FATCA Blowback: Some Americans Outraged by U.S. Tax Evader Law reports the Washington Diplomat.
The article reports:
If the bank doesn’t report on an American client’s overseas investments or assets, FATCA puts its secret weapon into action and levies punitive sanctions on the financial institution that failed to comply with U.S. law.
A little confused? It’s understandable.
James Jatras says:
“We’re making a demand on foreign institutions to follow a law that they have no legal or moral obligation to obey and threatening them with what, in my opinion, are illegal sanctions if they don’t obey,” said Jim Jatras, a former diplomat and U.S. Senate staffer who now works in government relations and media, and edits the RepealFATCA.com website. “That is a gross violation of the norms of international behavior,” he told The Diplomat.
The article also assesses IGAs:
IGAs are essentially tweaking the laws of a country so that its banks can ignore that country’s privacy and data protection laws and, basically, bow to the wishes of the United States, critics argue, with some calling FATCA an example of U.S. imperialism and the epitome of the “ugly American.”
It quotes an American accountant who insists FATCA is “nothing new,” but it just adds an extra burden. I think we can conclude he doesn’t live outside the U.S. with his personal financial records about to be sent to a foreign government.
Or, like Daniel Kuttel (aka Swiss Pinoy), the US military vet who was forced to renounce to protect his Swiss family, mortgage and home.
The article features We Are Not A Myth Portrait Protest (with a photo of Lynne Swanson (aka Blaze), making it appear she is an American citizen (She is NOT!).
Everything is best summed up at the end with a comment at We Are Not A Myth Portrait Protest from a Canadian wildlife photographer:
“Wife works as part-time retail cashier. You think we’re hiding millions?” he asks. “Get real.”
7 thoughts on “FATCA Blowback in Washington Diplomat”
Thanks for the update. I gave up on the idea of this story being published, so it is cool to see that it made it anyways. 🙂
I really enjoyed reading the article. Great quotes, SwissPinoy.
I hope that people reading this get a better sense of what FATCA is, and who it’s affecting.
And, Blaze, don’t worry, WE know you’re not an American. It’s a good, punchy photo!
@Outraged: Yes, everyone here knows I am not an American. However, does IRS and US Treasury think I’m a “US person?” That is the dilemma for all of us.
Read my lips. I am not an American citizen. I am not a U.S. person. I am Canadian.
I don’t understand this….
U.S debt is about 13 Trillion going to 20 Trillion (estimated) and U.S is threating foreign banks to implement FACTA (illegal) otherwise US will stop doing business with them.
Why someone wants to do business with someone full of debts?
why can’t we make business somewhere else?
FATCA is unconstitutional. Repeal it!
@Eagle and wings. Totally in agreement. Unfortunately, although we keep hearing that the U.S. is in decline, they still seem to wield a shocking amount of power and influence. I keep hearing that China holds the paper on almost all of the massive U.S. debt. Why isn’t China reigning them in then? How can a country so deeply in debt still be perceived as a powerhouse? I wonder about that stuff a lot, actually. Whenever conversation turns to this (which it does surprisingly often), there’s always someone who goes, “duh! drones!”
I’ll take shot at answering some of those questions in a general sense.
Normally when a country greatly increases the supply of their currency (prints money), their currency will depreciate compared to the currency of other countries. To do business internationally, it will take more of their local currency to purchase the world reserve currency that is necessary to pay for the goods and commodities they wish to import. That in turn makes the price of those commodities and goods more expensive. In other words, the population of that country will experience inflation and their standard of living will go down.
The US is in a unique position because the US dollar is the world’s reserve currency. When the US wishes to import something, they don’t need to purchase dollars on the open market, they can simply print as many as they need. The effect of this is to delay the inevitable inflation that would normally be caused by all of the dollar printing going on. This is how the US has managed to continue on for so long with such a gross imbalance between what they import and what they export. They import all manner of commodities and goods; they export US dollars (or dollar denominated assets such as treasury bonds), which up to now the other countries of the world have been happy to take because they can, in turn, exchange those US dollars for the goods that they want to import.
As some of the major players in the world economy start to do business in other currencies, the importance of the US dollar as a reserve currency will start to decline. That’s the point that inflation will start to have a major effect on the US economy. The US dollar will be less in demand therefore less valuable.
China (and other countries) have already started to divest themselves of dollar denominated assets. The process must necessarily be gradual otherwise they risk tanking the market for the US dollar and jeopardizing the value of their considerable dollar holdings. The US is still the world’s biggest consumer market. Even though the US pays for those goods with paper rather than hard assets, exporting countries have a vested interest in keeping the scheme going until such time as they have divested their dollar holdings, developed other markets, and created another world reserve currency.
We can only hope that the process is gradual and orderly. To have a sudden collapse of the US dollar would be catastrophic for the world economy and there is no doubt that Canada (and the Canadian dollar) would be severely impacted by such a collapse.
This is yet another reason why FATCA is so dangerous. If the US actually tries to implement that threat of 30% withholding, the risk of having US holdings, US cleared transactions, and US routed transfers will make any of those things worth far less. This will hasten the demise of the US dollar’s reserve status. Congress in it’s never ending stupidity, is blithely unaware of the potential consequences if FATCA becomes a reality.
Most of us have not lived in a world where the US dollar was NOT the reserve currency, but there was a period of many years when the British Pound Stirling held that position. After massive spending during the world wars (and the decline of the empire) the pound sank. The US emerged as the new world power and the US dollar replaced the pound as the reserve currency. This period was marked by tremendous upheaval in British society as the standard of living declined, unemployment soared, and the British government had to adjust to living within it’s means.
@maz57 – thank you!!! Very clear, and interesting, answer! I understand a bit more clearly now.