FATCA Needs To Go, But Unfortunately, The FATCA "Refugees" Are Never Coming Back

Tyler Durden's picture

Submitted by Duane via Free Market Shooter blog,

GotNews posted an article yesterday about a “refugee problem” America has, referring to approximately 20,000 Americans who have renounced their citizenship under Obama’s leadership, and suggesting America “repatriate” said citizens:

America has a refugee problem. Not the Syrian refugees. No, not the Afghan ones. No, not even the Cuban refugees. I’m talking about the born-and-raised American citizens who got fed up, gave up their U.S. citizenship, and escaped Obama’s America while they still could.

 

Yes, that’s right: nearly 20,000 American citizens left Obama’s America and forfeited their American citizenship while Obama was President.

 

Nearly 20,000 U.S. citizens voluntarily gave up their rights to vote, run for office, and the freedom to pursue “life, liberty, and the pursuit of happiness”, while Obama was in office.

 

We shouldn’t be allowing anyone from the violent and dangerous Middle East, including so-called “refugees”, into the United States right now. The only refugees who should be entering the United States are the American refugees who fled Obama’s America. Not only do we have that duty to our fellow Americans, but they pose no threat to us like Middle Eastern “refugees” do.

What was missing from the article?  Discussion of the Obama-sponsored law that caused many citizens (mostly expats) to renounce their citizenship: FATCA (Foreign Account Tax Compliance Act).

FATCA has been beaten to death by other sources, but surprisingly, very few people are aware of what it does.  The whole purpose of the law was to “crack down” on overseas tax evasion.  Simon Black of Sovereign Man did an excellent job of summarizing the net effect:

Deep within its bowels fell the Foreign Account Tax Compliance Act, or FATCA for short. It was a sort of ‘law within a law’, and one of the dumbest in US history.

 

FATCA effectively commanded every single bank on the planet to enter into an information-sharing agreement with the IRS.

 

(Well, not so much ‘information sharing’. More like ‘information giving’. Because the US government doesn’t share anything with anyone.)

 

It all started based on a phony assumption that millions of Americans were hiding trillions of dollars in secret offshore accounts. And given how broke the US government is, they wanted every penny they were entitled to.

 

So the plan was to turn every bank in the world into a global spy network.

 

Any bank that didn’t comply was threatened with a crippling 30% withholding tax on every dollar that went in, out, and through the Land of the Free.

In a nutshell, if you are an American expat living abroad, you just had to jump through thousands of hurdles to prove to the IRS that you aren’t evading any taxes, report all this information correctly, and within a confusing legal framework that leaves even the best accountants stumped, often triggering audits for “violation” of FATCA, even if it was not violated at all.

Unsurprisingly, since the law was enacted, the amount of expatriates who renounce their citizenship has risen exponentially:

FATCA forces any American opening a bank account overseas to be in compliance with the law, by having the IRS punish foreign nations that do not comply Because of FATCA, the majority of foreign banks quickly turned to outright refusal of US clients.  Good luck finding one that doesn’t charge a ridiculous litany of fees.

Obviously, you need to live abroad to renounce your citizenship.  But who is doing the renouncing?  For the most part, permanent expats who have no intention of ever moving back.  Eduardo Saverin, the Facebook co-founder whose story was on full display in the movie The Social Network, is the biggest name of the group.  However, billionaires like Saverin aren’t most people.  A more pertinent real-world example is Rachel Heller:

This state of affairs comes about because the US bases its taxation system on citizenship, unlike the rest of the world, where taxation is residence-based. In other words, while I live in the Netherlands, pay taxes in the Netherlands, and receive services in return for my taxes from the Netherlands, I was also expected to pay in the US, despite the fact that I received no services for my tax dollars.

 

The Foreign Account Tax Compliance Act (FATCA), passed in 2010 and in effect since 2014, was intended to catch “tax cheats”: billionaires living in the US who send their money abroad to hide it from the IRS. The problem is that people like me, who have moved abroad for jobs or for love, are persecuted as a consequence of that effort.

 

This does not mean that I was trying to avoid paying my “fair share,” the misleading phrase often used by politicians and repeated by the press. Because of a treaty between the US and the Netherlands (and many other countries), I only had to pay US taxes if my income was higher than about $100,000, which, as a teacher, it will never be. Instead, I pay where I live. I am in the 42 percent tax bracket here in the Netherlands, and my husband’s income puts him in the 52 percent bracket. That is much higher than it would be in the US, so I cannot be accused of avoiding taxes. If I wanted to do that, the Netherlands would be the last place I would live.

 

Nevertheless, I had to fill out US tax forms every year, plus extra forms to claim my foreign tax exemption, all to prove that I in fact do not owe any US taxes.

 

I repeat: I love the US. But I had to fill out lengthy forms (or rather, I spent almost a thousand euros a year to pay an accountant to do them for me), exposing my and my husband’s accounts to US government scrutiny, and I risked losing the ability to do the sort of banking that any middle-class American would normally take for granted.

Yes, it is true, the majority of US expats are willing to give up their citizenship.  It’s not because they aren’t American.  It’s because by not living in America, FATCA has effectively rendered them second-class citizens. 

The USA is one of only two countries in the world that has this system of taxation.  The other is Eritrea, which levies a simple 2% flat tax on its citizens who live abroad.  And still, the media, and even the UN have weighed on Eritrea’s simple regime, calling it “authoritarian”:

Nearly every country in the world bases its tax system on residency rather than citizenship. If you’re an Italian citizen, and you leave Italy to live and work in Dubai, you don’t have to pay taxes on the income you earn abroad to the Italian government.

 

But Eritrea levies a 2% flat tax on its citizens who live abroad. If you’re an Eritrean citizen, you have to pay taxes to the Eritrean government, no matter where you live and work.

 

The media has condemned this as “extortion” and a “repressive” measure by an “authoritarian” government.

 

The UN has even weighed in. In Resolution 2023, the UN Security Council condemned Eritrea for “using extortion, threats of violence, fraud and other illicit means to collect taxes outside of Eritrea from its nationals.”

FATCA is far more onerous, costly, and authoritarian than anything Eritrea does.  But don’t hold your breath expecting the UN to condemn what the USA is doing to its own citizens.

Rachel Heller went into detail on how difficult the renunciation process is in her above linked article, but even after months and months of interviews, the USA piles on a $2,350 “renunciation fee” and an exit tax on your net worth, in addition to a “doxxing” of your name and personal details in a Federal register, done to “name and shame” you for renouncing your citizenship.

It is sad that Americans have been forced to renounce their citizenship to comply with the onerous restrictions on their rights as a result of the Obama administration’s FATCA law.  But they didn’t give up their citizenship because they all of a sudden became un-American; no, they did it because of a law that has turned living and/or working abroad into an expensive, onerous, bureaucratic nightmare for the ordinary American citizen.  Repealing FATCA should be almost as high on Trump’s list as repealing Obamacare, but unfortunately for the citizens living abroad, a repeal of this law is not likely anytime soon, as Trump seems quite preoccupied with other affairs at the moment.

What is even more sad, however, is that these citizens who have renounced will not be coming back, or re-applying for citizenship anytime soon.  Most were already living abroad permanently, and had no interest in ever moving back.  Because of FATCA and the IRS, and nothing else, they will no longer enjoy the protections of afforded to them when they were born.  FATCA and its ridiculous system has ensnared law-abiding American expats into a constant battle with the IRS, all over the day-to-day activities all citizens engage in.

Regrettably, no new legislation can change that fact, undo all of the damage FATCA has already caused, or magically bring back the citizenship rights of those who have chosen to give it up, solely to avoid FATCA’s unjust burden.

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HRH Feant's picture
HRH Feant (not verified) Jan 31, 2017 11:05 PM

Preaching to the choir. The IRS will hunt a US tax mule to the ends of the earth to extract their wealth.

Enough! End FATCA. I am not US property.

Takeaction2's picture
Takeaction2 (not verified) HRH Feant Jan 31, 2017 11:06 PM

I present you with 20 questions...

https://www.youtube.com/watch?v=Eah1niD0dqs

HRH Feant's picture
HRH Feant (not verified) Takeaction2 Jan 31, 2017 11:25 PM

What is your point? I am a long time fan of Infowars and Paul Watson.

Islam is incompatible with western civilization. Period.

Heavy's picture

debt money is incompatible with civilization

fel.temp.reparatio's picture

usury is incompatible with civilization

balolalo's picture

I AM CONFUSED

does this include big business who hid their income overseas or not?

is that PRO OR ANTI - american labor?

wait is trump pro or anti labor?

who voted for this fatca????    anyone still in power?  any GOP members?  

kind of important questions TYLERS... don't you think????

or do you have an interest in not asking?

Déjà view's picture

Surprised if FATCA were repealed...

Would not fit in with "America First" policy...and...looking at an extra $500b p.a deficit putting it over $1t p.a. does not bode well for change...

Not surprised if strict capital controls are implemented... 

archon's picture

The IRS and US Govt. sees all citizens as cows to be milked.  How they treat expats is merely the smoking gun evidence that this is true.  The phrase "fair share" is kinda misleading too, because they really don't think of it as their "fair share" as much as they believe that they simply own us like cattle or sheep, and they're just taking what's already theirs.  "We own you.  Now, get to work, so we can milk you.  When you run out of milk, we'll put you out to pasture on deprivations until you die - and the sooner you die, the better."

gonetogalt's picture

The article deals with U.S. citizens who jump through all the hoops necessary to formally renounce. There must be 10x or 100x Galt's Gulch residents that have have taken their own routes to oblivion and left no statistically quantifiable tracks...

 

cayman's picture

FATCA = Satan.  Live with it every year and almost got burned once.  Article doesn't even mention what happens when you submit the form late, and they take all of your money.  Pure evil.

odatruf's picture

"Introduced in the House and Senate as Foreign Account Tax Compliance Act of 2009 (S. 1934, H.R. 3933) by Max Baucus (D–Montana); Charles Rangel (D–NY-13) on October 27, 2009"

Tells you everything you need to know...

flapdoodle's picture

Who voted for FATCA? Not sure, but I'm pretty sure that Chuckie Schumer was one of its principal architects & backer.

junction's picture

Exempt from FATCA enforcement are the Iranian ayatollahs to whom Obama air freighted in, in  the dead of night, $800 million in shrink wrapped bank notes on wooden pallets.

HRH Feant's picture
HRH Feant (not verified) junction Jan 31, 2017 11:14 PM

I thought Iran got $1.3 billion in various forms of cash: US FRNs, Euros, and my favorite, Swedish Francs. You can't make this shit up in your worst nightmare.

Zer0head's picture

and here's an update on the Quebec Mosque shooting

https://www.youtube.com/watch?v=gV62pqS7AAA&t=2s

 

(and wonder boy's PR gal just sent a thankyou note to FOX for scrubbing a tweet)

https://twitter.com/FryMcCain/status/826608900761726976

Never One Roach's picture

That's what I figured would happen. The immediate Real News replaced by their Fake News. I hope ZH runs a story on this.

Stuck on Zero's picture

I saw recently that a large number of Latino migrants to the U.S. were returning home. The reasons were many but crime was and standard of living were at the top of the list.

ZD1's picture

Large number moving back home? pffft.

It was propaganda to make you think that they're moving back home.

Come and visit a state like California (aka Mexifornia) and you'll see that half the state is from Mexico.

ProsperD9's picture

It's Swiss Francs...the Swedes have the Krona.

HRH Feant's picture
HRH Feant (not verified) ProsperD9 Feb 1, 2017 12:36 AM

Yep, thank you kindly for the correction!

Kirk2NCC1701's picture

Psst, if you were a Dual Citizen (US plus something else), then you have... OPTIONS.

That we can't post here.

BlindMonkey's picture

The option to renounce, correct?  The damnedest thing is that I would give up my SS benefits if I do that.  It might be worth it but I'm not quite there yet.  

 

Plan A is to just send them blank signed returns when I emigrate.  Granted, I'm small fish but I am hoping it works.  It is a benefit I will never step foot in the US after I leave though.

August's picture

>>>The damnedest thing is that I would give up my SS benefits if I do that.

It's good to hear I'm not the only poor schlub with that problem.  Older indiviuals contemplating expatriation need to understand that losing (i.e. 100%) your SS retirement benefits is indeed possible;  this depends on your post-USA residency and citizenship arrangements, and the specific details are subject to change over time.  Amazingly, the official SS website actually has a very good on-line tool to lead you to your answers, be they good or ill.  Start with "payments abroad" and follow the breadcrumbs...

Fred C Dobbs's picture

I do not think you will loose your SS benefits if you give up your US citizenship.  Look into it first. 

What you will need is another passport from another country.  Not easy for everyone to get. 

ProsperD9's picture

If you have another citizenship (which is the only way you can renounce, you can't be stateless) then you can collect SS from your other country. Don't count on United States SS being around for too much longer. If it is, the amount you might collect may not be worth it anyway!

LA_Goldbug's picture

What the Hell with these "down votes" ???? Get a life whoever you are.

gonetogalt's picture

Use a remail service...UPS package center with PO Box may work. Use  Debit/ATM card for as long as that's viable. Don't tell them you're gone, why wave a red rag at a bull...just stay quiet in the corner. After you secure second citizenship...if possible...it's very difficult and not really necessary depending on your situation...change your name, scrub connections to your previous self, (may require bribery, loss of records, files, marriage to foreign national, limitless routes here). Draw your SS at the ATM. Upgrade security settings monthly for foreign location withdrawl. None of this is hard. Just do it.

847328_3527's picture

Restructure Obamacare or abolish it.

Abolish FATCA and thousands of other odious regulations that harm Americans and small businesses and hard working Americans more then any terrorist ever did. Reject Obama's jihadist destruction of the USA and abolish these diabolical laws!

CRM114's picture

The effect of FATCA is far worse than bothering a few US tax exiles. It in practice obliges foreign institutions and citizens to do whatever the IRS asks.

 

FATCA made the US Government  a bully, and we hate you for it.

HRH Feant's picture
HRH Feant (not verified) CRM114 Jan 31, 2017 11:33 PM

Dup.

HRH Feant's picture
HRH Feant (not verified) CRM114 Jan 31, 2017 11:32 PM

Amen. I hate the FATCA rule more than any other rule the government has created because it makes me a fucking tax slave for life.

I am free. I am not a slave. I am not property. Period.

LA_Goldbug's picture

It also makes you look like a criminal overseas judging by the reaction of the financial institutions overseas. If I was out there I would be pissed.

WernerHeisenberg's picture

Yep.  I was a FATCA refugee, one of the 20,000 who renounced.  My current slave plantation country also sucks.  But it won't chase me around the world trying to tax me. 

LA_Goldbug's picture

"My current slave plantation country also sucks. But it won't chase me around the world trying to tax me. "

Good one :-)

chubbar's picture

It was always said by the people who have broken free of the system to have citizenship in one country (not US), live in another and keep your money in a 3rd country. I think with the correct combination of countries this is probably the safest situation but you definitely want a country with solid banking laws for holding your money.

Ghost who Walks's picture

I am Australian and although the Australian Tax Office nominally allows residency in other countries to be an excuse to not be liable for Australian taxes, they have a whole bunch of contradictory rules that means you really need to be out of Australia at least 3 years and have absolutley no ties to Australia or they reserve the right to tax you at Australian rates with none of the allowable deductions that you might get if you lived in Australia. I have alrady been stung once, so now my wife now lives with me in Asia. My household goods were shipped out of the country and I had to cancel lots of things linking me to Australia to indicate that I am not an Australian Resident. In one case they taxed people who had been living in Greece for 9 years because they had a rental property in Australia. The Tax was on their total income not just the rental income. The ATO beleives that it has the right to determine if you are an Australian resident for tax purposes, no independent tribunal involved in this.

I would like to see a way to demonstrate to all Tax departments that we are no longer their Tax cows for milking. While I am a peaceful person, I think we need a strategy that indicates to the appropriate Tax Authority that it it is not worth their while to annoy us once we become Foreign residents. In my dreams I see myself as a resident of a Country so powerful, that if the ATO annoys me they seize Australian Government assets to demonstrate that its not a sustainable strategy to pick on the residents of this country. Until this sort of thing happens, the ATO will treat me as a cow to be milked. Since most governments co-operate on Tax I can't see this happening until and unless we create a new country specifically to cover this need. Sort of a New Antarctica with teeth to cause the Tax Publicans to back off.

TeethVillage88s's picture

Perhaps it made the USA an Empire that everyone now had to acknowledge.

Very English that!

Farmer Joe in Brooklyn's picture

I had land and a home in Costa Rica...

I recently sold it largely because of all of the headaches with complying with FATCA. Every dime that went into that place was legal, accounted for in the US, and already taxed.

The banks down there often refuse to open accounts for US expats. Business has to be run through escrow companies, who charge an extra layer of fees.

I'm tired of being treated like a criminal by our government, when I have always operated on the up and up. Try going to the bank and taking out $10,000 in cash. It's almost as if you asked for a baby's heart. 

The more tyrannical our government becomes, the more honest people will say "fuck it" and learn to game the system...

 

HRH Feant's picture

Yep. Sickening ain't it? Enough. As I said, above, I am not government fucking property and I most certainly am not the property of the goddamned IRS.

Leave. Me. Alone.

business as stusual's picture

The harder they squeeze, the more people slip through their fingers.

Never One Roach's picture

I read that many expats in Thailand and HK had the same troubles. No bank would do business with them.

Stinkytofu's picture

not quite.  i've got one bank account in china, and two in thailand.

working in china now, retiring in thailand next year.

many banks will refuse to do business with americans, but not all.

just means you have to keep trying until one takes pity on you.

surprising when the first form you are given is not a chinese or

thai financial form, it's an official IRS fatca form.

 

currently pay about 1% tax on income in china (yes, 1%).

fully excluded and untaxed by irs, but must file and report.

 

beats the military; back then posted overseas had to pay

tax to feds AND to state government.

 

 

Déjà view's picture

"many banks will refuse to do business with americans, but not all.

just means you have to keep trying until one takes pity on you"...

 

Shady banks...not reputable banks...

Stinkytofu's picture

reputable?

 

way back when it was fairly easy to open an account at many (don't know about most)

banks with just your passport as identification.  rules and regulations are getting stricter,

most banks now require a long-term visa in your passport, and perhaps a rental

contract or a notarized statement of some sort from your embassy.

 

the laws may permit most banks to offer accounts to foreigners, but many simply don't

want the increased paperwork burden or having to provide info to the 'merkan gub'mint.

when banks do offer accounts, it may not be at every branch.  it's often up to the

individual branch managers whether they want to deal with the headaches.

 

bangkok bank says they offer accounts to foreigners, but you'll have to visit any

number of branches to find the ones that will accept your business.

 

 

 

East Indian's picture

My entire clan has been always here in India, for donkey's centuries. Yet, our bankers and our demat account companies asked all of us a lot of intruding questions, which our govt never asked, to comply with FATCA! Talk about injustice!

venturen's picture

and yet...Obama entire donor base pays about 9% taxes and hides money all over the world...with cusstom laws!

Never One Roach's picture

The entire tax code has to be re-written or seriously modified imo. Everyone agrees with that and hopefully Trump will give some tax breaks to the middle class and small business to kick start us again after the oppressive Obama regime.