxes its citizens on income they earn abroad.”

    It should read: “the U.S. is the only developed nation in the world which taxes its citizens on income they earn while resident in another country abroad.”

    Other countries do tax foreign income, but only if that person is “tax resident” within their borders. Once they move, they let go of the claim outside their borders. Only the USA, extends a long arm to asset taxation rights (plus FBAR and FATCA penalties) no matter where you are residing in the universe.

  2. United States of Arrogance thinks it has the right to determine laws of other countries.

    I became a Canadian citizen 40 years ago. At the time, US Consulate was very clear, direct and firm. I was “permanently and irrevocably” relinquishing US citizen. IRS didn’t care about me then. I was young and didn’t have any money.

    Four decades later as I am semi-retired, IRS wants to reclaim me. US is now claiming I am still a US citizen because I had the misfortune to be born in US. IRS and Congress are demanding my Canadian bank, (where I have been a customer for 32 years) and my credit union (where I have been a member for 14 years) report all of my savings, assets and transactions to a foreign government (US). This is despite the fact my assets were entirely earned, saved, invested and taxed in Canada. If I refuse to tell my bank where I was born or refuse to give consent for release of information to IRS, it is expected my financial institution will close my accounts.

    This is a clear violation of Canadian banking, equality, privacy and constitutional laws. Is this going too far? You think?!?

    Lawsuits await on this. in the past, Supreme Court of Canada ruled on other IRS attempts to gain jurisdiction in Canada. The court said under no circumstances will a foreign government’s revenue laws be directly or indirectly enforced in Canada.

    IRS bullies need to focus their attention on people like Mitt Romney and leave honest law-abiding people alone–especially those who are citizens of other countries.

  3. Last night during the debates it was claimed by one of the aspirants to the U.S. throne that the U.S. is “indispensable”. Well to tell you the truth I have come to see that in many, many ways the U.S. is actually at the root of many world ills. On a per capita basis the U.S. consumes too many of the world’s resources and the price for that is paid by everyone else in the form of world instability. Of all the colonial and imperialistic world regimes that have ever been the Unitied State is probably the worst.
    FATCA is an imperialistic intrusion of U.S. tax law and Congressional incompetence into the world financial system with U.S. persons living abroad serving as the rational for this imperialistic over reach.
    The nations of the world should not let the U.S. bully them into accepting an illegal encroachment of U.S. law that will violate their soveereignty. If the U.S. wants to exploit its role as the world’s financial clearing house then the U.S. should no longer serve in that capacity. If the U.S. won’t allow the Iranians to close the Straits of Hormuz, because of the oil that flows through it then why should the world allow the U.S. to close its financial centers to economic activity?
    FATCA is just a worldwide fishing expedition and we all know that fishing expeditions are outlawed under all international tax treaties. U.S. citizenship based taxation must be outlawed as a violation of human rights because it denies to U.S. citizens their right to freedom of movement. If a person is still subject to the laws of the land which he/she left behind then that person cannot be said to really have left. Just imagine what would happen if a U.S. person was required to abide by U.S. driving laws no matter where in the world he/she lived.

  4. US persons living abroad are second class citizens of the countries they live in. Because of citizenship based taxation, a USP will pay the higher of the two tax countries’ rates and get the lesser of the two countries’ deductions. They pay capital gains on fictive gains from the decline of the US dollar. The US government is fully aware of this and continue to ignore the problem, and the trampling of feet out the door. The actions of a nation willing to do this to its people can only be construed as malice.

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