Fallout from the CBS article on FATCA and U.S. citizenship

16 Feb

At the time of writing this blog there are more than 300 readers’ comments to the CBS article “Record number renouncing American citizenship.”

The report features comments I made last week on official U.S. Treasury Department data that reveals that the number of Americans who revoked their U.S. citizenship reached an all-time high of 3,415 people last year – a jump of 14 per cent from 2013.
Amongst other observations, I was quoted as saying: “It can be reasonably assumed that this trend is in direct response to complying with the onerous, expensive and privacy-infringing FATCA, which finally came into effect on July 1 last year.”

The well-written article portrayed the facts as they stand – and my take on them.

But it was the comments from readers that really caught my eye.  Reading through these comments, three main points struck me.

First was the vitriol of hatred towards Americans who choose to live and/or work outside the U.S.   One wrote: “Well, if they don’t want to be Americans anymore, that’s OK with me.  Just goes to show, though, money is more important than patriotism.”  Another fumed: “Don’t let the door hit their rear on the way out – Just don’t let them use benefits or do business in the USA without stiff penalties.”  Whilst this commentator affirmed: “I fought for my country. This is the best country in the world.  I have been around the world, to nice and not so nice places.  Fu#$ them! I want to be there to take their passport from them! Bye! Bye!”
Are they serious?! Whatever happened to that basic human right – you know the one in the UN charter supported by the U.S – that allows the free movement of persons?  There is throughout the comments the underlying implication that Americans who live overseas because they happen to choose to do so, or because they have been posted for work, are somehow unpatriotic.
In my many years of dealing with expats, and being one myself, I can say with some confidence that moving abroad can have a strange impact on people, making them more patriotic than they ever were when they lived in their countries of origin.

Indeed, typically, expats become quasi-ambassadors for their countries – and if anything, in my experience, this is usually more the case with American expats than with British ones, for example.  Americans are, generally, more proud, more ‘flag-waving’ – and I see this only as a good thing.

Second was the underlying and utterly misguided tone that FATCA itself, its very concept, was somehow patriotic.  I don’t know how this argument can be substantiated when, amongst other things, it violates Americans’ constitutional protections; it puts at risk American jobs and the American economy by putting off foreign investment in the U.S.; and it threatens American firms’ global competitiveness.

Third is the erroneous view that Americans abroad simply don’t want to pay any tax.  That’s not true – they just object to paying in their adopted countries AND in the U.S.

Many of the comments seem to suggest that America’s citizen-based tax system and the double taxation suffered by Americans living abroad is perfectly normal international tax practice. It is not.  Indeed, almost every other national government in the world adopts a residence-based system.  Apart from the U.S. the other notable exception is the dictator-led regime ruling the tiny African nation of Eritrea, which also demands tax from its citizens wherever they choose to live.

To my mind, the tone of the vast majority of these comments underscores the lack of knowledge regarding FATCA and its damaging consequences by Americans.  No wonder one critic, James Jatras, a former U.S. diplomat describes FATCA as “the worst law most Americans have never heard of.”

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