Today, 4th July, as Americans around the world celebrate Independence Day, the chief executive of one of the world’s largest financial advisory firms has slammed the U.S. government for its “fiscal imperialism” and its “complete disregard for 7.6 million American expats.”
The damning assessment from Nigel Green of deVere Group is in response to Washington’s implementation this week of the Foreign Account Tax Compliance Act, or ‘FATCA’.
FATCA, a global tax law that formed part of the Obama administration’s 2010 HIRE Act, requires all non-American financial institutions internationally, including all banks and insurance companies, to report to the IRS the hitherto private financial details of any of their U.S. clients who have accounts containing more than $50,000.
The official aim of the legislation is to try and combat tax evasion, although its opponents claim FATCA will be highly ineffective at achieving this objective.
Ever since FATCA was first mooted, there has been global opposition to it, with Nigel Green being one of the most outspoken critics of them all – as is evidenced in this video he recorded yesterday.
Speaking to iExpats.com, Mr Green says: “It seems ironic that as people across the States and around the world roll out the Stars and Stripes bunting and flags, parade the streets and enjoy quality time with family and friends today to rightly mark America’s independence, just three days ago the country’s government unleashed its fiscal imperialism on a scale never seen before in the form of FATCA.”
He explains: “On Tuesday, in an effort to purportedly catch a minimal number of tax evaders, America has – solely because it can due to its ‘superpower’ status – imposed its rules on the wider world.
“Those who fail to comply with America’s FATCA demands will suffer huge penalties and be, in effect, frozen out of the critical U.S. markets. As such, countries had no choice but to sign an intergovernmental agreement with the U.S. that insists that their financial institutions fall into line on this issue.
“Essentially, the American government has bullied foreign governments and foreign companies into following its fiscal regulations on foreign soil. Other countries’ sovereignty has been overridden and this demonstrates a remarkable arrogance.”
Whilst Nigel Green is keen to vocalise his thoughts on FATCA’s overreach in terms of “violating sovereignty”, it is the law’s impact on American expats that is his main area of concern. This is perhaps unsurprising considering his organisation specialises in wealth management solutions for expatriates.
He comments: “FATCA has turned the 7.6 million U.S. citizens who happen to live and/or work outside America into financial lepers. Why? Because non U.S. banks and indeed all foreign financial institutions are now, more often than not, rejecting doing business with Americans or anyone connected – through marriage or being business partners for example – to an American.
“They are branded as ‘too much trouble’ because compliance with FATCA is costly and lengthy. As American expats are now routinely finding out, being in a country without access to a bank or an insurance company is extremely difficult.
“The U.S. government has, in my opinion, shown complete disregard to these American citizens.”
He concludes: “Like many others, I am calling for fatally flawed FATCA to be repealed and I salute those heroic groups and organisations which are currently preparing legal challenges to achieve this.
“Perhaps next year on 4th July, as America celebrates its unshackling from a formerly imperialistic Britain, we can also resign its own imperialism, albeit its fiscal imperialism, to the history books too.”
Bravo, Mr. Green! You hit every point right on the head. The key is to get this to where people in Washington have to pay attention to it. For far too many Senators and Congressmen, FATCA, incredibly, is still a matter of “Huh, What’s that?” A real Independence Day celebration is when FATCA — the worst law most Americans have never heard of — joins Prohibition in the ash-heap for really bad ideas.
FATCA is the illegitimate spawn of America’s peculiar system of citizenship-based taxation, whose only other practitioner is the failed-state dictatorship of Eritrea in Africa – good company.
Distressingly, apologists for CBT treat it like some esoteric academic theory, the same way supposedly learned men, who should have known better, once opined about eugenics.
In fact, it’s really very simple: citizenship-based taxation is America’s own Apartheid system. CBT discriminates against a particular group of people on the basis of their place of birth – a characteristic as immutable as the colour of their skin. It labels them, tracks them, intimidates them, criminalizes them and forces them into virtual prisons from which escape is nearly impossible. Worse, the architects of CBT are now co-opting the rest of the world to implement this discriminatory regime for them. It is astonishing and disheartening how quickly and easily this is unfolding.
Far too many countries, cowed by the 30% withholding stick that the U.S. threatens to beat them with, like the FBAR and OVDP sticks they already beat their CBT victims with, simply refuse to challenge America on fundamental moral grounds and it is wrong.
The U.S. does not deserve a free pass on CBT and FATCA any more than the old South African government deserved a free pass for its heinous apartheid policies. Yet several ostensibly modern and enlightened nations have rationalized their acquiescence to FATCA by publicly exclaiming that America has the inherent right to tax its citizens in whatever manner it chooses. Well, in a just world it does not, for CBT represents a clear denial of basic human rights and dignity.
Yes, the global hypocrisy is staggering, especially from countries like Canada. Last year, our Conservative government expelled the consul-general for Eritrea for that regime’s tax extortion efforts against its expats in Canada. A couple of weeks ago, the same government enthusiastically ushered-in America’s FATCA laws to override our country’s own Charter of rights and freedoms, discriminating on the basis of national origin, gutting federal banking privacy laws and setting the stage for a massive legal challenge which will be fought in our Supreme Court.
Beneath all the technocratic language about forms, compliance, jurisdictions and enforcement, there is a fundamental truth: these American policies are morally unjust and the world must not condone them any longer. FATCA will be a global disaster unless it is stopped now.
It is indeed time for the world to say no to the U.S. practice of citizenship-based taxation and to force it to adopt residency-based taxation like the rest of the world. If not, then the world better find a more deserving reserve currency in a hurry – the United States has abused its position of trust for far too long and it needs to be reminded that it is just one nation in a community of nations. The breathtaking audacity of FATCA is simply a bridge too far.
Sadly the people paying the biggest price for FACTA is the average middle class American Expat. Finding a bank abroad that is willing to open a new account for an American citizen is near impossible. Forcing us to use higher cost services like western union or a Visa card to obtain cash from our U.S based accounts.