Monday, September 16, 2013

The End of American Ex-Pat Influence in the World

As the economy becomes more global, fewer and fewer Americans will be participants on the international scene. Why? The US government, in its infinite pursuit of more tax revenue, is making it almost impossible for America citizens to work overseas.

First, the US is the only country in the world that taxes its citizens no matter where they live. Even if you've not lived in the US for decades and earn no income from US sources. Even if you are a US citizen by virtue of being born to an American parent -- and you've never ever set foot on American soil. No other country has such audacity.

Now, in an effort to ostensibly track down wealthy tax cheats hiding their money in foreign banks, the US Congress has passed FATCA - the Foreign Account Tax Compliance Act. Beginning in 2014, foreign banks are required to report the financial information for any American customers ... or the banks can face stiff fines.

But rather than comply with the paperwork required by the US, foreign banks are making life easier for themselves -- by arbitrarily closing the accounts of Americans (especially smaller accounts, ie non-wealthy American citizens).

This, of course, makes life much more difficult for the non-wealthy American ex-pats. They have no bank account for making simple deposits and withdrawals. They cannot apply for a mortgage or a car loan. In short, it is almost impossible to do normal day-to-day things in a foreign country.

Many Americans living overseas are voluntarily giving up their US citizenship and passport - record numbers, in fact. (Note: they can only do this if they have secured citizenship in another country - a process that typically takes 5 to 12 years.)

It's not an easy choice to make ... but it is a choice being forced on them by a hostile US government which demands more and more money to feed its voracious spending appetite.

This will also affect American-based multi-national companies. They will have more difficulty sending key employees overseas, even for short-term assignments, because those employees will not be able to open basic bank accounts. In effect, American presence and influence will diminish outside the US itself.

Is this what Congress and the President intended? If they are pursuing wealthy cheats, why not limit the reporting requirements to accounts above a certain threshold?

As always, it's the little guys who get hurt by the unintended consequences.

The photo above is of D-L being interviewed by Swiss TV station RTS Un for the program Mise au Point, which aired last night and focused on FATCA. It's mostly in French, though you can hear some of D-L's English remarks. You can view the program at http://www.rts.ch/emissions/mise-au-point/5131227-mise-au-point.html. The FATCA segment runs from about 09:53 to 22:17.

I'm proud of her speaking out. Maybe if enough Americans contact their Congressman and Senators, FATCA can be revised and people can live their lives wherever they wish to pursue happiness.

1 comment:

  1. "As always, it's the little guys who get hurt by the unintended consequences."

    Could not agree more. We are the eggs being broken in the making of the FATCA omelet.

    As you so rightly point out this is having a terrible effect on the ability of ordinary Americans to be global - to participate in this extraordinary movement called 'globalization.'

    One suggestion for people in the EU. Sophie in't Veld, the MEP from The Netherlands is on top of this topic. She is doing what she can but she needs support. Anyone in an EU country who is affected by FATCA should contact her office. Her coordinates are here:

    http://www.europarl.europa.eu/meps/fr/28266/SOPHIA_IN+%27T+VELD_home.html;jsessionid=07900FE72FB3C6362F2E10CFD6685A34.node2

    with a copy of the mail to their local country MEP's.

    ReplyDelete