The Foreign Account Tax Compliance Act (#FATCA) is a law requiring all foreign financial institutions (FFI) to provide the United States’ Internal Revenue Service (IRS) with financial account details of any American Persons who has accounts with it. If a FFI does not comply, then it is subject to a 30% withholding tax on all its American transactions.
There are arguments for and against #FATCA, and even though I am fully against it, I will try to present both arguments.
The United States has suffered from tax evasion where its citizens and residents park their nest eggs abroad tax free. FATCA forces other countries to report these monies to the IRS. Estimates of taxes that will be recovered vary from $250 million a year to $792 million per year. The actual amounts received in taxes to date is only about $400 million.
The above includes some of the text of a comment at the Isaac Brock Society. The comment should be read by all Americans abroad.
Excellent post and I couldn’t agree with you more. I wouldn’t take back US citizenship if they offered it along with no tax obligations, a once a year round trip ticket to the US destination of my choice and leaving me alone forever. No, I wouldn’t want it back because any country that was capable of doing what they did to their expat community and continue doing those same things to their expat community, in spite of all of the articles and pleas alerting them to the fallout and with constant alarm bells ringing and do absolutely nothing, is not to be trusted under any circumstance. I too sadly agree that nothing will change regarding moving to RBT and FATCA wont be repealed either, in my opinion. There is too much to be made by picking the pockets of innocent folks living outside of their ever tightening borders, folks who have little to no say in the laws that are being thrust upon them, no representation in Congress and no interest whatsoever in speaking with them from US lawmakers. Like you say, “Is holding on to the nostalgia of one’s origins worth all that?” Absolutely not! To continue to be exploited, extorted, controlled, be under permanent surveillance, financial and otherwise, while living in another sovereign country, where I am and have been a citizen for nearly my entire life, makes the decision not to accept US citizenship, should it ever be offered back a no brainer. I recommend anyone reading this, in a situation of trying to decide what to do and wondering if, just if, things will change for the better, you should seriously consider renouncing, sooner rather than later. Things are not likely to improve and may in fact even get much worse. I felt ten years, or more, younger after renouncing and now live, invest and see life as a much freer and unburdened person. I will never forgive nor forget what Obama’s FATCA and related laws created and how much damage they did in destroying the overseas US community of citizens and deemed persons. It is and still remains an absolute disgrace and a dark spot in history.
We are comparing “Homelander Ted” to “Expat Benedict Arnold”.
Assume that “Homelander Ted” lives and works in the Homeland and purchases in ONLY U.S. dollars. He would not consider using any other currency.
Assume the Expat Benedict Arnold” (having escaped from the Homeland) lives and works in Canada and purchases in ONLY Canadian dollars. He would NOT consider using any other currency.
Assume that each of “Homelander Ted” and “Expat Benedict Arnold” own a home in their respective countries of residence, have employment income, engage in personal finance which includes retirement planning. “Homelander Ted” commits “personal finance” ONLY in the Homeland. “Expat Benedict Arnold” commits “personal finance abroad”.
Assume that “Homelander Ted” and “Expat Benedict Arnold” have financial situations that are comparable in their respective countries of residence.
To be specific both of them:
1. Have a principal residence in that they have owned for more than two years and that was sold on November 30 of the year. Assume further that there was NO capital gain measured in local currency. Assume that the sale included a discharge of an existing mortgage and that interest was paid on the mortgage up to the November 30 sale. Assume further that they each carry a “casualty” insurance policy on the property.
2. Have employment income and have pensions provided under the terms of their respective employment contracts.
3. Have and use mutual funds as a retirement planning vehicle.
4. Have a 401(k) plan in the USA and an RRSP in Canada.
5. Have spouses and must consider whether to use the “married filing separately” or the “married” filing category. “Expat Benedict Arnold” is married to an “alien”.
6. Give their respective spouses a gift of $500,000 on January 1 of the year.
U.S. Tax owing – versus TAX MITIGATION PROVISIONS
Assume further that each of “Homelander Ted” and “Expat Benedict Arnold” each prepare a U.S. tax return. Imagine that the Internal Revenue Code does NOT have (TAX MITIGATION PROVISIONS) either the Foreign Earned Income Exclusion (Internal Revenue Code S. 911) or the Foreign Tax Credits (Internal Revenue Code 901). Imagine further that there is no U.S. Tax Treaty that mitigates tax payable to the USA under these circumstances.
The question is how much tax “Expat Benedict Arnold” would be required to pay the U.S. Government if there were no TAX MITIGATION provisions.
How likely is that without the TAX MITIGATION PROVISIONS that the “Expat Benedict Arnold” would be required to pay HIGHER U.S. taxes than “Homelander Ted”. In other words:
I watched Smerconish last night on CNN. And before you label me a Libtard or a liberal lackey, and yes, I despise Fox News and the alt right, I am quite disgusted with mainstream media’s filtering the real Obama stories. I rarely watch any news on television anymore, and when I do, it’s usually Canadian CBC, CTV, or BNN. I like my news to be about the news. Stations like Fox and CNN should have the word News stricken from their titles.
Anyway, I like Smerconish. He tends to speak his mind, and his mind is very much in line with my own leanings: centrist, questioning all, and searching for the best. I know you righties cannot comprehend these concepts, so please stop reading before your brains explode. Except I am done with left-right bullshit in this post.
At one point he interviewed Mark Wrighton, chancellor of Washington University in…