Here is FATCA: A “Simple Premise” Gone Terribly Wrong
This was coauthored by Lynne Swanson (aka Blaze) in London, Canada and Victoria Ferauge (aka Victoria) in Versailles France and was published today in The Hill Congress blog.
In the article, we ask
President Obama and members of Congress, how did the “simple premise” of “cracking down on illegal tax evasion and closing loopholes” become an attack on financial lives and personal integrity of millions of people living outside United States, their banks and laws and constitutions of their countries of residence?
Is this how “common sense measures” will “restore fairness and balance in the tax code?”
In reporting on how complex, costly and convoluted FATCA has become Victoria and I also ask:
Mr. President and Members of Congress, is this what you intended?
35 thoughts on “FATCA: A Simple Premise Gone Terribly Wrong”
Thanks, Lynne and Victoria, and congratulations for getting this published at TheHill.com, which will get coverage. Excellent work!
Good article, although I don’t think Obama or members of congress or the Senate are bright enough to understand what you are saying. Some basic level of literacy and respect for freedom would be required for that, and anybody who can concoct a monstrosity like FATCA lacks both.
Some people here in Canada disagree with the venom I spew at Obama, saying it’s the “system”. They don’t want the media’s creation (Obama is a media creation) to look bad. They forget that Obama was the one who signed this monstrosity into law, and therefore must accept executive responsibility for it, thereby making him a perfectly legitimate target of our vitriol, the semi-protected status of his race notwithstanding.
Blaze….I don’t want to come across as being unduly critical of the article, but I think the following point should have been driven home:
“The right to life, liberty, and pursuit of happiness does not include the right to pursue those things in an unmolested and unfettered way beyond the borders of the United States. We lack the same rights as those who live within the United States, and are therefore second-class citizens.”
Obama is not the object of my vitriol because of his race. He gets my vitriol because he signed into a law an instrument that makes me a second-class citizen.
I don’t want to be a citizen of a country that makes me second class just because I don’t live there. Under Obama’s watch, record numbers of Americans are expatriating. As the man in charge, he must take take ultimate responsibility.
Blaze….to answer your question about the intentions of the President and Congress, I think they did intend to do what they are doing.
Good bye USA. I am not one of you any more.
Cross-posted, with a couple of edits, from my comment on the Brock site:
Several of us have already shared via private email our congratulations to Lynne (and Victoria, whose private email I don’t have, so I’ll thank her publicly here). As I’ve said in my emails to others, including my friends and family in the US, this excellent and well-reasoned article explains what is so horribly wrong with this arrogant, imperialistic stupidity. I’ve also copied the link, with appropriate comments, to my MP and to Mulcair and Flaherty; I urge other Canadians to call this blog to our politicians’ attention. The IGA isn’t signed yet, and it’s important to get out the message to naturalized Canadian citizens of other-than-US-origin that if the Harper government throws US-born naturalized Canadians under the bus, that would set precedents for them to do the same to naturalized Canadians of any other origin. That’s potentially up to 30% of Canada’s population and voters, if you include their children, and that’s not a demographic that any sane politician is going to want to alienate. This isn’t just about one million US-origin Canadians, this is potentially about many millions-more naturalized Canadians and their families too. Which is why our rights under Section 15 of the Charter of Rights and Freedoms are so important and must be protected. Personally, I’m primarily concerned about educating our Canadian politicians and fellow Canadians about the dangers posed by FATCA and by any caving in by our current or any future Canadian government. I long ago wrote off the US political system as a hopelessly lost cause, but that’s me, and maybe I’m wrong to do that (but I doubt it).
Let’s hope this article makes some sort of difference, though I’m not holding my breath. For decades I’ve thought the US political system is too terminally dysfunctional for American politicians to be able to come to their senses and behave sanely and rationally on this and most other issues, but I’ll be delighted to be proved wrong. Getting this article published in that blog is a huge coup, I think.
Well done, Lynne and Victoria! Past and present US persons outside the US owe you a debt of gratitude. And, whether they know it or not, so too do US persons living inside the US. They’ve been sleep-walking into a situation where their politicians, of both political parties, have eroded their Bill of Rights and the Rule of Law to the point of largely destroying the myths about their country they had drummed into their heads in high school. It’s time they woke up to how irresponsibly their politicians are sacrificing their country’s alleged founding principles and rights, and not just on this issue.
About America’s political malaise, you say you might be wrong?
Trust me. You are not. Any country that would relegate its non-resident citizens to second class status is not worth my time of day.
That sad thing is that we are in imminent danger of becoming second class citizens/residents in Canada too. You make an excellent point about precedence setting. If they can do it to Americans here (whether Canadian citizens or not), then they can do it to others too.
Let’s suppose that a Saudi immigrant comes here, and then openly and publicly apostates from islam. Suppose that the Saudi regime then demands his return to Saudi Arabia to face the death penalty for apostasy. Would Canada throw that person under the bus too?
@Schubert: Was USA ever the country of “founding principles and rights” which was pounded into our heads in school?
I certainly never learned:
Of the first five presidents, four owned slaves. All four of these owned slaves while they were president (including George Washington!)
Of the next five presidents (#6-10), four owned slaves. Only two of them owned slaves while they were president.
Of the next five presidents (#11-15), two owned slaves. Both of these two owned slaves while they were president.
Of the next three presidents (#16-18) two owned slaves. neither of them owned slaves while serving as president.
The last president to own slaves while in office was the twelfth president, Zachary Taylor (1849-1850).
The last president to own slaves at all was the eighteenth president, Ulysses S. Grant (1869-1877).
So twelve of the first 18 presidents owned slaves and eight of them owned slaves while serving as president.
So much for “all men are created equal” of those wonderful founding fathers. Of course, women weren’t even considered in that statement (not much different from the rest of the world at the time).
Fast forward 200 years. What was the reason many of us left? Vietnam, draft, Kent State, etc., etc.
Fast forward another 40-45 years and we’re where we are today.
We need to forget what we were taught. It never existed. It was a myth. And, they accuse the Soviets of propaganda!
I think there’s some hope that, as at least some Americans begin to realize what their government is doing, the US administration and in particular the Democrats are going to be in serious political trouble over this. My sister, a farmer in the US heartland who (unusually for anyone living in that State) voted for Obama both times, said this to me in response to my forwarding of this article:
“FATCA seems to me to be a way for USA to help pay off out debt without our USA sacrifice – make someone else pay. I cannot fathom how anyone can think someone who is working in another country and using their services and paying their taxes must pay another country taxes. … With NSA and FATCA, I wonder if we are even a free country anymore. Scarey.”
Get the message out to your friends and relatives in the US. If nothing else, we can help make the Democrats pay for what they’re doing to us and our families, in the 2014 elections. If my sister thinks this way now, and the message spreads, the Democrats will get screwed next year.
Don’t get mad, get even. Get the word out.
@Blaze and Arctic Grayling. Another thing the US doesn’t teach kids in high school: in researching my family tree, I got from the US Archives years ago a copy of an affidavit sworn by someone with my surname (who I sure hope I’m not descended from; I’ll disown the SOB if I am) to whom Congress awarded a pension in 1805 for his services to the army of Washington during the American rebellion. His services? Tracking down escaped slaves who ran away from their owners (this happened to Washington) to get to British lines because the Brits promised them freedom if they’d join the British in fighting the rebels (a promise the Brits honoured, by giving them British citizenship and transporting some of them to Nova Scotia or other places after it was over). He dragged the slaves he caught back to their former owners, in chains. That was his “war effort.” Not much to be very proud of for a heritage, is it? “What do you do in the war, Grandad?” “Oh, I bravely caught unarmed Black slaves who escaped from old George and dragged them back to him in chains.” The creep was proud of his services.
Any descendant in Canada of United Empire Loyalists, of any race, can tell you horror stories about what happened to those who were in the US colonies but didn’t want to rebel against Britain. Sam Adams and the “Sons of Liberty” could be tried under US anti-terrorism legislation today for what they did to their neighbours. And the lies and propaganda in US history books go on and on …
Terrific!! Great article in high visibility and very credible blog. Will be forwarding it.
Am curious how claim FATCA will generate $800 Billion over ten years was calculated? Even if this dubious claim were true, $80 Billion in annual revenue is a drop in a bucket of red ink. The US is hemorrhaging money. Its Federal government is projected to spend $3.68 trillion in 2013. About $10 Billion per DAY, and about $4 Billion of that is borrowed each and every day.
So at a wildly optimistic guesstimate of $80 B annually, FATCA’s annual revenue burn-rate is 8 days. And that’s not deducting the expense of administration for both the Treasury and US financial institutions.
Many State and municipal are in even worse shape; and FATCA offers nothing but harm and capital flight to states that rely on foreign investment and banking – such as Florida.
I admire your spirit, but I doubt that enough people who live inside the United States really care:
(1) Huge voter fraud in the last election.
Nary a peep about this fraud in the media.
Anybody who can read a map can see how territorially lopsided the election was in Romney’s favour. At least you have family and/or friends to communicate with in the States. Many of us, like me, don’t.
Obama and the Dems don’t care about us. Just look at the electoral map. There is no reason for Obama and the Dems to give a rat’s ass about us. Their voter base is lopsidedly in the inner city and a few air-headed Libs. Much of their voter base is functionally illiterate and doesn’t even know where Canada is. Much of their voter base does not even pay taxes within the United States itself, so we have no realistic reason to hope that they care about us.
Sorry, but I think you are spitting into the wind.
(2) You can be fairly sure Obama’s media pals don’t care. If the media had any morals they would cover this issue, but they don’t. Good grief, there is scarcely even any coverage of this in the Canadian media, so you don’t have to be a genius to see where media on both sides of the border stands on this issue. Anybody who watches any Mainstream Media at all can see that Obama was a media creation. I doubt that the media will make it their business to dismantle their creation.
If the media had any morals there would not have been the media-wide lynching of George Zimmerman.
(3) Most dual nationals in Canada who voted in the States in the last 2 elections voted for Obama. How stupid is that?
(4) Polls show that if most non-American nationals in Canada could vote in the States, most would have voted for Obama, yet not since 1812 has there been an American president who has so egregiously attempted to violate our sovereignty. So Canadians are not any smarter. Our media doesn’t get it either. They fear accusations of racism more than they cherish decency and common sense.
Sorry schubert….I wish I could tell you that I am optimistic about your efforts, but I am not. With few exceptions, you will find yourself preaching to the already converted.
As I just moved away from my computer and looked out the window, I saw one of the most magical sights I have ever seen.
Rain had just stopped. Sky was a bit grey but the trees in the park across the street were shimmering in the sun peeking through and the river was glistening..
Even more magnificent was a vivid double rainbow arching over the park and river. Not one rainbow–two! Perhaps representing Maple Sandbox and Brock working together to make a difference in the dark clouds? Signs of a turning point?
Somewhere Over The Rainbow….
This is unbelievable, but true. I was just outside in downtown Ottawa, right near the Ministry of Finance,and guess what I saw — a double rainbow!
Your article is even more powerful than I thought it was.
@Pacifica: Wow, a double rainbow near Ministry of Finance. A good sign for us or for them?
Bubblebusin’ posted this article at Brock today about a rainbow. A permanent–but very different kind of rainbow. They seem to be all around us.
I’m sure ArcticGrayling is still doubting the significance of the rainbows, but we have to keep working through the dark clouds!
There is at least one thing you have right in your sentiments. The Ministry of Finance is our best realistic hope.
You can be pretty sure that the warlord in the oval office doesn’t care.
I remember the song. I remember Judy Garland singing the song.
But it all turned out to be a dream that occurred in the wake of the tornado struck Kansas.
Well, this isn’t Kansas, but it is still, figuratively a tornado, and it is all too real. This is no dream.
@ArcticGrayling: “Toto, I’ve got a feeling we’re not in Kansas anymore.”
Dorothy and Toto did make it safely home to Kansas, the Cowardly Lion discovered he had courage, the Tin Man had a heart and the scarecrow had a brain.
We are putting our brains, hearts and courage together to find our way home again–but not to Kansas!
Rainbows do happen–I just saw two spectacular ones.
Trouble is, Dorothy never really left Kansas. It was all a dream.
I don’t expect a reasoned approach from a President who got into office to a large extent through voter fraud and a compliant media. I don’t expect a reasoned approach from a President who caters to a constituency that are largely tax consumers rather than tax payers. I don’t expect anything from the media either.
This is the most egregious violation of our sovereignty by the United States since 1812, and the current occupant of the White House is the Commander and Chief of that violation. Almost nobody in a position of electoral or judicial authority on either side of the border is saying anything about it.
Not even US person Elizabeth May has made made, as far as I know, the comparison to 1812.
So the nightmare is real. It’s the hope of anything good that, at this point, seems like a dream. The very fact that our government even parlays with Uncle Sam on this one is reason enough for pessimism.
Just wanted to congratulate you again publically. Good work.
You and Victoria should be very proud!
I love your double rainbow sign! Perhaps it represents the synergistic energy of two good people (you and Victoria) coming together to use their god given writing talents for the betterment of ‘US persons’ throughout the world. I believe your efforts, along with that of many other wise ANTI-fatcanatics, will help to finally put an end to the deadly FATCA storm.
As an aside, a storm is brewing in Ottawa now, as I strain to see the keyboard without lights and listen to the thunder in the background.
I think every ‘US person’ understands your anger and pessimism, and rides a rollercoaser of emotions dealing with FATCA, and all its negative implications – not only a personal level but also for other US persons, other countries, and for the US itself. Congratulations for taking the steps you need to take for yourself. But please don’t give up hope. The fight is not over. FATCA won’t survive – not when we have people like Lynne and Victoria on our side.
@Blaze and Victoria – congratulations and thank you! Wonderful article, and I hope it opens some eyes and hearts. I’m sure there was so much more you could have said, so I think you did a really great job in winnowing down and driving home the point.
I don’t vote in a country where I don’t live……………but……..
I am almost as angry at the majority of “US persons” in Canada who cast absentee ballots for Obama’s “hope and change” malarkey. That clown signed FATCA into law in 2010, presided over an Administration that came steam rolling in Canada in 2011 with all the FBAR blackmail, and yet the majority of these people voted for him again in 2012.
They are sheeple. They voted for a president who is riding roughshod over our sovereignty and the sovereignty of many other countries too. The American media are his biggest cheerleaders, the Canadian media is silently compliant, and even the Nobel Committee even gave that monster a Nobel Peace Prize, which Committee also seems to have forgotten about FATCA and that more American troops died in the first 4 years of his Presidency than died in the entire 8 years of George Bush.
Granted, Obama got the Nobel Prize before FATCA, but they should have the integrity to rescind it. Good grief, they even gave Al Gore a Nobel Prize for science fiction.
Obama plays the race card, and the sheeple comply. Even most non-Americans in Canada would vote for that criminal too. The sheeple fear accusations of racism more than they cherish decency and common sense.
So I think it is pointless to appeal to the American body politic. Our only hope is in our own lawmakers. Remember, Obama’s constituency within the United States, in lopsided numbers, consists of voters who are net recipients of government largesse, so I think you can bet you last dollar that Obama doesn’t give a rat’s ass about us. We are nothing more than another bank for that criminal to rob. He knows, from the results of the last 2 elections, that he already has the sheeple on this side of the border in his pocket anyway. His media hallelujah chorus saw to it.
Furthermore, my locale in Canada has me come face to face with many Americans travelling through this country. When I tell them that I am renouncing American citizenship because I want to live in freedom, they are incredulous. When I patiently explain why, they are even more incredulous. Their ignorance is only matched by their arrogance.
So as much as I admire the spirit of somebody like schubert, I think the reality is very different from what he wants it to be. I doubt that schubert’s contacts consist of Obama’s inner city voters. I don’t think Oprah would give him the time of day either. Our government in Canada is our only hope. They have to have the balls to call that monster’s bluff.
@ArticGrayling, the voter fraud went on the in the 2008 primary too. Two thousand reports were filed in Texas alone and a law suit was filed. I saw it myself when voters were literally locked out of caucuses, sign in sheets were manipulated and in some cases voters signed on to the sheets multiple times who did not even live in the district and on and on. A film about it was made called “We Will Not Be Silenced” yet not a peep while all this was going on. I won’t even get into what I saw going on at the convention which I did attend. It was disgraceful. And that’s when I first got a glimpse of the farce U.S. elections had become. I gave up on caring about their set up when I had a phone call with none other than Howard Dean who admitted to me “Some voters were left out of the process” It took me three months to get him on the phone but, I did it and they KNEW what they were doing. What a SCAM. Both their so called political parties are corrupt to the core.
The article was stellar and I’m so glad both of you were able to get it published in “The Hill” I just glimpsed the conversation at DU today. They are SO ill informed! And then there’s the fact that they feel “exceptional” so no amount of facts will seep through. CBT is right to them because well….it just is, Go U.S.A. and they are blind to how backward this is and how contrary it is to everything else they profess to believe.
I believe FATCA will die but, not before many are harmed by it. Later on we’ll be trotted out and examples of how bad it really is by the very people now saying it’s a wonderful thing to catch us “tax cheats” by then it will be too late for many. By then they’ll “understand” it all finally.
I honestly don’t understand a single thing about the U.S. government or either side of their arguments. The right is off the hook and the so called left just bends their “ideals” whenever it suits them just like what I witnessed in the primary and just like those who are against the NSA spying are championing FATCA. It’s all okay as long as it isn’t happening to them. I’m starting to become extremely disgusted by most home land “U.S. persons” The most MYOPIC ill informed yet so self congratulatory people on the planet. A mere seven years ago I had a very different opinion of most home landers. I hope the U.S.A. goes to RBT and does it soon or else provides us with an easy way to become an ex citizen.
yes…both parties are corrupt, but I think the Dems, going back to John Kennedy and Lyndon Johnson in 1960, are worse.
I also think more people, including the media, have to get their minds around and overcome the idea of being reticent about directing vitriol at Obama. I notice that some still fear being accused of being “racist”. They say it’s the “system”.
They are partly right, but Obama nevertheless sought the office of President, so he has to take all the baggage that comes with the job. He signed FATCA into law, and it doesn’t really matter whether he understood its implications at the time of not (I think he’s a tyrant by nature and understood very well what it meant). He is still responsible. As the man in charge, as the man with final signing authority on legislation, he is responsible.
As the head of state of a country that is violating the sovereignty of Canada and many other countries, he is responsible.
As the man who is presiding over an Administration that borrows or prints 4 of every $10 its spends, he is responsible.
As the man who had Black Panthers chasing opposition party invigilators from voting booths, he is responsible.
I will not treat with respect a Head of State whose country is violating the sovereignty of my country. I don’t care what colour he is.
Wow it’s been a really interesting week. Thanks to everyone who commented and sent notes and passed the link along. The article is getting around….
This one just hit my mailbox this morning. It’s a blog post from Greg in Thailand (and I really recommend his blog) called Is FATCA Doomed?
I wonder what the King of Thailand is going to do about FATCA. He was born in the United States too.
Do you think warlord Obama will send the Navy Seals after him if he doesn’t comply? If the IRS exempts the King and not us, we could bring a discrimination charge against the IRS.
A wonderful article. Keep em coming!
Yes…..the articles are good, but I won’t feel good until somebody pressures those clowns in Washington to back off. Our only hope is that our government will stand its ground. Maybe if Canada takes some leadership, others will follow. Maybe some who have signed will change their minds too.
The articles from all the sources (not just Blaze’s article), actually, are well written and well thought out. But I don’t expect any more wisdom from the Washington class than I would from an ordinary street punk. When a street punk is trying to mug you and gunpoint, which Warlord Obama is basically doing, they generally are not too receptive to calm and articulate reason. They generally don’t have a very clear idea of what it takes to create sustainable wealth.
Obama only knows how to feed at the tax trough. With his Administration borrowing or printing 4 out of every 10 dollars it spends, he really has no clue on what it takes to keep the trough full.
I liked that article from the fellow in Thailand. He makes a point about all the illegals from Mexico who are banking in the States. Has Mexico demanded that American banks give reciprocity for all the Mexicans in the States. Are they going to report to the Mexican government? American banks obviously would not like the idea.
Has Mexico asked them? Does anybody know?
Honestly, the ignorance, arrogance, and self-centred view of the Americans amazes me more each day. They are the only country on earth (of any consequence) that taxes on the basis of citizenship. Their heads are stuck up their asses. They need a good laxative.
Their body politic is made up of people who for the most part have never had a private sector job in their lives. They have no idea what it’s like to be responsible to shareholders for a bottom line. Warlord Obama is certainly among them. I don’t think he’s ever done anything of any consequence in the private sector.
Mark Steyn writes about the mindset of the American Public Class in his book “After America”. I recommend it as good reading.
@articgrayling, you won’t get any argument from me about Obama. I wasn’t fooled by him and perhaps disliked him early on for different reasons. Among them my lunch with a certain Alice Palmer who filled me in on his “actions” on the south side. She got him into politics there and she and her husband for over thirty years were the REAL “community organizers” there and are well known. In return for her help, he ruined her career and then took credit for being the true “community organizer” which was NOT his work. That told me all I needed to know very early on. All of this was ignored by his cheerleaders in my former party. *washes hands* I’m just DONE with them.
They have the same view with FATCA, they cheerlead it on one hand all while saying they are against being spied on without a warrant by the NSA. All while feeling the U.S. is going way too far collecting THEIR data and being totally full of it by buying propaganda on FATCA while really knowing nothing about it at all. Done, done and done.
My efforts are trying to get the Canadian government to say “NO!” and then to further not allow our banks to go along with FATCA without a fight here. The Americans are lost. Both sides are an echo chamber of hubris and misinformation there. The fight has become about fighting and not about facts even in the most enlightened circles.
FATCA though is so poorly thought out and so poorly written that it might just crash under its own stupidity. Like you, I’ve been turned into someone who feels that the U.S. can take its little blue passport and stick it where the sun doesn’t shine. Make a law that ma harms me… I won’t like it but, do the same to my non American family and I’m done.
May this article be the first in a long line. Cheers *raises glass* to both Lynne and Victoria.
This article does not specifically mention the Simple Premise article. It did, however, take some of the information from our article.
In fact, the Simple Premise article may be what awakened the author to the “ridiculousness” of FATCA. It seems she has just become aware of the “US person” rule
She reports, as did we, that the King of Thailand, Mayor of London England and Premier of New Brunswick are all “US persons”
She also lists several of the facts included in our article.
I agree with most of what she wrote. However, these statements give me grave cause for concern: “Before all the FATCA nonsense takes full hold in 2015, think about researching some safe-havens. Look at globalizing your assets in various stores of wealth.”
That is exactly what got us into this mess. We have been caught up in the mess of residents in US who are trying to evade taxes. We are not doing that. We pay taxes where we live, work, and earn an income. I have posted a comment on her blog. It is awaiting moderation.
I think the Public Class in the United States could use a little competition from “tax havens”. I suggest you read Mark Steyn’s book “After America”.
On average, Public Sector remuneration in the United States is significantly higher than in the private sector. Not only that, they get pensions that most private sector workers can only dream about.
@ArcticGreyling: There are those who believe what FATCA is really about is putting all the other tax havens out of business so they have the field all to themselves.
Even with that, I don’t think most of us support the idea of tax havens anywhere where people stash money to avoid paying taxes.
I absolutely do NOT support tax havens. This is where we get our message messed up by Americans who think FATCA is about tax havens. Maybe it started out that way but, it has morphed into what it is now. Remember when Canada asked for an exemption because “we’re not a tax haven”
The U.S. is using FATCA to collect enormous amounts of banking data all over the world. It’s doing this in high tax countries on individuals who never would owe a dime to the U.S. That wasn’t a mistake. It was a feature. That’s why they wouldn’t exempt high tax countries. It’s an opportunity for the U.S. to monitor and control persons and banking all over the world. As evidenced by Carl Levin’s remarks some of FATCA is indeed NOT about taxes.
I fully agree that large corporations should have been paying taxes. Such as G.E. who got a refund when they should have paid in. This is not about that. Too bad many inside the U.S. don’t know it. The U.S. government thinks no one inside the U.S. will listen to us and their press usually still keeps pushing their “tax haven” message/propaganda.
Then basically you are advocating unlimited power to the Public Class. They are helping themselves to a disproportionate portion of the pie. It’s bad enough here. It’s worse in the States.
Actually, in Canada, we do have access to tax havens. All we have to do is leave, which Canadians are free to do, and which any of us in here will be free to do once we have the CLN. To that extent, Canada’s public class does face competition from tax havens, and that is not, in my judgement, a bad thing. Competition is a good thing. Governments should face competition too. As a practical matter, most of us stay here.
The fact that most Canadians choose to stay and pay taxes here is testimony to the quality of life our country offers. To be sure, people like the Irving family took their personal wealth elsewhere, but the businesses they left behind pay taxes here. Also, for them to remit from their Canadian holdings to their accounts in Bermuda, they must pay a withholding tax. It’s only what they manage to invest from Bermuda that is sheltered from tax. As a practical matter, even that is limited, because most of their investments would be in jurisdictions where withholding taxes would be paid on their income.
So I think the “tax effect” of tax havens is overblown.
The real benefit of offshore havens is legal protection against non-tax related legal judgements. In a highly litigious environment like the States, many high-earning professionals will protect their money from judgements resulting from frivolous law suits. Frivolous law suits abound in the United States. It’s not nearly as bad here.
For those who may not know what AtticusinCanada is referring to when she mentions Carl Levin’s remarks, here is a letter he wrote in January, 2012.
This was posted at Brock just after Simple Premise appeared in The Hill. It gives us a clue as to how FATCA morphed from a “simple premise” to the nightmare we have been living. (Arcticgreyling, if your anger “was getting the better” of you before, I suspect this will make you ballistic)
On the first page, Senator Levin (who Obama lauded for his efforts on FATCA) says:
“These comments seek to encourage the development of guidance that will assist foreign financial institutions in meeting their legal obli-gations, while facilitating law enforcement’s use of foreign account information to combat tax evasion, money laundering, and other misconduct.”
“This letter also urges treating FATCA off-shore account information as non-tax return information to ensure its accessibility to law enforcement and national security communities combating crimes other than tax evasion.”
After several pages of very concerning suggestions for FATCA, on the last page, Levin writes:
“Although FATCA is structured to address offshore tax abuse, offshore account information has sig-nificance far beyond the tax context, affecting cases involving money laundering, drug trafficking, terrorist financing, acts of corruption, financial fraud, and many other legal violations and crimes. Given the importance of offshore account disclosures, FATCA guidance and implementing rule should create account FATCA forms that are not designated as tax return information but, like FBARs, may be provided to law enforcement, regulatory, and national security communities upon request.”
I e-mailed a copy of this letter to Kevin Shoom and Jim Flaherty.
Steven Mopsick reposted the Simple Premise article on his blog, along with Victoria’s earlier post on citizenship from her Franco-American Flophouse blog.