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The imperial ambitions of the Internal Revenue Service

It bemuses me that a certain type of commentator will often – sometimes rightly – be angered at the over-reach of Western powers’ foreign policy but be quieter about other, less obvious, intrusions if they happen when a more leftist government happens to be in power. And a lot of this sort of double-standard occurs with the United States.

Such critics appear to have been silent on the following issue: under the current Democrat presidency of Mr Obama, the US last year passed a stunningly badly crafted piece of legislation, known as FATCA (Foreign Account Tax Compliance Act). The law was passed at a time of what can best be described as hysteria about the amount of money that Americans were allegedly stashing abroad in places such as Switzerland, the Bahamas, the Caymans, and so forth. The major governments of the world, such as the US, Germany and UK, fondly imagine that there is, so to speak, a huge pot of gold that got lost down the back of the sofa.

What FATCA does is require any financial institution that is believed to deal with expat US citizens and Green Card holders to provide a great deal of information to the Internal Revenue Service. In other words, all manner of financial institutions, ranging from big banks to small investment boutiques, must prove to the Internal Revenue Service’s satisfaction that they have not got US citizens/GC holders on their books if they want to be unmolested by the IRS’s powers. If they have such clients or invest into the US stock market, etc, they must provide huge amounts of additional reporting data to the US. “Foreign Financial Institutions” must report investors who are taxable in the US to the US tax authorities. If they fail to do so, they pay a 30 per cent withholding tax. And proving that someone is, or might be, a US citizen might be hard, particularly if that person has been living outside the US for decades, and there is not much paperwork going back, say, 30 years.

This is a quite stunning extension of the IRS’s power around the world, affecting European, Asian, African, Latin American and other regions’ banks, who may have been blissfully unaware that some of their clients had, at any point, a US “taint”. And I am frankly astonished that not more has been said by non-US governments about this; however, given that governments such as those of Germany have resorted to the dubious practice of paying for data stolen from Swiss banks, I have no great hopes that respect for sovereignty or the rule of law applies.

The net effect of this law will be to make it even less likely that banks and other firms will want to touch Americans living outside the US due to the heavy compliance cost. The law will be a blow against globalisation and business growth, as this article at Forbes makes clear. It will be even less profitable for firms to deal with Americans if they live abroad. Those US nationals working in the City of London, for example, will find it is harder to open a bank account, manage a mutual fund or get insurance. A former US colleague of mine is in a nasty predicament. When I called the US Embassy here about the matter, I received nothing but blank ignorance.

FATCA is yet another blow against the free movement of people around the world, and will be particularly tough on the middle class, hard-working professionals who don’t have access to the flashiest lawyers and advisors. The super-rich and well-connected will, of course, be okay. I doubt that someone like the US Ambassador or military types serving abroad have even heard of it. (The US military tends not to be affected by such legislation anyway, although you can never be sure. If any serving personnel do get hit, it would be good to know the details).

It is sometimes said, by a certain type of sneering European or self-hating international travelling American, at how bad it is that all those ghastly, ignorant hicks don’t hold passports. Well, part of the reason is that getting a passport is a bureaucratic nightmare in the US. Another is that the US is a big and beautiful place with so much to see that why would any sane American want to leave for any extended period of time? But another reason is that the IRS, which is out of control, is making the process of being an expat a waking nightmare.

As for whether politicians of any kind, including the Tea Party crowd, give a flying f**k about this issue, is unclear. There may be few votes in it, but I would have more respect for supposedly libertarian-leaning GOP members such as Ron Paul, his son, or one or two others, if they could be persuaded to lobby for wholesale repeal of this atrocious piece of legislation.

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75 comments to The imperial ambitions of the Internal Revenue Service

  • Jonathan, I gather this can only practically apply to non-US financial institutions that also operate in the US? Otherwise, how can the IRS enforce compliance – unless there is some kind of an international treaty attached to this? What am I missing?

  • Alexa Grey

    A friend of mine is a US ex-pat here in the UK and she decided to simply not renew her US passport when it expired. It means she cannot go back but she does not enjoy travelling much anyway.

    So she decided that as she only ever went back to see friends, they could come see her instead as it is just not worth the grief of having the IRS bugging her. She is not formally renouncing her US citizenship as that actually attracts their attention but she has changed her name and address (for other reasons, i.e. she got married) and is just slipping away from the intrusive eyes of the US taxman. If someone she does not know asks where she is from, she says “Canada”.

  • Chet

    This legislation is just one more example of over-reach by the government, and it smacks of pandering to a small but vocal minority.

    Question: when you say that it is a “nightmare” getting a US passport, are you referring to US citizens outside the US getting passports or are you talking about getting passports in general?

  • Yes. Indeed this has been a subject of some discussion among the Malaysian expat community. Most of us out here are European or Austrlian but with the odd smattering off Americans.

    Their view generally is not to blame the IRS, but rather to blame “those who don’t pay their damn taxes”. I’m not sure if this is good programming of the proletariat by the US education system or just a case of being unable to understand the problem.

    When you point out that no other modern Western country cares about it’s expats (apart from to campaign for votes at election time) after they leave there shores (as long as their final tax bill is paid), they seem rather bemused. They understand the words, but not the meaning.

    The only exception to this I came across was an ex-hippy who went to Canada and obtained Canadian citizenship during the Vietnam war. We never discussed whether he had renounced his citizenship, but he certainly didn’t have the abiding love for the USA that most Americans seem to share.

    In actual fact, if it wasn’t for the American drawl, he was almost English in character and outlook. Spent most of his life teaching English as a Foreign Language in schools all over the world.

    Not sure what needs to happen to shake some sense into most Americans. The home of the brave and the land of the free might have been true once, but it seems like a lesson in ancient history rather than a practical application.

  • Alex VanderWoude

    This issue certainly has importance, but it fades when compared to more pressing issues such as the current deficit and debt of the US government. Basically, you are pointing out that there is damp in the basement. This is true, and it should be dealt with, but right now the kitchen is on fire.

  • Laird

    This can’t be really a surprise to any American who’s been paying attention. After all, ours is a government which presumes to tax its citizens on income generated anywhere in the world, and which extorts a massive “exit fee” if you try to leave. We are now aggressively taxing “citizens” who had the misfortune of being born on these shores but whose (non-citizen) parents moved them to some other country when they were infants. (That’s the flip side to “birthright citizenship” which is allowing all those “anchor babies” to remain in the country even though their parents are illegals.)

    The IRS is just following the law. The real problem is the people who write those laws. To them we’re all just domesticated animals to be shorn. There’s a fine line between shearing and skinning, though, and we’re getting perilously close to crossing it.

  • Jane

    As for whether politicians of any kind, including the Tea Party crowd, give a flying f**k about this issue, is unclear.

    Hi,

    I’m part of the Tea Party crowd and I don’t give a flying f**k about this issue.

  • Sounds like they’ve created a gap in the market for a bank that has nothing to do with the US. The FOIRS Bank perhaps?

  • Johnathan Pearce

    Jane, so I suppose you think it is a Tea Party
    idea to destroy US business interests
    overseas and those of US citizens?

    Isolationism is dumb and not what the
    Tea Party stands for.

  • Richard Thomas

    It’s something of a dilemma for me. I’m currently a permanent resident on a green card and I have to decide whether to renew my green card in 2013 or become a citizen. If I renew the green card, that means I need to renew my UK passport and I understand that’s become a PITA.

    As for obtaining a US passport being a beureacratic nightmare. Certainly not the experience obtaining one for my daughter a couple of months ago. There it was just a case of obtaining the photograph, filling out the form, attending a short interview at the post office and sending off for it. Not even any of that nonsense of having the photograph signed by a doctor or other person assumed to be of good character (anyone know how many passport photos Harold Shipman signed?) and whatever else they’ve bolted on tp the process since I last obtained my UK passport.

    On the subject of travel (broad segue), I had the disfortune to be flying (internally only) on Sunday. The full-body scanners were in operation for *everybody* (for some reason, I had the impression it was only going to be for random people). As I have suggested I might, I did opt for the pat-down. I just feel that if you’re going to be illegally searched, it should at least be done honestly. The truth is that other than it being a political violation, the physical act of the search itself is not something that any mature adult should find particularly discomforting and I’ve certainly had worse going into nightclubs (in fact, I personally find being forced to remove my shoes more of an imposition) . It was also done in a big glass box so a bonus on my protest being visible to the public and not in some seedy backroom somewhere. Perhaps I should get a t-shirt made.

    The one bad thing is that it took significantly longer to go through the pat-down as opposed to through the scanner, mostly because it took a long time for the guy who does them to become free (how deliberate that is, I don’t know) so I may take the path of least resistance when time is an issue. When I am able to do so though, I will opt for the pat-down in future and would encourage everyone else to do so. No point making it easy for them to violate our rights.

  • 'Nuke' Gray

    I have just read an interesting book called ‘treasure Islands’, all about tax havens. The two biggest havens are the islands called Britain and Manhattan. Yes, the city of London loves and protects foreign money, and New York does its’ best to emulate London, in this regard. So, if the IRS was serious, it would be given real powers within America.

  • Well... Meh

    I’m part of the Tea Party crowd and I don’t give a flying f**k about this issue.

    So… a Tea Party supporter, a movement arguing for limited government, does not care that almost uniquely amongst major nation the USA taxes its subjects globally. If that is your idea of limited government then you guys are probably just like the people you oppose but fondly think you are so different from.

  • Richard Thomas

    The tea party is more about reigning in the ever-increasing tax burden on the US population in my estimation. While I’m not a tea-partier myself, I would very much appreciate it if they stayed somewhat on-message rather than getting diverted into every Tom, Dick & Harry’s hobby horse. Much like the commerce clause, “big government” is, to mix metaphors, a large umberella term which can paint with way too broad a brush with similarly unfortunate outcomes.

    The tea party is doing a good job at what it’s doing so far. Don’t mess with success (or Texas)

  • 'Nuke' Gray

    ‘Treasure Islands’ also tries to claim that if tax havens were outlawed (somehow!), then (honest) governments would have enough money from taxes to have eliminated poverty. This naive trust in government power-solving abilities would have been sweet centuries ago, but you’d think that history would have shown its’ utter folly now!

  • bgates

    I’m part of the Tea Party crowd, and I think the country could do without an ERS (External Revenue Service). If the government wants Americans to keep their own wealth inside the country, they could try making it less attractive to flee their jurisdiction rather than imperiously expanding their jurisdiction across the globe.

  • James Waterton

    I love the acronym, “FATCA”. Very instructive indeed. No T required, we get the idea.

    how bad it is that all those ghastly, ignorant hicks don’t hold passports.

    The other point to consider is that when the factoid that “99.999999999999% of American citizens don’t have passports (or breath through their noses or have opposable thumbs)” was released, American citizens could travel to Canada and Mexico – and possibly other Central and South American countries – with a driver’s licence. They could be well-travelled within their region and still not hold a passport.

    If a European had travelled extensively throughout Europe but not left the continent, I suspect they wouldn’t think of themselves as insular or poorly travelled. But an American who may have been to all of the 57 (ahem) states plus Mexico and Canada is thought of as an ignorant redneck hillbilly.

  • James Waterton

    …simply because they don’t have a passport.

  • I don’t think it is a fair comparison, James: it’s not the size of the area one travels that counts as much as its cultural diversity (hate that phrase, but let’s just say I’m reclaiming it here). Traveling within no-matter-how-many different United States (including Canada – I’ll certainly grant you Mexico though), is not the same as traveling among several different countries, with vastly different cultures, histories and languages. Now I know that the EU idea is to change that, but how successful they have been or are likely to be in the future remains to be seen.

  • Jane’s position is perfectly understandable, but extremely unwise. “First they came for the evil tax evaders – and I said nothing, because I file my taxes every April as is my birth-given duty.Then they came for those unpatriotic expats – and I said nothing, because I live in the US, as every good American should. Then they came for those failing to pay their share in Obamacare…”

  • Vinegar Joe

    Alisa, I’ve seen the British idea of cultural diversity up close in Amsterdam. Streets full of drunken aggressive Brits fresh off the boat for a weekend of mayhem is not culturally enriching. But maybe you were referring to Gary Glitter’s trips further afield to say Vietnam?

  • I feel your pain, Joe:-)

    I’ve seen many Brits in Italy and Greece, and most have been delightful (save for one couple who could actually use a pint or two to help them lighten up).

  • Jane

    Alisa,

    Are you suggesting that I stand up and fight for the tax evaders? No way.

    Forgive me but I despise the tax evaders just as much as I despise the welfare cheats and entitlement whores. I can’t get worked up over requiring people to pay their taxes and preventing folks like the Kennedys from hiding their assets and income or the Kerrys from docking their boat in a neighboring state so as to evade taxes imposed from their own home state.

    As for expats, if they want to enjoy the rights and priveledges that the US offers then they will have to prove they are paying their taxes while choosing to live overseas. I understand the inconvenience of doing some extra paperwork but that is the way of the world.

    Everyday I have to do stuff because of a few bad apples. I have to be molested at an airport before boarding a plane. Our state is a testing ground for when Obamacare takes place. They are hooking up people’s medical records to all healthcare providing networks. The purpose is to stop fraud and catch those who are visiting muliple doctors to secure multiple prescriptions for narcotics etc. This system will include access to pharmacies, eye doctors, dentists as well as every doctor and medical facility and clinic in our state. I will not even so much be able to go to a pharmacy to pick up a prescription without having my whole health history pop up on a screen, same with getting my teeth cleaned or eyes checked. And why? because of a few bad apples out there.

    In my local store I get stopped at random to have a “greeter” go through my bags of groceries and match each item on my receipt. It doesn’t matter that I may be in a hurry. Why? because a few bad apples steal.

    When I shop at a department store many times there is a person on the other side of a mirror watching. Why? A few bad apples steal. I could go on and on, but you get the point.

    If a few people who choose to live overseas need to prove they are paying their taxes and playing by the rules and need to fill out extra paperwork I can hardly get worked up over that.

    As a former poster said…we have a kitchen on fire, the damp smell is not a problem for me. Perhaps the wealthy should fight their own battle with their own lobbyist and lawyers.

  • I am not suggesting anything, Jane – I could clearly see from the outset that your mind is set on setting yourself apart from the “rich” (yeah, right) who have lobbyists and lawyers (where are mine?), and the “bad apples” who do not willingly open their wallets to their betters in Washington, DC to have their hard-earned money transferred to, um, “more deserving” citizens, and the expats who have the temerity to go about living their lives as they please, instead of opening their wallets to those same DC (and local) critters back home and their dependents – who now riot in places like Madison, WI with righteous anger at the mere suggestion that their dependency maybe should be limited, just a little, and that they should maybe consider living within their means and earn their own “benefits”, like the rest of us, rich bastards, are doing. Yes, the house is clearly on fire, and it is only now that some of you who have long been drunk on koolaid are noticing. That post above is your wake-up call, but you are clearly intent on rolling over to the other side and going back to sleep. Sweet dreams.

  • Our state is a testing ground for when Obamacare takes place. They are hooking up people’s medical records to all healthcare providing networks. The purpose is to stop fraud and catch those who are visiting muliple doctors to secure multiple prescriptions for narcotics etc.

    You really do believe everything they tell you, don’t you. And the gall of some people wanting to visit multiple doctors (what has the world come to?) and secure multiple prescriptions for, gasp, narcotics! Clearly, there’s no way to prevent such atrocities from taking place, other than hooking into the medical records of upstanding citizens such as yourself.

  • I don’t want to be compelled to visit any doctor anywhere where I want to obtain narcotics. I should be able to buy as much of them as I want at Tesco. The whole prescription system is a dreadful, rent-seeking, ticket clipping scam

  • But it’s for your own good, Michael (not to mention the good of the children and the society, or something).

  • “Are you suggesting that I stand up and fight for the tax evaders?”

    And you’re claiming to be part of the Tea Party crowd?

    Jesus wept…

    Anyway: who’s to say digitally distributed currencies in the mold of Bitcoin might not render this sort of thing completely powerless?

  • Jane

    Alisa, did you understand the purpose of the examples I gave? My point was that EVERYONE is inconvenienced and gives up liberties due to a crackdown on illegal behavior. The point about the medical records was that people now have to give up their medical privacy and confidentiality. If one wants to pick up a prescription for a cough medicine the technician enters name into a computer and one’s whole medical history pops up. If you want to get your teeth cleaned, the dentist office pulls up your name in a computer and your whole history pops up. I think it is terrible that we have to lose privacy and freedoms in the name of catching the bad ones out there.

    If I want to volunteer my time and work with children or teach Sunday school, I’m treated like a criminal and must submit to background checks and fingerprinting. there is no reason for anyone to suspect me of wrong doing but I must prove it anyway.

    Johnathan did not make his case to me. Basically I hear that people will be inconvenienced by extra paperwork to prove that they are reporting income and paying their legal taxes. Oh the travesty of that!!!! How dare they be inconvenienced, right? WE are ALL inconvenienced.

    Forgive me for believing they should have to pay their legal taxes and should not hide their income and assets. If they want to enjoy their benefits and priviledges of being an American, AT TAXPAYER EXPENSE, then they need to pay their legal taxes. The government has a right to insist they prove they are playing by the rules. Added inconveniences happen to ordinary citizens everday.

    What am I suppose to get my panties in a wad about?

    Do I believe the government as to the reason of why we all have to give up our medical privacy? Not necessarily, the reason why isn’t really relevant. The point was we are all being subjected to inconveniences. I find losing privacy and freedom more important that worrying about someone having to do extra paperwork to prove they are paying their legal taxes.

    It isn’t my battle I choose to fight.

  • Jane, I don’t know if it has ever been pointed out to you, but ‘legal’ is far from being the same as ‘right’. Please take some time to consider this radical idea and its implications on the discussion at hand.

    Do I believe the government as to the reason of why we all have to give up our medical privacy? Not necessarily, the reason why isn’t really relevant.

    Well then you are very much mistaken: the government is the only reason for these transgressions, and the reason why could not possibly be more relevant. Again, please take the time to consider.

  • Jane

    “First they came for the evil tax evaders – and I said nothing, because I file my taxes every April as is my birth-given duty

    LOL, The nerve of those tea party people not standing up for the tax evaders!

  • Jane

    The tea party, more than anything else is about a balanced budget. And if we do that it will limit the power of government and it will put us back from financial ruin. That is the main focus of the tea party. Anyone who wants to tack anything else onto that is operating from their own agenda.

    There are many issues out there but the above stated is the reason why the tea party was formed and we don’t want to be side tracked with all these other personal issues.

    This FATCA isn’t my ax to grind. I’m sorry I just don’t give a flip about it.

  • Jane

    Do I believe the government as to the reason of why we all have to give up our medical privacy? Not necessarily, the reason why isn’t really relevant.
    Well then you are very much mistaken: the government is the only reason for these transgressions, and the reason why could not possibly be more relevant. Again, please take the time to consider.

    Sorry, what I meant by that was I don’t necessarily believe the reason of fighting prescription medicine abuse is the real reason we need to give up our privacy. It may be one of many. My cycnical self thinks it will have to do with rationing care in the future.

  • Jane, my problem with your position is not really about expats or tax evaders: I said from the beginning that your position is understandable, and I was only partly sarcastic. I do understand that not every person in the Tea Party or in any other movement can master the energy or even the time or, indeed, plain interest to concern herself with every single issue out there. Rather, my problem is twofold: one part is that you are not merely indifferent (as in ‘I don’t give a flip’), but are outright hostile to the idea that the payment of the myriad of taxes thought up and imposed by some idiots (at best) in DC is less than our absolute moral duty. The other part I have a problem with is with your rather narrow (not to say ‘narrow-minded’) view of the purpose of the Tea Party. Yes, the Tea Party is also about a balanced budget – but where do you think did the unbalanced budget come from in the first place? What enabled it? Could it have been maintained even for a very short period if not for the ability of politicians to come up with the ever-more creative ways of taxing the living shit out of us all, expats or not? Those agendas that you see as being tacked on are at the core of our current predicament, they are the problem. The Tea Party is all about smaller government (of which a balanced budget is but a natural result) – not a government that is left free to redistribute the fruits of our labor as it sees fit through taxes and entitlements.

  • “And if we do that it will limit the power of government and it will put us back from financial ruin.”

    No it won’t.

  • Jane

    Alisa,

    Am I interpreting you right? I hear in your last paragraph that your issue is mostly then about the tax law and code that the idiots in DC have implemented and therefore have rationailzed that since the laws are stupid and even unfair then people should be able to break the law by hiding assets and not reporting income. Legal is not the same as fair you said. I agree, however just because it isn’t fair doesn’t mean we break the law. We work to change the law.

    This is where we disagree. I do not support or condone breaking the law and evading taxes because one simply thinks they are unfair. People who think the law is unfair should engage in our political system and work to change it.

    Jesus wept? Jesus said give unto Caesar…..

    Yes Mike, cutting the government’s budget will cut off their power. The Tea Party is concerned about the financial ruin of America and they want the budget under control and debt paid. They want government to stop digging the hole and start to be fiscally responsible and as Jane agreed this will cut the govs budget and a natural result will be the limiting of their power. This is about all the Tea Partiers agree on, after that we all have different ideas and beliefs about how things should be. I’m not a Republican, I’m an Independent and do not always agree with the republicans in the Tea Party. We agree on the basis.

  • Jane

    Oh, one more thing before I leave, I’m really not hostile or even angry. Jonathan posted that he was unclear if any politicans or tea partiers “gave a flying f**k” about the issue and I used his words and answered his confusion that as a tea partier and one who was elected to a small local position, I really didn’t give a “flying f**k”. I prefer the use of the word “flip”, but I was only quoting Johnathan.

  • “Yes Mike, cutting the government’s budget will cut off their power.”

    Can you spell “debt monetization”?

  • PeterT

    Jane, quite a few of us here would consider tax avoidance a moral duty, while of course you should balance the risks to yourself of doing it.

  • Jane

    That is fine Peter but than just as you said balance the risk yourself and take responsibility for it yourself. Do not expect the Tea Party to come to your defence. We will not support people who break the law and avoid paying their tax. It is not “shame on the tea party” or “Jesus wept” because we do not take up your illegal cause.

    But here is what the Tea Party would most likely stand with you on….a flat tax. We would stand with the wealthy and fight for a flat tax. No favortitism towards anyone rich or poor, no exemptions, no loop holes, no write offs etc. A fair flat tax, simple, uncomplicated, for everyone and corporations.

  • mose jefferson

    I don’t know, Jane may have a point. If injustice happens to everyone equally, is it still injustice? Those Rawlsian folks have been telling us for years that it is better to be equally poor than to be unequally rich. Maybe they have a point?

    Nah, still sounds dumb.

    “Render Unto Caesar…”
    That’s why I don’t keep my wealth in dollars.

  • mose jefferson

    Oh yeah, and Jane, I hope you mean “we” in the royal sense.

  • Laird

    This is an interesting discussion and I’m glad Jane joined it. What we’re seeing is an illustration of why the Tea Party is not a libertarian orgnaization (no criticism intended). It’s a conservative organization. Our paths coincide on certain issues (well, one specific issue, anyway: reducing government spending which, I think, also entail shrinking government in general). But that’s about as far as it goes. I would be very surprised if Jane doesn’t support the current anti-drug laws, and clearly her mindset is that one should follow the law (however wrong we may think it is) and work within the system to change it. That is a very legitimate position. Many of us here feel that the system is unfixable, and we have a moral obligation to disobey “bad” laws, but as she says that’s our decision and our risk.

    One point I would make to Jane: you should be aware that our government is the only one in the developed world which seeks to tax the foreign income of its citizens. There is no rational justification for that position, other than the government’s obvious belief that as citizens our only fuction is to supply it with revenue. It even seeks to tax the income of nonresident foreign citizens merely because they happened to be born in this country and thus are considered “birthright” citizens and therefore subject to our taxes. (This is actually a fairly new position.) That tells you how immoral our government has become. I know that your only concern is lower domestic taxes, but now that you’re thinking politically I would you invite you to consider larger issues.

  • Simon Jester

    I do not support or condone breaking the law and evading taxes because one simply thinks they are unfair.

    The Tea Party … want the budget under control and debt paid.

    We will not support people who break the law and avoid paying their tax.

    we do not take up your illegal cause.

    lol. Assuming “Jane” isn’t a passing “Liberal” who’s just yanking everyone’s chain (congrats if you are, BTW, mission accomplished), it seems she may not have heard of the Boston Tea Party.

  • No, Simon, she is not – I know a lot of people like her. The confusion between ‘moral’ and ‘legal’ is all too common. And you can’t even bring the most obvious examples of recent history where such confusion led to the death of millions, because then everyone throws their hands in the air, rolls their eyes and screams ‘Godwin!’.

  • People who think the law is unfair should engage in our political system and work to change it.

    Oh please. The entire political system is DESIGNED to make that pretty much impossible. To legitimise the system by saying “well that is the law” denies that it is the system itself that is the problem, which it clearly it.

  • Sunfish

    The tea party, more than anything else is about a balanced budget. And if we do that it will limit the power of government and it will put us back from financial ruin. That is the main focus of the tea party. Anyone who wants to tack anything else onto that is operating from their own agenda.

    You’re speaking for the whole Tea Party now? Because I was around from the beginning somewhere out west and I don’t remember any resolutions to oppose tax avoidance, or taking a vote to have someone back east named Jane
    speak for us all.

    As I see it, this can go two ways:

    “x is evil and wrong, but I have to deal with it so you should also have to deal with it as well even though it’s evil and wrong.” Note the close relationship to “I don’t mind having to prove that I have a right to breathe to some bureaucrat’s satisfaction before I can have a job or get on a bus, and even if I do mind, the unjustifiable is perfectly justified if other people have to suffer as well.”

    “x is evil and wrong, and should be opposed even if it’s not happening to me, and even if it’s happening to everybody and opposing it might spare someone else but won’t keep it from happening to me.”

  • Sunfish

    The parallel between Option A and everybody’s favorite answers to illegal aliens should be obvious.

    IMHO. Apologies for the hijack.

  • Jane

    As I stated before, the Tea Party would support revising the tax code to a more fair system that would eliminate all exemptions, loopholes etc and everyone pays the same percentage rate. Tea, stands for the taxed enough already. This isn’t coming from Jane, do your own research. No where EVER has the tea party EVER condoned or encouraged its members to break the law, evade taxes or resort to violence. They have always been confident in their position and never felt a need to win support by using those tactics. If there was ever a resolution from the Tea Party, Sunfish, suggesting otherwise, I sure would like a link to it because I haven’t seen or heard of it. I’m sure the liberal media would have had it plastered all over tv if that ever happened.
    Our local tea party has made it very clear to its members to always be careful in their presentation due to the media salivating to capture any picture of radicalism. Members are told to yell “NO” if anyone from the party talks smack or uses profanity and to move away from that person immedicately and disassociate.

    The tea party is often associated with the 9/12 principles which you can find them by googling. Many tea party groups use the 9/12 prinicples in their title and teachings at their meetings. An example of their values and principles is…

    “Justice. Justice is blind and No One is above it. If you break the law, you pay the penalty.” Another is honesty. It is false to state that the tea party would support the breaking of laws. This is not according to Jane but can be found on the tea party patriot website and the 9/12 principles.

    I am not going to support people who are hiding their wealth and breaking the law. Be furious with that if you like, but that’s where I satnd. I will help to change the tax code. However, the opening post was not a debate on the tax code or whether or not expats should pay taxes or whether or not the wealthy pay too much. It was a rant about how unfair that people overseas will now have to disclose their earned income and assets, pay their taxes or face penalties and the extra paperwork is just too much and grossly unfair. Does anyone, especially tea party people, care?

    The real issue however was uncovered after 30 some- odd posts that this was really about the wealthy feeling like their tax bill was unfair and took it upon themselves to decide that laws are not for them to follow and there will be loopholes for them to take advantage of. When the loopholes were closed they got angry and screamed for the Tea Party to come help them in their continuance to evade taxes and break the law. Again, I’m not stating whether I think their taxes are unfair or not, I’m simply stating that I’m not sympathetic to their breaking the law.

  • Jane

    And shame on Samizdata for moderating my last comment. I’m moderated because I do not think the tea party should support tax evaders.

    Percy, shame on you if you do no think people can change things and you refuse to try. The tea party has made a difference.

    By writing letters to my senator over certain issues on behalf of a small group of people we made a difference and changed things.

    To the expats who are complaining, how many letters have they written, emails, rallies attended, senators and congressmen contacted. Senator Jim Demint was behind a bill called the “alliance for a Competitive Tax Policy.” Did any contact him and let him know he had alot of support behind him? How many are members of the AARO, The Association of American Resident Overseas? They lobby congress on these issues. How much fighting have they done? I believe change can happen, it doesn’t come easy but God Bless the people who try and continue to fiight regardless of the criticsms.

    Now I’m moderated because I don’t support the op. Nice site.

  • MD

    I think moderating or banning someone like Jane due to a disagreement of opinion is really bad. She was not nasty to anyone on the site she just has a difference of opinion. Not a great place for debate when people are censored.

    Jane’s husband

  • Paul Marks

    The United States has many “laws” (regulatrions( – a vast number.

    But it is no longer a land that has the rule of law.

    The difference between having lots of “laws” and having the “rule of law” is NOT about whether the laws are enforced, or even about who passes them. It is about the nature of law itself – the principles of law.

    This is no longer understood (or, if it is understood, not accepted) by the people who have power (not just in politics) now.

  • MD, what on earth are you talking about?

  • md

    Her last two postings did not appear and her screen said she was smited and will be moderated or put on hold.

    Md

  • Now I’m moderated because I don’t support the op. Nice site.

    and…

    I think moderating or banning someone like Jane due to a disagreement of opinion is really bad. She was not nasty to anyone on the site she just has a difference of opinion. Not a great place for debate when people are censored. Jane’s husband

    If your comment got moderated, did you not bother to read the pop-up that appeared? No one got ‘moderated’ because of their ‘opinions’. How do I know? Because Smitebot does not have the slightest idea what your opinions are… it is a piece of code that looks for spam and holds it for moderation if the word strings meet certain criteria. Hell, I own this blog and *I* get nailed by Smitebot occasionally.

  • Jane

    did you not bother to read the pop-up that appeared?
    *****************************************

    Umm…..not really, Well, I skimmed it.

    Due to the former accusations of…… being a liberal (which I’m not) and yanking people’s chains to being a liberal from the east coast (which I’m not from the East coast) to being an ultra conservative over drug laws which I have made no comment on, I skimmed, and jumped to the conclusion (which many have been doing to me today) that I was also being accused of being a spammer or liberal troll and that was the reason why my comments did not post. I apologize.

  • jdm

    Well, I skimmed it.

    Personally, I don’t think that’s the only thing you’ve skimmed. You’ve skimmed some(, most?, or all?) of the arguments against you here as well (eg, being a liberal from the east coast), and I wouldn’t be surprised if you’ve skimmed to some of the positions you hold as well.

    As a former expat and the parent of one – and one who always filed and paid my taxes, thank you very much – you have really no idea what you’re talking about vis a vis this post other than you’re against it. Whatever it is. Because life is hard and, dang it, if anyone out there is less burdened than you, well, pile on the pointless regulations as long as they’re legal and binding and stuff.

    Bah, and I always liked to think of myself as a member of the Tea Party.

  • Johnathan Pearce

    Jane, if you are representative of the Tea Party movement, then I hope it fails.

    You seem to have overlooked a rather basic point that is raised in my post: the worldwide tax issue. The US, unlike most countries, expects its citizens to pay taxes to the US even if they have never lived there. For example, a person born in the US but who has lived his entire adult life in say, the UK, still has to file returns to the IRS. This is absurd.

    People should pay taxes – if they have to pay them at all – in the countries where they live, to pay for the services, such as transport, law and defence, where they live.

    The territorial system of tax ought to commend itself to anyone who believes in liberty, limited government and capitalism. It encourages people to migrate to jurisdictions which offer a better quality of life, lower taxes, more efficient public services, etc. The freedom of capital to move around the world is one of the reasons why some governments, even those inclined to socialism, have been forced to keep taxes down in recent years.

    There is now a very determined effort by the world’s leading powers to halt this process, to create a global tax cartel that makes it impossible for people to vote with their feet and wallets for a better life.

    If the Tea Party movement is full of people who fail to see the significance of this, then so much for the worse for the Tea Party.

    Of course, it may be, as some have said, that “Jane” is a false-flag Tea Partier. Goodness knows, there are plenty of people out there who are trying to discredit political and intellectual movements these days.

  • Johnathan Pearce

    “Johnathan did not make his case to me. Basically I hear that people will be inconvenienced by extra paperwork to prove that they are reporting income and paying their legal taxes. Oh the travesty of that!!!! How dare they be inconvenienced, right? WE are ALL inconvenienced.”

    I clearly haven’t made my case to you, because you don’t give a damn about things that don’t affect you and believe the crap you probably read in the newspapers. But as I said, there are tens of thousands (maybe more) of “accidental Americans” who were born in the US but who have never spent any adult years there. I know of several. Why should such people be chased and harrassed by the bureaucrats of a state which provides them with no services for which they don’t need to pay? Why?

    And if you think compliance burdens is a non-issue, then once again this shows alarming ignorance for a purported “Tea Partier”. The cost of complying with taxes and regulations is, or ought to be, a massive issue for the US and global economy. Many businesses, entirely honest ones, face ruin or reduced profits because of the costs of dealing with red tape. The solution to this is not to spread the net wider, but for the US to hack away at these rules, imposed a simple, low, flat tax and remove all loopholes and exemptions.

    If the Tea Party champions such issues, it will deserve praise.

    Another point is that American corporations around the world will be less likely to set up shop in places such as China, or Singapore, or the UK, if they fear that American expat employees are going to face a tax nightmare. Perhaps the folk in your Tea Party group might try to get their minds around that issue. It is good for US citizens to work abroad and gain valuable experience, contacts, business and so on. It is striking how few of them do so, and the overweening power of the IRS is a key reason for that.

  • The thing that keeps being forgotten about this whole argument is the vast number of Americans who live and work abroad and obey the law.

    These poor folks will effectively be deprived of the right to do so by the IRS because banks outside the US will not take either the additional risk or the additional costs of dealing with Americans.

    No matter how much these individuals may wish to comply with the law and meet the draconian demands of the IRS, if they are refused or expelled from their local banking system because the local banks find Americans ‘too much grief’ how does that help?

    If you stop non-resident Americans living abroad from having access to the most basic financial services, how does the IRS expect them to continue earning a living.

    They will end up being forced to either renounce their US Citizenship or return home. If they are married with foreign wives and children this might be more than many marriages can cope with.

    It doesn’t matter that this might also prevent some manner of tax evasion. The evaders will either just go elsewhere which does not do business with the US or will buy / borrow / steal / forge the documentation of a non-US citizen. If they are prepared to evade taxes do you imagine they wouldn’t be prepared to indulge in a bit of identity fraud?

  • bgates

    The tea party, more than anything else is about a balanced budget.

    No, the tea party, more than anything else, aims to reduce government spending. Budgets can be balanced either by cutting spending, as the tea party wants to do, or by empowering the government to seize more wealth, as you and Obama want to do.

  • Exactly, bgates.

    The real issue however was uncovered after 30 some- odd posts that this was really about the wealthy feeling like their tax bill was unfair and took it upon themselves to decide that laws are not for them to follow and there will be loopholes for them to take advantage of.

    No, Jane, the real issue has been uncovered in the above quote. Some things you say are understandable and even legitimate, including some things I don’t necessarily agree with. But one thing to me personally is unforgivable, and that is your unmistakable animosity towards the wealthy simply for their being wealthy (or, more precisely, for being wealthier than you are). That, as bgates has nailed it, puts you squarely in the same camp with Obama and his ilk.

    Now I have a question for you if I may, seeing as you are adamant on obeying the law, and on others doing likewise: how far would you be willing to go with that obedience? Is there a certain line that you wouldn’t cross – i.e. an hypothetical law you would be willing to break (independent of whether you are concurrently working on changing it through legally acceptable channels)?

  • MattP

    I feel the need to apologize to the rest of the world for people like Jane. She doesn’t understand basic facts. As in, the T.E.A. Party is about taxes. As in “Taxed Enough Already.”

    Then there’s her obvious failure to undestand how this hurts US competitiveness abroad. When I was living in Japan, there was a $70,000 tax exemption. Why? Bacause US expats were paying taxes where they earned it; in Japan. It may have slipped Jane’s eagle-eyed ken, but when you’re living abroad you’re using the services there, not in the US.

    It isn’t just US expats that Jane wants to have pay “there fair share,” or in other words double taxation on their income. But corporate taxes as well.

    It’s really insane. The US economy is in the toilet because of Obamanomics, and people like Jane buy into the class-warfare arguments that promise more of the same. Eliminating jobs for US citizens abroad will not help the US economy. Which, as has been repeatedly pointed out, is what will effectively happen when they can’t open a bank account in the countries in which they live. They can either go underground or renounce their citizenships, and stop paying US taxes entirely, or they can come home and collect unemployment.

    Tell me Jane, how does that balance the budget?

    I frankly don’t understand why people like Jane let themselves get played like this. Eliminationg fraud or tax evasion isn’t the goal of the Obama administration. It’s using the spectre of fraud to impose more and more regulation on American citizens here and abroad.

    Exploiting people’s envy is the key to that effort. Somewhere, someone is getting away with something.

  • Matt, please play the ball, not the man… er… woman. I agree with your arguments but please scale back the personal animus.

  • Jackthesmilingblack

    Hate it and leave it, America pals.
    And don’t leave a forwarding address…with anyone.

  • Jackthesmilingblack

    Hate it and leave it, America pals.
    And don’t leave a forwarding address…with anyone. Especially “Anybody”.

  • not_my_name

    I am a long-term expat. The IRS requires me to file a tax return each year, and send then information about my bank accounts, even though I have neither lived nor worked in the USA for decades. I believe Libya and the USA are the two countries that require this – perhaps soon the USA will be alone in the practice…

    When filing tax returns, there is a large deduction, which in the past has meant that people with average incomes do not actually wind up paying any tax. However, with the continuing devauluation of the dollar against other currencies, this deduction will soon be to small to cover a normal, middle-class income.

    In my case, the result will almost certainly be the renunciation of citizenship. I will regret that – it will be emotionally difficult – but I see no reason why I should pay tax to a country where I do not live or work, and to which I have no intention of returning. More practically, I am already taxed where I live, and can hardly afford to pay a second set of taxes.

    However, the US goes much farther. First, they claim the right to deny a renunciation, if the IRS considers the primary reason to be tax-related. Second, if they generously do accept the renunciation, the IRS claims the right to levy a one-time tax on your assets.

    As other posters have said, this will never make headlines in the USA. No one there is affected, and no one there has any reason to care about expats.

    Jane writes: “As for expats, if they want to enjoy the rights and priveledges that the US offers then they will have to prove they are paying their taxes while choosing to live overseas.”

    Dear Jane, just which benefits are those? I don’t live there, I don’t work there, I use no services. I do have an emotional attachment, having been born and raised in the USA. I usually don’t even travel on my US passport, because American interventionism has pissed off the most of the rest of the world. Really, what wonderful benefits am I missing out on here, that would justify my paying taxes? I really don’t see it…

    Sorry for not using my normal screen-name, but for all I know the IRS would match it up with my real name when the time comes…

  • MattP

    Posted by not_my_name:

    Second, if they generously do accept the renunciation, the IRS claims the right to levy a one-time tax on your assets.

    In other words, the USG claims the right to sieze part of your assets. I honestly see that happening here in the US, without the excuse of calling it an “exit fee.” Farfetched? Recall that FDR by executive order 6102 forbade the “hoarding” of gold in any monetary form. “hoarding” was defined as the private ownership of monetary gold beyond a very small amount or collectable coins. The government of course compensated people, partnerships, and corporations for their gold. At 60% of its value.

    The excuse for what was rightfully viewed as pure governmental theft was that “hoarders” were preventing the US from pulling out of the depression by sitting on their assets.

    If that sounds familiar, it’s because that’s the tune the Democrats are still singing. They accuse all sorts of “reactionary” forces of sabotaging Obama’s economic recovery plan. A plan for exactly the kind of economy that worked so well in Greece.

    As other posters have said, this will never make headlines in the USA. No one there is affected, and no one there has any reason to care about expats.

    Another item that hasn’t made headlines is a form proposed by the Department of State designed to significantly increase the difficulty of acquiring a passport.

    I’m sure there’s a class of people here in the US who won’t give “flying f*&#” about that, either. Not as long as the crocodile is eating others.

    If the DoS questions the documents you provide to establish your identity and citizenship, they propose a new biographical questionnairre for you to fill it.

    Under certain circumstances it requires among other things, and I’m not kidding, the dates of your mother’s pre and postnatal medical appointments as well as the name and phone number of the doctor.

    Under all circumstances it requires, among other things, your entire employment history down to including the name and telephone number of your immediate supervisor.

    Don’t accuse the DoS of not having a sense of humor. In the “paperwork reduction act” statement they estimate the burden of searching for, compiling the information, and filling out the form to be 45 minutes.

    Which is of course insane. It’s more like 45 years in nearly all cases because they are asking for documentation that doesn’t exist in many cases and that no one has ever been required to keep. The only way this could be done is if parents are filling out the form for a minor child. Someone born within the past few years, obviously with no work history.

    I don’t know about the rest of you, but my work history goes back 30 years. I have no clue about the names and phone numbers of most of my supervisors. And there’s no way to find out because many of my employers are no longer in business.

    Then the final joke; you get to sign it under penalty of perjury.

    Not quite the final joke. I forgot to add that all the information you provide will be shared as a matter of routine course with other government agencies. That’s in the hilariously titled “privacy act statement.”

    I view all of this, the IRS and DoS overreaches, as a form of asset control. Fewer people will be able to travel abroad, and if you can you won’t be able to bank abroad. Except for a few thousand dollars in travelers checks, all your assets remain here. Within easy reach in case the government decides it needs it.

    Read up on executive order 6102 and tell me that’s just crazy talk. Or just look around and see how many other countries have decided to sieze pension funds because the governments really need the money now.

    I wonder how the nominal TEA partiers who think that movement is “more than anything else” about balancing the budget will feel when the entity that’s done so well managing social security siezes the money in their 401K, IRA, or pension fund to do just that. In return for a government promise. And if they don’t like it, they discover that due to all the things they never gave a “flying f*%#” about before there’s not a thing they can do about it.

  • MattP

    Just to make clear, I have no personal animus toward Jane. I don’t know who she even is, so I have to accept her assertions that she’s sincere. If so, then extremely shortsighted.

    I do feel, and I’m sure it shows, the same sense of exasperation that Churchill must have felt as he walked the streets of London in 1939. As he’d pass by restaurants and cafes he’d see through the windows people laughing and chatting, thinking to himself “the poor sods; they have no idea what’s coming.”

  • jdm

    MattP, I didn’t understand Perry’s comment to you. Mine was just as “bad” but brief (perhaps a mitigating factor) and not_my_name addressed many of the same issues, but perhaps more nicely. Nonetheless, it’s his blog…

    The item on which I really wanted to comment was your description of Churchill in 1939. Man, I have that feeling every day.

  • I think it was beginning to look like we were piling up on Jane, which would have been unfair, seeing as she didn’t attack anyone personally.

  • MattP

    Perhaps not personally, Alisa, but she was awfully quick on the trigger to label the entire expat community “tax evaders.”

    I think the commentator “John Galt” came closest to the answer when he said he didn’t know if it’s merely good programming of the proletariat or failure to understand the problem.

    I respectfully would like to note I don’t see it as an either/or proposition. Successful programming of the proletariat leads to the inability to understand the problem.

    I think you, Alisa, along with others have done a good job demonstrating that Jane’s programming leads to her failure to understand the problem. She understands the problem as if people living overseas will be inconvenienced by having to fill out extra paperwork to prove they are not tax evaders. When in fact the IRS’s declaration of global jurisdiction over financial institutions that do business with Americans living abroad does nothing of the sort.

    The problem, and I’m not I’m not directing this at anyone personally, Perry, I believe I’m making a valid point, is that what Bill Buckley used to call the “liberal mania” has gone global. His point being that when you touched on a liberal’s mania, the liberal loses the ability to think. My point about “John Galt’s” comment is that if you program the proletariat well, you get exactly that desired result.

    Let me use an example entirely unrelated to this post or related comments. I follow California politics closely for a few reasons, although I don’t and would never live there. Last November Prop 23 was on the ballot. It would have suspended the implementation of what’s been called CA’s Kyoto initiative. I won’t describe the law in detail, but amongst all the “green” nightmares it imposes are stringent new emissions regulations on all commercial diesels.

    A little background. industry groups were already howling well before the current recession that they largely couldn’t afford to meet all the new regulations the CA Air Resources Board was going to implement as a result of this initiative. Freight haulers, farm tractors, construction veihicles, stationary generators or pumps, all would be effected. Units older than a certain year would have to be junked, vehicles within a certain window could be retrofitted to meet current standards for a while before being junked, newer vehicles would meet the current standard, but eventually all units would have to meet stringent new 2014 standards.

    All this was made worse by the current recession. So, CA voters had an opportunity to vote yes on a proposition to suspend these requirements until the economy improves. I read with interest news articles about how things looked for this proposition’s passage.

    One LA Times article sticks in my mind. They were doing man-on-the-street interviews. One guy they interviewed said he was going to vote no. He didn’t like the proposition because it was backed by “Big Oil.”

    The guy’s job? Truck driver.

    I was thinking, “hey buddy, if you’re a TEA Party member you can stop worrying about being overtaxed if you get your way. You’ll be paying zero in taxes when you’re out of a job.”

    But again, touch on his mania, in this case by mentioning the words “Big Oil,” and he loses the ability to think. He can’t make the basic connection between the rising cost of fuel (the initiative requires special blends for the CA market) and the ruinous cost that will drive out of business companies that employ people like him, and his own livelihood.

    I have a close friend who’s a fairly reliable conservative in most ways, but mention the “religious right” to him and you’ve touched on his mania. If the media sufficiently tars a candidate as one of the “religious right” it just paralyzes him; he’d sit out an election and let a democrat win. He’s positive they have a secret plan to run his life.

    Hello! How could that possibly be worse than the quite open plan the left has to run his life? There is no aspect of my life or his that is free from over-regulation by a bunch of leftist busybodies that have decided they can tell me how to live. The worst thing the “religious right” ever did to me when I was living in the Bible Belt was ban alcohol sales on Sunday. So if I was hosting a get-together during football season I had to by all the beer I was going to need to get through the weekend by midnight Saturday.

    We are a heavily propagandized society. Not all the programming sinks in. The more that does, the more likely you are to be a liberal immune from reality. But even people who think they’re conservative are effected, and they don’t realize it. Touch on their mania, the programming that did sink in, and they can’t understand the problem because they can’t let reality interfere with their cherished beliefs.

  • Sunfish

    I think it was beginning to look like we were piling up on Jane, which would have been unfair, seeing as she didn’t attack anyone personally.

    Well, she did (June 30 at 1736, 1942, and 2312) claim to speak for several other posters in this thread, me included. The Former Mrs. Me didn’t get that either. I don’t need someone else to say stupid things on my behalf. I’m perfectly capable of that on my own.

    Personally, I think the issue of the IRS harassing expats is roughly like worrying about a broken arm when you can’t find the patient’s pulse. It’s bad but we have more-immediate problems right now.

  • MattP

    Personally, I think the issue of the IRS harassing expats is roughly like worrying about a broken arm when you can’t find the patient’s pulse. It’s bad but we have more-immediate problems right now.

    Personally, I think we ought to be paying heavy attention to the test cases the government assumes no one will care about.

    That’s where the precedents are made that arguably make the assualts on the freedoms you do care about legal.

    Sure, this test case doesn’t effect you or anyone you know. It’s not supposed to. Otherwise you might object in timely manner.

    It’s best, if you’re of such a mind, to build the wallls of the cage while the chimpanzees are distracted by he banannas that cost you a few bucks.

  • Laird

    I agree with MattP; the time to smother this infant is while it’s still in its crib. In fact, I agree with all of his fine posts in this thread.

  • Johnathan Pearce

    MattP, your point about the parallels between how people are “programmed” to think about say, tax “evasion” or “Big oil” is spot on.

    I can think of a few others, such as the way in which any issue affecting children will disable the ability of people to think straight, such as on issues about safety, etc.

    I don’t think we’ve been harsh on Jane; what has concerned me is that a Tea Partier is shrugging her shoulders on what is, by any standards, a dreadfully crafted piece of legislation that will hurt Americans living abroad, damage business, and shrink the horizons of trade.