July 31, 2013
By: Kelly Diamond, Publisher
I’ve been operating in a fog. I honestly thought FATCA was only meant for American CITIZENS. Turns out it’s meant for “U.S. Persons”.
With the net casting far wider than many realize, the IRS is essentially fiscally persecuting anyone who’s even tied to the U.S. … and by extension their non-U.S. family, businesses and/or organizations!
As Paul Seymour has pointed out numerous times (but still not enough, in my opinion), the US is the ONLY country that taxes its citizens no matter where they earn. You want to earn in Japan? Great! Work there, pay Japanese taxes, and then pay Uncle Sam his fair share too… Taxation in general has become more like membership dues rather than the common notion of “paying for basic services that everyone uses”.
In a local article today, for example, I’m reading about this measure in the tiny town of Marble Falls, TX where they want to tax residents for projects. Not fixing lamp posts or fire hydrants… which the average person could get behind. Building shopping centers! Evidently, they don’t want private developers to come in and invest in building shopping centers. This is now a city function: building shopping centers?
Likewise, what we have here with FATCA measures is no longer about residents paying for services they receive… it’s about paying for the privilege of touting some sort of affiliation with the United States.
So, under FATCA, and starting in 2015, the U.S. IRS will force banks to submit information on total assets, account balances, transactions, account numbers and other personal identifying information. Ever see a 1099? Yeah, it’s nowhere near this detailed. In fact, if it were, you’d have a rather reluctant group of individuals on your hands when it came time to collect.
IF we are really going to pursue “U.S. Persons” and their foreign accounts, then you might find it interesting to know who falls into that category: the King of Thailand, the Mayor of London (England), and the Premier of New Brunswick (Canada). I’m curious if the IRS will seek their personal banking records… and how well that would go over…
Okay, let’s assume that royalty gets immunity. What about people who are married to non-US persons? Is the United States prepared to take the wealth of individuals who have no tax obligation to it simply because of their association with someone who does?
What about individuals who are simply authorized signatories to a foreign account on behalf of a business or organization? Is the United States prepared to take the wealth of a foreign institution simply because they authorized a US Person to access that account for operational purposes?
What about those who hold dual citizenship, do not reside in the United States, do not receive any benefits from the United States, and do their living and earning outside the United States? They should also pay into our system? For what?
How much will it cost to pursue this revenue? I mean, we can make all sorts of estimations as to what the revenues will ultimately be… and that’s all well and good for the smoke and mirror show. But what will it cost to do so? I mean, telling me that there’s a billion dollars’ worth of gold in a mine is fabulous, until you tell me it will cost two billion dollars to excavate it.
Let’s just see what we can expect in the proper execution of the FATCA measures:
- Over 500 pages in new complex regulations
- BILLIONS of dollars in costs to financial institutions around the world
- 800 new IRS agents
- Present and future closure of bank accounts of “U.S. Persons” living in other countries
- Demands that banks in other countries VIOLATE their own countries’ laws and constitutions
- Strained international relations, due to the strong-arming tactics of the U.S. to get this information
- Arbitrary “negotiations” with allies and enemies for Intergovernmental Agreements (or IGAs)
- Promises to foreign governments from U.S. Treasury for U.S. banks and IRS to provide information to home governments on U.S. assets and income for non-U.S. residents
- Potential lawsuits
The reciprocity deals with other countries will trigger capital flight faster than you can say “fair share”! Trust and privacy are kind of a big deal… especially to those with a lot to gain or lose.
I don’t see the cost-benefit-analysis amounting to much more than chump change on a good day…
The desperation of the US government to get money has become both obvious and crazed. With little or no regard for cost-benefit realities, and grasping at anything that remotely looks profitable. The FBI recently seized over $840,000 from a used car salesman in New Mexico. For what? Don’t know. No charges have been leveled against him yet. But hey! They got nearly a million bucks!
Our tax code is over 73,000 pages long. We just slapped on another 500 with FATCA. Americans spend approximately 6.1 BILLION HOURS trying to comply with our tax code. That ALONE constitutes such a huge economic loss. “That’s the equivalent of more than 3 million workers toiling away full time, all year. By way of comparison, the Federal government employs the equivalent of 2.1 million full-time civilian workers,” writes Janet Novak of Forbes.
A little hat-tip to Somalia (since this is where all libertarians are told to go if they don’t like it here in the US): the most dangerous job in Mogadishu is………………… get this……………….. TAX COLLECTOR! I nearly spit my coffee out reading that the other day! (I didn’t, of course, because it’s COFFEE!) Turns out, the people of Somalia don’t trust them. (Crazy right?) They are only too aware of the corruption of the government and are used to bribing their way around as needed, as opposed to paying for services they don’t receive through taxation (Wow. I feel like I should be calling it Moga-de-troit!)
“They consider me to be a bandit. They don’t want to get taxed,” said Mohamed Nor, a tax collector for Mogadishu’s municipal government.
If you hear the government side of things, they will say that “people don’t want law and order”. Of course, they have law and order… what they don’t want is another bully posing as an institution of law and order stealing their money.
I highly doubt we will ever pull off such a feat here in the United States. Still, I think there is a general connection to be made between the likes of Somalia, Detroit, and the United States as a whole. People who are loyal to the concept of taxes will argue that a more simplified version of our tax code would only offer a greater level of compliance, less wasted hours, and even with a revenue neutral goal in mind, revenues will likely go up.
I made this very cases to some greeniac environmentalist who came soliciting at my door a while back. He was advocating a 5 cent redemption value on all recyclables. I said, “Why? It’s easier for me to sort my trash in two bins, recyclable or not, than it is to have to drive 10 miles for 5 cents.” Make it EASY for people to comply and they will… or at least MORE people will.
Clearly, all this sense and logic falls on deaf political ears… So in the interim, 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. A simple consultation can be a very eye-opening experience. If you’re used to hiring a CPA to navigate your tax obligations, then it only stands to reason that you would hire an expert to navigate the waters of tax PLANNING, and taking the figurative sign off your back that says, “HEY, TAX ME!”
For more information on what you can do NOW, contact us today for a consultation!
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I like your article, it’s apparent you read The Hill. The distinction to be made here is that non-resident US citizens and non-resident US persons alike should not be subject to US taxation. Living abroad makes one a non-resident, not a non-citizen.
I was forwarded the article, actually. I don’t read the Hill much anymore. Same goes for RedState, Breitbart, Daily Caller and Townhall. I agree 100%: the issue is that NO ONE should be taxed by any country if they aren’t earning there… regardless of their connection to that country. In this case, the US is the country in question.
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First, full disclosure: I am one of authors of the article in The Hill. FATCA: “Simple Premise” Gone Horribly Wrong.
I think some of the information here is from that article. I’m glad it managed to awaken some in the United States to what “US persons” have been living for two years. Because of FATCA, Finances and marriages have been strained, banks is some countries have or will close accounts of long time responsible customers just because they were born in US, jobs have been threatened and some have even contemplated suicide.
I was told by US Consulate in 1973 that I was “permanently and irrevocably” relinquishing US citizenship when I became a Canadian citizen. Four decades later, as I am in early stages of retirement, IRS is trying to reclaim me and my money. If I refuse to tell my bank where I was born or give consent for my personal financial information to be released to a foreign government, US expects by bank to close my account.
This clearly violates Canadian laws and Canada’s Charter of Rights and Freedoms.
I don’t call IRS International Revenue Service. I call them International Robbery Service.
I do, however, take issue with these comments in your article: “Think about researching some safe-havens. Look at globalizing your assets in various stores of wealth. ”
That type of offshore tax evasion is exactly what got honest people living outside US caught up in this nightmare. A law intended to combat illegal tax evasion is instead snaring honest people leading productive responsible lives and willingly paying taxes in the countries where they live, work, earn an income, save and invest.
“That type of offshore tax evasion is exactly what got honest people living outside US caught up in this nightmare. A law intended to combat illegal tax evasion is instead snaring honest people leading productive responsible lives and willingly paying taxes in the countries where they live, work, earn an income, save and invest.”
I took the data from the article, but disagree with the sympathetic tone toward taxation or tax reform in general. I personally don’t find “tax evasion or avoidance” to be criminal in the least. I find it to be a rightful defense of property rights. The whole notion of “tax reform” is foolhardy. What exactly are we reforming in the nearly 74,000 pages of code? Nothing. The only “reforms” to the tax code that make any sense whatsoever is cutting them (or in my ideal case, eliminating them outright).
Your assessment of “tax evasion” is faulty. What I advocate, and what Global Wealth Protection does as a whole, by the way, is 100% LEGAL. Protecting your property is not criminal. It’s a natural right. That’s like saying that me defending myself with a gun is what ensnares all other gun owners into more gun restriction laws. Or some sociopath shooting up a school ruins gun ownership liberties for the rest of us. No it doesn’t. That’s scapegoating.
The ones responsible for ensnaring anyone into anything is our government. The blame lies squarely and solely on their shoulders and their shoulders alone. If the government wasn’t so pathetically incompetent or so desperately power hungry, they wouldn’t pull such tactics in the first place. But they use our tax code to manipulate and socially engineer people. It’s a control mechanism… like all the other stupid laws they conjure up that make no damn sense. Unless you look at them through the lens of controlling the masses… then it makes a whole lotta sense real quick!
Tax evasion is a totally 100% victimless crime. Just like smoking pot. Just like me not wearing a seatbelt. The fact that I do or don’t comply with any of these doesn’t affect you or anyone else in the least. I didn’t impose a single thing on you by not wearing a seatbelt, and would pose no imposition on you if I didn’t pay my taxes. The government imposes itself on you and uses people like me as an excuse to do so. And you clearly bought into it as shown in the exception you took to my suggestion to bury money offshore.
Ironically, rules are made for those who are willing to follow them. Not for those who don’t. That’s why gun restriction laws don’t make any sense: because people will still go out and buy a gun. It’s against the law to murder. Hasn’t made the numbers go down at all to have that law on the books. Likewise, further complicating the web of tax code isn’t going to get MORE people to comply. It’s just going to criminalize more people.
Kelly You are correct in your views here as a non resident living in a country that has had its banking system almost completely ruined by these onerous laws ie { corresponding banks pulling out because the US and EU have Labeled them suspect }. And making investment and business transactions very difficult I feel its time for the US to make some good choices going forward for the sake of its population and people wherever they reside and not penalize them for their life style choices. I have always payed my taxes and feel I am being unjustly discriminated against in my retirement due to these overstretched and onerous regulations .
The thing is, the mere existence of criminals isn’t an excuse to presume that everyone in a certain economic space IS a criminal. There was a time when the US clung to a presumption of innocence, not guilt. Moreover, this blanket excuse can be endless: criminals wear shoes, so now we must micro manage all shoe stores. They get gas, they eat food… They do a lot of what non criminals do because they are human beings using human tools for criminal purposes. But here you are being caught up in the same net simply because you live and bank offshore. In my opinion, one innocent person being wrongfully persecuted in the efforts of apprehending the guilty is too many. It’s not a sacrifice I’m willing to make, nor on behalf of countless other individuals. The more the US tries to control things, the more expensive it becomes for the taxpayers. These policies aren’t self-sustaining.