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Monday, January 7, 2013

The FATCA Forum

It is a very serious matter when a foreign country in this case the United States tries to usurp certain powers over other countries and its citizens, or the people and permanent residents of those countries. 
The Honourable Sinclair Stevens
Progressive Canadian Party/Parti Progressiste Canadian
This man certainly knows how to get to the crux of the matter because fundamentally this is what the United States of America is trying to accomplish with FATCA, the Foreign Account Tax Compliance Act. The question, of course, is whether or not the other countries of the world are going to let them get away with it. (Oddly enough the French I've talked to seem to think the Americans are on to something with this law. Go figure.)

A few weeks ago a forum on FATCA was organized in Toronto, Canada and hosted by the Canadian Progressive Party.  There were many great speakers including Peter Dunn of the Isaac Brock Society and James Jatras of Repeal FATCA. 

Nine videos of the event can be found here:  FATCA Forum.

All of them are excellent and I encourage you to have a listen and to pass them along.

What a pleasure to see a gathering where the subject of FATCA is taken very VERY seriously indeed.  And where the issues, the really important ones like sovereignty, civil liberties, human rights and international law, are so eloquently discussed.

I thought Allison Christians' of the McGill Law School (blog here) talk was particularly fine and so I am re-posting it here.  I learned a great deal (tax treaty override? I had no idea) and I loved her passion.   She does a fine job of explaining why something that sounds so reasonable to many (catch those "rich tax cheats") is pure poison, a legal nightmare, which will have an impact well beyond the few people the law was ostensibly designed to catch.  I wonder if Americans back in the homeland understand that this American law (FATCA) is basically telling other countries (like Canada) to break their own laws or else.  She also raises the question of whether or not FATCA could be considered an impediment to American citizens' freedom of movement (their ability to move out of the U.S. and around the world) and suggests that a U.S. constitutional scholar have a look at this.  And finally she discusses FATCA and international law.  Fascinating stuff.


Anonymous said...

It makes me sick that all the countries that sign an FATCA IGA with the United States are endorsing the idea of citizenship based taxation which basically means they are endorsing the idea that you can not flee a jurisdictions and their laws by leaving the country.

Just me said...

Thanks for highlighting this forum. I agree with you about Allison. Very good forum. Also there is another video out there, that has taken cuts from many of the speakers and put into a 30 minute segment for the less wonky amongst us.

Victoria FERAUGE said...

@stateless - Those IGA's are really something else aren't they? I can't help but wonder if the Americans are not setting themselves up to be fleeced. Let's face it if a country like Mexico, for example, decided to implement citizenship-based taxation and levy taxes against Mexican-Americans in the US who would come out the winner here? There are far more Mexicans in the US than there are Americans in Mexico. Which by the way was one argument (a good one) I read FOR FATCA and citizenship-based taxation. The developing world could do quite well under such a system, right?

@justme- Thank you for the link. I will add it to the post for those who need a synopsis.

Rosy the Riveter said...

Well, things are moving, aren't they? Just hope it isn't too late. The problem with the Depardieu affair, for example, is that it detracts from the problem of ordinary citizens everywhere who are just unfairly taxed. As I said in a previous post, concerning France, no one seems to take this as a sign that maybe something is wrong somewhere with the tax system, and needs looking into. WHY are people fleeing or just withdrawing and putting under the mattress ? France is the country that most taxes clean, non-speculative FAMILY money. We can't even give to our kids without paying for it ! Kids who often can't get steady jobs inspite of their studies, etc. So imitating our homeland, they're now talking about citizenship-based taxation. That means DOUBLE TROUBLE. Fine example the IRS has given the world. Bully your way into other countries' banking systems, and show the world what real men can do. :-(

Victoria FERAUGE said...

Hi Rosy, We've been having a discussion about this over at Isaac Brock.

I'm arguing that in some ways it is too late. A lot of the people I talk to (US persons) are completely disillusioned and their trust (which I personally think was very high for years) in the U.S. is completely gone. I think a lot of people are simply going to do a deep dive and do their best to hide or erase their US connections. I've seen this people referred to as "silent relinquishers."

If the US government does take the TAS recommendation would that change anything? I don't think so at this point. They dug themselves too deep a hole and I think it will take a generation for the government to dig themselves out. I also don't think they care - I suspect that Americans abroad have been written off as collateral damage. Remember homelanders suspected our loyalty in the first place and all we do when we protest is confirm an assumption they already had.

Maybe if Obama stood up and said something it would make a difference but I don't think he will.

So that leaves us with the question of what we are to do. My .02?

"Any fool can carry on, but a wise man knows how to shorten sail in time..."

Rosy the Riveter said...

I have a crazy idea, but it just might work. Back in the '60s,a couple of Columbia sociologists who were trying to promote the idea of a guaranteed minimum revenue, even for non-workers, got the idea to "flood the rolls, get everybody on welfare." In other words, they went out in the street, got the press in on it - did everything they could to get anybody they could on welfare. That was thte beginning of the modern-day post New Deal welfare state in the US. NOW, my crazy idea is this: what if we "flooded the IRS" with all the FBARs we could, even if a bit approximative, but so many that the IRS just couldn't process and audit all of them ?? In other words, give them a dose of their own medecine! "OK, you wanted FATCA and FBAR, so you've got them ! Now it's your problem! "Flood the rolls"! See ? Un realistic? I'm just wondering... If everybody suddenly became compliant, assuming they're willing to take the time to do it.. well. safety in numbers, no ? :-)

Rosy the Riveter said...

And here's a second scenario. All Americans here abroad, when the time comes and are requested by their local banks to provide those wavers for the 2014 due diligeance provisions of FATCA, suddenly refuse to do so and withdraw their money (you need a good mattress for this one or a home-installed safe) or change to somewhat less diligent banks. I wonder what will become of "due diligeance" then ?
And imagine that the banks in the world start really balking at the loss of customers and don't sign FATCA. They pay 30% on US transactions - but what if they stopped doing business in the States? Who loses then ? At that point, FATCA will cost the very nation that invented it. Unintended consequences ;-) But I'm just dreaming. Afterall, if a fruit vendor in the Magreb could set off the Arab Spring thanks to our viral technology, why can't we do the same about FATCA ?? Any practical ideas?

Sitting on 2 Chairs at once said...

Update: I was at my local bank today here in France and was quite unexpectedly asked "Are you a US Person? I see you were born in the US." My answer "Who Me??? I'm a French citizen!" producing my carte nationale d'identité (which I knew they already had a photocopy of). The kind lady, the director of the agency, not the overzealous type but kindly trying to find her way around what seemed to her as imminent international trouble, asked me a few things about US citizenship in general - linked to birth on US soil, etc. And then mentioned that she had US person clients and wasn't sure what to do. Anyhow, I re-stated that I'm a French citizen and as such, have the right to the full protection of the French state. And in defense of non-French "US Persons", added that I thought that the US had no business telling foreign banks what to do with their local clients, adding the possible unconstitutionality of that - on both sides of the ocean. That seemed good enough for her. Let's hope it holds !

Victoria FERAUGE said...

@Rosy, Those are interesting ideas. It seems to me that biggest impediment to some sort of collective action is the sheer diversity and disorganization of the very people most impacted by it. In no particular order they are: Americans abroad, accidental Americans outside the US, immigrants to the US who are now living abroad, parents with children in US universities, Canadian snowbirds with summer houses in Florida and so on. This is the collateral damage - the ordinary folks caught up in this mess. Are these folks likely to get any support from local governments or the public? Depends.

@Sitting on two chairs, Thank you for that report. So it has begun in France. I'm hoping that as bank personnel start making inquiries of French citizens about their US connections that this will start making it into the papers.

Anonymous said...

Has anyone approached Judicial Watch about challenging FATCA?

1389 said...

More from James Jatras here:

FATCA intergovernmental agreements exposed as bad deal for partner countries