New Flophouse Address:

You will find all the posts, comments, and reading lists (old and some new ones I just published) here:

Monday, December 12, 2011

Hard Times for the American Diaspora

The relationship between the American Diaspora and the home country is a strange one.  There is no official recognition of its existence.  The last time any serious effort was made to count the number of Americans living abroad was during the Eisenhower administration.  When asked, the U.S. government replies that it simply lacks the means to conduct a census which is a rather odd response when you consider that U.S. government is publicly committed to enforcing taxation of American citizens abroad.  If you can't count them and you don't know where they are, how in heaven's name are you going to send them a tax bill?  The answer to this, of course, was FATCA which asks the host countries to be enforcers of American law abroad - something that other countries are understandably rather loathe to do.  In some sense FATCA is, in my view, an admission of weakness by the U.S. government. It is saying openly that it lacks the means to assert effective sovereignty over its citizens abroad and must call on other states for help.

This is a very sad state of affairs since it assumes ill-will on the part of Americans abroad, it punishes the host countries that welcome American citizens as residents and it is quite likely to reduce foreign investment in the U.S.  If including an American as a business partner in a transnational business venture means tons of paperwork, complying with onerous reporting requirements, and risking the seizure of one's assets, that does have a dampening effect on the non-US partners' enthusiasm or doing business with Americans.

I suspect that this will not end well for anyone and I think that is a shame.  If I may make a modest proposition?  Wouldn't it be better if, instead of trying to punish people, a real effort were made by the U.S. government to negotiate with its diaspora?   When the U.S. government takes action that impacts  states, it listens to their representatives and is obliged to take their interests and concerns into account.  The American diaspora does not have that kind of representation but it should.  If the American diaspora was taken into account, it would have a population larger than 25 states - a bit bigger than Kentucky but somewhat smaller than Colorado.  There is even a precedent that goes back to 1787 for this kind of representation for people living outside the borders of the United States proper.  They are called "delegates."  These delegates can vote in the committees of which they are members but they cannot vote on the floor of the House of Representatives.

But to get there from where we are now would require a major shift in mentality.  First of all, the United States of America would have to admit (and there seem to be some real psychological barriers to this) that a large number of its citizens do not choose to live in the United States.  In all my years I have never met an American who liked hearing this - it makes them very uncomfortable.

It would also mean learning something about the diasporans and putting a human face on them.  It's very easy to call U.S. citizens abroad tax cheats and so on until you actually meet a lovely 70ish American lady who has been living in Paris since World War II who is not rich, who still identifies herself firmly as an American and who considers herself to be an unofficial ambassador from her home country to her country of residence.

Another very good example of the diaspora as asset can be found in one of Robert Kaplan's books where he describes how one retired military expatriate American in Thailand acts as a facilitator between the U.S. military and the Thai authorities.  Or, for another example, watch Suzanne Moyer's Ted Talk about connecting people in Morocco with people in the States to everyone's benefit.

I would argue that these people are assets, not liabilities, or people to be punished.  Their activities are generally helpful, not hurtful, of American interests.  It is unfortunate that all the quiet good they do is not better recognized.

Furthermore it is downright painful to listen to some of the rhetoric coming from members of Congress.  Americans in general tend to have a very healthy suspicion of government and talk like this can drive them to a state of deep paranoia since it implies that their government sees them as the enemy to be hunted down with the help of their host countries.

It doesn't have to be this way and I honestly don't think that much effort would be required to make it better.  How hard would it be really to come up with an outreach program though the U.S. embassies all around the world that would gently remind Americans abroad of their rights (to vote, for example) and their responsibilities as citizens wherever they happen to be living?   Or what about an amnesty for those citizens who, after living abroad for many years, had no idea of the laws being passed in Congress that affect them since they have no effective representation that would keep them informed and work on their behalf?

For this to work and for Americans abroad to come forward and participate there needs to be an atmosphere of trust.  No sane individual is going to do so if he or she thinks that the U.S. government is going to punish him or her for ignorance and destroy their families.  FATCA is simply confirmation for many that this is exactly what will happen.

And that, mes amis, is a very sad state of affairs indeed.


Expat Taxes said...

Interesting Post!

Peter W. Dunn said...

Great post would be good to cross post this at Isaac Brock.