Many Americans abroad are just finding out about the legislation, enforcement tactics, non-represented national treaties (IGAs), tax treaties that impact your life, and a compliance industry that is making a fortune out of us. Many have written letters to Congress, only to receive an answer that has nothing to do with our situation or not get an answer at all. Some non-elected bureaucrat makes life-changing decisions on rather or not our pension that we are required to pay locally will be double taxed or penalized. Some bureaucrat makes decisions on rather or not your local social benefits are “passive income” and double-taxed. Many of us are facing financial ruin, just for being American. We are forced to maneuver two non-related tax systems. We have no privacy, FATCA has killed that and caused massive local discrimination. We certainly do not have freedom or a government that represents us. What is worse, either the people who are doing this do not understand or, worse, do not care. The well-documented problems that our Government is causing are being written off as “unintended consequences.”
The tax cheating rich people “Fat Cats” that the US Government says that it wants to catch are either in the US or have already avoided being caught. Therefore, because the US Government is not catching enough “tax cheats” or enough penalty or fine revenue, some think that the laws are not tight enough. So some are proposing even making it worse. As soon as Americans begin to organize, the partisans jump in and deflect our unity. It does not matter if you support the current President or if you are a Democrat or Republican, conservative or liberal. Neither party has represented us. Our Government has failed us like no other group of Americans. We cannot hide from this anymore.
We do not know if our efforts will be worthwhile. The system is against us. But for any American citizen living abroad and planning to live abroad for longer period of time, you can either fight or renounce your citizenship. As you will find out, complacency will ruin you. Join us in the fight.
What are we advocating?
Citizen-Based Taxation was an effort, during the Civil War, to punish Americans for leaving the country during wartime. It continues today. Eritrea is the only other country that taxes based on citizenship. They have been condemned by the UN for human rights violations because of it. If you have US sourced income, you should pay US taxes. If your income is sourced abroad, you’re taxed under another system. Further taxation and super-imposing the US system on top of the resident country’s system for Americans abroad, independent of being covered by a US exemption or tax credit, is unjust, ethnocentric, discriminatory, and violates fundamental human rights. Furthermore, a US Government official should not decide on the tax exposure of social programs in another country. We feel that this is a violation of other countries’ sovereignty. Why should the social system of another country fund the US Government? Because of the broad definition of a “tax citizen,” our unjust citizen-based double tax exposure is spread to people who don’t even realize that they are Americans. No American should be proud of how our country handles people who are accidentally born in the US, then decades later, taxes them for a house that they sell in their home country. Taxation based on residency would also eliminate the very unfair treatment around accidental Americans who don’t even want to be Americans.
If a US resident (both citizen and alien) opens a foreign bank account, it is understandable that the US Government would track that bank account. However, if the US would implement Resident Based Taxation, there would be no need for the Government to monitor the bank accounts of Americans who reside abroad. If the US Citizen foreign resident would open a cross-border bank account, the resident country will follow their bank through CRS. Despite the forced implementation of the FBAR, most hidden money found in foreign bank accounts have been from US residents. In fact, reporting the standard checking account of a US nonresident merely is bureaucracy and unjustifiably exposes ordinary citizens to fines and costly paperwork.
FATCA is a failure. The perception that FATCA would help net the US government hundreds of billions in hidden money was apparently incorrect. Since FATCA is unilateral and the US has not adopted OECD – CRS, FATCA has turned the US into a global tax haven. Although the US Government claims to have collected some revenue because of FATCA, the Government does not break down how much revenue collected was for penalties or erroneous errors or slight discrepancies of the bank reporting from ordinary middle-class citizen checking and savings accounts. It is highly likely that the US Government penalized normal nonresident middle-class citizens in order to justify the continuance of FATCA. The lack of reciprocity and the unilateral nature of FATCA has hurt our foreign relations and has caused many financial institutions to exit dealing with US citizens or dealing in the US. Although FATCA has discouraged foreign investment into the US, the cost to American citizens abroad has been even more enormous. Threatening our banks with existential fines for even the slightest mistake in finding all American “tax persons” has made us completely unwanted as customers. Because of constant threats of prosecution of bank personnel, even the most simple conversations with a bank person is a risk to them.
We feel that because of the unilateral nature of FATCA, the implementation is a clear violation of 4th Amendment rights of normal citizens. Worse, the implementation has caused well-documented discrimination in banking access, financial planning, canceled mortgages, even access to jobs and putting some signatory responsible American jobs at risk. Americans abroad are now toxic, as are our families, business partners, and employers. People around us get punished for dealing with us. We feel that the US Government and those responsible for FATCA should be held liable for the “unintended consequences” that FATCA has caused. If the objective of FATCA is genuinely to battle tax evasion, then why doesn’t the US drop FATCA and join the multi-lateral CRS from the OECD or deliver on its promise of reciprocity to other countries? Is our Congress afraid of violating privacy rights of residents like they have non-residents? Is the real intention of FATCA to make the US a tax haven? Enough!
We are not alone. We work with other organizations with the same goals around the world.
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Laura Snyder provides insight to Americans who believe that they can easily move abroad and the distressing life that the US Government has in store for those who do move abroad. This is one of the best descriptions of the US Government’s impact on an expat’s life. Must read.