In a huge publicity coup as protests grow against America’s controversial Foreign Account Tax Compliance Act (FATCA), Canada has finally signed an intergovernmental agreement to swap tax information with the US.
Canada signing up for FATCA is a huge political and publicity coup for the US government as the Republican Party has ramped opposition to the tax law.
Many campaigners saw Canada remaining outside FATCA has a fillip for their protests as many American expats live and work in Canada, while the nation’s financial institutions were seen as a safe haven for cash and investments beyond the reach of the US government for many US taxpayers.
Around 250,000 Canadians have dual citizenship with the US out of an estimated 6 million American expats worldwide.
The will-they-won’t-they see-saw of negotiations over whether Canada would sign up to FATCA has gone on for two years.
Republicans undermined
The Canadian FATCA deal allows a two-way flow on tax and financial information between the Canada Revenue Agency and the US Internal Revenue Service (IRS).
Financial institutions in Canada will deliver the details of US taxpayers holding cash or investments of US$50,000 or more, while the IRS will reciprocate with financial information about Canadian taxpayers with accounts and holdings in the US.
The Canadian Bankers Association has taken a stand against FATCA, but the agreement is the “best approach under the circumstances.”
The Republicans Overseas group only launched a petition protest against FATCA online two days ago calling for Canadian and other expats to voice their objections against FATCA.
The Republican Party has also backed a resolution calling for the scrapping of FATCA – a law heavily backed by Democrat President Barak Obama.
New Zealand ready to join FATCA
However, government officials in the States say FATC will not be repealed or delayed anymore and will begin implementation from July 1, 2014.
The law requires overseas banks and financial institutions to register with the IRS and to report accounts and investments with a balance of more than $50,000 held by US taxpayers each year.
Financial firms and taxpayers who flout the rules face heavy fines and withholding taxes.
Meanwhile, the government in New Zealand has passed a new law paving the way for a FATCA agreement with the US.
The new tax statute clears the government to make tax information exchange agreements with the US and any other country.
In Canada we frequently refer to French-Canadians, Italian-Canadians, Chinese-Canadians and so on. Curiously, American-Canadians is a hyphenated term rarely seen or heard, yet that is exactly what many of us are. In our multicultural society, it is simply shorthand recognition that we are Canadian citizens who happen to have a heritage or connection with another country. Outside of our native population, this would apply to the vast majority of Canadians, whose ancestors were all immigrants from distant lands.
Fast-forward to the absurdity and immorality of our present situation. France or Italy or China would never dream of trying to extract tribute from their expatriate citizens who no longer reside in their place of birth. Only the United States (and that other bastion of democratic freedom, Eritrea) would have the arrogance to treat their diasporas like mere chattel to be digitally tattooed and targeted for the confiscation of their legitimately-earned life savings.
The U.S. recently condemned Eritrea at the United Nations for that country’s extortionate practices against its own emigrants, but now hypocritically celebrates its far more widespread, sophisticated and egregious practice of the very same thing.
Simply put, citizenship-based taxation is a violation of fundamental human rights. The fact that the United States is its main practitioner does not lend it the slightest shred of moral justification. Rather, its resurgence as a crude weapon of extraterritorial coercion and punishment is a very clear sign of just how far the US has strayed from its own moral compass, and from its very own creation myth, borne of a yearning by its founding people to cast off the yoke of colonial oppression and to demand no taxation without representation. It is an exquisitely ironic turn of history both tragic and very, very frightening.
You may dismiss these final thoughts as hyperbole, but we may very well be witnessing the beginnings of a kind of economic world war unprecedented in human history, all thanks to the completely unrestrained Exceptionalism of our neighbours to the south, and enabled by the very same technologies which give voice to us – the canaries in the coal mine.
Soon the entire world will be engulfed in this grand folly, and all will pay the price, especially America itself. When the withholding and reciprocity games begin, it will trigger a 16 trillion-dollar neutron bomb of foreign disinvestment in the U.S. which will rebound across the entire global financial system.
Is so much global enmity and economic destruction really worth the petty, vindictive sacrifice of a mere six or seven million ordinary brothers and sisters whose only crime has been to exercise our supposed cherished freedom of movement and to spread ourselves across this big, wide world?
You know, most of us, in our heart of hearts, had never completely abandoned America. But now, it is painfully clear that America has completely abandoned us. Now, unfortunately, so has Canada.
Put in the face of the american congress why USA beacame independant in the first place :
Ok, let’s get down to a little bit of facts and history to better understand what’s at stake.
First of all, why did the 13 first colonies in america go to revolution against the english empire. Yup, you bet, the main reason was taxes. The main reason the colonies started rebelling against ‘mother England’ was the taxation issue. The colonies debated England’s legal power to tax them and, furthermore, did not wish to be taxed without representation. This was one of the main causes of the Revolutionary War. Now how about that one for greedy little congressmen.
Read on further : https://www.history.com/this-day-in-history/american-colonies-declare-independence
Second of all, the origin of citizen based taxation was the civil war. Yup again. To discourage soldiers from leaving the states they created citizen based taxes, just like the english they fought for independance did. Read on further : https://tax-expatriation.com/2014/04/01/the-u-s-civil-war-is-the-origin-of-u-s-citizenship-based-taxation-on-worldwide-incomes-for-persons-living-outside-the-u-s-does-it-still-make-sense/
So the real question is : Is this taxation rule still relevant in the 21st century ?
Not only is it very descriminating for US citizens like you and me abroad, but FATCA also creates serious damage to the United States and its economy!!!
Over here in France the AXA bank has thrown out all it’s US citizenship customers and I have received a FATCA form from my bank. As I arived in France in 1975 at the age of 9 years old, I’m going to get naturalized French sooner than I thought and give up my american passeport and nationality if I have to. On top of that, my mother is Dutch so heck, I don’t care. Thanks dad for bringing me to this lovely country. But it’s something that american citizens working for a couple of years abroad aiming to go back to the states will probably not do. And that’s where the economic factor comes in.
Most americans that are sent to work abroad are important people. Now, major companies don’t want to hire americans anymore, nore have them participate in their actions. You can easeliy mesure the negative impact on the US economy. read on : https://www.repealfatca.com/index.asp?idmenu=4&idsubmenu=121&title=News
and
https://www.thenewamerican.com/usnews/congress/item/17273-new-u-s-tax-regime-is-devastating-experts-say
The only thing that will stop citizen based taxation is when the congress wakes up and realizes the harm it’s doing to the US economy, wich will come in the near futur.