The consequence of FATCA is that Americans abroad are either renouncing U.S. citizenship or returning to the U.S. This is NOT good for American companies in world markets. Although it makes no sense, the U.S. destruction of U.S. citizenship abroad continues.
The article includes:
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Nice post about the “coming together” of American Expats Abroad to fight U.S. citizenship based taxation.
It’s all very sad, but the FATCA of the matter is that U.S. citizenship is not compatible with life outside the United States. The article includes:
Ferauge said despite the complications she has not thought about renouncing her U.S. citizenship. She said she will exhaust all options before going that route. She does say it’s been increasingly difficult to remain optimistic about the situation.
“On a last note, to be brutally honest with you, I’m just very tired” she wrote in a recent blog post. “I’m tired of writing letters, tired of explaining and tired of fighting. There is so much about this that I simply cannot change. I cannot make homeland Americans feel differently about their expatriates. My influence — even as a U.S. voter — is practically nil. I have lost all faith in the U.S. government (Obama and company included). I no longer think it will improve – on the contrary I can think of a hundred ways it could get worse. And I have slowly come to the realization that American citizenship and globalization are an imperfect fit these days. Perhaps it will get better with time but that, it seems to me, is something I can hope for my children’s sake, but not something I am coming to believe that I can realistically expect to have for myself.”
How can a government be as stupid as the current U.S. government?
This is a good article. As always the comments add great value.
The article includes:
Most expatriations are probably motivated primarily by factors such as family and convenience. Many people like Ms. Turner have built a life somewhere else and may not plan to need a U.S. passport.
Complex or costly taxes can help sway a decision but are often only one factor. Although statistics are not available for why people say a final good-bye, many now find America’s global income tax compliance and disclosure laws inconvenient and nettlesome. Some go so far as to say that the U.S. tax and disclosure laws are downright oppressive.
No group is more severely impacted than U.S. persons living abroad. For those living and working in foreign countries, it is almost a given that they must report and pay tax where they live. But they must also continue to file taxes in the U.S. What’s more, U.S. reporting is based on their worldwide income, even though they are paying taxes in the country where they live.
Many can claim a foreign tax credit on their U.S. returns, but it generally does not eliminate all double taxes. These rules have long been in effect, but enforcement was historically less of a concern with expats. Today enforcement fears are palpable.
Moreover, the annual foreign bank account reports known as FBAR forms carry civil and criminal penalties all out of proportion to tax violations. The penalties for failure to file these forms, civil and criminal, are severe. Even civil penalties can quickly consume the balance of an account.
The coup de grace is FATCA, which is ramping up now worldwide. It requires an annual Form 8938 to be filed with income tax returns for foreign assets meeting a threshold. And foreign banks are sufficiently worried about keeping the IRS happy that many simply do not want American account holders. Americans abroad can be pariahs shunned by banks for daily banking activities.