Author Topic: American expatriates forced to renounce citizenship  (Read 5582 times)

Pete at Home

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American expatriates forced to renounce citizenship
« on: February 09, 2016, 05:47:55 PM »
http://www.bbc.com/news/35383435

Quote
The United States is one of only two countries in the world that has citizenship-based taxation (the other is Eritrea).

As a US citizen you must file a tax return, no matter where you live, and often pay US taxes on top of the tax you already pay in your country of residence - so-called double taxation.

This has been the case in the US since the Civil War in the 19th Century and until recently really only affected the rich. Americans abroad are given a yearly allowance of $106,000 (£73,000) before double taxation kicks in.

But Fatca expands the scope of what can be taxed, and places a burden on foreign banks to identify US citizens among their customers to US tax authorities. The penalty for failing to do so can be as high as 30% of all a bank's dealings with the USA.
Refused banking

As a result, ordinary Americans abroad are being denied access to basic banking facilities; banks would rather refuse US citizens' custom than run the risk of hefty penalties.

"I went to one and as soon as I typed in I was born in the United States, there was a big set of red letters that said 'No to US persons'," says Jane.

"I've got to pay my bills, I've got to buy food - I've got to have a bank."

For people like her the only option is to renounce their citizenship, and this is causing such a backlog of paperwork that in November, the fee for renunciation was put up to $2,350 - an increase of about 400%.

Glad the law wasn't like that when I was growing up, or my own parents would have been forced to choose between their job and their citizenship.

D.W.

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Re: American expatriates forced to renounce citizenship
« Reply #1 on: February 09, 2016, 11:32:44 PM »
When you were growing up big business couldn't hire a firm to disseminate sob stories through the media fast enough to make impacts which could sway the middle class into helping them safeguard wealth retention methods.
« Last Edit: February 09, 2016, 11:34:51 PM by D.W. »

Pete at Home

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Re: American expatriates forced to renounce citizenship
« Reply #2 on: February 10, 2016, 03:58:52 AM »
I don't understand what you said. Do you?

D.W.

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Re: American expatriates forced to renounce citizenship
« Reply #3 on: February 10, 2016, 09:27:27 AM »
Mostly ya.

What I'm getting at is that while I have little doubt this DOES happen, I think that the intent of such measures is not only justified but essential to our country.  While you tend to stay abreast of a lot more news than the average Joe, the primary reason I see information such as this getting out is that people who have millions or billions at stake want these stories out there.

Pete at Home

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Re: American expatriates forced to renounce citizenship
« Reply #4 on: February 10, 2016, 09:39:50 AM »
I don't think you read the story very carefully.  The whole point was that these laws used to not kick in until someone was making a lot more money.given the real hurt to vulnerable innocents, it Seems a bit cold blooded to dismiss the whole thing as a "sob story."

Let's think about this, DW. If American bigwigs wanted to get sob storIes out there to get Americans to change the laws that get Arthur rich protected accounts, doesn't it seem odd that they do it through the British Broadcasting System?  You realize BBC is not a right wing Republican shell operation, right? :)



D.W.

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Re: American expatriates forced to renounce citizenship
« Reply #5 on: February 10, 2016, 09:52:11 AM »
I never underestimate global business interests.  ;) 
Also, I wish I thought it was only the right wing in their pocket.

I can be cold blooded though, that's true.  Collateral damage is awful but you don't always hold fire to avoid it.

NobleHunter

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Re: American expatriates forced to renounce citizenship
« Reply #6 on: February 10, 2016, 10:07:47 AM »
Back when this hit the news, the CBC gave it a fair amount of coverage. We have a ton of expats (one's sitting across from me) and the rules are (maybe were, I don't recall the extent of the fixes) sufficiently tone-deaf to the idea that some Americans actually live outside the country and aren't offshoring millions that it would have cost a lot of Canadian residents and citizens unreasonable amount of money. At one point, wanted to know the maximum amount of money that the ex-pat had had in their bank accounts. Which is a problem if the proceeds of a mortgage had dwelt therein before going on to the seller.

Pete at Home

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Re: American expatriates forced to renounce citizenship
« Reply #7 on: February 10, 2016, 10:12:10 AM »
I never underestimate global business interests.  ;) 
Also, I wish I thought it was only the right wing in their pocket.

I can be cold blooded though, that's true.  Collateral damage is awful but you don't always hold fire to avoid it.


Who said hold fire?  Why not even consider adjusting your bleeping aim?

According to Bernie Sanders, these laws don't even affect rich Americans from offshore g their tax free assets in the Cayman's.

D.W.

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Re: American expatriates forced to renounce citizenship
« Reply #8 on: February 10, 2016, 10:44:51 AM »
So adjust the aim.  I'm not an economist and I'm not in charge.

You were making, or relaying, an emotional argument against a taxation policy.  I personally would tolerate a chilling level of collateral damage to improve things for the lower to middle class who live and work in this country.  I don't apologize for those priorities.  I don't claim to know the most efficient way to go about it.  I certainly don't claim to know, or even care much about, the most fair or humane way to go about it. 

You see a country refusing to bank with Americans because it's too much of a PITA.
I see a country leveraging banking access as a tactic to get us to change policies which are directing cash to us that they think they can get their hands on.  Not a bad plan really.  Now I threw in a little bit of tinfoil hat level stuff suggesting that the billionaires who want tax havens are out there promoting this type of narrative because outrage against this is good for them.  That's probably bull, but I like spouting a little crazy talk now and then.

Pete at Home

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Re: American expatriates forced to renounce citizenship
« Reply #9 on: February 10, 2016, 10:58:28 AM »
Uh, wrong.

First of all, I would start by prohibiting banks that refuse to service Americans from doing any business with or in the USA.

second, I would focus banking laws on the Cayman's where the rich ARE vising their money , and adapt the laws so American humans making up to Median income AFTER foreign taxes don't pay more than nominal tax to remain American. 

(Humans, to distinguish from American corporations, whose median is irrelevant.)

Seriati

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Re: American expatriates forced to renounce citizenship
« Reply #10 on: February 10, 2016, 12:03:35 PM »
Glad the law wasn't like that when I was growing up, or my own parents would have been forced to choose between their job and their citizenship.
Not sure I understand your outrage here, the tax law isn't what changed, so it was "like that" when you were growing up.  As a US citizen you are allowed to treat foreign tax as a itemized deduction, at the minimum, in many cases it can be a tax credit.  If it's a credit you're only paying US tax to the extent your US tax liability exceeds your foreign tax liability (putting you in rough parity to people in the US).  The low exclusion threshold is very similar to the AMT threshold that catches more middle class people every year.

As far as FATCA reporting, not sure what bank they tried, but any global bank will take on US customers, and I've not heard of any large non-US bank that won't.  The difference is that you have to provide them with your social security number so they can report to the IRS, whereas they used to neither take the number nor report.  I can't get worked up about people losing the ability to hide bank accounts with ease, or being forced to switch from an exceeding local bank to a mid-level player.

Pete at Home

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Re: American expatriates forced to renounce citizenship
« Reply #11 on: February 10, 2016, 06:42:48 PM »
That's cool. What's the BBC article talking about, then? I doubt that BBC is spreading propaganda for the tea party ...

Seriati

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Re: American expatriates forced to renounce citizenship
« Reply #12 on: February 11, 2016, 09:13:24 AM »
BBC's correct that the US is rather unique in how they tax expats, and I agree its not particularly fair.  The big change with FATCA is that the IRS used to not have the ability to even find out what a persons non-US income actually was.  The US government broke the global banking model and forced the banks to report on their US accounts.  If you look there is article after article about them forcing Swiss banks even to enter into disclosure agreements with US tax authorities.  With the increased reporting, the IRS is now finding themselves in the position to catch people who were previously choosing not to report.

Consider too, the BBC article points out there are 9 million US expats and yet apparently only 4 thousand appear to feel "forced" to renounce citizenship. 

Pete at Home

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Re: American expatriates forced to renounce citizenship
« Reply #13 on: February 11, 2016, 10:50:12 AM »
American citizenship is harder than many to give up. My girlfriend gave up her British citizenship and we agree she didn't feel about it like I felt about mine even though our international backgrounds and childhoods are eerily similar.   Given how Americans feel about being American, I submit that 4000 per year is shockingly high.

In any event, the cure I propose, cutting off banks that refuse to serve American expats, actually serves the purpose of helping America stop tax evasion and money laundering.  If millions of American expatriates ate forced into grey market banking substitutes to just pay their bills, that's an environment that not only serves rich scoff laws but also pegs like Al Qaeda and DHAESH.

Seriati

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Re: American expatriates forced to renounce citizenship
« Reply #14 on: February 11, 2016, 11:22:29 AM »
In any event, the cure I propose, cutting off banks that refuse to serve American expats, actually serves the purpose of helping America stop tax evasion and money laundering.  If millions of American expatriates ate forced into grey market banking substitutes to just pay their bills, that's an environment that not only serves rich scoff laws but also pegs like Al Qaeda and DHAESH.
Maybe I was unclear, the complainers are not being forced into grey market banking substitutes, they're being forced out of them.  I'd expect that any bank you've ever heard of, any bank that has offices in the US and the country in question (big plus for expats), any large bank in any major country and a majority of all banks in a country (unless the country itself is a pariah) are already FATCA compliant and will open US accounts.  I'd be more interested in exactly what bank is refusing them (as they'd be an outlier) and why this person is insisting on dealing with such an operation.

When you're talking about "millions" of American expats, you're talking about "millions" that have  no trouble setting up a bank account.  I mean between Citibank and HSBC alone you'd be hard pressed not to be able to find a bank where you are, and there are dozens of banks with global scale.

TheDrake

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Re: American expatriates forced to renounce citizenship
« Reply #15 on: February 12, 2016, 06:46:56 PM »
I concur with Seriati. You look at the large multinational banks, and they're easily going to have the resources to add the software and process to be compliant, and they are likely to serve rich Americans with lucrative accounts. I have no trouble believing that the French equivalents to local credit unions are choosing to avoid the whole mess.

The BBC article doesn't give many details, which is frustrating. They state that "banks would rather refuse" and other vague statements - they don't even name the bank that "Jane" was denied by. Fabien wasn't actually refused, he just faced a paperwork nightmare, which is also not great.

All that said, one might easily be led to conclude this is widespread, otherwise why was renouncing citizenship the last resort, as described by Jane?

This article talks some about this action. They cite ABN AMRO as closing portfolio investment accounts help by US citizens. AMRO is an almost exclusively Dutch bank, and its an investment house - not a basic checking account.

Interestingly, the Patriot Act is cited as a reason why Americans overseas can't just open a US-based account in many cases.

There is a fairly elegant proposal being made to fix this, which is a same-country exception. So, if you can prove to the bank in Brazil that you reside in Brazil, the bank would be exempt from reporting. I'm sure there are ways to game that system, but on the face of it - it works. People hiding money in the Caymans don't want to live there.