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Monday, October 22, 2012

Perspectives on Compliance with Citizenship-Based Taxation

I've thought more about taxation in the past year than in all my 47 years combined. For most of my life taxation has been a no-brainer. When I lived in the U.S. and worked my way through university, I was subject to local and federal taxes and I always paid up. The only time I ever really gave it any thought was at election time when I was asked if I would be willing to fund this and such. Sometimes I said yes and sometimes I said no but after checking the appropriate boxes, I let it go and went on with my life.

When I moved to France many years ago I brought that attitude with me.  I firmly believe that taxes are the price of civilization.  If I want healthcare, good roads, firemen, teachers, public transportation, museums and all the goodies that government can provide then I need to haul out my checkbook and fund these things.  

When I talk to my fellow Americans abroad that's pretty much their take on it as well.  I hear very few complaints from Americans living in France about the high rate of taxation because they (and I) perceive that being able to live in a well-run modern country under good government is worth the price.  

So given that most us of don't object to being taxed, nor do we have a problem with government, why then do Americans abroad have a problem with U.S. citizenship-based taxation?   Many of my friends back in the U.S. ask me in all sincerity, "What's the big deal?  Just file the damn forms already. " Take the exemptions and those foreign tax credits, they assure me, and you won't actually have to pay anything.

I listen to these arguments attentively and I have to wonder if they've really thought this one through.  Do they really want all 6-7 million of us to flood the U.S. government with millions of useless pieces of paper (tax forms, bank account and asset reports) that will cost U.S. taxpayers money to process but that they themselves believe will not generate a dime of revenue.  

Aside from the fact that they are fundamentally incorrect and that, yes, Americans abroad can end up paying U.S. taxes even if they take all the exemptions, are homelanders really saying that they are so determined to get us to comply that they are willing to divert their tax dollars away from things like interstate highways, national parks and the defense of the nation to ensure that a few folks living abroad aren't getting away with something?

The answer, strangely enough, seems to be "yes."   I'm starting to believe (and please feel free to disagree) that it's not really about the money, it's about the very uneasy relationship that homeland Americans have with the Americans who live abroad.  Homelanders don't know much about us and so we are a blank screen upon which they can project their fantasies (good and bad).

Some seem to feel that we've done a marvelous and very courageous thing by "escaping America" and wish they could do they same.  How else to explain the popularity of all those books about quitting one's job, buying a plane ticket and moving to France to restore a stone farmhouse or live it up in Paris?  Others are rather suspicious of us and our loyalties.  They don't understand why anyone would leave the U.S. and even when do see a reason for it (a job or marriage to a foreign national)  they seem to feel that such choices should have consequences.  I was once told by an older American gentleman in an airport that my marriage to a Frenchman and our decision to live in his country should have meant that I lost my U.S. citizenship.  He was dead serious and a bit hostile about it but it was his point of view and I have to thank him for stating it so clearly.  And, yes, there was a time when that would have been true - marriage, long-term residency in another country or acquiring another citizenship would have resulted in the loss of one's U.S. citizenship.  The law may have changed but attitudes and feelings about this sort of thing remain and may take generations to catch up.

So from the homelander perspective (a perspective I am trying desperately to understand) asking those of us who live abroad to participate in the national ritual of filing U.S. tax form 1040 every year seems (to them) such a small thing to ask.  It irritates and hurts them that we are not happy about it.  I was reading through the comments following a recent media article on this topic and I winced when I read one homelander's words:  it's the least you can do, he said, after having abandoned us.

I have no control over other people's thoughts and feelings.  The best I can do is to try and understand the other perspective and have some empathy for it.  But empathy can only take us so far.  On some level real understanding isn't possible.  Homelanders who have never lived outside the U.S. can't know in their bones what it's like to live abroad.  And those of us who did leave for distant shores will never know what it's like to live in just one country for one's entire life.  These are two radically different experiences and they are mutually exclusive - you can't live both.

Best I can do is give my perspective as an American who chose to leave the U.S. and who up until very recently was rather proud of being an unofficial ambassador from my home country to my host country.          I come from one of the most beautiful and congenial parts of the U.S., the Pacific Northwest, and there was never anything to "escape."  I could have spent my entire life in the Puget Sound region and I think it would have been a very good life - not better than the life I've lived abroad, just different.  I don't think I've done any harm by living outside the U.S. and when I've seen an opportunity to do some quiet good on my home country's behalf, I stepped up and did my best.  I may not have agreed with the decision to go to war in Iraq but when I was faced with a group of angry Frenchmen and women questioning me about it over lunch, I tried to convey an American perspective on it.  That Americans themselves have changed their minds about the whole business does not in my mind change anything and if I had to do it over I would do it again in a heartbeat.  I truly believed it was my job to make that effort at mutual understanding.  In some ways living outside the U.S. made me much more aware of what it means to be an American.

So I get a bit testy when I feel that my loyalty is being questioned and that the burden is on me to prove that I'm not a tax evader or a drug lord or a money launderer.  For the record, I work in IT and I think the most nefarious thing I've ever done is be a foot soldier for international capitalism (perfectly legal but morally dubious).  The presumption of innocence seems to be suspended for those of us who have done something that, from our perspective is quite normal, but is viewed with enormous suspicion by our compatriots back in the home country:  live, work, and raise families outside the U.S.  And I guess I fail to see the link between filing a 1040 or a bank account report and love for my country of origin. As a loyalty test, let's face it, it's rather ridiculous.

The bottom line is that I, like many others, simply don't agree with the basic premise of citizenship-based taxation.  We don't see this as an effort to evade our responsibilities or to abandon the homeland.  It's about the fact that we already pay taxes where we live, earn our income and save for retirement and we don't think we should have to pay taxes or file complicated paperwork to two or more countries on the same income and assets.  If I had moved from Washington state to Texas instead of France, I doubt any homelander would argue that I would owe taxes to Washington state for the rest of my life.  What we want is that the basic principle, territorial taxation, be extended to those of us who move, not just across the U.S. continent, but across countries as well.  Tax us on our U.S. assets, tax us if we move back to the U.S., but don't go after our savings earned elsewhere that has already been taxed in the country in which it (and we) reside.

One last word.  Do not underestimate how strongly Americans abroad feel about this.   I have yet to meet one American abroad who is non-compliant with the U.S. tax and reporting requirements who believes in his or her heart that he is a "tax evader."  And all the yelling and efforts by the homeland aren't going to change that and I would even go so far as say that I don't think the much touted new IRS Path to Compliance is going to help much.  Yes, a 5% penalty is better than a 27.5% penalty but many view even that as an admission of guilt.  Psychologically I don't think Americans abroad are willing to agree and pay out that kind of money because they don't think they've done anything wrong.

You could hire 10,000 new international IRS agents (proposed number is actually around 800) to enforce citizenship-base taxation around the world and all that will do in my honest opinion is expand the scope and size of the U.S. government, generate enormous ill-will among those who are in a position to do the U.S. some good in their host countries, create a new class of Closet Americans (those who have tossed their passports in a drawer, avoid the U.S. and hope for better days), and radically increase the number of U.S. citizens seeking second citizenships and renouncing.  And all of these lovely outcomes paid for by taxpayers living in the U.S. to the detriment of other homeland priorities like education, infrastructure, national defense, parks and the like.

Two different perspectives and we seem to be at an impasse these days.  I first started writing many months ago about what I call the Diaspora Tax War of 2012 and I regret to say that today the situation has not fundamentally changed.  I'm even seeing some signs that really disturb me -  the development of an "us" versus "them" mentality where once upon a time it was simply Americans at home and Americans abroad.  From the perspective of the former, the latter just need to get with the program, do their duty, and comply with the law that requires all U.S. citizens to report their personal finances and submit for taxation regardless of where they live or earn a living.  Well, Americans abroad don't agree with the program, don't see that this has anything to do with loyalty to, and love of, the U.S., and they feel the laws (FATCA and citizenship-based taxation) are fundamentally unjust and unreasonable.

The way it stands right now nobody is going to win this one.  To the division between Red and Blue States, we can now proudly add a divide between "homelanders" and Americans abroad.

Does kind of look like that grand American experiment is fracturing into smaller and smaller pieces.  So what are we all willing to do to fix it?  Does anyone these days (at home or abroad) even care enough to try or is this a lost cause?  I really have to wonder....


A broken man on a Halifax pier said...

If it was just a 1040 I would just make my peace with it. But overseas tax compliance, at least for people with rooted economic lives outside the US (businesses, retirement savings organized according to the system of the host country, etc.) is almost impossibly burdensome, expensive and complicated (in the case of PFICs, deliberately complicated).

Anonymous said...

Hello Victoria
Thank you for this thoughtful piece.

The USA is a country built on immigration, a place folks yearn to go to, not depart from. It does not have a "colonial" history where establishment abroad was an important element of maintaining the "Empire", recognized and appreciated. Throughout its very short history the USA has always reverted to isolationist policies. Due to the mere size and natural resources the USA could be self-sufficient (especially once the need for Middle East oil no longer exists). And lastly, it is just the way Americans are raised and educated. One has to keep in mind that it is a nation of immigrants and so I would say they have done a good job of creating unity around the notion of being American -I call it the "Greatest Nation on Earth" propaganda machine.

It is indeed a sad state affairs when the only relationship between America and its diaspora is the IRS and the only value the USA places on their countrymen and women abroad is as a potential source of taxation revenues.

None of this is new. Mainstream Americans have always had a difficult relationship with anything foreign. It could be different but there is little appetite for the idea that America could benefit from two (repeat TWO) way exchange with other nations.

I'm sorry to say that I don't believe the situation will change in my lifetime. Such a pity and such a waste. Just think what a
truly great nation America could be if it opened its eyes, heart, mind and arms to the rest of the world- embracing it, enjoying the difference and the intellectual and personal stimulation of experiencing and understanding something different. Otherwise, how would anyone ever truly be able to make the claim that they are a citizen of the greatest nation on earth?

Anonymous said...

Homelanders and US citizens abroad are like two ships passing in the night which will never connect.

Anonymous said...

Thank you for such an eloquent expression of what I too think but could never articulate in such a clear manner.

Tim said...

I have been thinking about a response all day long. A few points I don't think the truly average person has much understanding or comprehension of what expats must face. Second even those who are more educated have a certain partiality towards living in the US. I think for example many IT workers in the US would be shocked that someone such as yourself who is/was in IT and from Seattle would choose to live outside of Paris for the last twenty years. Many people in IT in the US have it ingrained in themselves that the US is top dog in IT. This goes for a lot of other professions. A lot of this is tied to the perception not entirely unfounded that for all of America's problems the university system is still very much a cut above that of the rest of the world. I think many "educated professionals" such Doctors, Lawyers, Professor's as worldly as they seem would have a hard time seeing themselves living outside the US and maintaining the lifestyle they are accustomed too living inside the US.

Along these lines the US also always had very low unemployment by international standards whereas lets say they UK with high unemployment actually desired high emigration as a way of lowering domestic unemployment. This has changed though especially in the last few years causing considerable angst in the US. Now you have a situation where someplace like Alberta has substantially lower unemployment than the US average.

Tim said...

Another interesting thing I just found:

Mr. Michaels started the presentation by discussing the elections that occurred in France in the late spring – early summer 2012. During that discussion, it was proposed that the France tax citizens living outside of France on their worldwide taxation in quite a similar way to the approach taken by the United States. Mr. Michaels went on to state that while there had been a few countries that have taken this approach to taxation, the only major developed country was the United States. The proposal by the French government to tax based upon citizenship, according to Michaels, is the first major attempt by a European government to impose worldwide taxation based on citizenship.

While Mr. Michaels did acknowledge that tax based on citizenship is a real risk given the global economic environment and the need for countries to generate a tax revenue, he also acknowledged the likelihood that the proposal discussed during the French elections would be blocked. Among other reasons, it would require the complete rewriting of all tax treaties that France has with every country around the world.
(As I commented on Brock Canada should refuse to go along with this under any circumstances no matter how much Hollande and co. don't like it. Tell Hollande to pound sand like Eritrea).

However, Mr. Michaels said that notwithstanding this fact, it would be prudent for wealth owners to consider planning for the future in light of the fact that in future there may be more countries than just the US that move towards taxes based on citizenship.

Anonymous said...

The one area of compliance many U.S. persons forget about is phantom gains in USD.

For example if you are paid in EUR, you need to record the exchange rate in USD the day you are paid, then when you spend this EUR you need to track the value of what you spent in USD to determine if you had a gain or a loss in USD.

You also need to track any purchases that may be resold in the future, so if you purchased a house using EUR you need to determine the value of the EUR you paid in USD that day and when you sell the house you need determine the value in USD the day you receive payment to determine any gain or loss in USD, you could have a loss in EUR and still have a gain in USD.

I renounced, that gave me the peace of mind I needed.

Good luck, and I hope you are doing well.

Victoria FERAUGE said...

@Broken Man, Yes, I 'm with you. If it were relatively simple to comply. If it did not require jumping through multiple hoops every year I might feel better about it. Or here's an idea: if Americans abroad must report all their local bank accounts, how about making it a requirement that ALL Americans in the homeland report theirs too? That would be fair, right? :-)

@anonymous, Thank you for a very thoughtful comment. Yes, Americans have at different times in the nation's history retreated into isolationism. I don't really have an opinion about whether or not that would be a good idea right now but here's something I am 100% sure about: American big business won't allow a full retreat. They want to play in a globalized world. I agree with you completely about the immigration machine though I think there are signs that this is not working as well as it has in the past. Has nothing to do with the US and everything to do with "the rise of the rest." I just read a book by V. Wadwha that I plan to review today or tomorrow.

@Tim, I honestly think ti works both ways. I was talking to my dearest friend here in France about this one day. He's a brilliant man - works for a high-tech firm here in France and speaks flawless English. He's never had the desire to live anything other than France. He just doesn't see why that would be interesting. We've talked about this at great length and clearly we don't understand each other (though he is kind enough to say that he is very glad that I moved to France :-) But I came to the conclusion that the fact that we do TRY to understand each other make all the difference. Empathy takes effort. Americans, as you point out, don't see why the exercise would be worth their time. I think that is a very dangerous (potentially deadly) flaw. The world changed and many Americans I talk to seem either oblivious or a bit shocked that the rest of the world is doing just fine or even better than the US. How did that happen?

The US is a great nation but it has weaknesses, flaws. 200+ years is a blink in time. Just because it has done well up to now does not guarantee that it will do well in the future. What made it a magnet in times past may not hold true in the 21st century. I'm not even talking about decline - I'm talking about what's going on in the rest of the world independently of what the US does or does not do. Eva Hoffman put it so beautifully when she said that no place is now the center. I think that will continue and the fear that I have is not that the US will become isolationist but that the American people will misunderstand "the rise of the rest" and react with hostility and anger to a world they can no longer lead. This might lead to aggression against the rest of the world AND pit U.S. citizens in the homeland against each other.

Just me said...

Well... after such an eloquent post, and thoughtful comments there is nothing much more I can add of any significance. I just wanted to thank you for applying that chemo hampered brain to this lovely prose. I am in great admiration of how well you express these perspectives.

I know you have been following the comments and new divide in the recent WSJ article.

Wary Swiss Banks Shun Yanks

I wished some of those that have contributed to the 500 plus comments would discover your blog. It might help bridge the divide.

celtat22 said...

Good morning. Thanks for a pertinent and well written (as usual) message. How much money will have been spent on the presidential election compared to how much tax revenue could be collected from citizens abroad : I didn't do the math, and, granted, they are two different things, but I am sure that some of those who contribute thousands of dollars to the candidate who promises to represent their personal interests are also those that think the hard working Americans abroad should pay more in taxes. And what about the immigrants in the US? Have they abandoned their home country just because they live and work in the US? Probably not.

StillAmerican said...

I am fortunate to have found you here. You expressed so well my thoughts and feelings about being a dual citizen Brazil/USA living in working in Brazil after being in the USA 30 years. I have been under a lot of pressure, with sleepless nights, trying to comply with the US taxation and FBARs to the point of questioning if it is worth to remain an US citizen. This has been a nightmare for me and my family. I don´t beoieve Americans in the mainland know what we are going through. Thank you!

Just me said...


I sent your blog post to a good friend who has been very much involved in the issues of Americans Abroad for years. He was a good friend with Andy Sundberg who has been removed from the battle field by the effects of entropy, my choice for a way of describing our inevitable passing without using the D word. I thought I would share what he sent back to me.

It illustrates what we have learned back here on the home front: We simply have to keep coming up with analogies that homelanders can "get".

For instance, the issue of trying to explain the "expatriation" feelings is fairly simple: Ask the person where his family came from to America originally. Ireland? Italy? Germany? Russia? Philippines? Everyone in America is an expat from their land of birth! So how would they feel if Ireland or Italy or Germany decided to start sending them forms to fill out even if they owed nothing? And how would they feel if they actually owed something? Would they feel obligated to pay? Remember, for some countries like Ireland and Italy, if they can show a paternal line in their family they have a right to dual citizenship upon application.

It is virtually impossible to explain what it is like being an American living overseas, or even the decision to do so. But we can ALL turn the tables by putting it in a context that Americans can understand. That's why I always use the moving from California with high income taxes to Nevada with no income tax, and asking them if they feel it is California's right to tax them if they now live in Nevada?

That's why I recently wrote that members of Congress simply won't respond to the equity, equality, or philosophical arguments about citizen- vs territorial-based taxation issue. They simply don't know enough about it, don't want to know enough about it, will never know about it, and it won't get them re-elected! JOBS at home get them elected - that has to be our messaging: Taxing Americans overseas costs jobs at home!

barbara lowenstein said...

I truly appreciated your thoughtful piece, and agree with you wholeheartedly. While the IRS uses FATCA to throw an absurdly unfair net, catching mostly law-abiding and tax-paying American expats, my husband and I wait with great trepidation to see what the Brazilian banking community plans to do. (We're both Americans, and we retired to Brazil ten years ago.) Our sense is that Brazilian banks will refuse to comply with FATCA and instead close down the accounts of their American clients. How we will be able to conduct a life without banking services in this global world we cannot say. We have joined many, many expats here and elsewhere in suffering sleepless nights.

I was particularly struck by your discussion of how important American expats are to America as good-will ambassadors. This is a side of our presence in other countries that is completely ignored by the homelanders, as you call them. I've more than once found myself trying to explain this or that U.S. policy to a respectful (but skeptical) audience. We represent our country every single day, and how we talk to people, how we deal with daily situations, how we comport ourselves, whether and how well we learn another's language is all part of our being informal, but important, delegates to the world.

I don't see citizenship-based taxation ending in my lifetime. I can only hope that FATCA will be amended to exempt Americans residing abroad, while they concentrate on stateside Americans just hiding money abroad. That was their big fish target in the first place. They should stick to it.

Shadow Raider said...

Victoria, you asked "So what are we all willing to do to fix it? Does anyone these days (at home or abroad) even care enough to try or is this a lost cause?"

Perhaps you haven't read about my latest progress here.

StillAmerican said...

Americans Abroad should be members of AARO and ACA. Let´s support them!

StillAmerican said...

Let´s join AARO and ACA!

M3nac3r said...

Well stated Ms. Victoria and the rest of you fellow expats. Keep writing. Keep shouting. We are going to have to get a lot louder to be taken seriously.

bubblebustin said...

"No country can live in isolation". The alienation of its own citizens brings the US closer to its demise. 1780+ canaries last year aren't enough of a warning that the US's policies are toxic, it's much less thought consuming to blame the victim in this case.

calgary411 said...

Hello Victoria,

I hope this finds you well.

I continue to be amazed with all you do and want to congratulate you on this, your latest effort. You so well express the divide in the perceptions of the Americans Abroad of whatever description, and most of those within the bounds of continental USA on what our US responsibilities are due to the accidents of our birth.

I can't add to anything others have so well already said, but want to give you my appreciation, my admiration and my respect for all you do.

Be well! Thanks, Victoria.

Tim said...

Dave Reichert of WA-8 has now gone public with his concerns over FATCA. Press release on his website:

As an aside Jim McDermott is also a member of the House Ways and Means Committee too.

Anonymous said...


I'm sorry to inform you, but despite your ruminations, you just don't get it. US tax law is not about collecting taxes. It is about an inquisitorial gov't controlling the population. It's about currency controls and keeping people compliant out of fear. The divide it's creating between US residents and expats is jsut a side benefit. As you pointed out (probably the only thing you said that is cogent), it's only one of many ways they divide and conquer.

To your comment: "The way it stands right now nobody is going to win this one."

Clearly, Big Brother is winning. Might I suggest you read 1984?

Victoria FERAUGE said...

@Just Me, The WSJ article was really fine and your and Roger's comments were on the money. The nice thing about the very negative (and sometimes pretty ignorant) comments is that helps us to see what the objections to our position are. At least that's what I tell myself after I read a few "you are all tax evaders!" comments and my blood pressure rises to a dangerous level. And thanks so much for sharing the note from Andy's colleague. He's right and analogies work!

Celtat22, Thank you and that's a very good point about the elections.

@StillAmerican, I love your user name. :-) I can tell you that there are folks here in France who are feeling the same thing. It is a nightmare for so many. Oh the conversations I'm having to have with my French husband these days because he is collateral damage in all this. It make me so damn sad for us, our families and for the US. Courage! And yes you are absolutely correct we need to join ACA and AARO. Good organizations and I'm a member of both.

@Barbara Lowenstein, Thank you so much for sharing your experience about being an ambassador. Yes, the folks back in the US miss this one but it's true. I live in a place where Americans are not necessarily loved (is that true in Brazil as well?) But whatever their feelings about the US people in our host countries will often give a hearing because we are their colleagues, friends, wives, husbands, mother-in-law and so on. And as you pointed out it is not necessarily what we say so much as what we do and how we behave. I really liked how you put it, "We represent our country every single day, and how we talk to people, how we deal with daily situations, how we comport ourselves, whether and how well we learn another's language is all part of our being informal, but important, delegates to the world."

@Shadow Raider, That is absolutely BRILLIANT!

@M3nac3r, Absolutely! Americans abroad tend to be very quiet but time for that has passed. If we don't raise our voices and insist on being heard we are not only going to lose this one but all the future battles as well. Time to raise our voices and get heard even if we do have terrible representation.

@bubblebustin, Good to see you here and thanks for the comment. Yes, the nearly 2000 renunciants are indeed the canaries in the coal mine. Wonder what 2012 will bring?

@calgary411, So wonderful to hear from you. Thank you for your comment and my deep appreciation to all the U.S. persons in Canada who are working so hard to fight this. You folks are on the front lines and very close to the heart of the problem. You folks have a lot of courage and you have my respect and admiration.

@Tim, Thanks for the link. I wrote to McDermott (he's my rep in Seattle) and have yet to receive an answer. I've decided that if I don't hear from him I'm going to write again and again and again. I call this the "Just Me" method. :-)

@anonymous, You may be right. My starting position is that they aren't that bright :-) But I could be wrong. It's been many many years since I've read 1984 but I will take your advice and read it again. Will give me a good reason to head down to the American library.

Christophe said...

Hi Victoria,

I hope you're doing well.
You said in one of your comments:
"how about making it a requirement that ALL Americans in the homeland report theirs too? That would be fair, right? :-)"
Don't worry, this is coming. Not as extensively as on a FBAR form, but regulators make brokers collect this type of information from their customers. Yesterday, my wife and I had a meeting with the investment firm where she hold a small retirement fund. She had not contributed/get in touch with them since we got married. They set up a meeting to get all the information they were missing regarding net worth, debt, etc. They said they're required by regulators to get this type of info, and if we refused, her account would likely be closed.
The purpose of the meeting was to acquire that info, the guy even refused to provide simple financial advice without getting paid. Well, we're closing the account and moving to a friendlier firm...

Anonymous said...

Bravo Victoria for a lovely post.

Let me please tell my testimonial so everyone can see how "tax evading" had absolutely nothing to do with my sad and traumatic renunciation.
peace of mind, mental health, and marital problems.

Having lived in the US as a child, I have instilled in my a fundamental sense of justice and fairness. Like all US kids i started every morning saying the pledge of allegiance 'with liberty and justice for ALL". This whole situation is breathtakingly unjust and completely unfair. I found myself feeling emotions and living situations that only refugees from authoritarian countries normally experience. Coming from my own (birth) country, "the land of the free", I found the injustice even more staggering. I absolutely cannot get past the basic human unfairness factor and that is the bottom line which made me take the big step and return my passport to the embassy.

Just me said...

Thought I would share this video (with an attempt at humor) which tells the tale of the American Expats plight. It is not long.

Victoria FERAUGE said...

@Christophe, Good to see again. That is fascinating. I had no idea. The net tightens! :-)

@anonymous, Thank you so much for the comment because it really captures beautifully the disillusionment a lot of us are feeling. We don't agree that this is right and many of us feel so strongly about it that we are contemplating turning in our passports.

@just me, That is absolutely BRILLIANT and I'm going to post it tomorrow. Thanks so much.

Anonymous said...

Hello Victoria
I found this transcript from le Senat "Commission d'enquête sur l'évasion des capitaux et des actifs hors de France et ses incidences fiscales" rather fascinating. It gives you a good idea of how the French view some of the issues on citizenship based taxation, tax evasion, FATCA, etc.|d136365-73652&_c=fatca&rch=ds&de=20111108&au=20121108&dp=1+an&radio=dp&aff=36365&tri=p&off=0&afd=ppr&afd=ppl&afd=pjl&afd=cvn

I did not read all 1200 pages but did a quick search on "FATCA" and "Etats-Unis". It was amazing to read the words of the French contributors, who for the most part, are in great admiration of the American policies regarding taxation and tax evasion.

It is useless to hope that the French would defend their citizens who also happen to have USA nationality.

There are also a few fun comments. One concerns the predominance of the English language (page 435).

There are a few "intervenants" who do understand the dangers of citzenship based taxation - see page 206 "alors même que nous observions une mobilité tout à fait classique au sein d’une économie ouverte, mobilité qu’il ne s’agissait pas d’empêcher"

But generally speaking, those who testified seem to side with the Americans, or accept that it is inevitable page 553 ". De plus, nous savons bien que la mondialisation, les contrôles fiscaux et la finance sont
culturellement anglo-saxsons ; il est donc fort probable que le système américain va se généraliser."

Some of the comments suggest a bit of jealously that the French cannot wield as much power as the Americans. They admit that if the French tried to pull off a FATCA, no one would lift a finger, they would just pull out of the French financial markets.

I did not see anything regarding the costs of implementing FATCA (or an IGA) versus the benefits, but I only read a few paragraphs. It doesn't seem that any representatives of the French banking system nor French consumers participated. No one seems the least bit interested in the fact that it will be the ordinary French citizen - with no ties whatsoever to the USA - who will pay for the fancy reporting to the IRS via increased banking charges.

I'm sure there are many more take aways, it is just a bit much to digest in one go!

Tim said...

A couple of thoughts after speaking to some people in the US on the issue. One is from the perspective of many homelander Americans its hard for them to see how they personally are effected by this in any negative way. Many do not ever think they will live outside the US. It is also(and I do agree with this)hard for many native born US citizens to actually more to another country. It is far far easier to move from one US state any foreign country to another than to move from the US to a foreign country . There is no country on earth other than Canada to a limited degree that gives US citizens immigration preference such as the EU countries give to each other. Since the recession and even before legal immigration to the US such as through the H1-B program is down sharply so native US citizens have less competition in the job market than they did perhaps ten years ago from H1-B's. Fewer jobs due to the recession though.

Tim said...

A couple of more comments:

I talked specifically to someone who was a US citizen and had graduated from college back in 2007 from a major US university with a lot of foreign students. Generally when major companies came to recruit on campus like lets Dassault Systemes(who I know you are familar with) they generally wanted US citizens and green card holders for their positions at their US headquarters outside of Boston and EU nationals(attending as foreign students) for positions at their office in St. Cloud France. Very little opportunity if any if you were a sole citizen on one side of the Atlantic to move to other. Internships and coops were a little more flexible.

Some American companies were open to trying to get EU national students H1-B's but generally ran into the low cap quite quickly.

Interesting video interview with DS North American CEO on New England Cable news:

Anonymous said...

I've been an expat on and off for more than 45 years and haven't seen anything fundamental change. Citizen based taxation rests on the view - shared by lawmakers and US citizens alike - that those who choose to live abroad are practically traitors and should suffer for their choice. This is so primal that it obviates any advantages they bring and talk of being diplomats, etc, is pointless.

Victoria FERAUGE said...

@anonymous, I started reading the article and it is quite a find. I'll do a post on it soon. Thank you! I have excatly the same impression as you - if the French government could manage to implement a system like the American one, they would. And the French would be cheering them on.

@Tim, I think more Americans (and Canadians and Australians and so on) qualify for citizenship in one of the many countries of the EU. Most have no idea. Jus sanguinis is alive and well but you'll notice that it's not well-advertised. I wonder why?

Loved the news about DS. Yes, when I left they were still scattered around the US east coast in Charlotte and Lowell. I had teams there and have a lot of good memories of visiting them. The dream was to have a US campus and get everyone (solidworks and matrix one and nvidia and DS) under one roof like the one here in Velizy and it looks like they did it.

Not sure about the hiring priocess but I do remember a lot of mobility within the company with folks from Japan coming to France and the French going to the US.

@anonymous, Yep, that is indeed our reputation. And I'm not too sure we can do anything about it. Alas.