Is U.S. Treasury Secretary Nominee A Real Tax Cheat?

Hmmm. Donald Trump’s nominee for Treasury Secretary failed to disclose $100 million in assets and “forgot” to mention his corporation in the Cayman Islands.

Don’t worry. Steven Mnuchin assured U.S. Senate it was all “a simple mistake made amid a mountain of bureaucracy.” His “oversight..was unintentionsal.”

Mr. Mnuchin says

Filling out these forms is quite complicated.

He insisted he does pay all his taxes. I wonder if he shares the view of Trump that a billionaire not paying taxes “makes (him) smart.”

I suspect Mr. Mnuchin doesn’t like FATCA very much–if he even knows what it is. He does want to make things simpler.

“I would support changing the tax laws to make sure they are simpler and more effective.”

So dare we hope he would actually bring forward the Republican resolutions to repeal FATCA and move to residence-based taxation?

25 thoughts on “Is U.S. Treasury Secretary Nominee A Real Tax Cheat?

  1. George III

    Lynn is the Committee (either Steve or You) going to contact the Canadian government regarding Trump renegotiation of NAFTA?
    He get more more manufacturing jobs in USA in lieu of dropping FATCA against Canada. It is imperative to make the approach as soon as possible.

    As I said before Trump can even get this approved through budget reconciliation because increase manufacturing jobs will exceed the amount of money he can collect from US citizens in Canada. He does not need 60 votes in Senate.
    The lawsuit is not a slam dunk because of the impact to rest of Canada if USA imposed sanctions. Even if we win the lawsuit the Canadian government can re pass FATCA IGA with the non withstanding clause. They may not want to do it, but they will do it if they think US sanctions will cause great economic harm to Canada.
    You have gone to court already twice. Were you satisfied with the results?

    In addition I am certain Trump would want to get rid of the regulations on US banks Imposed by FATCA. He has talked about reducing business regulations. He may want to monitor tax heaven countries, but that is not Canada.
    http://www.cnbc.com/2017/01/23/trump-tells-business-leaders-he-wants-to-cut-regulations-by-75-percent-or-maybe-more.html

    Reply
  2. PatCanadian

    @WhiteKat

    “Other governments don’t have a FATCA lawsuit to deal with (yet).”

    We should all be proud of the Canadian lawsuit. Even though it this involves Canadian citizens standing up to FATCA and not the Canadian government. It will indeed be interesting to see how the government deals with this.

    Reply
    1. WhiteKat

      @PatCanadian, re: “We should all be proud of the Canadian lawsuit. Even though it this involves Canadian citizens standing up to FATCA and not the Canadian government. It will indeed be interesting to see how the government deals with this. ”

      Yes, proud in that we all (plaintiffs, witnesses, organizers, supporters, financial donors, etc) have stood up for our rights as Canadians, but not proud of our Canadian government. And, yes, it will be interesting to see how the government deals with this when push comes to shove.

  3. maz57

    To add to the confusion, Trump and his cronies aren’t even singing from the same choir book. Mnuchin states he would like to increase the size of the IRS while Trump himself has gone on record as wanting to shrink the size of government. My guess? Congress will wind up doing pretty much the same as they always do…..not much.

    I agree whole-heartedly; they absolutely can’t be trusted.

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  4. maz57

    Re: Mr. Mnuchin’s comments about increasing the size of the IRS.

    1. The notion that increasing the size of an already cumbersome bureaucracy will somehow increase its productivity which will therefore result in more revenue is laughable.

    2. The Republicans by definition hate taxes and I don’t see enthusiasm for increasing them suddenly taking hold among the now Republican controlled Congress. After all, many of those very same Republicans are the reason the IRS shrank in the last number of years because they got their knickers all in a knot over the politically motivated IRS targeting of Tea Party non-profits. They were on a mission to “starve the beast” and they were more or less successful. What is suddenly different?

    Reply
    1. PatCanadian

      The IRS is a very cumbersome bureaucracy and undoubtedly understaffed. However, with Trump, we are now in uncharted territory.

      I never underestimate the IRS. Perhaps this is because I received a letter from them in 2008 in Canada. At the time I was a permanent resident, although became a Canadian citizen later in 2008. The IRS letter stated that I owed the IRS a six figure sum. And this was before FATCA. It turned out, after consulting a lawyer, that I owed them nothing. Only ended up paying some legal fees. If it had been after FATCA, things may have been disastrous. The stress left a lasting impression. I renounced in 2014.

      My experience leads me to recommend a cautious approach in regard to the US/IRS as I do think that their function is to “make money” for the government. FATCA increases their ability to do this.

  5. PatCanadian

    @WhiteKat

    “Rather than fighting us in the courts, the Canadian government should be on board HELPING Canadians to find a way to rid themselves of US taint without such Canadians having to do back flips (impossible reporting), exposing themselves to privacy risks (revealing all financial details to a foreign country), dealing with the outrageous expense of all that complicated reporting, and paying an outlandishly high renunciation fee. ”

    Totally agree. But when will Canadian and other governments act? The Trump presidency, with accompanying mass protests in the US and worldwide, may widen the wedge between the USA and the rest of the world. US domination will eventually fail. We don’t know when or the exact mechanism but the downfall is likely. In the meantime let’s hope Canada and other nations learn to stand up to the US FATCA attack on their sovereignty.

    George III makes a good point for being on our guard in the meantime:

    “Trump’s pick for Treasury Secretary Steven Mnuchin says he will INCREASE the size of the IRS to help ‘make money’ for the government.”

    Trump and his cronies are not likely to consciously assist our cause.

    Reply
    1. George III

      Trump may want to get rid of FATCA for the following reason
      1) It is waste of US banker money The US banker lawsuit is a backdoor way of killing FATCA
      2) if Canadian government agree to increase US imports, Trudeau demand he drop FATCA. These may be done through budget reconciliation no need for 60 Senate votes. The increase in USA exports to Canada will lead to greater government revenue than they will get from FATCA thus it can pass through budget reconciliation.

    2. George III

      Canadian has massive trade surpluses with USA. We are dependent on them.
      Trudeau is not going to stop doing business with them for FATCA.
      “According to a statement from Trudeau, the leaders “reiterated the importance of the Canada-United States bilateral relationship, and discussed various areas of mutual interest.”
      https://www.yahoo.com/news/trudeau-trump-discuss-trade-white-house-vows-nafta-233904869.html
      Do you think Trudeau is going to stop doing business because some Canadian are getting nasty letter from IRS. The IRS can only collect for USA based income from USA only citizens at time tax occurred. During FATCA hearing The Conservative committed to this.
      I have commented last week we should be contacting the Canadian government that in exchange for increase import to Canada demand that USA end Canadian requirement for FATCA. Trump will make that deal
      Lynn as I said before can you or Steve see about contacting the Canadian government?

    3. WhiteKat

      @PatCanadian re: “But when will Canadian and other governments act? ”

      Other governments don’t have a FATCA lawsuit to deal with (yet). With a federal court date imminent, the Canadian government can only push the can down the road so long (though could still take years). The outcome of this lawsuit is going to affect the entire country, not just the 3 plaintiffs, so you’d think the Canadian government would be working on some sort of game plan to deal with the fallout, such as a diplomatic solution. For example, if Canadians with US person status were given a relatively easy way to ditch US personhood, a lot of teeth would be knocked out of the plaintiffs’ arguments.

  6. George III

    The discussion came the day after the Trump team swiftly updated the White House website to reflect commitment to “renegotiating NAFTA,” the free trade agreement that has linked Canada, the United States and Mexico since 1994.
    https://www.yahoo.com/news/trudeau-trump-discuss-trade-white-house-vows-nafta-233904869.html

    As I posted before Lynn or Steve please contact Canadian Government so that in lieu of increasing US imports they eliminate Canadian FATCA. obligation

    Reply
  7. PatCanadian

    Yes there are ways to evade US taxes even for us “Canadian dummies”. After all, morally and ethically speaking, none of us owed the US/IRS anything in the first place. Like the “laws” made in Hitler’s Germany, FATCA may be legal but that in no way makes it right. Discrimination against the Jews was of course a far worse scenario. Financial discrimination against Canadian retirees, with US taint, on a pension is a lesser offence but can be financially devastating.

    Reply
  8. Lynne Swanson Post author

    Not paying taxes “makes (Trump and others) smart.

    We all need to do a crash course on Tax Evasion for Dummies.

    Reply
  9. PatCanadian

    I agree with Schubert:

    “Now even more than ever, the US is a train wreck.”

    It is highly unlikely that Trump and his billionaires are going to fix FATCA. Apparently it’s okay for the 1% to be tax cheats. FATCA and FBARS only seem to apply to us ordinary folks. We need to protect ourselves here in Canada. Now not just from FATCA but from anything US.

    Reply
    1. WhiteKat

      @PatCanadian, re: “We need to protect ourselves here in Canada. Now not just from FATCA but from anything US”.

      Agreed.

      At risk of sounding like a broken record, as long as you are a ‘US person’ living in Canada you are vulnerable to US in ways that other Canadians are not. It is FATCA today, but will be something else in future.

      For those Canadians who find the obstacles(i.e. $ and reporting complexity) surrounding renunciation of US citizenship too difficult to surmount, we need to push for support for these Canadians. The Canadian FATCA IGA lawsuit is one such effort, but is limited to protection against the FATCA IGA, offers no guarantee that we won’t be FATCA’d by our banks even if we win, may fail in any event, and could take years to resolve through the court systems.

      We need an amnesty sooner rather than later for Canadians who are happy to give up US citizenship. Rather than fighting us in the courts, the Canadian government should be on board HELPING Canadians to find a way to rid themselves of US taint without such Canadians having to do back flips (impossible reporting), exposing themselves to privacy risks (revealing all financial details to a foreign country), dealing with the outrageous expense of all that complicated reporting, and paying an outlandishly high renunciation fee.

      A simple form and one-time processing fee is all it should take. “Dear USA. I’ve been gone X (put your number here) years and ain’t coming back. Here is 200 bucks for the processing fee. Now please be a nice neighbour and give me my CLN.”

  10. maz57

    This story sounds like a cheap re-run of the Timothy Geithner story back at the beginning of Obama’s first reign. Democrat or Republican, it doesn’t matter…..they’re all Goldman Sachs types who think taxes are for the little people. (At the time Geithner also referred to his tax deficiencies as “unintentional” and got a pass from both Congress and the IRS.)

    Expecting or hoping these guys will give a damn about expat tax problems is an exercise in futility. The Trump government might repeal FATCA but not because they are concerned about the injustice of it all. If it is repealed, it’ll simply be because Obama and the Dems passed it and the new guys want to take a wrecking ball to everything Obama. As for real tax reform, that will never happen because too many sacred cows would get gored in the process.

    Call me cynical, but this has been going on far too long to for me to believe that moving a new liar-in-chief into the White House is going to make any difference at all.

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  11. Tim

    My main hope is that in Canada at least a lot of the “deference” given to the US on policies such as FATCA over the course of the Obama years is now gone for good.

    Reply
  12. JC Double Taxed

    Did Mnuchin not declare offshore assets to FINCEN and IRS? If not then should be FBARed and FATCAed with confiscation of those accounts (all right not confiscation of the whole account just a significant chunk). And it sounds like that Cayman Islands corporation is a PFIC – does he have any personal money in this? Does he have signing authority on accounts and have reported this to FINCEN? These are the questions that the Senate should have asked.

    Otherwise, generally, I am not opposed to him. He obviously knows something about money, and this is better than someone from a political background.

    The relatively wealthy Australian PM Malcolm Turnbull has declared most of his wealth in investment accounts in the Cayman Islands. He did this to be above conflict of interest of owning shares in Australian companies becoming a political leader. Of course as he is not a U.S. person then no FBAR, FATCA, PFIC to deal with.

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  13. Schubert

    I find it impossible to believe that a government of billionaires, by billionaires, and for billionaires is going to do anything a) to close or eliminate tax loopholes and outrages like FATCA, or b) to improve the economic well-being of any American anywhere who isn’t in their income class of well less than 1%.

    And, so Mnuchin says it’s OK that he helped his clients shelter or hide income from taxation in Cayman Islands because he didn’t do this for himself. And the Senate Republicans are buying into that? Don’t hold your breath for the Republicans to be any better on any of these issues than were Shumer and the Democrats.

    People who voted for Trump in the belief that he is going to “fix” economic problems were sold a bill of snake oil. My only comfort is their outrage will (I hope) no doubt be intense when they finally realize this, but at what damage to income disparity not to mention the environment, democracy, race relations, respect for all genders, a free independent and investigating press, what passes these days for world peace …

    Now even more than ever, the US is a train wreck. Let’s do our utmost to keep the wreckage out of Canada and to minimize the damage on our side of the border, as best we can.

    Reply
    1. Schubert

      … and a rich man like Mnuchin finds the tax forms too complicated to fill out correctly? Really? As if he actually fills out his own forms and can’t afford and doesn’t pay people who do comprehend the forms to fill them out for him. And no one on the Senate committee thought to question him or call him out on this point (as far as I know anyway)?

      Yep. Train wreck, all around.

    2. Lynne Swanson Post author

      Yep.  The same Reoublicans who slammed Jack Lew at his confirmation hearings for having $56,000 in the Cayman Islands now thinks it’s just fine and dandy for Mnuchin to manage millions in the Caymans.  Hypocrisy on steroids.

      The only good thing about these billionaires evading taxes is they likely don’t want to be outed by FATCA.  So there may be a glimmer of hope that the Republicans will repeal FATCA.

      Plus, they know it would be one more thing to royally tick off Obama, Clinton, Schumer, et. al.  So maybe, just maybe…

    3. Patricia Moon

      Not defending Mnuchin by any means but the forms he was referring to were not filing tax and information reporting forms but disclosure forms required due to his nomination for a cabinet position.

  14. nobledreamer-Tricia

    In a hearing marked by sharp exchanges, Mr. Mnuchin struggled to answer questions about his use of tax havens as a hedge fund manager and whether he thought such loopholes should be closed.

    Senator Debbie Stabenow, Democrat of Michigan, pointedly asked Mr. Mnuchin if he was using Cayman Islands corporations to avoid taxation. He responded that he was working on behalf of his clients, in accordance with the law.
    “Let me just be clear again: I did not use a Cayman Islands entity in any way to avoid paying taxes for myself,” Mr. Mnuchin said. “I would love to work with the I.R.S. to close these tax issues that make no sense.”

    He added: “I would support changing the tax laws to make sure they are simpler and more effective.”

    Republicans came to Mr. Mnuchin’s defense, suggesting that none of his omissions were willful, and they gave strong indications that they would vote for him.

    Nevermind on top of all that he is the #ForeclosureKing, totally devoid of any empathy whatsoever. An elderly woman losing her home over $0.27…..

    Reply

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