How would you challenge FATCA if you were a world leader?

As “US persons” abroad there is one thing that we all have in common: we are all vulnerable to the US government  and subject to the whims of politicians and a tax code from a distant foreign country, who do not represent us as overseas citizens yet still subject us to their laws as if we lived there.  Many of our own countries are busy lining up to sell us out (“us” being dual citizens and “US person” permanent residents) as quickly as they can to the US government.

This is abhorrent and wrong – What would you do if you were a world leader with the power to challenge FATCA? How would you right this grave injustice?  What follows is done partly in jest, partly as a seriously intellectual exercise and partly as a rant to express my disappointment with our political “leaders” worldwide.  Suspend your belief for awhile:

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I have just anointed myself the next European Commissar, a role with undefined, absolute power over all EU Member states.  I am appalled by FATCA and will take all necessary steps to resist it, since I am a single issue politician and my only purpose in life is to punish the US Government, Congress and the IRS.  This is my agenda, much in the same way that several US Congressmen seem to only be interested in bleeding all “US persons” abroad dry.   Here is my agenda, in two stages:

  • I would immediately denounce FATCA clearly and unequivocally as an extraterritorial tax grab, gross invasion of privacy and sovereignty and the most arrogant law ever conceived in the history of the United States’ existence.  I will give the US Congress 2 weeks time to repeal FATCA or face “serious consequences” and tell them to expect diplomatic relations to be downgraded if it is not repealed.  Details of the “serious consequences” will remain vague, much in the same way that the FATCA draft provisions never seem to be finalised and will be in a state of flux to enhance confusion and increase US lobbying costs.
  • The US Congress, even if it wanted to comply, would be unable to pass legislation this quickly due to its partisan politics.  The two week deadline was meant to be unrealistic as a statement on how FATCA itself is unrealistic in expecting every FFI (Foreign Financial Institution) in the world to somehow comply with its draconian reporting requirements.  I call the US Ambassador to the European Union for a dressing down and implement the next stages of my policy, which include the following (which I also dictate to him in person in crystal clear Brussels-style French, because the US Ambassador to the European Union knows French for sure):
  1. I will work with Switzerland to protect them from the US and, in unison, we will both immediately publicly release all US corporate and US politician-held accounts in Switzerland, Luxembourg and in every country in the EU, likely exposing several US Congressmen who are not complying with FATCA or even aware of what it is even though he or she likely signed the bill back in 2010.  I will also work with Caribbean financial hubs towards the same purpose: immediate release of all accounts held by US corporations and politicians offshore.  These acts will violate every country’s data protection law, but this is OK since FATCA has set the precedent that Data Protection Laws are inconvenient and meant to be ignored.  The US preferred policy is to name, shame and terrify – We are just copying this fine import and applying it on America’s finest: its “public servants” 😛
  2. Next, I will create CCCPFASM* (Congress Critters Contravention &  Presumptuous Foreign Account Seizure Mechanism), a sort of anti-FATCA.  This will entail withholding 30% of all EU source or pass-through income through any EU bank intended for the IRS or  “Congressional Persons”.  This will be automatic for any US Congressman or the IRS and is unavoidable.  It will also include special retroactive FBAR-style reporting rules dating back to 1960, entailing a 10,000 Euro penalty per un-filed year for each non-willful failure to file.
  3. Following the above, any US politician that decides to close an EU/EEA bank account will be automatically considered a “covered expatriate” and subject to a special exit tax, in return for services rendered.  What those services were for a non-resident is not relevant, much as it does not matter whether or not somebody renouncing US citizenship and is subjected to an exit tax has actually used any US services in their lifetime.
  4. Further to this point, all US citizens based in the EU will benefit from immediate protection from the IRS.  The IRS will be labeled a terrorist organisation and given 48 hours for all personnel (yes, all five of them!) to leave every EU member state before being subject to European Arrest Warrants on charges of harassment, disturbing the peace, extortion, spying for a foreign government, intention to commit fraud and money laundering.  All EU-US taxation treaties will be declared null and void and the principal of the territoriality of taxation will be enshrined in the Lisbon Treaty (EU Constitution) with immediate effect and added to the European Declaration of Human Rights.
  5. Extradition to the US for any financial crime or US tax filing mistake will be immediately outlawed for both EU citizens and residents alike.  US citizens who renounce citizenship and become stateless will receive an automatic guarantee that they will not be deported and will be able to apply for citizenship under an expedited procedure.  Actually, all extradition to the US will be outlawed as we distrust their legal system and respect for the rule of law, both internationally and likely domestically.
  6. EU banks will be outlawed from reporting any information to the IRS or any other foreign government.  For each instance that the US seizes 30% of income intended for an EU bank or resident, the EU will seize the equivalent amount from all monies going to public or corporate accounts in the US (again, individual citizens are exempt) to offset the balance and reimburse our own banks and companies.  Because banks in the EU cannot report “US persons” accounts to the IRS, all “US persons” will be able to immediately access normal banking services again.
  7. FDI (Foreign Direct Investment) in the US will be outlawed from European sources and sanctions imposed on investing in US mutual funds, banks, and other financial assets until FATCA is repealed.  This is in response to the US government’s fine criticism of the diaspora tax/extortion on Eritrean citizens overseas and call for the practice to be banned. We believe in investing only in democratic, representative societies where people have the right to come and go, so we will allow these sanctions until the US repeals US citizenship-based taxation.
  8. Lastly, as an aside, All US Ambassadors found to not be able to speak their host country’s language will be called in for a dressing down and immediately expelled.  The Ambassador to the European Union will be expected to speak flawless French, German and the language of the country holding the rotating 6-month presidency (currently Denmark).  They will also be barred from accessing US-sourced bank accounts and financial assets and will be invited to participate in special “US Government Persons” bank accounts at selected branchs, with selected rates and restrictions.  All reporting costs attached to these accounts borne exclusively by the account holders.

*CCCPFASM: Dear US Government, We have selected this ridiculous ackronym to emphasise how much we love all of the silly US government ackronyms that you have produced recently, such as FATCA(T) and F(U)BAR.  We chose this combination especially for you, US politician and viewer, due to your penchant for proclaiming anything foreign as being socialist or communist (CCCP: USSR) and the FASM bit for proclaiming anything else that you don’t seem to understand the meaning of but want to shout your disapproval at loudly anyways as being “fascist”.  With our compliments 🙂

Remember, I am a single issue politician and not at all concerned with the ill-will generated by this, by the economic and financial side-effects or fallout, or by the charges of violating data protection laws or discrimination against a specific group (here “US Government Persons”).  This is identical to how the US Congress has passed FATCA: no concern for other countries’ laws, sovereignty, financial security, data protection laws or even its own image overseas or financial security at home.

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What would you add, change or modify?  How would you battle FATCA, either as a realistic politician or as a single-issue autocrat as above?  What tools are at the disposal of world leaders to effectively challenge this sort of legislation?  Share your thoughts.

15 thoughts on “How would you challenge FATCA if you were a world leader?

  1. I had to travel today to get the “last document” that I need (hopefully) to enter in with citizenship here. The person I talked to interacts with everyone who naturalizes in this gigantic state. When I told them why I wanted to naturalise: (because my life is here), they asked me if I lose US citizenship when getting Brazilian. I said no. And in fact, you have to pay $450 to be able to hand in your US passport. That shocked them a bit that you have to actually pay a big fee to get rid of a ctizenship.

    If the US’s aim is to get their cut of interest income, let them have their 25% of 1% per year 🙂 I keep saying, this is about CONTROL, and nothing to do with money. Just add a sprinkle of SPITE and you have the recipe for the FATCA.

    If it were really about the money, they could do what many European countries did and ink a contact with Switzerland the Channel Islands to withhold taxes and remit tax money to their respective governments. This is nothing more than wanting more control and punishment of US people abroad.

    If I were a Chancellor of any country, I would tell them that this is our country, not the US, and the US needs to stop poking its nose in every countries’ business.

    Last thing — Every time I see some sort of news, it usually has a headline about the US possessing some sort of “advanced technology” to catch the bad guys. Well, use this technology to collect the money from millionaire cheaters in America and leave the innocent people overseas — alone!

  2. Fixed some typos (wrote this on a French AZERTY keyboard!) and added some tags to the article to increase FATCA-related search hits on the site.

    @geeez

    Wishing you a speedy path towards citizenship! Where do most of the immigrants in Brazil come from nowadays? Other Latin American countries and the EU? I read something once about there being lots of Japanese there as well? Seems like a real melting pot of cultures!

  3. In the case of Canada in my mind the next logical step for the government is to invoke the Foreign Extraterritorial Measures Act. The effect of Canadian government invoking the act has never been clear but as a matter of Canadian law its five years in jail for breaking it. My impression right now is the US is refusing to even discuss FATCA with Canada instead trying to negotiate less controversial deals with everyone else first effectively isolating Canada. I think this is a highly risky strategy for the US but one apparently they think will work. I also have noticed Canada has been the most critical of any country to the extraterritorial application of Dodd Frank and the Volcker Rule and back in 2010 the Global Bank Tax that everyone in Europe and the US was so excited about.

  4. @Don as to AZERTY: The French keyboard is embarassing, especially because one must use the Shift key to type numbers! That is why I prefer the Swiss QWERTZ

    On a more serious note, (and this may need a seperate thread) would anyone want to talk about the text of a popular initiative (requiring a national vote in Switzerland) to outlaw FATCAt, FuBAR, LevinCUT, double taxation, other violations of sovereinty, and general Uncle Sam madness once and for all?

  5. @Jefferson D. Thomas

    Tell me about it! I can’t stand AZERTY. I always seem to pick a semi colon when I want a period and my typing speed is reduced by maybe 20 words a minute due to all of the corrections that I need to make. Would love to get a Swiss keyboard due to the ability to input both German and French accents. Maybe I’ll buy my next laptop there actually! QWERTZ doesn’t bother me at all though and this would be the perfect keyboard for me:

    http://en.wikipedia.org/wiki/File:KB_Swiss.svg

    As to your second point, If any of those measures you propose were pass in Switzerland I am packing my bags right away and moving! Seems like most here aren’t in Switzerland, but I’m sure that many would love to contribute some ideas! Sounds like a good post idea to get the ball rolling.

  6. @Tim, I would really like to see Canada publically condemn the US for Eritrea-like tax policies and shake-downs. I really can’t believe they let this “hypocracy” go by.

    I’m only singleing Canada out because the culture is almost the same as the American culture and it appears to have the most dual citizens, and possibly the most to lose.

    Amazing though. The US is a bad case of “BIG Brother”. I can’t possibly understand WHY in the world the US would even care about people overseas!

  7. @geeez

    I would say the steps Canada is taking on this issue and other similiar issues of US extraterritorial legislation like the Volkcer Rule are already unprecedented. Yes, I would like to see more but the legal issues at hand are fairly complex(notwithstanding the situation with Eritea) and require a fairly long time to analyze. The following is just a short article but it shows the degree to wish Canada is already becoming the US’ harshest critic on these types of legislation.

    http://blogs.reuters.com/financial-regulatory-forum/2012/02/17/sopa-fatca-and-the-volcker-rule-the-border-busters/

  8. Tim said: “In the case of Canada in my mind the next logical step for the government is to invoke the Foreign Extraterritorial Measures Act. The effect of Canadian government invoking the act has never been clear but as a matter of Canadian law its five years in jail for breaking it.”

    That would be so awesome. Every country in the world could enact such a law to protect their dual US citizens. If the US government won’t respond to logic, then countries have to find ways to protect their dual citizens.

    Isn’t it interesting that foreign governments have to find creative ways to protect American expatriates. The US government should be ashamed of themselves but I don’t think they understand the concept of shame just like a habitual criminal doesn’t.

  9. I think Canada should pass a law that rejects citizenship based taxation outright. Who would we piss off … the US and Eritrea. If every country did that what could the US do? Nothing.

    The US is alone with their insane taxation policies and should be isolated.

  10. @omghe’sstillanamerican

    Love it. Simple and effective. No need to analyse and decrypt everything that the US and Eritirea do. A simple statement of “this is Canada, we are a sovereign nation and we reject the extraterritorial claims of all foreign nations upon all of our residents and citizens alike” would suffice.

    I bet that the EU will NEVER issue a statement anything like this. All of our politicians have ZERO backbone and even what Flaherty has done so far none of them would ever dare to attempt. Canadians – Be proud that you a have a government that is fighting for your rights, because mine is doing jack squat to protect mine 😦

  11. Oh my this world is getting to be a very messy place.

    Canada to France: keep your election to yourself

    http://news.nationalpost.com/2012/01/26/canada-to-france-keep-your-election-to-yourself/

    “No authorization has been given to France to permit it to include Canada in an extraterritorial electoral district,” Mr. Lavoie said. “We summoned the ambassador to tell him of our disappointment with the French government’s decision to ignore this Canadian policy, aimed at upholding Canadian sovereignty and reducing foreign interference in Canadian domestic affairs.”

  12. @OMG

    I found this to be really interesting because Italy does the exact same thing and the Canadian government didn’t complain during our first elections with the new electoral districts a few years back. The Canadians on the site have implied that this is mainly due to France’s relationship with Quebec though.

    I don’t see what Canada can do to stop this though since if the ballot boxes are inside French consulates and embassies they are legally in France technically. I suppose that they could restrict the ability of the candidates to campaign in Canada somehow?

    It is going to become a messy world though, that’s for sure. I think the intersection of an increasingly interconnected world and nation states looking eager for revenue and to maintain their power will not be a pretty confrontation.

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