The Law That Makes U.S. Expats Toxic

[dnoblett]

More posted in the Wall Street Journal.

 

A measure targeting tax evasion pushes Americans out of bank accounts—and jobs—abroad

 

The U.S. government has long created hardships for Americans who live abroad, and much of the problem relates to the tax code. America is the only country that taxes citizens on their global earnings, and in 2010 Washington exacerbated that by passing the Foreign Account Tax Compliance Act, or Fatca. As this law comes into force, it is doing immense harm to Americans and American interests abroad.

 

Aimed at preventing money laundering, the financing of terrorism and tax evasion, Fatca requires foreign financial institutions such as banks to report the identities of their American customers and any assets those Americans hold. Institutions that don’t comply are subject to a 30% withholding tax on any of their own transactions in the U.S.

 

This provision was enacted without regard for its effects on the 8.7 million U.S. citizens living abroad, who have essentially been declared guilty of financial crimes unless they can prove otherwise. Many institutions no longer consider their American clients worth the burden and potential penalties of the law, and are abandoning them in droves.

 

American leadership overseas, from volunteer organizations to the business world, has diminished. No one wants an American involved when their citizenship attracts a maze of rules, regulations, potential fines and criminal penalties. In one case a Swiss hospital, understandably reluctant to have its account information released to the U.S. Treasury because it has an American chief financial officer, gave the American executive a choice: Give up your job or give up your citizenship.

 

As a former American diplomat who now lives in Europe, I am acutely aware of the important public-diplomacy role that overseas Americans play. It’s painful to witness the anguish of patriotic Americans as they contemplate giving up their U.S. citizenship, as record numbers have been doing. In 2014, 3,417 renounced their citizenship, a 266% increase over 2012, before Fatca came fully into effect.

 

The U.S. Congress needs to pay attention, not because it will win votes, but because of the long-term policy implications for the future of America. Overseas Americans are often multilingual, understand the culture, and are key influencers in facilitating trade and investment, foreign policy and more.

 

While much of the nation is focused on undocumented workers coming in through one door, most voters are unaware that the U.S. government is pushing its citizens, who would like to remain U.S. citizens, out another. Presidential candidates would be wise to grasp this problem if they want to attract the overseas vote, which has swung elections in the past.

 

Unfortunately, no single member of Congress represents these American constituents who together would rank, if a state, 12th in population size after New Jersey and before Virginia. By virtue of living abroad, they are second-class citizens, paying onerous tax burdens without representation.

 

In a rare display of cross-party unity, overseas Democrats and Republicans are united in wanting to rectify the injustices caused by Fatca. Lawsuits and legislation are in progress. The legal action argues, among other things, that the Treasury Department exceeded its authority by making intergovernmental agreements, which require U.S. banks to divulge their clients’ citizenship to foreign governments.

 

Legislative solutions would range from repealing Fatca, to bipartisan support from the congressional co-chairs of the Americans Abroad Caucus for a “same country exception.” This would exclude Fatca reporting for accounts held by Americans in the foreign country where they reside.

 

The best solution is for the U.S. to join the rest of the world in taxing based on residency rather than citizenship. Congress could address both the need for global banking transparency and the negative effects of Fatca by including this in the comprehensive tax reforms likely to take place under the next administration. Doing so would advance American fairness, mobility and economic competitiveness, in addition to protecting the country’s most valuable global asset: its people.

 

Ms. Graffy, a law professor with Pepperdine University, is a former deputy assistant U.S. secretary of state for public diplomacy for Europe and Eurasia (2005-09).

http://www.wsj.com/articles/the-law-that-makes-u-s-expats-toxic-1444330827

[tsap seui]

Yes, all of you ex-pats (a population that would be number 12 in size if you were a state)....send of ALL of your money, open up those offshore banks accounts and let Uncle Sammy slither out a few pesos. We need your money here on the mainland. We're soon to lock horns with Russia, and we need a loan so we can irritate the Chinese with some ships off their shores. It hasn't been easy being the Doberman of the world...we need more loot, soon!!!! You don't want to be living safely in your country of choice and read about us falling down the Roman Empire hole, do ya?? We may well let 200,000 Syrian refugees enter the borders soon, but word is they don't have much money, certainly not enough to pay for their green cards, health care, education,and such so you know who is gonna foot the bill. Help yore poor Uncle Sam....give till it hurts and you grit yore teeth!!! Do it today, don't delay....we don't think China is gonna give us a loan to fight Russia with, much less a loan so we can fuel up our ships and send in our Navy to fly the flag, in their face, close to their shores. Don't make dear ol' Sammy have to change his name to Claudius, Hemorrhoidus, or some such ancient failed civilization name. You don't want to come back to America for a visit and see such national treasures such as the Super Dome, NYC, et al, shrouded in dust, or having to be excavated to the surface once again like it was New...er ahh... olde Rome.

 

Yeah, there may be a wee touch of sarcasm above, but nothing amazes me anymore. If they sold America to the lowest bidder next week, you'll find no surprise here. Hell, on my way out the door, I'll leave flowers for the buyer And, there won\t be no bank account in my sorry assed name in some other country.

 

tsap seui

Come on America

snap out of it, wake UP

We can save ourselves

[Randy W]

More on CFL about FATCA and FBAR (Report of Foreign Bank and Financial Accounts )

 

Beijing to back United States over new FATCA law against tax evasion