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Sunday, June 30, 2013

Le Mariage pour Tous (Gay Marriage)

Excellent article up on Arun's blog, Arun with a View, about the recent passage of a law that authorizes marriage between gay and lesbian couples here in France.  It is commonly referred to as Le Mariage pour Tous (Marriage for Everyone).

Like Arun, I was not very comfortable discussing it during the rather bitter political fight that went on as the law was being debated.  Back in February I wrote this post expressing my uneasiness at being asked to take sides.  I am not yet a French citizen and I drew the line at signing any petition that implied I was one which made a few people very unhappy with me.

How I feel about this personally is informed by my upbringing in the U.S.  I knew gay couples in my youth, some of whom had children.  The parents were good people (in one case I know of there were four parents) and the kids were just like any other kids.  Did they make mistakes?  Of course but not any more than any other parent.  During the AIDS epidemic in the 1980's I watched the grief of one partner in a long-term (decades) relationship when his partner got sick and later died.  You can't tell me that these two were not together in all the ways that matter and it seemed so unfair that their relationship did not have legal status.

In France there is the wedding at the mayor's office and, for those who wish it, a wedding at the church or synagogue.  For me the first was perfectly nice but it was a formality we had to go through in order for my spouse and I to be able to be together in France.  The one that counted was the wedding at the church.  The French state could authorize polygamy tomorrow and I wouldn't bat an eye.  There is civil marriage and then there is religious marriage - the first is for legal certainty but the latter is a sacrament.

What's kind of ironic in this entire debate is that marriage (civil or religious) is going out of style here in France.  Very few of the young couples I know are actually married - the PACS (civil partnership) is preferred.  In 2010 the number of births here outside of marriage was a whopping 54%.  It's rather funny that an institution that is being abandoned more and more by straight couples is the object of so much controversy when eligibility is expanded to include gay couples.  It may be that this new inclusive law will be the only thing holding up civil marriage in France in the future - so much for the idea of "Marriage for Everyone."

Arun's post is interesting on several levels.  He points out that the debate over gay marriage in France is not a mirror of the debate in the U.S.  The law in France was opposed by quite a few people on the Left like students and feminists.  The churches here certainly played their part but it wasn't simply the Religious Right against the Progressives.

Once again this shows the danger of looking at any issue solely through the prism of what is going on in one's own country.  The conversation is not the same and there can be as many faux amis (false friends) as there are genuine similarities.

Enjoy the post and your day of rest.

Friday, June 28, 2013

French Law and Basic Banking Services

Lots of documented stories out there right now of U.S. Persons (U.S. citizens and Green Card holders) being denied banking services both inside and outside of the United States.  Some banks are even putting up notes on their websites that they will serve anyone except people with a connection to the U.S. That connection can be something as simple as being a European couple with a child who attends university in the U.S.  I've received stories from readers and both the Association of Americans Resident Overseas (AARO) and American Citizens Abroad (ACA) are collecting people's tales of woe.

Hanging Together:  If you or someone you know is in this situation, the first thing to understand is that you are not alone. This is happening all over the world as FATCA marches toward implementation.   I urge you to send your story to one of the above organizations - the more documentation they have, the more effective they can be on your behalf.  Remember Ben Franklin's saying: "You must all hang together, or assuredly you shall all hang separately."

Contact Local and Regional Lawmakers:  If you are a dual citizen or an Accidental American then talk to your local or regional lawmakers too.  If you are in Europe then you should know that there are Members of the EU Parliament who are very interested in the impact of FATCA on their citizens.  A letter to your country MEPs with a copy to Sophie in't Veld (MEP - The Netherlands) is definitely a good idea.

Know Your Country Law:  Depending on the country you live in, the bank that refuses you or who tries to close you existing accounts, may be in violation of local law.  ACA has this article about Germany which is not terribly encouraging but every country is different so it's worth taking the time to find out what your rights are.

Just for fun let's look at what French law says about access to banking services in France.  To my surprise, the news is a bit better.

Under the Code monétaire et financier - Article L312-1, Chapter 2, section 1 it says:
Toute personne physique ou morale domiciliée en France, dépourvue d'un compte de dépôt, a droit à l'ouverture d'un tel compte dans l'établissement de crédit de son choix. Toute personne physique de nationalité française résidant hors de France, dépourvue d'un compte de dépôt, bénéficie également du droit à l'ouverture d'un tel compte dans l'établissement de crédit de son choix.
(Every natural or legal person living in France, deprived of a deposit account, has the right to open such an account at the credit institution of his choice. Every natural person of French nationality living outside of France, deprived of a deposit account, also has the right to a deposit account at the credit institution of his choice.)
Read that carefully. The right to a bank account is not limited to French citizens - it covers ALL persons who live in the Hexagone.  This right was reinforced by a charter that the banks are held to (une charte d'accessibilité bancaire) which has a list of the services that banks are required to provide which include a debit card and checks. Note that the bank can refuse to open an account for any reason and can also close an account.  However, when this happens there is recourse for the person who was denied services.

If the bank refuses to open an account for someone, it must provide that person with a letter documenting the refusal and explaining his rights.

The recourse then comes through the Banque de France.  The person denied services can send the refusal letter and proof of identity and residency to them and they will find a bank for that person either close to his home or in another place of his choice ("désigne un établissement de crédit situé à proximité de son domicile ou d'un autre lieu de son choix").

Please note that this recourse is not available to people who already have accounts.  It can't be used to open another account with another bank.  The person must be facing a complete loss of all banking services to be eligible.

Also it only provides for access to basic banking services (I would assume this means checking and savings) and does not include investment accounts and the like.

The bank also has the right to close the account it was forced to open.  However, it must give a reason and two months notice before closing the account.  If the person is then left without any access to services at all, then he is back to contacting the Banque de France and going through the procedure again.

For a foreigner who has recently arrived in France and has limited French, this can be a real problem.  Naturally the laws are in French and a new resident may not understand his or her rights. I could see a bank playing on the ignorance of the non-French person and trying to get away with refusing him without any explanation at all.  There is also the file one must prepare for the Banque de France which must also be in French.  But this is France, folks, and the official language is French (why this surprises people is always a mystery to me).  This is a very good example of why learning the local language is not optional.  No, it is absolutely necessary for survival.   It's that or throw yourself on the mercy of someone who can interpret for you but that's not a viable long-term strategy in my opinion.

So there you have it.  I'd be very interested in hearing from readers about the local banking access laws in their country.  Does the U.S., Canada, Japan or the UK have any laws similar to this?

Wednesday, June 26, 2013

Exile from the 'Land of the Free'

"Just because you're paranoid doesn't mean they aren't after you."

Joseph Heller

It's not much fun being an American abroad these days.  It seems like every time we open a newspaper, read the headlines on the Net,  or talk with other Americans in our host countries, it's bad news followed by more bad news.  Even the most level-headed and loyal are beginning to wonder if the U.S. government and  the American homelanders really are after us.

The latest is a little amendment that two U.S. senators decided to slip into a U.S. immigration reform bill (S. 744: Border Security, Economic Opportunity, and Immigration Modernization Act).  Guess they decided that while they were working on immigration that they might as well strike a blow against emigration. Kind of implies this mentality:  Once we've got them (migrants and their children) the U.S. needs a way to make them stick around and never EVER leave.

It's called the Reed Schumer Amendment and it adds a brief section to the immigration bill entitled "Inadmissibility of individuals who renounce citizenship to avoid taxes." Full text can be found here at Isaac Brock.   It says that if the U.S. determines that someone has renounced U.S. citizenship to avoid U.S. taxes, then that person can be barred from the U.S. for life.

Who could possibly vote against such a worthy purpose with such a catchy title?  If Americans don't like the U.S. system of citizenship-based taxation and want out, well, at least the U.S. can spank them and then close the door on them forever. 

A Catch-22:   It's a classic catch-22.  If this amendment passes then American emigrants facing double taxation, the high cost of compliance with U.S. reporting requirements, loss of access to banking services outside the U.S, and limited business opportunities abroad (all of which are happening right now) run the risk of never being allowed back into the U.S. to visit family and friends if they renounce U.S. citizenship.

Rock shake hands with hard place.

Allow me to anticipate the arguments in favor of this amendment.  It only applies, some will say, to the rich who made their money in the United States and then fled the country to low-tax jurisdictions.  I would ask these people to read the text again because that interpretation is not at all what the amendment actually says.

Who is Inadmissible?:  Read the first paragraph very carefully.  There are two groups here that can be sanctioned.
I) Any alien who is a former citizen of the United States who officially renounces United States citizenship and who is determined by the Secretary of Homeland Security to have renounced United States citizenship for the purpose of avoiding taxation by the United States.
(II) Subject to clause (ii), any alien who is a former citizen of the United States and who is a covered expatriate.
The first section should already make us all very nervous because it's a U.S. government agency that would be tasked with determining if someone renounced to avoid taxes.   That means that exile is going to be based on a ruling by the bureaucrats - they get to decide who is and isn't a "tax evader."  What fun for them.  And what fun for the renunciant.  The onus for proving that one did not renounce U.S. citizenship to evade taxes is on the person renouncing - literally he is "guilty until proven innocent."

What would that person have to provide in way of proof that he is not a tax evader?  Hard to know.  Look, because of the U.S. system of citizenship-based taxation just about everybody who renounces is going to save money on taxes or on fees.  Even those Americans abroad who don't make enough money to pay income taxes still may owe capital gains on property, pension plans and other investments.  That makes us all very vulnerable - from the expatriate entrepreneur in London to the English teacher in Korea.

Covered Expatriates:  In the second section, the key term here is "covered expatriate."  Not many people know what that term means but it's important to know because it broadens the scope of this amendment to include a very large number of American emigrants (6-7 million people).  A "covered expatriate" can be someone who is "rich" (owes a substantial amount of U.S. tax or has over 2 million USD in assets)

Someone who–regardless of net worth or prior Federal income tax liability–cannot say under penalty of perjury that the prior five years of Federal tax obligations are fully satisfied. Finally, a covered expatriate is someone who is late filing the exit year income tax return on time.
This means anyone who hasn't done the paperwork (filed all the U.S. income tax returns, FBAR's and the like) for the past five years.  So that nice American lady in Paris who works as a secretary for a little NGO making the Smic (French minimum wage which is 1425.67 Euros per month) but who never filed U.S. tax returns because she didn't know she had to is a "covered expatriate" unless she hires an international tax lawyer and backfiles.  

For those of you who are wondering why in the hell this woman was supposed to be filing in the first place given that she earns what little money she has abroad (not in the U.S.), please note that this is a requirement for ALL U.S. citizens and Green Card holders wherever they live and work (Belize, Mexico, China, Indonesia, France....).  This includes (but is not limited to) secretaries, server monkeys, small business owners, teachers. musicians, au pairs and many other professions that are not particularly well paid.  They all must report their worldwide income (the money they earn in those countries) to the U.S. every year. "It's the law." 

In her case, if she is married to a Frenchman and her tax status in the U.S. is "Married filing separately", she must file a U.S. tax return if she makes over 3,800 USD in a year (about 2,900 Euros).  This woman would probably owe no U.S. taxes but she is still in trouble because she didn't file and report that income.  Under the amendment, if she doesn't get into compliance, she will automatically be barred from the U.S.

Impact:  Would the U.S. really force this woman to pay the exit tax and then exile her permanently from U.S. soil for not filing a few pieces of paperwork?   A few years ago I would have said, "no way" - my country is better than that.  These days I have doubts.  The rhetoric around the issue of emigration and tax evasion in the U.S. is pretty harsh these days.  What if she falls afoul of one person in the Department of Homeland Security who holds a rather negative view of American women who marry Frenchmen and live outside the U.S. permanently?  What if he decides that her actions should have consequences?  The law would be on his side if he chose to apply it.  

Senator Reed said recently in support of his amendment: "American citizenship is a privilege. But it seems that a privileged few are trying to game the system by accumulating wealth and benefiting from the greatness of the United States and then renouncing their citizenship to avoid paying their fair share of taxes."

Let me count the ways that this statement is horse manure.  As we've seen "the privileged few" includes an awful lot of people who are not particularly well off.  Most Americans abroad are not rich and many have "accumulated their wealth" in the countries where they live and work, not in the U.S.  There is no distinction made here between those who get rich in the U.S. and leave and those who leave the U.S. and make their money elsewhere.  As for Americans abroad "benefitting from the greatness of the U.S."  well, that right there is enough to send many of us into hysterical giggles.  Let's see, what is it about living abroad and holding a U.S. passport and on that basis being denied banking services, business opportunities and employment, or having our foreign spouses threaten to divorce us, that just screams the greatness of the United States and "Aren't you lucky to be a U.S. citizen?"

Right now the last thing that many of us feel is "privileged." On the contrary that U.S. passport is turning us into pariahs in the societies in which we live, at our places of work and at home. And that is a terrible thing not only for Americans abroad but Americans at home as well.  What is becoming clear is that U.S. citizenship is a very heavy burden with some duties and responsibilities that are unique and it is not clear that the benefits outweigh the risks.  Just as many Americans abroad are beginning to question the value of their U.S. citizenship (and there are some like me who are just so damn tired of being slapped around by people like Reed), immigrants are going to question the wisdom of taking on this kind of obligation which has serious penalties and risks and who, in a globalized world, don't want to be disadvantaged if they decide to live and work outside the U.S. at some point in their careers.

In that context it is rather ironic that the Reed Schumer Amendment is being introduced as part of an immigration bill.  On one hand they are trying to rationalize the immigration process in the U.S. and on the other they are proposing something that will give immigrants further cause to think twice about becoming U.S. citizens, residents or Green Card holders.

As for those who are already U.S. citizens and are considering renouncing, this amendment (and the one before, the ex-Patriot Act and the one before that, the Reed Amendment) it says that these lawmakers are not going to give up until they get what they want:  punishment for those who leave the U.S.  Today the threshold for the exit tax is 2 million but what will it be tomorrow?  1 million?  200,000?  Or even 20,000?  If this amendment passes how many people with small to middle-class incomes abroad who have aging parents and other family in the U.S. will be trapped into keeping a citizenship they no longer want, or can no longer afford, because the risk of exile has them scared?  That's enough to make many of us very paranoid indeed.  Some of us are even wondering if it might be better to, in the words of Phil Hodgen, "Get out while you still can."

And last there is an impact on U.S. citizens in the homeland.  It is their citizenship that is devalued by this system and it is their ability to be global that is at stake here.  Do people in the homeland understand how repelling it is when the U.S. punishes people who live and work abroad or who decide they wish to be citizens of another country?  This is not "greatness."  This is petty and vindictive.  It is unworthy of a great country that calls itself "the land of the free" and I can find no excuse or grand purpose good enough to justify it.

Update:  Just Me reports:

"This amendment has now been pulled from the Immigration bill and moved to a second-degree amendment to Patrick Leahy (D-VT)’s border security amendment S.A. 1183.
The number of this latest amendment to an amendment is S.A. 1609. It appears at page S5075 of the Congressional Record for Monday, 24 June 2013.  Here is the actual direct link to where it is now buried to be sure that NO ONE sees it, so it can just slip on through..."

Keeping track of the shenanigans of U.S. lawmakers is indeed, as Marvin calls it, a game of "whack the mole." 

Friday, June 21, 2013

A Brief History of Porchefontaine

I like hearing stories just as much as I like telling them.  This past month I've spent a few hours every Wednesday visiting a elderly woman in Petit Montreuil.  She just turned 90 and is still sharp as a tack.  She was a stay at home mother and is a breast cancer survivor.  Her husband was a fireman and later a taxi driver.  She has many memories of Versailles that she's been kind enough to share with me.  In turn I tell her what it was like to grow up in the U.S.  and to be a young foreign bride in France.   It makes for an interesting exchange and I find myself really looking forward to Wednesdays.

When people hear that you live in Versailles, the first thing they think of is the rather gaudy monstrosity  on the other side of town.  But the city and the chateau have very little to do with each other.  The castle is owned and operated by the French government and the city derives no benefit or tax money from it.  Yes, the tourists come and spend money but only in the restaurants and shops near the train station, Rive Gauche.

That's a pity because Versailles (the city) is a pretty interesting place with a long history.  Regular people have lived and still live here - there is a broad spectrum of people from every socioeconomic class.   There is even public housing in the city (called "HLM's) for low-income families.  At church and around town most of the people I meet are retirees, working people or military families.    Outside the areas frequented by the tourists there is so much to discover and so many people to meet.

My neighborhood, Porchefontaine, is one such place.  Being a curious sort, I've been trying to learn more about it.  Not easy.  Most of the books about Versailles (once again) focus on the castle and the Ancien Regime.  But I was able to come up with a few sites and two books from the local bookshop:  Porchefontaine au coin de la rue published by the Archives communales de Versailles and Versailles:  Sept Siecles de l'histoire du quartier de Porchefontaine neither of which are available one-line (no Kindle edition).  Add to that the conversations I've had with my neighbors and other long-term residents here and I think I now know enough to draw a brief sketch of the quartier.

Today Versailles is divided up more or less into these neighborhoods:  Notre Dame, Saint Louis, Satory, Les Chantiers, Montreuil, Jussieu and Clagny-Glatigny.  Very often Montreuil is divided in two depending on what side of the Avenue de Paris you live on in which case you can be more precise and say Grand or Petit Montreuil.  This map was drawn up for the purposes of showing where the schools are.  I know that the boundaries are drawn differently by the inhabitants but this will do for a start.

If you look at very old maps of Versailles, you will notice that Porchefontaine isn't even on them.  There is no written documentation of this area before the 14th century.  The first mention of it comes from the Church and the "Registre Manuscrit des Celestins de Paris."  In 1350, it is written, the area was given to one Etienne Porcher, Sargeant at Arms to the king Jean II Le Bon. It was then passed along to different owners and their children until one of them so annoyed the king at the time that the property was confiscated and the castle (yes, there was a castle) was razed to the ground. In 1395 the domain was given in perpetuity to the Celestines in Paris.

Here is a map from one of the books that shows Porchefontaine in 1686.  You see the outline of the Avenue de Paris, the road that leads to the Versailles castle.  You will also see that there at least five "Estangs" which I would translate as "ponds."

My house today sits where the Estang Pierray used to be which may explain why my basement is so damp.  The road next to this pond which goes southeast off the Avenue de Paris is today called the Avenue de Porchefontane.  This was the main road to the rest of the domain.

You will also notice the woods to the east called the Bois de Porchefontaine.  In 1740 during a very cold winter the inhabitants of Versailles started taking firewood from it - a "pillage systematique."  The Celestines didn't do anything about it but the King did.  He sent his guard to occupy the area which provoked all kinds of emotion, especially fear.  They started throwing out the stolen wood from their houses lest they be caught by the King's men.

In 1748 Porchefontaine became part of the Royal Domain (the Celestines got property elsewhere in exchange) and it became a Royal hunting ground.

After the Revolution it was sold and passed into private hands.  Around 1800 the city of Versailles got permission to impose an tax on goods and beasts coming into the city.   Two customs houses were built on the Avenue de Paris and a wall was constructed in 1849 between Porchefontaine and le Petit Montreuil.  Part of that wall is part of my garden today.

By 1889 the area had been cut into small parcels and sold to individuals who built free standing houses.  At the beginning of the 20th century the neighborhood began to take shape.  There was a tramway and lots of businesses, both small shops and larger companies.  It was a quartier with a terrible reputation at that time - sewers, gas, electricity and water services weren't even started until 1928 (though there were public water fountains) and a dangerous slum graced the area along the railway.  My house was built in 1929 and there is a brick structure in my garden that looks a lot like a well.

Perhaps it was once and I'm halfway tempted to see if we could open it up and get it working again.

I was rather shocked to read that in World War II Versailles was bombed by the allies on June 24, 1944 (not an anniversary anyone I know plans on celebrating three days from now).  Porchefontaine took the brunt of it and the pictures are something to see.  21 residents died.  Earlier in 1941 two German planes crashed into the area - the first killed a local resident, the other damaged the local movie theater.  The Frenchwoman I visit on Wednesday talks a lot about that time.  She was in school at the time but her parents decided to send her off to countryside because it was dangerous to stay in town.

By the 1950's Porchefontaine had become a very nice place to live with its modest little houses and gardens.  The creation of a train station along the Paris-Versailles Rive Gauche line (now the RER C line) meant easy access both to the center of Versailles and to the center of Paris.   By the 1970's it had actually become a rather desirable location.  Middle-class French looking for a small reasonably priced detached house with good access to the city started buying and are gradually replacing the older residents.  As a result in 2013 the house prices are high as are the local taxes.  I won't tell you how much we paid for our house but we did well because most of the potential buyers considered the house to be a tear-down and were only interested in the land.

There are still a fair number of long-term residents who came here before "gentrification." On my street are mostly retired couples one of whom is former military and another is an Italian immigrant.  The latter and his wife gave me a cutting from their fig tree for my garden.  Their tree came from Italy and he told me a wonderful story about driving back to France with his father with a sapling in the back seat.

For some great pictures of how the neighborhood has changed over the years this site has postcards from the early 20th century and this one has "now and then" pictures.   I'll leave you today with a few pictures of my own.  Have a lovely weekend, everyone.

Thursday, June 20, 2013

Guest Post: Jumping Together into the Cancer Abyss

"Eternity, the idea of it, is a powerful magnet for the mind, but the heart remains unmoved. It is a truism to say that we are never more alive than when we are close to our deaths. (It is also at times, if said of one whose suffering has swamped his humanity, an obscenity.) Yet under the easy gesture toward this fatal intensity (easy so long as it is safely intellectual, remote from us) there is a sharp edge: it may take an illness for you to feel that edge, either in your body or in the body of one you love, or it might simply be a kind of cut in consciousness so sharp that there is a pause between you and all that is not you, and like a quick-handed cook whose deft slicing suddenly opens his own thumb, you are stuck in the shock of watching."

Christian Wiman
My Bright Abyss

During my cancer treatment last year, I was painfully aware that that my family was also along for the ride - the Frenchlings and my spouse. Whenever I asked the latter how he was doing, he always replied, "I'm not worried." Ahem. It was only after treatment was over that he confessed that he didn't sleep much the entire time, especially during the chemotherapy.

My spouse is a very private person and I would never ask him to contribute something to this blog. But not too long ago I was contacted by Cameron Von St. James whose wife was diagnosed with mesothelioma. They are dedicated to raising awareness about this form of cancer and write for the Mesothelioma Cancer Alliance Blog. It's a very rare form of cancer but it's deadly - life expectancy after diagnosis is usually measured in months rather than years.

I was delighted by his offer to write a guest post for the Flophouse. This is a perspective I can't offer because I was the patient, not the caregiver and family member. My sincere thanks to Mr. Von St. James and I hope his post will give you an idea of what it's like for those who leap into the cancer abyss along with a loved one.

Lessons From an Unexpected Caregiver
Cameron Von St. James

A little over three months earlier, my wife Heather and I had celebrated the birth of our daughter Lily. On November 21, 2005, we were sitting in the doctor's office, listening as the doctor told us that Heather had malignant pleural mesothelioma, a particularly deadly form of cancer. In that moment, I had to take up the job of being a cancer patient's caregiver. Instead of celebrating the holiday season as any new family might, we were thrown into the chaos of treatment, fear and pain that those who suffer from health problems know too well.

My role as a caregiver began immediately, before we even left the doctor's office that day. The doctor gave us terrifying details about Heather's disease, and then he gave us options. Depending on our choice, Heather could pursue treatment at a local university hospital, at a good regional hospital that unfortunately lacked a mesothelioma program, or with Dr. David Sugarbaker, a well-known specialist in Boston. I sat back and expected Heather to aggressively ask questions and make her choice, but when I looked at her face, I knew that wasn't happening. At that moment, I knew that I had to step in. She was frozen with fear and shock, and I knew that she wasn't going to move forward without help. Immediately I turned to the doctor and told him we would be going to Boston. I could only hope that the specialist there would be able to save Heather’s life.

I still remember the next two months after that with something like dread. I went part time at work, and Heather quit entirely. She had an entire round of doctor's visits to attend to, and when I wasn't by her side or at work, I was consumed with talking with people in Boston, making travel arrangements and figuring out who was going to take care of Lily while we were traveling. The list of things to do just got longer and longer, and through it all, fear gnawed at me. I was afraid we were going to go through all of this pain, and Heather would still die. I would be left alone with Lily and a mountain of debt, and that thought broke me. I ended up on the kitchen floor just weeping, but I knew I had to be stronger than that. These moments of weakness came several times, but I never let them take hold over me. I got up, I made sure that Heather never saw me weak, and I remained her support and her rock through it all.

Our friends, family and even complete strangers stepped in to help us. They told us it would be okay, and they even offered financial assistance where they could. There is no way to repay these people who took us into their hearts, but I can definitely tell you that if you find yourself in this dark place, accept this kindness and help. This is something that needs to remind you that you are not alone and that there are people who can help you. They will help you lighten your load.

There is nothing easy about being a caregiver to someone who is diagnosed with cancer. Life is going to be very rough, and it will be full of fear and uncertainty. You can't walk away from it all or quit; you just have to keep on going, and some days, nothing feels tougher than that. At some points, you will feel like you are being overtaken with fear and anger. Accept the fact that some days, you will not be at your best, but never give up hope for a better tomorrow.

It took two years before things returned to something like a normal routine. Heather at this point had gone through mesothelioma surgery, radiation and chemotherapy to beat her cancer, and in the end, she emerged victorious. Now, seven years after her diagnosis, she is happy, healthy and cancer free.

For my part, I learned that my stubbornness is one of my greatest strengths and that you never know what tomorrow will bring. After seeing my wife through her cancer and caring for our young daughter, I decided that it was time for me to pursue my career in Information Technology.

Let me tell you, after balancing a young baby and a cancer treatment, I could handle anything that life threw at me. I ended up graduating with high honors and speaking at my own graduation. I don't know what life is going to throw our way next, but I do know that I can face it with strength and faith. To anyone else out there currently fighting a battle with cancer or any other disease – never give up hope, and always keep fighting for the ones you love.

Tuesday, June 18, 2013

Bac 2013: Philosophy Subjects for Geeks

The younger Frenchling took her Philosophy exam yesterday morning.  Going through her papers today she handed me the question sheet and I thought I would share it with you.

These questions are destined for French high school students seeking a Bac-S (Science) and that means all the budding physicists, engineers, mathematicians, computers scientists, biologists and geologists (the Geeks).   The exam format is as follows:  Three questions (the candidate must choose one); answer is essay format; he/she has four hours; no calculators allowed.

Subject 1:  Peut-on agir moralement sans s'interesser a la politique? (Can one act morally without being interested in politics?)

Subject 2:  Le travail permet-il de prendre conscience de soi?  (Does work lead to self-awareness?)

Subject three (comment on a text):   Translation came from this site.
Qu'est-ce qu'un jugement vrai ? Nous appelons vraie l'affirmation qui concorde avec la réalité. Mais en quoi peut consister cette concordance ? Nous aimons à y voir quelque chose comme la ressemblance du portrait au modèle : l'affirmation vraie serait celle qui copierait la réalité. Réfléchissons-y cependant : nous verrons que c'est seulement dans des cas rares, exceptionnels, que cette définition du vrai trouve son application. Ce qui est réel, c'est tel ou tel fait déterminé s'accomplissant en tel ou tel point de l'espace et du temps, c'est du singulier, c'est du changeant. Au contraire, la plupart de nos affirmations sont générales et impliquent une certaine stabilité de leur objet. Prenons une vérité aussi voisine que possible de l'expérience, celle-ci par exemple : "La chaleur dilate les corps." De quoi pourrait-elle bien être la copie ? Il est possible, en un certain sens, de copier la dilatation d'un corps déterminé, en la photographiant dans ses diverses phases. Même, par métaphore, je puis encore dire que l'affirmation "cette barre de fer se dilate" est la copie de ce qui se passe quand j'assiste à la dilation de la barre de fer.  Mais une vérité qui s'applique à tous les corps, sans concerner spécialement aucun de ceux que j'ai vus, ne copie rien, ne reproduit rien.
What constitutes a true judgment? If an affirmation agrees with reality then we say it is true.   But in what does this agreement consist?   Our inclination is to see in it something like the resemblance of the portrait to the model: the true affirmation would be the one which would copy reality.  Upon reflection, however,  we shall see that it is only in rare and exceptional cases that that this definition of the true finds its application.  Think about this, however, we see that it is only in rare, exceptional cases, that this definition of the true find its application. What is real is any determined fact taking place at any point in space and time, it is singular - it is changing.  On the contrary, most of our affirmations are general and imply a certain stability on the part of their object.  Let us take a truth as close to experience  as possible, for instance, "heat expands bodies."  Of what model is this truth a copy?  It is possible, in a certain sense, to copy the expansion of a specific body at particular moments by photographing it in various stages.   Even by metaphor I can still say that the affirmation, "the metal bar is expanding" is the copy of what happens when I watch the expansion of the iron bar.  But a truth which is applied to all bodies without that applies to all bodies, without concerning any one in particular that I have seen any concern especially with what I've seen, copies nothing, reproduces nothing.
The younger Frenchling choose question 3.  I think that was insane myself but it was her choice.

If you're interested here is the post I wrote about the 2011 Philo exam of the elder Frenchling (Bac-L).

This exam will be graded on a 0-20 scale (20 being a fantasy that is almost never ever achieved). We'll see how she does after the exams are over and the results are published.  However, her father (the engineer) confessed last night that he scored below 5 on his Philo exam thirty odd years ago.

Monday, June 17, 2013

FBARs: Nul n'est censé ignorer la loi

It's that time again, folks. The United States IRS Form TDF 90-22.1 Report of Foreign Bank and Financial Accounts is due at the end of this month (June 30th).

Filing this form is mandatory for all U.S. Persons if:
The United States person had a financial interest in or signature authority over at least one financial account located outside of the United States; and
The aggregate value of all foreign financial accounts exceeded $10,000 at any time during the calendar year to be reported.
There is still a lot of confusion about this form which hardly anyone knew about until very recently.  I'm still meeting new arrivals here in Paris who have no clue that this form applies to them.  I even know some people in the U.S. who probably also owe this form to the American "fisc" but they are still living in blissful ignorance.

But guess what?  Ignorance of the law is no excuse (nul n'est censé ignorer la loi) says the U.S. government  and that argument won't necessarily get you very far in front of an U.S. IRS agent.  Are there and will there be lawsuits over this?  You bet but...

The fines for not filing this form correctly are literally enough to bankrupt the average working person or retiree:  The "non-willfulness penalty" which means that you just didn't know but you sure didn't intend to break the law is 10,000 USD per year. If it's "willful" then the IRS says here:  "For violations occurring after October 22, 2004 the ceiling is the greater of $100,000 or 50% of the balance in the account at the time of the violation."


Now that I have your attention I'm going to use this post today to  translate what this all means into language we can all understand:  Who has to file this form, what information is required, and when it's due.  For the moment we'll skip the "Why" which merits its own post.  Please bear in mind that I am not a lawyer or an accountant or a tax expert.  Feel completely free to correct me if you see anything that you think is unclear or incorrect.

Who Has to File this Form?  

This form is to be filed by all "U.S. Persons" with at least one account in a bank or financial institution outside the U.S.  What does that mean?  Some people think it means U.S. citizens and others think it means companies (as in "Corporations are people, too!")

That is only partially correct.  Here is the definition of the term from the IRS website:
A U.S. Person "means United States citizens; United States residents; entities, including but not limited to, corporations, partnerships, or limited liability companies created or organized in the United States or under the laws of the United States; and trusts or estates formed under the laws of the United States."
So yes, U.S. citizens and companies all over the world (192+ countries) have to file but so do Green Card holders and other U.S. immigrants inside and outside the U.S, as well as anyone who spends enough time on U.S. soil in a year to be considered a "resident."

Does that mean that all U.S. Persons must file this form?  No, there is one other condition to be met and that is the amount in the foreign accounts.

What is the Filing Threshold?  

The U.S. Person must have one or more Foreign Accounts (accounts with a foreign bank or financial entity outside of the U.S.) and the value of all the accounts taken together (that's what "aggregate" means) must have been above 10,000 USD (or about 7,000 Euros) at any point in a calendar year for there to be an FBAR filing obligation.

When is it due?

It must be received by those fine folks in Detroit by June 30th.  That means you are not supposed to mail it on June 29th from France or China or Australia. :-)

Update: A reader added some important information about filing in the comments section:  

"You might also want to mention that as of July 1, 2013, it will be mandatory that FBARS are filed electronically with the Treasury Department. From their website

"Electronic Filing for FBAR Forms – MANDATORY Beginning July 1, 2013
On June 29, 2011, FinCEN announced that all FinCEN forms must be filed electronically with certain exceptions. The FBAR was granted a general exemption from mandatory electronic filing through June 30, 2013. E-filing is a quick and secure way for individuals to file FBARs. Filers will receive an acknowledgement of each submission. For more information about FBAR e-filing, read the FinCEN news release."

So it looks like this is the last year the forms can be mailed.  If you (like me) are already cutting the deadline fine this year, it's probably best to file electronically now especially since (as Just Me points out) the deadline is really June 28 this year since June 30th falls on a weekend.


Took me a while to wrap my head around this.  It wasn't until I had to fill out my own FBAR and I talked to other people who were doing it too that I finally felt that I had a good grasp of what this reporting requirement entails.  So here are a few broad examples drawn from my experience (and none of them represent a specific individual but are composites of different stories I've been hearing the past year)  that will hopefully give you a better idea how this all works and just how many unsuspecting people come to be in violation of U.S. law:

Second Generation Americans Living in the U.S.:  An American citizen residing in the U.S. for his entire life has a father living in Ireland.  The father passes away and part of the son's inheritance is his father's nine bank accounts with Irish banks (savings, checking, investment).  The value of any one of these accounts does not exceed 1,500 American dollars but together they are more than 10,000 USD which means that the son must start filing FBAR's with the U.S. government.

An American Couple in the U.S. with a Child Studying Abroad:  The child is accepted into a program at a foreign university where she will spend the next 2-4 years studying.  Let's say McGill (lots of American students at McGill).  She and her parents open an account for her in Montreal so they can pay her tuition and living expenses.  Between tuition, books, food, first and last month's rent, the value of the account temporarily exceeds 10,000 USD at the beginning of the academic year.  Let's congratulate these folks because they are now in possession of a "foreign account" and they now do some of their banking "offshore" in Canada.  Yes, they must file an FBAR.

Green Card holders:  A politician in the U.S. has a British wife (who one assumes is "legal" and held a Green Card at one point).   They used to live abroad but now they live in the U.S.  If his wife has accounts in the UK under her name that were opened before she moved to the U.S.(which seems reasonable to assume because that's where she grew up) or a member of her family added her name to their accounts to make it easier to care for aging parents or to facilitate inheritance, and the amount in all of those accounts exceeds 10,000 USD, then she is required to file an FBAR every year and disclose all those accounts.  

It doesn't matter that the money in those accounts never came from the U.S.  It is completely irrelevant even that she is a British citizen and that these accounts could be considered "local" to her.  She still has to report them to the U.S. government:  account numbers, highest balance in a calendar year and so on.

An American Abroad:  A young woman marries a German citizen and moves to Berlin.  She does part-time translation work at home because she has small children to care for.  They have all the accounts a family would be expected to have in order to live a normal life:  savings, checking, retirement.  Her name is on all of them.  The bulk of the money in those accounts was earned by her German husband in Germany (and the little she contributed was also earned there and has no connection to the U.S.) who is not a U.S. citizen, Green Card holder or resident.  She is still required to file an FBAR - she must disclose her husband's financial information - to the U.S. government. 

An Accidental American:  An individual living in Australia who was born in the U.S. when his parents were studying there and left as a child.  He realizes one day watching the news or through an American friend that he is in fact a U.S. citizen and that this status has certain implications.  He is in his mid-fifties and has savings as well as retirements accounts and so on.  He decides that he rather likes the idea of being a dual citizen and so he asks the U.S. government what he has to do to get compliant.

He is told about an IRS program that provides relief for Accidentals under certain circumstances.   If he qualifies, they say, he will only have to file three years of back tax returns and six years of back FBARs.  And then of course he must swear up and down to remain compliant from that point on.

And if he doesn't qualify?  If he actually owes U.S. tax in excess of 1,500 USD for any of the years he failed to file then he doesn't qualify and can't get compliant through this program.  

Let's say that all this annoys him to no end or he simply doesn't have the money to hire an international tax lawyer, what's the Plan B?  Well, the IRS has a compliance program (the OVDP -
Offshore Voluntary Disclosure Program) that he could join though it's not really clear if he should and no one should ever do this without the advice and help of a competent international tax lawyer.  

Perhaps he throws up his hand and decides to renounce his U.S. citizenship.  Joker.  In theory he is not supposed to do this unless he files all those back tax returns and FBARs and pays the Exit Tax (if it applies to him).  Phil Hodgen's has a brief but very useful post about this here.

I hope this effort to provide some clarity around FBARs is useful to you or someone you know.  If you have your own examples to add, I'd be delighted to hear them and I will post them as they come in.

I think we can all agree, however, that this is quite a mess. FBARs (and FATCA too) are a huge net with a very fine mesh and I have to wonder what would happen if everyone who was supposed to file actually did it.  Imagine the millions upon millions of forms pouring into Detroit, Michigan to be processed and IRS agents combing through the standard savings and checking accounts of English teachers in Italy or IT workers in Shanghai to find the needle in the haystack.  If that happens then this system meant to catch U.S. residents with "offshore" accounts might actually help them to hide more effectively (yes, Virginia, there is such a thing as TMI-Too Much Information).   

In another post we'll talk about where the FBAR came from and what it was meant to do.  

(Here's a hint:  A three letter acronym, "BSA.")

Sunday, June 16, 2013

Tempus Fugit at the Flophouse

Tempus Fugit (Latin)

"Le temps passe vite " (French)

"Time flies." (English)


It was a very productive week here at the Flophouse in Versailles.  Two projects finally came to a good end:  the chimney and the garden shed.

The chimney project has been on the table for many months.  It was an essential pre-condition to the installation of our new wood stove (a Petit Godin).  Since we live near several national monuments like les octrois de Versailles, we had to ask for permission to raise the chimney (I swear the dossier was a few centimeters thick) and then we had to put up a sign (a really ugly one) on the front gate and wait four months during which anyone who disagreed with our little project had the right to complain to the Mayor's office.  And after all that time passed, our mason said he didn't want to work in the rain.  

Last week our patience was rewarded.  Took them three days of work but they got it done and it's lovely.  Here are some pictures during and after the construction.

What a pleasure to see.  We've examined it from all angles and it's nicer than we thought it would be.  We were worried that the height would be disproportional to the house and that it would look odd.  Not at all.  Now that our fears are relieved and the work is done we now have yet another set of papers to prepare:   a Dossier Fin des travaux .  But the good news is that this filing will only require that the papers be submitted in triplicate (and from that you can get a good idea of why the original request was such a monster).

Second project was a thorough cleanup of the shed on the side of the house.  When we moved in last December we didn't bother because the priority was given to the spaces we live in.  Now that summer has finally arrived, I am effectively spending a great deal of time in the shed digging through junk to find my garden tools and it was driving me nuts.  So yesterday we took everything out, did a thorough cleaning, and then put everything back more or less in an orderly fashion.

There was some interesting stuff in that shed.  Under the shelves in the back are dozens of tiles for the roof from tuileries (tile factories) all over France.  The tiles are dated 1956 and 1958 which may just be when our roof was installed (isn't that a scary thought?)  And I found this sign which may have been where the former owner worked.

We worked until late afternoon and then I sat on the back porch with a cup of coffee to relieve my aching muscles.  Yes, that's a couch on the porch with a couple of bright orange cushions.

And I admired the garden.  Nice way to end the week.

Bon dimanche, everyone.

Friday, June 14, 2013

New Rules

Americans take a lot of criticism for their supposed ignorance about what their government is really up to but Europeans aren't much better.  "All politics is local," said Tip O'Neill, what people really care about is what is of direct concern to them and the communities in which they live.  Their level of concern and interest wanes with distance which can be geographical or psychological.  This is just as true of the inhabitants of Limoges, France as it is of the people in Port Angeles, USA.

And that's fine.  There are only so many hours in the day and aren't things like family, friends, work and the garden much more important than following the goings-on of distant bureaucrats and lawmakers?  It does make me smile, however, to hear a Frenchman talking about "those damn bureaucrats in Brussels" which reminds me of my childhood and the grumbling against "those damn bureaucrats in Washington."

I do try to pay attention to what's going on where I live both at the member state level (France) and at the superstate level (the EU).  Some of that stems from genuine interest (my undergraduate degree is in Political Science) but surely the fact that I am an immigrant has a lot to do with it.  There is a certain insecurity that comes with that status - a residency card does not make one the equal of a citizen - and it seems prudent to pay attention.

And, oh my, is there a lot to watch here in Europe.  The EU is and isn't a "United States of Europe."  All of the member states are sovereign states and most have existed for centuries.  For much of that time, they have been at odds with each other.  Borders have shifted back and forth, as well as the balance of power, depending on what era you're talking about.  Nothing quite like that ever happened in the U.S. which was founded relatively recently as a settler colony (or colonies) with people from those warring European states.  Some U.S. states (provinces) were independent early on in American history.  Texas, for example, and even today Texans like to point this out often and at great length.  As someone who comes from one of the other 49 states, can I say how boring this gets after awhile?  And do they understand how many of us, when they threaten to secede, are cheering them on?  Oh, please do.  Please turn yourself into an autonomous buffer state between the rest of us and part of that southern border.

Back to the EU.  So here you have 27 sovereign nations that have decided to come together and somehow they have to come up with common rules everyone can live with.  And that's precisely what they have been doing slowly but surely.  So slowly that many EU citizens seem completely unaware of what they've cooked up.  Just for fun, here are some examples that I follow regularly but when I try to talk about them with my friends and family here in France, they have no idea that these things were ever on the table, much less that EU laws and directives have actually been passed that are binding on them and that their national legislation (local laws) is being adjusted accordingly.

EU Blue Card:  This is an EU-wide immigration scheme very similar to a U.S. Green Card designed to draw highly qualified migrants to the EU.  It was proposed back in 2007 and was implemented in the member states in 2011/2012.  It offers very generous terms for work and residency in the EU and allows for mobility between member states.  A migrant can get a Blue Card in France and then move on to work in Austria, for example.

If you are a non-EU citizen interested in living and working in Europe, the EU has an immigration portal meant to help third-country nationals who wish to migrate here and have skills of interest to EU companies.

Cross-border Inheritance:  This one is pretty radical.  It offers nothing less than the right to choose the law under which you wish to have your assets distributed after your demise.  If you are French and you live in Germany, for example, you can choose either French law (nationality) or German law (domicile).  It even goes so far as to cover third-country nationals like myself.  I can, in theory, choose American succession law over French law even though I live in France and am married to a Frenchman.

Cross-border marriage:  Another fairly radical one concerning matrimonial property regimes is being negotiated. Divorce and custody were already the object of new regulations called Brussels II bis.   The Rome III Regulation allows cross-border couples to choose the law under which they wish to divorce.  Now the EU is looking at the issue of marital property regimes of cross-border (international) couples.  The Commission proposal is here.

I strongly urge all cross-border couples and their families in the EU to look into this legislation.  These rules were designed with you in mind and they impact you directly.

Social Security:  This goes back to a directive that was issued in 1992 (92/49/EEC) on insurance.  It allows EU citizens to opt out of public social insurance regimes and to purchase private insurance instead either in that EU member state or another.  Is it really possible to "quitter la sécu"?  Yes, but it's not easy and very few try.  To say that it is strongly discouraged would be an understatement but under EU law one does have the right to do this.

Automatic Information Exchange (The EU version of FATCA):  Talk of this has been around for a long time.  What the U.S. did with FATCA is something that politicians at the EU level have been dreaming of for a long time but there just wasn't enough support to launch something at that level.  FATCA changed the landscape and now the European Parliament thinks the time is right to push a similar system for EU citizens.  This proposed directive to amend "Directive 2011/16/EU as regards mandatory automatic exchange of information in the field of taxation"  was published right after the EP public hearing on FATCA and gives a framework for an EU version that builds on what has already been done, the European Savings Directive, for example, and the "DAC" which will require the automatic exchange of information between member states "on five categories of income and capital: employment, directors' fees, life insurance products not covered by other Directives, pensions and ownership of and income from immovable property.."  If passed, this new directive will expand the scope of the information to be collected to include "dividends, capital gains, other financial income and account balances."

My reading of this directive (and please feel free to correct me as I am not a tax expert or a lawyer) is that what FATCA does to U.S. Persons around the world, the  EU Automatic Information Exchange will do to EU citizens living in another member state.  So a Frenchman, for example, who lives in London or Berlin may have his financial information (income, account balances and so on) automatically sent to the French "fisc".  And if he's a U.S. Person as well?  He will have several states with seriously domestic budget problems looking through his personal finances and one does have to wonder what that will lead to.

This is going to be interesting for European banks and other financial entities.  Not only will they obliged to find U.S. Persons on their client list, they will also have to find and track those pesky German/French/British/Spanish Persons as well.  27 member states plus the U.S. - that's a lot of reporting.  It would not surprise me if some local banks in EU member states tried to wash their hands of ALL those damned foreigners (non-native EU citizens and third country nationals alike).

I respectfully suggest to my EU citizen friends that perhaps they might want to expand their definition of "local" and widen their circle of interest to include what's going on at the EU level.  Not all of the above apply to all but surely one or two have a direct impact on the lives of the EU citizens reading this post.  Grumbling about it after the fact is understandable (and a lot of fun, too) but that's not going to save any of us from the consequences, right?

Thursday, June 13, 2013

Americans Abroad Anonymous

Let's take Pema Chodron's advice this morning and lighten up.  Just for today.

Because in the middle of all this FATCA nonsense it's very easy to forget just how damn funny it can be if you look at it a certain way.

I was highly amused this morning by Stephen Mopsick's latest post,  IRS, FATCA, NSA, And The International Banking Conspiracy.  His tongue-in-cheek take on Datagate:
No one in our government is thuggish enough to presume to read the content of a private e mail message but it’s good to know at least that a few people in the States have pen pals in the quaint, ethnic hamlets in the Swat Valley in Northern Pakistan.
And mark your calendars, everyone, because Stephen notes that the new IRS FATCA Portal to Mordor will be having it's grand opening in July.  This will be THE place to be with bells on for those Foreign Financial Institutions caught between a rock and a hard place.  Once registered these non-US banks will be on record (and on a list) as being perfectly willing to screw over their domestic customers (and in many cases, their fellow citizens) in order to be "FATCA Compliant".  (And isn't there something about that stamp of approval that just screams, "bend over and grab your ankles?")  I'm very much looking forward to seeing that list and I completely agree with Monsieur Mopsick - what an entertaining summer we have ahead of us.

This brilliant and very funny take on the 12 Steps was written by WhiteKat over at Isaac Brock.  My sincere thanks to her for allowing me to repost it here at the Flophouse.  I laughed so hard when I read it.

The 12 Steps of Americans Abroad Anonymous

1: We admitted we were powerless over America–that our lives had become unmanageable.
2: Came to believe that a Power (IRS) greater than ourselves could restore us to sanity.
3: Made a decision to turn our will and our lives over to the care of IRS as we understood Him.
4: Made a searching and fearless moral inventory of ourselves and all our foreign bank accounts.
5: Admitted to IRS, to ourselves and to another human being the exact nature of our wrongs.
6: Were entirely ready to have IRS remove all these defects of character, along with our life savings.
7: Humbly asked IRS to remove our shortcomings, in addition to the contents of our "offshore" accounts.
8: Made a list of all homelanders we had harmed, and became willing to make amends (i.e pay for services we never use) to them all.
9: Made direct amends to such homelanders wherever possible, except when to do so would injure them or others.
10: Continued to take personal inventory (i.e. FBARS) and when we were wrong promptly admitted it.
11: Sought through prayer and meditation to improve our conscious contact with IRS, as we understood Him, praying only for knowledge of His will for us and the power to carry that out.
12: Having had a spiritual awakening as the result of these steps, we tried to carry this message to other Americans Abroad, and to practice these principles in all our affairs.

To this I would add my take on the first paragraph of chapter 2 of the Big Book.  Not a joke like the 12 Steps above but a serious statement about who we are and how all this nonsense has nevertheless brought us together:

We are average Americans living normal lives.  The only difference between us and the homelanders is that we are doing these normal things outside of the U.S. Some of us have only one nationality, some are Accidental Americans who have just learned of their citizenship status, others are duals.  Some have already renounced, some are still thinking it over. Some of us grew up in the homeland, others are more recent emigrants.
All sections of the homeland and many of its occupations are represented, as well as many political, economic, social and religious backgrounds.  We are IT workers, managers, secretaries, missionaries, stay at home moms and dads, retirees, veterans, musicians, writers, Republicans, Democrats, Progressives, Conservatives,  small business owners and independent contractors.

We are people who normally would not mix. We live in many different countries.  Sheer distance and the cost of travel makes it hard for us to meet each other in person.  However, through email, websites, skype, and social media we have forged a strong connection.

But there exists among us a fellowship, a friendliness, and an understanding, which is indescribably wonderful.  And this is the silver lining in this catastrophe that keeps us going and gives us hope.

Wednesday, June 12, 2013


While I was sitting happily here in Versailles watching the mason build me a chimney, a perfect storm (they are calling it "Datagate") was breaking out all over the world.  It appears that the United States has been caught peeking into the everyday lives of millions of ordinary people.

Americans themselves seem only mildly disturbed by this.  According to a New York Times poll,  "6 in 10 Americans said they were not very or not at all concerned about the government’s collecting their phone records or monitoring their Internet use."

Well then, if homelanders are not concerned and have no desire to do anything about it, than I will leave them to it.  They have the government they deserve and if they wish to believe that nice man in the White House, who am I to argue with them?

So what follows is me speaking as the denizen of another state, a long-term EU resident and one who hopes to become a citizen of the French Republic (though I will return to an American perspective at the end of this essay).

Following the activities of your own citizens is surveillance.  Tracking the activities of other country's citizens is spying.  Am I surprised that the U.S. is doing this?  Not really and the other Americans abroad I've talked to are not surprised either.  I and others I've talked to have always believed that our communications with the U.S. were being monitored - it's part of the price to call "home" from time to time.

That makes sense and I'm sure other countries do the same.  Think about it - expatriates can be a very rich source of information about what is going on in another country.  People who would never EVER share their opinions and impressions with someone representing their government will certainly do so freely when chatting with Mom and Dad.

As for the monitoring of the phone calls, email and other on-line activities of non-US citizens,  that shouldn't surprise anyone either.  Welcome to the house (Google, Yahoo, Microsoft..) that the U.S. built.  They have a sense of ownership of this space (which is not "ungoverned") and so they feel justified in applying the equivalent of the Grandma Rule (when in Grandma's house, you live by her rules).

Warnings about this are not new.  Questions about on-line services, cloud technology, data security and how U.S. law applies have been raised before.  In 2011 Jon Stokes wrote this article in Wired, PATRIOT Act Gives Foreigners Good Reason to Avoid US Clouds.  Looking back what is rather ironic is how the U.S. government reacted to those questions at that time.  Seeing the potential of the Patriot Act to derail a promising U.S. product (cloud technology), officials dismissed those concerns as so much false information.  The Obama administration even went so far as to use diplomatic channels with other nations to assure them that there was no problem at all and that their data was safe and secure.  Looks like that nice man in the White House lied.

What is new is that all these suspicions have been confirmed.  Edward Snowden took care of that very effectively and he has resigned himself to accepting the consequences of his actions: "I do not expect to see home again, though that is what I want."

What is the reaction outside the U.S.?  Outrage and anger.  Other countries and regions like Europe have more stringent privacy and data protection laws and there are strict limits to how personal data can be gathered and used.  In France the revelations about PRISM influenced a parliamentary debate yesterday on the protection of personal data.  In the UK, The Guardian continues to follow the story with some very good coverage and analysis.  This page (which is being updated regularly) is a nice round-up of the reactions and how the U.S. is doing damage control.

In addition to all this the ALDE (Alliance for Liberals and Democrats in Europe) called for an European Commission debate which was held yesterday.  Supposedly you can see it here:  US Internet surveillance of EU citizens (NSA PRISM programme) (debate) but I haven't been able to get the video to run on my Mac.  If anyone has better luck, let me know.

To my delight Dutch MEP Sophie in't Veld is at the forefront of the debate  Here is an excellent interview (hat tip to Marvin) she gave:  European Union Angered by N.S.A. PRISM Program. (Click on the link that says "stream m3u").

 "This is no way to treat your allies," she said.  Indeed.  However, I would say that a country that has no problem  whatsoever in establishing an Orwellian surveillance system for its own citizens (who themselves don't seem to mind), probably has even less concern for foreigners.

As a denizen of the EU, I sincerely hope that Europe pushes back hard on this one.  As an American citizen abroad I find myself once again at odds with my own people and government.  I watched Edward Snowden's interview and found myself in complete sympathy with him. Yes, there is a moment where one must make a decision to cross (or not) the line and to follow one's conscience.  I have spent much of my life abroad struggling with this and, up until very recently, almost always giving my country of origin the benefit of the doubt.  Can you love your country and be critical of it or even act against its interests?  Is it possible that the latter flows from the former?   Politics be damned - this is something deeper - a concern for the well being of the place one came from, a stark but honest acknowledgement of its imperfections, and a desire to change it.

These days I find myself reflecting more and more on these words by G.K. Chesterton:
Can he hate it enough to change it, and yet love it enough to think it worth changing?   Can he look up at its colossal good without once feeling acquiescence?  Can he look up at its colossal evil without once feeling despair?  Can he, in short, be at once not only a pessimist and an optimist, but a fanatical pessimist and a fanatical optimist?

Tuesday, June 11, 2013

FATCA: An Incomplete Map

FATCA, the Foreign Account Tax Compliance Act, a few words hastily inserted into the 2010 HIRE Act that was passed by the U.S. Congress, is a perfect example of what James C. Scott calls Authoritarian High Modernism, "a sweeping, rational engineering of all aspects of social life in order to improve the human condition."
All the state simplifications that we have examined have the character of maps.  That is, they are designed to summarize precisely those aspects of a complex world that are of immediate interest to the mapmaker and to ignore the rest...
In case after case, however, we have remarked on the apparent power of maps to transform as well as merely to summarize the facts that they portray.  This transformative power resides not in the map, of course, but rather in the power possessed by those who deploy the perspective of that particular map.
FATCA is an attempt to make a map with information of interest to tax authorities.  The original objective was to catch Americans who remove their money from the U.S. in order to escape local taxation by requiring foreign financial institutions to report on every bank, retirement or investment account abroad connected to a U.S. Person (a U.S. citizen, Green Card holder, immigrant or resident).   Sounds rational, even laudable, doesn't it?  Catch bad people doing something wrong and use their ill-gotten gains to fill the hole in the national budget.  Who could possibly argue with that?

Well, I'm here to argue and I will keep arguing because this is not about tax evasion, it is about something else entirely:  policy laundering, discrimination on the basis of national origin, and the creation of an automatic information exchange system that makes the 99% suffer while doing next to nothing to catch the small percentage of the 1% trying to evade their responsibilities.

What the architects of FATCA (and the governments that are willing to sign on to it) gravely underestimated was how FATCA would change the landscape even before it was even implemented.  It did not occur to them that there would be consequences for good people doing normal things.  Only difference between these people and homelanders (U.S. residents) is that they are doing them in another country.  Things like raising a family, working at a career one loves, going abroad to work with an NGO, saving for retirement or for a child's college tuition, buying that first home.  These adverse impacts have been well documented by American Citizens Abroad and the Association of Americans Resident Overseas.

Americans abroad are being shut out of basic banking services in the countries where they live and work.  American clients are "toxic" to banks that simply don't want the hassle of dealing with all that expensive paperwork.  Businessmen and women with U.S. connections are being told that they should seek elsewhere for business partners because they don't want to have to deal with the U.S. government reporting requirements for even very simple cross-border joint ventures.  U.S. Persons (not just U.S. citizens, mind you) are being stripped of their signature authority over company accounts and cast out of banks they have had a relationship with for years.  Non-U.S. spouses and partners are removing their American spouse's names from joint accounts or demanding that she/he renounce U.S. citizenship ("Your American citizenship or our family. Pick one.")

Those are just a few of the impacts and FATCA hasn't even been implemented yet.  What astonishes me is how many people react when this is pointed out to them.  "OK, there may be problems but how else are we to catch tax evaders?"  Well gee whiz, the U.S. government seemed to be rather successful at it (see the UBS saga) long before FATCA.  Others have said that we are making a mountain out of a molehill.  There aren't that many U.S. Persons abroad, they say, and these folks are just "temporarily" out of the country.  The stories are just stories and these are minor problems compared to the grand scheme which will benefit us all in the end.

Tell that to swisspinoy, one of the sacrificial lambs, over at Isaac Brock.  He is a U.S. military veteran living in Europe.  He fought for his country (and any homelander who thinks he made millions doing so and then decided to live in Switzerland with his ill gotten gains is delusional) but his country wouldn't help him when his local bank decided to pull his mortgage and just make life very difficult for him.  He has renounced.

Tell that to the people interviewed for this article in the Atlantic, The Unintended Consequences of Cracking Down on Tax Dodgers Abroad.  One lawyer had this to say:
"I know of one client whose parents live outside the US," he said. "They are in their 90s, and have a bank account in their home country. They added their son as a signatory because if they become incapacitated, they want him to have access to money to pay their bills. But their account has now been frozen because he's American. The bank wants the son to provide the last five years of his tax returns before it will unfreeze the account. He has had to hire a lawyer to sue the bank to let his parents access their own money."
Tell that to me as I sit here wondering how long my bank will continue to keep me, my French husband (not a U.S. citizen or Green Card holder) and our two daughters (EU citizens) as clients.

The unintended consequences of FATCA on regular people are many but in the race to create an American-style worldwide automatic information exchange system they are being dismissed as of no consequence.  This is the new landscape that FATCA made.  Evading the complexities may please the policy makers who are using their power to control the debate and to ignore the objections of the 6-7 million American citizens abroad and their families,  the  Green Card holders and immigrants, and the U.S. Persons who are not U.S. citizens but only have the most tenuous of connections to the United States.   But the problems aren't simply going to go away.  There will be lawsuits.  Maybe demonstrations.  And of course, there have been and will be more renunciations of U.S. citizenship and a growing number of "Secret Americans" who will cut all ties to America just to be able to keep their homes and retirement or just to keep their families together.

That governments seem to fear all this becoming public, and the lengths they are going to in order to keep this issue as far as possible from the democratic process, says a great deal.   Don't believe me?  Check out page 202 of Obama's 2014 budget here  (hat tip to Tim) and see how they plan to slip FATCA reciprocity (U.S. banks reporting to foreign governments) through right under the noses of the U.S. Congress.

And that's not acceptable.  One way or another the FATCA map must be revised to take into account the real world which I acknowledge is sometimes messy because it has real, live human beings in it.   But that's why we have something called "democracy," why we are citizens (not subjects) and why we have political processes in nation-states where (ostensibly) these things can be worked out and the worst effects mitigated.

As I was walking to the conference room at the European Parliament the other day, I talked with one of Sophie in't Veld's staff and tried to convey some of the desperation and fear some of us feel right now.  We may all have to renounce in the end, I said.  "You shouldn't have to," he replied.

Damn right.