— Citizenship Lawyer (@ExpatriationLaw) June 10, 2014
So, what’s FATCA anyway?
FATCA means so many different things to so many different people. FATCA is versatile. FATCA accomplishes so many things in so many different ways. It affects so many different people in so many different ways.
Therefore, the answer to the question:
What is FATCA?
Depends on who you ask.
For lawyers, accountants and academics (they love it) FATCA is:
“The Gift That Just Keeps On Giving”.
For the FATCA Compliance Complex, FATCA is:
“The annuity that keeps on growing“.
For ordinary middle class Canadians, without or without a U.S. birthplace, FATCA is:
“The Horror That Keeps On Coming”.
For Canada’s tax base, FATCA is:
“A tax that keeps on stealing”.
For Canada’s future as a sovereign nation, Canada becomes:
“A U.S. colony that must keep on paying.”
That’s what the imposition of the U.S. FATCA law on Canada means.
But, what about the rest of the world? What does FATCA mean to the world as a whole?
Again it depends. FATCA has been:
– called the “neutron bomb” of the financial system
– a huge cost for poor nations and every individual living in them
Interesting, but a most interesting thought comes from Professor Allison Christians of McGill Law School in her post “The World According to FATCA, in 3 Maps“.
The World According to FATCA, In 3 Maps http://t.co/TiDMln3rP4
— Allison Christians (@taxpolblog) June 8, 2014
The post referenced in the above tweet is quite brilliant. It’s an example of the old adage that a “picture is worth a thousand words”. The commentary to the pictures includes:
There really isn’t any doubt that some of the poorest countries in the world will be most unfairly treated in any multilateral regime for global information exchange which excludes the United States because it acts unilaterally to attain solely its own goals, with no regard for the price others must pay or the appropriateness of imposing that cost where no wrong has ever been accused much less proven.
Prof. Karen Brown wrote an important and influential article in 2002 called Missing Africa on the topic of US tax and trade policy toward developing countries in general, Sub-Saharan Africa in particular. Her article starts with a quote: “We’re the… United States. Do we need Africa?”‘ (from a former World Health Organization official who resigned over the lack of commitment to control AIDS in Africa).
Here the pattern repeats itself: even if they wanted to, many of the countries in the third map cannot forestall the present threat of economic sanctions. The United States simply doesn’t need them. Yet many, many of these countries suffer far more from bank secrecy provided by the US and elsewhere than the other way around.
The unjustified and virtually-ignored perfection of US citizenship taxation is one part of FATCA’s unexamined legacy, the dismantling of comity in international taxation another; so, too, the repeated exclusion of the developing world from an institutional order that is becoming increasingly unjust.
Therefore, we could add that:
For the world as a whole:
FATCA is a U.S. weapon to keep the poor countries poor. How poor?
— U.S. Citizen Abroad (@USCitizenAbroad) June 12, 2014
Update – June 12, 2014
This post was largely motivated by Professor Christian’s use of the “FATCA Maps” showing how large is the “Non-FATCA world”. A similar post titled: “The Looming FATCA Iceberg” appeared today at the Isaac Brock Society. This is another “a picture is worth a thousand words” post.
To whet your appetite:
As most of us will recall from our school days, an iceberg is a deeply deceptive thing since 90% of its mass lies hidden beneath the waves. Like an iceberg, the full reality of FATCA remains largely hidden from view, even now, a mere 20 days before its implementation.
Much attention has been paid to FATCA’s most visible aspects – the growing numbers of both signed and “in substance” agreements – as well as the more than 77,000 FFIs which have entered the Portal of Mordor and received their shiny new IRS deputy badges. As Robert Stack, deputy assistant treasury secretary for international tax affairs crowed, ”The strong international support for FATCA is clear, and this success will help us in our goal of stopping tax evasion and narrowing the tax gap.”
But appearances are indeed deceiving with FATCA, and the imminent danger lies not so much with what is already seen, but that which remains to be seen, still lurking in the shadows beneath the surface.
The IRS itself recently realized that progress was going painfully slowly on officially signing-up the 263 tax jurisdictions which it recognizes (196 Independent States in the World and 67 Dependencies and Areas of Special Sovereignty) to its list of IGAs. It therefore decided to lump together all the full-term babies (signed agreements) with the preemies (“in substance” agreements) to suddenly come up with a combined list of 70 more-or-less IGAs. Well, here’s what that actually looks like: