[onlooker]

http://investmentwatchblog.com/treasury ... -july-1st/
This link is to this new law which went into effect in July of 2014. i was wondering what effect this has been having. Especially in terms of US and investors. It seems on the surface like a good law. To try and catch tax cheats and putatively make them pay their fair share. Yet I wonder if it is spooking current investors of US assets as well as any potential new investors. Just curious I am not apprised of these matter, perhaps others more knowledgeable can weigh in.

[Paulo1]

It isn't a good law. It is a bullshit law.

It is an attempt to grab people's money who choose to live elsewhere, but have somehow fallen into the crack of dual citizenship. It was written under the guise of stopping drug money laundering, but we all know that could have been done decades ago. Furthermore, very big and supposedly influential banks have been involved in drug money laudering for decades. How do you think Miami got built?

If they need legit money they could stop the offshoring of businesses that sell into the US market, tomorrow. But no, they have politicians bought and paid for so that won't get done. They go after the little guy, instead.

Take my story as an example. My family immigrated here (Canada) when I was 12. I was born in Oakland CA. I have never worked in the USA, and have only earned money in Canada. I am a Canadian citizen. I am now retired and have always filed my taxes under the Canadian system. Technically, uder this law they (USA IRS) could go after me for back taxes, and certainly for not having ever filed a US tax return. For awhile it looked like I could never return and visit my family who are US citizens, without being thrown in the clink.

I have to laugh at this one, though. Back when Hopey Changey was just getting started I was approached by several people in my area who somehow knew I was of US descent as were they. They urged me over and over to vote for Obama as a US citizen exercising rights of citizenship. I was dumbfounded, and patiently explained that I felt I had no right to vote as I had never participated in the USA's business or benefits, and therefore should not even if I could. They didn't let up for several months. I even received phone calls at home about it. I said, "no, I am a Canadian and have only the right to vote in Canada". I also mentioned that with rights comes responsibilities....and left it at that. When this law came out all the offshore voters certainly had to go for legal advice, let me tell you. I thought it was pretty funny as these goofs voted for the guy who did this to them!!

All my accounts are in joint accounts with my wife as is our property. That is one form of protection. If they come after me through the tax system I would simply take my name off everything and put my kids in there somehow. As for visiting relatives I could stop that tomorrow and insist because of the law they should come here.

My older brother, and his wife (US army veteran), have formally renounced their US citizenship. They have also lived here in Canada for 40 years. In their case they filed US tax returns over the years because they had worked there when younger and his wife receives some sort of army benefit, or at least used to. However, it cost them over $5,000.00 EACH to renounce their US citizenship. They did this because of the overseas military meddling and war. They had finally had enough of it and put their money where their mouth is.

[Ibon]

I tried late last year to open a commercial bank account in Panama for our eco business. All 5 banks I went to refused my business and refused to open an account because I am a US citizen and they point blank told me that the reporting requirements that the IRS imposes on them is too restrictive and too cumbersome and they decided not to accept US citizen clients. I have ex pats friends in other countries confirming the exact same thing. The reason foreign countries don't say Fcck YxU to the US on this is that the DOJ is threatening to criminally prosecute foreign banks that dont comply and refuse all financial transactions with those banks. That is why Swiss banks, who have had bank secrecy laws in their constitution for over 100 years have mostly all capitulated and are reporting to the IRS all US citizens holding bank accounts with them.

The strength of the US financial industry is the leverage that gives the DOJ and IRS the power to impose their strong arm around the world.

The tragedy is that this hurts the US economy severely because every US citizen who goes overseas to transact a business is at a competitive disadvantage. Canada,Japan and all European countries do not tax their citizens on their foreign earned income when they are foreign residents. The US is the only country that does this. And many US citizens are increasingly refusing to engage in foreign business ventures for this reason. An entrepreneur engaged in an overseas business is exposed to more risks and when you consider that your earnings will be subject to double taxation and the time and money and burden of expensive lawyers to insure compliance and double reporting really makes engaging in a foreign business too burdensome.

Most US citizens eventually would repatriate their earnings back into the US in the future anyway but now many think twice about engaging in overseas business. Many US citizens are turning in their passports and relinquishing their US citizenship for this reason.

http://www.nytimes.com/2014/12/08/opini ... .html?_r=0


Sure, a rich US citizen who intentionally moves US funds offshore to avoid taxes should be held accountable. But a US citizen, who generates income over seas as a foreign resident who no longer lives in the US should not be penalized. That is the main reason this law is wrong.

[onlooker]

thanks for that perspective Paulho , it is a bull law. Going after the little guy how typical in this world. The big guys get off as you said via essentially bribery and the bigger ones "Too big to fail" The whole system unfortunately worldwide is deeply corrupt and do not get me started on the banks. Just glad you are doing what you can to protect yourself. If all else fails you may need to find an attorney. I say that because Canada usually does what the US wants. That means handing over the records.

[onlooker]

Holy cow, I had no idea that they still wish to assess taxes on US citizens living and working or starting businesses abroad. That is just unjust. I just thought it related to any income earned within the US.

[Ibon]

Holy cow, I had no idea that they still wish to assess taxes on US citizens living and working or starting businesses abroad. That is just unjust. I just thought it related to any income earned within the US.

Onlooker and others, FYI I edited my post above and added a link and more comprehensive info on this issue in case your interested.

In how this relates to the larger themes we discuss?

Smaller fish increasingly get screwed while the upper echelons get away with what they want. I think that is valid. In this particular case foreign US residents have no representation and this situation may not be malice and intentional but we are certainly collateral damage to legislation that was not necessarily targeting us.

Also an overcrowded world with digital transparency infringes on personal freedom. There are aspects in this issue. Ones attempt at chameleon stealth invisibility moving about the world is severely impinged upon these days. Prior to the digital age things functioned much more in the dark. The arms of surveillance have a long reach.

Think about in our grandfathers day when a huge part of the economy was unregulated and bartering and cash transactions dominated rural and urban life. Now there is a digital record of most every transaction and the government has a long reach. This actually decreases efficiency severely when the informal economy is stymied by this transparency. This also hurts mafias and drug traffickers but what about the millions of morally and ethically law abiding citizens whose informal economic activity gets pinched out of existence?

Sometimes I have sympathy to the Republican party's platform of getting government off ones back.... if only they weren't so stupid and dumb.

[onlooker]

I guess Ibon, this situation which you refer to harkens back to what you yourself stated about increasing control by the authorities as we head down the road of Consequences. Comfort or lack thereof by people related to this control depends on how comfortable you are with government control in general. I do not know but it seems a balance must be reached. Too much control and we risk a dictatorship or fascism too little and we risk anarchy and chaos. A fine line indeed

[careinke]

I guess Ibon, this situation which you refer to harkens back to what you yourself stated about increasing control by the authorities as we head down the road of Consequences. Comfort or lack thereof by people related to this control depends on how comfortable you are with government control in general. I do not know but it seems a balance must be reached. Too much control and we risk a dictatorship or fascism too little and we risk anarchy and chaos. A fine line indeed

Whats wrong with Anarchy? And, yes you can have anarchy without chaos, go check out your local farmers market, almost pure anarchy.

Also you don't have to use banks. Crypto currency comes to mind.

That said, I think this law sucks, but hey, we are an empire.

[onlooker]

Wondering Care, what your thoughts are about bartering system. Is it feasible for complex civilization like ours?

[KaiserJeep]

Look, I am not arguing with anybody's status as a "big fish" or "little fish". None of you have actually come out and said that you refuse to pay taxes on monies that you earned in the US AFAIK from a quick read of the messages above. None of you have said that you are earning incomes in ways that are illegal by US Law or that you have taken money out of the USA and stashed it in banks in other countries to avoid US taxes.

The law quite simply is aimed at criminals who are earning unreported incomes and hiding money in foreign banks. There are lots of such criminals, many kinds of criminal enterprises, and lots of people who seek to avoid paying US taxes. The existence of the law simply gives the USA grounds to prosecute those who violate the provisions therein. The law has in fact been used to recover literally Billions of tax dollars.

You owe US taxes on money earned in the USA regardless of nationality or citizenship status. My wife is a CPA who prepares non-citizen tax returns all the time. Dual Nationality and Dual Citizenship are outside of the legal theory used to craft our US law, as I am sure all of you know. The official US policy is to allow US Citizens to claim both Nationality and Citizenship in another country without any penalty. That many of you do so and in fact have US passports tells me that many of you find some advantage in doing so, even if that advantage is simply unencumbered travel across national borders - which is possible with US passports and those from Britain, Sweden, Finland, and Germany.

That some of you are being inconvenienced as a result of a law intended to prevent criminals from cheating on taxes is unfortunate. But the one legitimate complaint I heard from Ibon resulted from a local bank policy in response to the reporting requirement - not from the law itself.

If it is any comfort to those of you who prefer the Dual Citizenship or Dual Nationality status allowed by US law, Barack Obama has also abused US citizens with other tax laws and IRS regulations simply because they were wealthy and conservative Republicans.