The Problem Is That The U.S. Government Won’t Leave Us U.S. Folk Alone
The Problem Is That The U.S. Government Won’t Leave Us U.S. Folk Alone
May 20, 2012, Panama City, Panama: The U.S. government continues to work aggressively, with the HIRE Act, FATCA, the “Transportation Bill,” and the ExPATRIOT Act to invade the privacy and over-extend its bounds in controlling the lives of U.S. citizens.
Dear Live and Invest Overseas Reader,
“I have decided I want to avoid the United States in old age,” wrote Perpetually Traveling Correspondent Paul Terhorst in an e-mail overnight.
“In my mind the U.S. has taken direct, forceful action to prevent citizens and residents from enjoying life, liberty, and the pursuit of happiness.
“Invasion of privacy, security pat-downs, GPS surveillance, confiscation, brainwashing, intimidation, and various legal traps become bigger and bigger threats, more so than in other countries where Vicki and I spend time.
“You may dispute my conclusion about risks of living in the U.S. You may point to Heathrow pat-downs, to dictators who rule on whim, to torture in Africa. I hear you. Even Vicki disagrees with me about risk in the United States. Still, balancing all factors and based on my direct experience, I’m sticking with my position…”
I’d like to dispute Paul’s conclusion. But I can’t.
No question, Lief is with Paul. At this point, he’d as soon never go back to the States.
This is very sad for me. Not that Lief doesn’t want to travel to the United States, specifically…but that our country has become a place where, increasingly, the folks I spend time with, including more and more American friends, are none too eager to spend time.
Certainly, the practical experience has become excruciating. I won’t tell you more security or all-body-scanner horror stories. You know them. We’ve all lived them. But it’s becoming harder and harder for me to close my eyes, shut down cognitive function, and assume the position so that under-thinking and over-zealous “protectors” of the homeland’s borders from Miami to Houston, Newark, D.C., etc., can do their thing.
Still, I’d argue (with myself) that an unpleasant airport experience is no reason not to travel to a place where you want to be, and, certainly, I’ve had unpleasant experiences in airports in other parts of the world. You suck it up, answer the questions, wait in the lines, produce the documents, stand by to bear silent witness to the tussle, tousle, and exposure of your packed personal possessions…then you continue on your way. That’s not the real problem.
The real problem is that the U.S. government won’t leave us U.S. folk alone.
This week, for example, Sens. Chuck Schumer and Bob Casey unveiled the “Ex-PATRIOT” (“Expatriation Prevention by Abolishing Tax-Related Incentives for Offshore Tenancy”) Act in response to Facebook billionaire Eduardo Saverin‘s decision to give up his U.S. citizenship and become a resident of Singapore. As far as I’ve read, young Mr. Saverin followed the rules. He’s paying the required U.S. exit tax. He’s just decided he’d rather not be an American any longer.
If I were in a position where any of this were my business (say, involved with the U.S. government), I’d wonder why. Why does Eduardo want to move on? What is it he finds so unappealing about life in America? I’d work from there and try to adjust things to make this country a place where motivated and successful entrepreneurs want to hang their hats and earn their billions.
But that doesn’t seem to be the approach the U.S. government is taking. At least two guys involved in running things, Schumer and Casey, aren’t thinking about how to keep hard-working and revenue-generating people like Saverin in the States. Instead, they’re contemplating ways to punish them when they decide to leave.
If the ExPATRIOT Act proceeds, any American who makes such a decision in the future could find that even giving up U.S. citizenship isn’t enough to sever connections with U.S. tax authorities. Once a U.S. taxpayer, Uncle Sam would insist, always a U.S. taxpayer. The expatriated American would be required to keep sending tax payments Stateside…even though he, himself, might no longer be permitted to return to the country.
That was what the U.S. government got itself up to last week, how it opted to spend its time and energy. The good news, an attorney friend points out, is that this could be nothing more than posturing. Just politics. If misters Schumer and Casey were serious about passing their punitive legislation, they likely wouldn’t approach its introduction so publicly. They’d likely hide it inside some other bill where it could pass without anyone noticing.
They’d hide it inside something like, say, a “transportation” bill.
Oh, wait, that’s already been done.
I’m speaking of Senate Bill 1813, the new “Transportation Bill” currently being debated by Congress. Hidden inside is a Section 40304, wholly unrelated to “transportation.” Section 40304 gives the IRS the power to revoke the passport of any American who the IRS decides might owe US$50,000 or more in taxes. The IRS wouldn’t have to prove you owe the tax. Simply alleging that you owe it would be enough for them to legally snatch away your passport.
Now that’s how you get a law passed. Quietly.
That’s how the Foreign Account Tax Compliance Act (FATCA) was passed–as part of the HIRE Act, a so-called “jobs” bill. In fact, FATCA amounts to one of the most arrogant and extra-territorial pieces of legislation in history, the consequences of which are only now beginning to come to light even though the bill dates to 2010. We’ve been reporting on the absurd implications of this absurd piece of legislation throughout the two years since, but it’s only in the past month or two that the mainstream U.S. media has been picking up on it. And, unfortunately, it’s getting close to too late for the average American to do what he needs to do to prepare and protect himself for and against what FATCA could mean.
If passed as currently written, the FATCA ruling will require all foreign financial institutions to disclose details of any U.S. taxpayer accounts to the IRS. That or be forced to withhold 30% of any funds passing through the U.S. banking system.
What would that mean, exactly? That is, how would this play out, practically speaking? The truth is, at this point, no one really knows.
Banks in China, for example, are wondering how they’re going to check for U.S. ties among the millions of clients in their system. Non-resident U.S. retirees are wondering what this could mean for retirement income they receive overseas. And travelers who’ve begun to think all this through are wondering if the 30% would be withheld from debit card withdrawals at foreign ATMs.
As the global banking industry grows ever-more-uncertain as to how to deal with FATCA, increasingly, it’s deciding to opt out of dealing with it at all. If we have no U.S. clients, banks around the world are figuring, we won’t have to worry about any crazy U.S. legislation. So, as we’ve also been reporting, more and more foreign financial institutions worldwide are saying thanks but no thanks to any would-be client holding a U.S. passport…and even to existing clients who fit that description, unceremoniously closing existing U.S. client accounts.
I’m not political, and neither is Live and Invest Overseas. Our beat isn’t politics. It’s opportunity.
Our position on the politics of any country has always been straightforward–we ignore them until or unless they begin to interfere with the day-to-day lives of would-be retirees or investors, until they begin to get in the way of opportunity. We aren’t moralists. We’re pragmatists.
Now there’s no question. The politics of the United States are getting in the way of opportunity, for retirees, for investors, for entrepreneurs, for travelers.
If it were any other country making life so hassle-filled, so intrusive, so unpleasant, so risky, and so expensive, we’d suggest that you cross it off your list. That you have better options elsewhere. Friend Paul Terhorst has come to this conclusion on his own, as have many other friends. And as has Lief. I can’t argue with their thinking, and, on one hand, I come to the same conclusion myself. Options and opportunities are currently better elsewhere.
Lief and I left the United States more than 14 years ago. Our move overseas pre-dated FATCA, pre-dated the TSA, all-body scanners, and aggressive IRS fear-mongering. Back when we moved to Ireland, it was still possible for an American to open a bank account most anywhere in the world, and it was still possible for a parent to pass through to the gate to see a child off for an international flight. I know, because my mom and dad did it with me, time and time again, as I was traveling back and forth often back then, between Baltimore and Waterford.
Lief and I didn’t leave the States to escape. We weren’t running away…but toward. Toward discovery. A bigger world. More options. Expanded opportunity. All these years since, we’ve remained living outside the States, in Ireland, in Paris, and, now, in Panama City. But we’ve also remained Americans. And we haven’t decided categorically that we wouldn’t ever return to the States. In fact, I’ve watched in recent years for a fall in property values in and around Charlottesville, Virginia. A fan of Thomas Jefferson and of the Blue Ridge Mountains, I’ve thought that that part of the country, where Jefferson chose to build his Monticello, could play a part in Lief and my long-term retirement plans.
Now friends point out that the United States might not be the best place to plan to spend one’s golden years. They’ll get no argument from Lief, who is ready to write off that country altogether.
A friend who gave up his U.S. citizenship some time ago once told me, when I asked him about the experience, that he now regrets it. Not practically, but psychologically. I understood.
I don’t want to write off the United States. Never did. And I don’t want to stop being an American.
Neither do I, though, feel compelled right now to spend time in that country. Nor to do business there. Or keep assets there.
And, for that, I am sad.
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