The American Diaspora Tax War continues. Nearly five years after President Obama signed the HIRE Act and the now infamous Foreign Account Tax Compliance Act (FATCA) into law, Americans abroad still struggle to be heard in the homeland and still suffer the negative unintended consequences of this nasty little piece of extra-territorial legislation. The most serious repercussion is discrimination on the basis of national origin. Banks outside the US are denying basic banking services to individuals for no other reason than their US nationality or some connection to the United States .
Americans in the homeland argue that Americans abroad ought to be paying taxes to the land of the free because we are said to be under the protection of the mighty United States in our host countries. We are still waiting to see what that "protection" consists of. When banks can post notes on the Internet that say "We do not offer our services to US citizens" and the US government does not respond, how are we to interpret the silence? Without descending into utter paranoia, one conclusion is that we are citizens not worth defending. This conjecture does not inspire us to that unflinching loyalty we are expected to demonstrate in our words and by our conduct living abroad.
But conjecture is all we have. We read tea-leaves and consult oracles. If this goes on much longer we'll be sacrificing small animals and making predictions from the entrails.
A few weeks ago yet another group of supplicants went forth and walked the halls of Washington. This annual pilgrimage by Americans abroad organizations is called Overseas Americans Week - a Je vous ai compris affair where the politicians make polite noises and get to feel all international meeting people who live (imagine that!) outside the United States. What do we get out of it? More cryptic messages from the heart of the beast, Something about how they can't do anything until they have more information? How interesting. That's what they said last year.
At least Senator Elizabeth Warren was more forthcoming in her reply to Donna Lane Nelson. She gets points for honesty. Yes, the letter says, it is a pity that FATCA is causing problems for US Persons, but it's worth it. For her a potential 100 billion in tax revenue trumps 7 million Americans abroad hands down. And that should be all any American abroad who votes in her state needs to know.
And if that elusive 100 billion in lost tax revenue turns out to be a chimera? A wild ass guess thrown out in a meeting in Washington, D.C. years ago that has been repeated so many times it has become gospel truth? We must admit that it makes for a fabulous sound bite, but where are the studies that prove that this number is true? Where is the hard data that makes this number credible? And yet Warren takes them at their word (Treasury says so, so it must be true) and pronounces FATCA a necessary tool in the fight against overseas tax evasion.
But Warren won't take the word of her constituents abroad in this matter and the US government wants Americans abroad to get cracking and prove they are being discriminated against with hard data: something that it absolves itself from providing to citizens. Frankly all anyone needs to do to find "No US citizens need apply" banks around the world is Google.
What happens next if the coffers are still empty and all the US government has managed to do with their revolutionary system of information exchange is to alienate millions of American citizens around the world and lose many of them to other countries? That is just as likely a scenario as the one that giddily promises homeland Americans that America's fiscal future and way of life will be saved if some unknown unquantifiable population out there in the world gets frisked by foreign financial institutions.
Or, put more eloquently by Edgar Quinet: "How long will you go repeating this strange nonsense that all the scaffolds were necessary to save the Revolution, which was not saved?"
And here is Mark Twain over at the Isaac Brock Society with a link that traces the provenance of that 70/100/150 billion figure that everyone's throwing around: The Source of the Standard Offshore Lie. A must read.