If we had any question about why Congress and US media do not get the problems with FATCA, here it is.
In a bizarre Fox News Business interview, the conclusion is made that all the good Senators are dead.
We learn that the Senate is “full of millionaires with nothing else to do with their money.” I wonder if they FATCA their offshore accounts.
Here’s what the panel had to say about some of the Senators:
Max Baucus is “a big cowboy.” (that was the only compliment!)
Eric Cantor is a “little weasel.”
Harry Reid is a “thieving skunk.”
Chuck Schumer is “dreadful, embarrassing.”
The interview veered off into some really weird on-air discussions of the personal lives of the panel members.
And, we want these folks to understand something as complex as FATCA?!? We are doomed if we rely on them.
We have to keep the pressure up on our own politicians and media–who look fabulous in comparison!
21 thoughts on “Why Congress Doesn't Get It”
Your friend and mine over at Task Force for Global Integrity and Transparency are back on the subject of the FATCA. You might want to go over and pound them. I will try to post something myself later tonight.
Thanks Tim. I’ll post something. If I recall correctly, Ann Hollingsworth did not respond when I posted on that blog before. Someone else did, extolling the virtues of FATCA and totally overlooking the affects on anyone living outside US.
I did reply to her tweet today, but have not heard back.
I should probably do a disclaimer to my own post.
I do not share the view of the panel member who thinks US Senate is like an “upscale old age home.” I personally think that is a total insult to retirement and nursing homes and the people who live in them!
I just posted this in response to the article mentionning FATCA at Financialtaskforce (next to Blaze’ post):
US persons (whether US nationals or green card holders) living abroad are taxed in their country of residence. Taxes may even be higher in their country of residence but things like the Alternative Minimum Tax, Medicare surcharges, and US self-employment tax may make it impossible to deduct all foreign taxes using foreign tax credit (FTC). Furthermore, there are many countries where income tax is much lower, but other costs are much higher than in the US (example Switzerland, with higher fees for government services, higher cost of living in many countries, and higher VAT on retail purchases as well and very expensive excise tax on fuel).
The Foreign Earned Income Exclusion (FEIE) rules mean that persons who receive retirement benefits, welfare benefits, disability benefits, or unemployment insurance compensation cannot use the $90,000 exclusion for these because they are “unearned income”. Such persons may be in a situation of limited income, where their local country taxes are not that high in recognition of their situation, and hence can be bankrupted by US surcharges on their so called “unearned income”. The situation is further exacerbated by the depreciating value of the dollar in the past few years: forcing persons abroad into ever higher US tax brackets.
Many of the US persons abroad who are not tax compliant with the IRS are so because of lack of knowledge about US extraterritorial citizenship-based tax polices, and/or have been told in the past by local banks and tax authorities that their income in the country is taxable only by that country, and/or they simply do not have the financial or time resources to deal with very complicated tax and asset reporting requirements.
The capital gains taxes on foreign real property are also at issue, especially because they can result in negative effective return on investment whether property is sold at a loss in local currency or not. The diminishing value of the dollar means that US taxes on the sale of property could exceed any profit and even eat away at the initial capital used to purchase the property.
Mandatory and optional pension schemes in other countries lose the locally mandated financial incentives legislated by the local jurisdiction due to US double taxation of contributions and proceeds. A tax deduction in the local country only results in increased US extraterritorial tax burden. This is discriminatory: US persons living abroad have to deal with both the advantages and constraints of the foreign jurisdiction. The double taxation also serves to effectively deplete the treasuries and economies of the foreign country in question. Residents of foreign countries should be free to spend their after tax income in the local country if they wish, not pay part of it in additional taxes to the US, for which the US person receives little or no direct services from the US.
Many US persons abroad hold another nationality, and often the nationality of the country they live in. Many are married to non-US persons with no other direct US-ties who would be adversely affected should the US person spouse become compliant. In many cases divorce has been threatened or sued for, and the US person may be forbidden from compliance due to communal property laws, local bank secrecy, professional secrecy to one’s employer or business partners, or other local issues in the foreign jurisdiction to which the US person is directly subject.
There are even stories on websites such as the Isaac Brock Society and Maplesandbox about US persons abroad who have gone mad and are in psychiatric treatment because of the recent IRS and Treasury crusade that attacks not only rich frauders living in the US, but also normal working and middle class families abroad who are only trying to earn an honest living, raise their children, save for retirement, and fulfill their tax and civic obligations to the countries they live in. Rumours of suicide or attempted suicide are also circulating.
FATCA, while advertised as a method to prevent US residents from exiting capital from the US and hiding the capital and interest abroad, is threatening to make the lives of innocent persons abroad who respect their local tax laws into living hell.
US citizens living abroad are not counted in the decennial census mandated by Article 1 Section 2 of the US Constitution. Thus the House of Representatives is not purportionally constituted to represent their interests (5-7 million US citizens abroad=larger than some states in the US). Many US citizens abroad cannot vote because no county will accept them as a virtal resident for electoral purposes. Many in Congress pay little attention to letters and other contact from US persons abroad, as even those who do manage to be registered voters are diluted over the 50 states and form only very small minorities in each congressional constituency. For this and many other reasons, the authority of Congress to pass such intolerable acts is undermined.
For anyone who is interested in these issues and injustices, please look online for Isaac Brock Society, Maplesandbox, and American Citizens Abroad websites.
Congress doesn’t get it, but Tina Turner sure does:
Here’s an article from the Vancouver Sun:
Best quote: “I think anytime a person, whether they’re world-renowned for the most meek and mile, makes the decision to change their citizenship we need to step back and think — what causes that decision.”
Thanks Wilderness. I had posted this in the Renunciation thread:
Tina’s rep said she was becoming a Swiss citizen to “clarify her situation.”
Maybe Tina just wants to be able to have a bank account.
Jefferson Thomas, you may want to see if you can contact Tina and commiserate with her.
Here is a story just out about a guy who immigrated to the US from the UK, recently became a USC, and the IRS is trying to nail him for 1000% penalties on 2800 worth of interest in undeclared accounts that he had in the UK before and/or inherited from dead relative.
IBS Discussion Thread: http://isaacbrocksociety.ca/2013/01/28/the-perils-of-overseas-tax-disclosure-an-immigrants-story/
Mopsick is quoted in the Reuters article. Interesting as we haven’t heard much from him lately. I just noticed that he posted today a new article on his blog: “Living With FATCA Uncertainty: What Should A Foreign Financial Institution Do Until A Bilateral Agreement Is Signed?” http://mopsicktaxlaw.blogspot.ch/2013/01/living-with-fatca-uncertainty-what.html
***Maybe it is time to go visit Steven?***
By the way, I coined a new term and started using it at IBS as I was tired of typing FATCA, FBAR, Double Taxation. Now my enemy is called simply FATBARDT (FATcafBARDoubleTaxation). FATBARDT is a very obese blue-suited bureaucrat with coke-bottle glasses, who rides a rather over sized skateboard with steam roller rollers for wheels.
I don’t have a sketch of him yet, but I can imagine an Economist artist’s rendition, or perhaps a Scott Adams version.
@Jefferson: Love your image. Any artists out there who can make it come alive? You might also want to try your hand at Johnnb and AnonAnon’s crazy zombie.
The Reuters story is scary, but unfortunately too common.
You have probably seen this story
This is about an American who is packing it in in Switzerland and heading back to US, despite the fact he has been promoting US interests around the world and creating jobs for Americans in US.
He’s going to farm in Vermont instead.
All because he can no longer have a bank account in Switzerland because of FATCA.
The article doesn’t say if his Swiss wife is going with him or if he has Swiss children.
This man proudly insists he is 100% American to his bone marrow. Look what patriotism got him.
@blaze I did a TooDoo rendition of Mr. Fatbardt, but am afraid he doesn’t look evil enough:
Meet Mr. FATBARDT:
“Hi, I’m Mr. FATBARDT (FATcafBARDoubleTaxation) I’m here to double tax you, cause negative returns on your tax-deferred retirment accounts abroad, fine you 3200% on FBAR and close your bank account due to FATCA. I may be smiling, but don’t let it fool you, you’ll soon see Mr. FATBARDT’s special steam-roller”.
TIME: “Mister Taxman: Why Some Americans Working Abroad are Ditching Their Citizenships”
@Jefferson: Cool, but you’re right. He looks too nice. He needs a sneer. Where is his steamroller skateboard?
FATBARDT is a work in progress.
This is how I visualize the IRS Monster hungry for money and determined to gorge on anyone who dares to live outside US.
@John Brown: Thanks. For some weird reason, Americans just can’t get that some people simply want to live their lives in other countries without outrageous demands from their place of birth.
Why can’t they see we are simply doing what their ancestors did. Moving to and becoming citizens of another country for a better life.
Even US Embassy “does not encourage dual citizenship because of the problems it may cause…The country where a dual national is located generally has a stronger claim to that person’s allegiance.”
As I’ve said many times, dual citizenship makes no more sense to me than a bigamous marriage. How can one be faithful to two spouses?
That’s why I divorced US 40 years ago. I never thought they would be stalking me and my remarriage to Canada four decades later.
@Blaze Interesting to hear you bring up the marriage analogy. It certainly rings true….
I’ve just come from responding to a student survey on expats (per ACA), and am taking the liberty of copying part of my response below, since it also draws on marriage, though from a slightly different angle. Hope that’s ok.
(But please make allowance for the fact that it was aimed towards student-age readers….):
I’ve lived approximately 30 years in USA and 30 in UK (where I now am).
They are BOTH wonderful places. Yet whenever a US voice comes onto the radio, I find myself beginning to smile. There is something very special about the US’s ability to let people reinvent themselves that has left me with a feeling of love and allegiance.
That said, I have to admit that it’s all too easy for the US’s inhabitants to consider their own powerful and spacious land as being the entire extent of the world’s geography; and ideas. Thus they often cannot grasp the circumstances of migrants, expats, and other nations. This “willful ignorance” is nurtured partly by folklore, partly by long economic dominance, but also by political and commercial self interest in emphasizing the US’s specialness.
In hard times, isolationist thinking tends to grow, to protect the thinker from painful realities. The consequences for the expat community have been dire. Where once we “didn’t really exist” in the minds of homelanders, now we are become the scapegoats for financial decline. It seems to me that the consequences of the HIRE act and FATCA are in danger of becoming the new witch-burnings.
If that analogy seems extreme, try picturing the sheer terror faced by someone like me who was worrying about the cost of a postage stamp versus food for the day, when she was told that had she held power of attorney over her mother’s accounts (fortunately I didn’t, but could so easily have done) she could face fbar penalties upwards of $50,000. It is a cruel fear that is robbing many expats of hope and trust, and sorely trying their love for the US.
These rules put the US in the role of abusive spouse – much loved, but needing to be divorced in the interests of survival.
Where and oh where is the marriage counselor that can put this marriage of citizenship back onto its feet???
PS: And that’s for someone who knows and loves the US. Now consider that same situation for someone who may be an accidental American – never having received a smile or a penny from the US – being told of that same liability. What else could result but hatred and committed enmity?? It is a self-defeating set of laws that could damage the US for years, and yet apparently will raise less funds than a residence based taxation system could do.
I only hope that we can communicate this to the many wise, gentle and peaceful persons who I know also exist in the US. At present it is so far beyond their comprehension that such an evil law could be enacted in their name and on the watch of such a fine President. But the mistake has been made, and the suffering of overseas Americans faced with huge expenses for paperwork, constant fear of vicious penalties, loss of income needed to survive in old age, and above all a cutting sense of betrayal of their belief in the land of “liberty and justice for all,”
Many years ago, the Frenchman Alexis de Toqueville is reputed to have warned about a tendency to excessively severe punishments in a democracy structured like the US. For years we managed to turn a blind eye to vicious use of the death penalty, the excesses of racism, and other such severities, and modified our concerns by more-or-less fruitful efforts to mitigate them for the future. So, now it is the expats’ turn to feel the excesses of the whip and I, who have been privileged to escape the lash of the past excesses, am at last beginning to understand what it is like to be their victim.
So, USA, I love you, but you are become a most abusive spouse. For heaven’s sake, let’s get counseling!!!
Thank you for listening, and good luck with your survey!
@Sad in UK; Thanks so much for posting that. I’m glad you’re here again. Have you had any more difficulty commenting like you initially did?
I identify with the power of attorney issue. I have secondary POA for my 89 year old mother. My sister (who lives in US) has first POA. When I agreed to POA ten years ago, I never thought about IRS. As far as I was concerned, I was Canadian and only Canadian. Plus, I had never heard of FBAR, FATCA, etc.
Now, I fear what could happen if my sister for some reason was not able to continue as POA. I fear helping my American mother (who has lived her whole life in US) could put finances of both of us at risk. I have not raised this with her because I know it would create even more stress and anxiety for her than it has for me.
On the marriage analogy, I truly do feel like I am being stalked by a long-ago abusive ex-spouse who insists he wants me back–but really just wants my money and support because he has dug himself into a financial hole.
That spouse is screaming at me that I’ve been “cheating” on him through my marriage to another country. Four decades later, he’s telling everyone I’m a “traitor” to him.
What?!? I thought we had an amicable divorce all these years!
The US insisted 40 years ago our divorce was “permanent and irrevocable.” Unlike others, I am not applying for a CLN because I don’t want to give the abusive spouse any information on where to find me in my happy marriage to Canada.
Fortunately, my Canadian citizenship oath in 1973 required me to sign and swear an oath renouncing other citizenship. I have a copy of that oath, which was witnessed by a Canadian Citizenship Court official. It is secure in my safety deposit box along with my citizenship certificate.
I will resist having to give any information to my bank or credit union about my place of birth. If I have to, I will also provide a copy of that oath. I don’t see how any Canadian bank could not accept that as proof that I’m not a “US peson.”
To me, that is my restraining order to keep IRS away from me. Unfortunately, we know from too many cases that restraining orders often do not keep the abuser away and the innocent spouse is the one who continues to be stalked, harassed, beaten,, bruised or even killed by the spouse violating the order.
To add to the conversation, I just posted this on Isaac Brock, my analogy of marital or other relationship abuse to US citizenship-based taxation, FBAR, FATCA abuse:
The first step in getting out of an abusive relationship is to realize that you have the right to be treated with respect and not be physically or emotionally harmed by another person (ANOTHER COUNTRY?).
SIGNS OF ABUSIVE RELATIONSHIPS
Important warning signs that you may be involved in an abusive relationship include when someone (OR SOME COUNTRY THAT PRACTICES CITIZENSHIP-BASED TAXATION):
•harms you physically in any way, including slapping, pushing, grabbing, shaking, smacking, kicking, and punching (NOT YET, GIVE IT TIME)
•tries to control different aspects of your life, such as how you dress, who you hang out with, and what you say
(TRIES TO CONTROL DIFFERENT ASPECTS OF YOUR LIFE, INCLUDING (BY FBAR AND FATCA) THE FINANCIAL LIFE AND FUNDS ENTIRELY EARNED AND TAXED IN YOUR “FOREIGN” COUNTRY, WHO YOU GIVE ALLEGIENCE TO)
•frequently humiliates you or makes you feel unworthy (for example, if a partner puts you down but tells you that he or she loves you) (BLAMES THE VICTIM; FREQUENTLY HUMILIATES YOU, CALLS YOU A TAX EVADER — GUILTY UNTIL PROVEN INNOCENT, MAKES YOU FEEL UNWORTHY SINCE YOU LEFT THE “HOMELAND” — WILL NOT LOVE YOU UNLESS YOU GAIN YOUR SENSES AND RETURN TO THE HOMELAND)
•threatens to harm you, or self-harm, if you leave the relationship (SEE ANY RELEVANCE HERE? INCLUDING, WILL CLAIM YOUR FOREIGN-BORN CHILDREN FOREVER IF THEY HAPPEN TO HAVE A DEVELOPMENTAL DISABILITY AND YOU DO NOT HAVE THE “RIGHT” TO RENOUNCE ON THEIR BEHALF .)
•twists the truth to make you feel you are to blame for your partner’s actions (MORE BLAME THE VICTIM — BY YOUR OWN CHOICE AND RIGHT, YOU LEFT THE HOMELAND (WHERE YOU WERE BORN BY THE ACCIDENT OF BIRTH OR ELSEWHERE BY US CITIZEN PARENTS); I.E. THERE IS A VAST DIFFERENCE BETWEEN “RIGHT” AND “PRIVILEGE” OF LIVING / BECOMING A CITIZEN OF ANOTHER COUNTRY. THE “VICTIM” WILL BLAME HIM/HERSELF OVER AND OVER AGAIN AND STAY IN THE ABUSIVE RELATIONSHIP, CONTINUE TO ACCEPT THE ABUSE AND TAKE THE BLAME — FOR HAVING LEFT THE HOMELAND?)
•demands to know where you are at all times (FATCA — REGISTER ALL YOUR CHILDREN AS US CITIZENS. WITH FATCA, THE US WILL KNOW ALL YOUR FINANCIAL BUSINESS IF YOU ARE A CITIZEN OF A “FOREIGN COUNTRY”; OR WILL TRY TO KEEP YOU IN THE HOMELAND WITH FURTHER PUNITIVE “EX-PATRIOT” LEGISLATION, NO DIFFERENT THAN THE OTHER “BERLIN WALL”)
•constantly becomes jealous or angry when you want to spend time with your friends (THIS “MAY” BE THE BEHAVIOUR OF FAMILY AND FRIENDS AND CONGRESSPEOPLE STILL IN THE HOMELAND — AND THOSE WHO INCREASINGLY FEEL TRAPPED IN THE HOMELAND.)
I further tried to encourage one person to see that it is the SAME thing:
“That is your British “friends?” problem if they cannot understand and abhor the abusive relationship you are in with the US. The only person, really, you need to please is yourself — along with gained self-respect.
It will continue to be difficult for you as long as you have the need to have others understand and somehow give you permission to do what you decide you have to do for yourself.
It’s very hard, I know. You are valuable and strong and need to believe that completely before you can be the one in control of your own life, deciding to be free of abuse.”
As I see it, too, our relationship with the US as US Persons Abroad is definitely abuse. Whether it’s a bully in a work relationship, a marriage relationship, a school relationship, abuse must not be tolerated. It should be the new norm.
Thanks Calgary. That is a good analysis of the abuse we are experiencing.
Here’s more about why it’s important to get out of an abusive relationship with US before it is too late. It also deals with why the average trapped American may feel resentful towards those of us who left.
This suggests “the Ex-PATRIOT Act is another in what seems to be an irresistible juggernaut of repression against expatriates and Americans abroad.”
The thing I find so bizarre about this is the US was built on immigrants. Why can’t they understand we just want the same rights our ancestors had–to live wherever we choose in the world, to earn an income there and to be free from the stalking and financial terrorism of our country of birth (I still can’t use the word “homeland” because it does not describe how I feel).
I was going to post the same link. Would any of the “Homelanders” UNDERSTAND any of what the conclusion to the article says — or even take the time to read it in the first place? I think not.
As it is currently written, the Ex-PATRIOT Act would not be retroactive in its tax provisions. But 2013 may be the last year to use the old tax code. If you are thinking about leaving the U.S., then do it NOW! The legislative pipeline in Congress has been clogged during much of 2012. Do not wait until measures like the Ex-PATRIOT Act or another Section 40304 pass the blockade and land directly into your life. 2014 may be too late.
This fits right in with the conversation, what the US is doing to “its own” right now!
John F. Kennedy, Berlin 1963 — a different time / same story:
@Blaze; Thanks so much for your encouragement!
(Login goes ok now that I know to disable the “Turbo” accelerator on this Opera browser…)
I’m so sorry about your situation. It must be a living hell having these uncertainties and unknowns hanging over you, such that you can never fully rest. You have done a wonderful thing by creating this site to help others, and I wish we can help you too.
(I was fortunate to know nothing of the tax law changes until after my mother died, because with caring for her round the clock, 18 or more hours a day, seven days a week, that knowledge would quite literally have killed me. It seems the timing is much harder for you, and I can only pray that your sister will cope….)
Now I will try to come up with some posts that will aim to create a bit of pushback, and if I seem to be approaching it in a “soft-sell” sort of way, it is with the hope that this technique may reach out to some who may help us.
My reasoning is that perfectly good people (and politicians?) have often been induced to do very evil things (as illustrated in Stanley Milgram’s experiments where it was shown that normal people can be induced to become torturers), and I hope that by appealing to the politicians’ good side we may hook them back into positive actions. It may be a long shot – but it’s the only way I know.
For a little light relief, here’s a true story that may perhaps be relevant:
When I was a child, I knew an adorable old brown carthorse, gentle and loving. She was good with children, and gently tolerant of the barnyard chickens that ran freely around her.
Yet one morning I heard one of these chickens squawking and cursing and shouting abuse at the carthorse. The gentle animal looked horrified at the stream of expletives, and my childish mind could hear her thinking “What a horrible hen; how can she be so beastly and rude?!” Clearly the chicken had lost its mind, and the poor insulted horse didn’t know what she had done to merit such hatred.
A puzzling situation one might think. Perhaps a mad or wicked hen?
But, on closer inspection, the reality was rather different. The horse (think USA government?) had accidentally placed her metal shod foot on top of the middle toe of the chicken (think expat?) so that the chicken was pinned to the hard ground, trapped and in considerable pain. I doubt there’s a chicken (expat) in the universe who would not have cursed and sworn in such an agonizing predicament. But, as far as the old horse (US) was concerned, the bird (expat) was behaving atrociously and violating all that was valuable in their friendship.
Problem was resolved when the child (me) inducing the old horse to lift up its foot and release the bird from its agony. Not sure if that dear horse ever understood what had happened, but its relationship was strong enough with the child that it did cooperate with the request to lift up its foot.
Now we just (!!!) have to get the US to lift up its foot, so that we chickens may live in peace in this barnyard. I can only hope.
And meanwhile, many thanks for letting us refugee chickens enjoy your lovely sandbox….. It’s perfect!
I don’t know what to say.
**** “For heaven’s sake — let’s get counselling”? ******
So many, including me, are decades past any kind of counselling and left the US for good reason back then.
******”My reasoning is that perfectly good people (and politicians?) have often been induced to do very evil things and I hope that by appealing to the politicians’ good side we may hook them back into positive actions. It may be a long shot – but it’s the only way I know.”*********
Who will your “soft sell” be to?
***** “those who have created evil law … on the watch of such a fine President”???*******
*******Those “…perfectly good people (and politicians?) … often induced to do very evil things…**********
Nope, I don’t know what to say!
Why would you have love for an abusive spouse (country)? Refer to my comment above starting with:
“The first step in getting out of an abusive relationship is to realize that you have the right to be treated with respect and not be physically or emotionally harmed by another person (ANOTHER COUNTRY?).”
Anyway, let us know how that (your soft sell) works out.
Time is of the essence and, in my mind, a soft sell now (or ever!) with anyone in the US is futile.
@Sad: Thanks for sharing your story. We have been encouraging US to stop stomping it’s foot on our faces for over a year. So far, as we squawk louder, they stomp harder.
:Like Calgary 411, I don’t need or want counseling with my abusive, stalking ex-spouse.
As I’ve said, my divorce was final 40 years ago. I’m happily remarried. I don’t want to reconcile. Fortunately, I don’t have any children for the abuser to demand custody of.
So, the abuser needs to stop stalking me for support and a huge chunk of the assets that I earned, saved, invested and paid taxes with my spouse, Canada.
So far, my beloved partner Canada has stood with me and told the abuser they can’t have my money. Canada has assured me they will protect me by not letting CRA give any of my money to IRS.
I am somewhat ticked that Canada has not yet told the abuser clearly and strongly it has no right to review all of our joint finances held at our bank and credit union. Instead Canada wants to negotiate with the interloper in our marriage. This leaves me with a sense of betrayal at both my ex-spouse and my spouse of four decades to whom I have been completely faithful.
Yet, Canada and I will celebrate our 40th anniversary April 27, 2013. Mr. IRS and Ms. FATCA are not invited to the party.
Sandboxers and Brockers are all invited to the celebration. Unfortunately, I will be spending the day with my abuser (US). I will be there for my mother’s 90th birthday. What should be a great cause for celebration will be marred by staying with the abuser even temporarily.
I understand you are in a different place with trying to work things out with the US. However, often abusers don’t want help. They just want to continue to bully. That has been common behaviour of US for ages and is what they the abuser is now inflicting on us.
Despite that, we at Sandbox hope to continue to provide refuge to you and others seeking a safe place to learn, create, share and explore as we confront the bully together.