June 26, 1963 – America Supports Freedom
President John F. Kennedy Visits Berlin
“Freedom has many difficulties and democracy is not perfect, but we have never had to a wall up to to keep our people in and prevent them from leaving.”
President John F. Kennedy – June 26, 1963 – The Berlin Wall
Twenty four years later, on June 12, 1987, another U.S. president Ronald Reagan implored the Soviets to “Tear down this wall!”
In August of 2011 the U.S. government came perilously close to defaulting on its debt. For the first time ever, its credit rating was lowered. The simple fact is that many Americans want to get some of their capital out of the United States.
“As a result, the U.S. Department of the Treasury is now experiencing a flight of capital. With three foreign currencies (the Swiss Franc, the Australian Dollar and the Canadian Dollar) and gold appreciating, the risk of a flight to a hard currency is taken seriously. Just as serious, is the flight of the entrepreneur and the wealthy.
England discovered that exchange controls prevent the highly educated and the entrepreneur from leaving the Country. They cannot leave without money. In the 1970’s, England kept a 90% tax rate because knew the wealthy could not leave. Parents and their children were confined to the U.K.
During last month’s crisis, new laws were enacted. Starting 2014, all foreign banks, brokers, investment funds and insurance companies are required to report to the Department of the Treasury. They must report financial accounts owned by Americans and the foreign entities with American owners.
If a foreign financial institution does not report, then the IRS will take thirty percent of both payment of principal and/or income earned by the foreign financial institutions and their clients. In addition, the foreign financial institutions must have a new IRS reporting computer system in place within twenty-four months.
Consider the following:
“It’s come to this: The IRS considers Canada a tax haven.
Yes, Canada — with a combined federal and provincial tax rate higher than the United States. “People do not flock to Canada to avoid paying taxes,” says the nation’s finance minister Jim Flaherty, belaboring the obvious.
“Many Canadians, however,” Flaherty goes on, “have become concerned about the impact of a proposed piece of American tax legislation — the Foreign Account Tax Compliance Act, or FATCA.”
Allow us to correct the minister. This is not “proposed.” This is the law now… and while Canadians are concerned, it’s Americans who are the targets.
Indeed, FATCA is an essential brick in the “virtual Berlin Wall” that aims to keep Americans and their money trapped within the U.S. dollar and U.S. banks.”
Clearly FATCA will have the effects of:
1. Making it harder to leave the United States (you need your money and there is no constitutional right to leave the U.S.);
2. Making it much harder to get your money out of the U.S.
FATCA is illegitimate legislation. It “hitched a ride” into law as part of the HIRE Act. It virtually certain that virtually no congressmen and women even knew what they were signing. Prediction: FATCA will result in the end of the United States as a world leader. The U.S. clearly thinks that access to the U.S. is essential foreign banks. I think not!
Expats should find solace in the fact that they and their money are already gone.