Thanks Randall for the email.
http://mobile.bloomberg.com/news/2012-05-08/u-s-millionaires-told-go-away-as-tax-evasion-rule-looms.html
Congress imagines itself to be the Borg. Resistance is futile. Submit and be assimilated.
In fact America is declaring itself irrelevant. And the rest of the world agrees. Add to this the way it is being done — in a schoolyard bully style — and is it any wonder that we are entering the American Pariah Era?
Reader comments (20)
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Not to ask any specific details but are people aware of this in DC and what is their general reaction.
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You are so right Phil. Michigan is in the dumps thanks to this smart politician who thinks all americans overseas are cheating millionaires and the corporations like Haliburton, apple are law abiding, tax compliant. You see most american companies are in low tax or zero tax lands and senator levin and his kind cannot do a thing to them. No wonder people are jumping USS america
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You have to realize there is a whole Levin clan in Michigan brother Sandler and a sister who is a federal judge. The thing to remember in the context of US Canada relations is coming from a border state means little or nothing in most case. US politicians in border states care little or nothing about what happens in Canada even when for the own sake they should. I do think there is an interesting political divide on this whole issue between people on the left in the US and left in Canada. I don’t know if it is old school Trudeau era Canadian nationalism wanting the rise up against the imperialist US or what but its there(Some of it is also providing very good consituent services to people effected).
I would have to wonder if on an issue such as RRSP’s whether there is some realization in DC that there is a big difference between Canada and the Cayman Islands or is all that matters is that Canada is “foreign.”
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Somebody ought to tell the headline writer that it ain’t just millionaires. It’s regular people with regular incomes.
So, America doesn’t want us. Other countries do. The lady at the local naturalization office was quite enthusiastic about getting me.
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Carl Levin is an idiot. One only has to contrast Detroit with Windsor, Ontario to see how previous generations achievements have been squandered. Detroit sh*thole, Windsor clean and respectable. Which would you want to live in crime-ridden Detroit with $1 houses or clean Windsor?
The UK went through their “anti-terrorist brigade” moment during the IRA years. The British realised fairly quickly it’s very difficult to have an open society and economy while fighting the terrorists. The two are inter-dependent, if one suffers so does the other.
If you craft a legal system in such a way where everyone is guilty by “over law” then you cease really to have a justice system. This is pretty apparent in the US with explosion of plea bargaining on lesser (and more provable charges) vs lack of going to trial for more serious charges.
For the Government, they’d rather find you guilty of FBAR violations, than bring you to court on tax evasion which would be vastly harder to prove particularly if you don’t owe the government any taxes. FBARs are more slam dunk.
The reaction you got out of Washington is exactly why I’ve always avocated legal action from abroad (perhaps discrimination issues) because people like Levin don’t care. Phil I know you help the ACA, but I hope they are quitely using their contacts abroad fight FATCA via foreign governments and put aside their organisation charter of working only with the American side.
The only language Levin will understand is Wall Street is ringing him up to complain about loss of business (and commissions) because of FATCA.
What’s going to happen when foreigners start yanking their money out of banks in Florida and California in the run up to 2013 because of FATCA’s effect on US banks? Why do they need to keep the nest egg in the US if their only goal is privacy? Certainly there must be other “tax havens” and I say tax haven because that’s exactly what the US was doing before requiring FATCA reporting for domestic US banks.
Lastly and probably most important, what is going to happen when foreigners realise their US investments are subject to a 30% withholding tax which other countries do not have? Why would you want the hassle or the reclaim process?
I think US investing will dry up for small to medium foreign investors who don’t want the hassle or want to take the risk for that little bit of possible extra return you may get from US stocks? Oh….by the way how about the US dollar devaluation risk? Levin seems to think foreigners don’t mind losing money on exchange rate as well as withholding tax. With the US dollar becoming a more tricky reserve currency once this 2008 hangover finally ends, FATCA will give investors just one more reason not to invest in the US. If China or Europe start to erode into the US dollar’s reserve status, FATCA is done.
Levin may annouce his intention to leave office by Jan 2015 and not seek re-election, but who will be left to clean up his mess? The FATCA damage won’t either take hold or be noticable until well after he leaves office. What an outrage – putting your own ideology ahead of the country’s best interests.
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What I have always found amusing is the second most important economic policy official in Canada, the Ontario Liberal Finance Minister Dwight Duncan actually represents Windsor-Tecumseh in the Ontario Legislature and despite being a centre left politician has totally diametric policy views than Levin. Dwight Duncan opposes the Volcker Rule, Dodd Frank, Glass Steagall, Sarbanes Oxley, FATCA, FBAR and basically all the crap that Levin generates in Washington(The Ontario Finance Minister’s position is actually important because Canadian provinces control more tax “points” than US states do and overseas most non bank financial regulation such as the Ontario Securities Commission, Trust and insurance law etc). I remember Dwight Duncan doing a big press conference in his hometown of Windsor with the Detroit skyline in the background talking about how Windsor Ontario now had a corporate tax rate of 26.5% while Detroit had a corporate tax rate of over 40%(and Canada has a “territorial” corporate tax system too).
The two other neat Windsor pols are Sandra Pupatello of Windsor West who as Ontario Industry Minister got the Chinese People’s Liberation Army controlled Huawei telecom to open a big R&D center in Kanata outside of Ottawa(something I doubt Levin thinks very highly of)and Joe Comartin who represents Windsor in Ottawa who single handidly has gotten Canada to legalise internet and sport betting again something Levin or the “Homeland” Security Committee thinks very highly of. Duncan, Pupatello, and Comartin are all centre left in Canadian politics and close to the Canadian Auto Workers union to boot.
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The US always has to do it “their” way first before changing course. Take the internet gambling, the UK has taken the same approach as Canada, allow it and control it, but more importantly collect gambling duty on it. Not that I’m a gambler, but here you can play the lottery, and gamble online – anything you want poker, craps, roulette, bingo etc. (especially late at night when coming back from the pub – not a good idea). While in contrast US state lotteries struggle to become more efficient because they have difficulties using the internet to process ticket sales because of Luddites like Carl Levin.
Levin thinks he’s the future (oops – he means back to the future), but it’s still the US answer to many things, rather than regulate it, they ban internet gambling (which still goes on underground I’m sure) and the government collects nada. This thinking is especially dumb since the US is so fond on taxing gambling winnings unlike Canada or the UK.
When I visit the states, I think it’s so ridiculous that in my friend’s local Elks club they stockpile losing lottery tickets so if someone wins more than $600 they can use the losers to offset the winners on their income taxes. What’s more they think the system is OK, the government double taxing money. I don’t understand it.
Canada will do well in the next 10 years satisfying the US’s thirst for oil if they ever allow the pipeline to be built. There’s so much work in the US that has to be done it boggles the mind.
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America has always had a very prohibitionist and puritanical culture. Nothing has ever or really ever changes. In fact the fines for poessessing Alcohol during prohibition were just as excessive to the average person as those for FBAR.
This is what Conservative Canadian Senator Bob Runciman had to say about sports gambling in Canada recently(a complete no no to US law enforcement)and compare it to views of Levin and his ilk.
Notes for remarks by Senator Bob Runciman at 2nd Reading of Bill C-290 Senate of Canada, Ottawa, ON March 15, 2012
Honourable Senators, I rise today to speak on Bill C-290, an Act to amend the Criminal Code. My remarks will be brief, to match the length of the bill.
Bill C-290 has just two clauses. The first clause repeals paragraph 207(4)(b) of the Criminal Code and the second clause says the bill comes into force on a day to be fixed by order of the Governor in Council.
Section 207 of the Code authorizes the provinces to operate and regulate lottery schemes, and in the course of that authorization, it prohibits certain activities.
Paragraph 207(4)(b), the subject of this bill, prohibits betting on a single sporting event. This bill repeals that prohibition, while ensuring that such betting will be regulated by the provinces.
This bill was put forward in the other place by Mr. Cromartin and was supported by all parties. In fact, members of all parties spoke in favour of this legislation. The provinces, particularly Ontario and British Columbia, have asked for this change.
I support this bill, not because I’m a fan of gambling – I’m not – but because it is obvious that anyone who wants to bet on a football or a hockey game is already doing it. And rather than benefiting a provincial government, they are benefiting, among others, organized crime.
It is ironic that the prohibition on single-event sports betting has been retained to prevent organized crime from bribing athletes to throw a game – based on the theory that it would be easier to influence the results of a single game than to fix multiple games.
Think about that for a moment. If the betting is illegal and underground, is it not more difficult to trace unusual betting activity and discover if the fix was in? This prohibition does not accomplish its intended goal. In fact, it essentially concedes the field to offshore betting organizations, including organized crime groups.
In Canada, betting on two or more sports event – known as a parlay – is perfectly legal and every province offers it through provincial gaming corporations. Canadians bet nearly half a billion dollars a year in these legal bets. But the odds of winning a parlay are vastly lower than betting on a single game, which is why many sports fans seek other ways to place their bets.
This is why the take for organized crime from illegal gambling dwarfs the legal sports-betting industry. The 1999 U.S. National Gambling Impact Study Commission’s final report estimated that illegal sports betting in the U.S. was up to 100 times that of legal betting – anywhere from $80 billion to a staggering $380 billion. There are no authoritative estimates of the illegal sports gambling market in Canada, but there is no reason to suspect it varies from the U.S. experience.
During my time in the Ontario government, I announced funding for the OPP to take a leadership role in a province-wide fight against illegal gambling. The Ontario Illegal Gambling Enforcement Unit was formed in 1997.
That unit investigated more than 1,300 occurrences in its first five years of operation, charged more than 2,000 people, and seized millions of dollars of cash and other items. (OPP Det. Inspector L.D. Moodie, in “Organized Crime Section: Illegal Gambling: Gambling Law Enforcement Systems Issues Conference, March 8, 2002)
As Detective Inspector L.D. Moodie of that unit wrote in a 2002 report, and I quote: “Illegal gambling, while appearing to be a minor part of a traditional organized crime network, is actually a foundation upon which most other illicit activities are supported.” (Ibid) END QUOTE.
Illegal gambling is a major source of revenue for organized crime and that capital is then laundered through legitimate enterprises. In that same report, Detective Inspector Moodie noted that at least eight murders in Toronto over the previous three years were directly related to the illegal gambling activities of organized crime.
Legal, provincially regulated and operated single-event sports betting offers an opportunity to reduce the revenue stream to these criminal enterprises.
It also offers some economic benefits, particularly to border communities that host casinos. The Canadian Gaming Association, in a 2011 report entitled “Single-Event Sports Wagering in Canada” had consultants do a case study based on border commercial casinos in Ontario, specifically in Windsor and Niagara Falls.
They concluded single-event sports betting would bring in incremental revenue of $40 to $50 million, and 250 potential jobs split between the two cities.
I would like to address another aspect of this. It’s one that concerns me and I’m sure is also in the minds of other Honourable Senators. I’m talking about problem gambling. I do not dismiss this concern. The research shows clearly that around one per cent of people have a gambling problem.
There is also a legitimate concern that increased availability can lead to more gambling problems. If you can drive 10 minutes to the slots, you may have a greater chance of developing a problem than if you have to travel five hours.
But we know that people have no trouble accessing single-event sports betting now. It’s as close as their computer, with offshore and illegal websites proliferating on the Internet. With the industry essentially underground, it is even more difficult to identify problem gamblers. If we don’t know who they are, we can’t treat them.
By international standards, Canada does a very good job of promoting responsible gambling, training employees to detect problems, and devoting resources to research and treatment. Ontario alone invests about $50 million a year on education, research and treatment through the Ministry of Health and the Ontario Lottery and Gaming Corporation.
Rather than resulting in more problem gamblers, I believe this bill may allow us to identify and treat existing problems more effectively. Honourable Senators, this bill does not promote gambling, but it does recognize it as a fact of life.
It is also important to remember that this bill does no more than offer the provinces an option. I think some provinces will exercise that option, adding to their own revenue stream and offering other economic benefits to some communities.
At the same time, bringing single-event sports betting under provincial jurisdiction has the potential to deprive organized crime of an important source of funds.
I urge all Senators to support this bill on Second Reading.
Thank you.
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The UK has phone numbers and gambleaware.co.uk to tick off the socially responsible box.
Other interesting news, Michelle Backmann has become a Swiss Citizen, strange but true.
I wonder what her stance on FATCA is?
http://www.dailymail.co.uk/news/article-2142048/Michele-Bachmann-Swiss-citizen.html
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Remember this well. The US Treasury Department was actually the lead government agency in enforcing prohibition in the 1920 and 1930s including ordering manufacturers of industrial alcohol to put deadly poison in it which some historians believe caused the deaths of 10,000 people(A part of history that doesn’t show up on the Department’s website).
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So, levin will move out of office in 2015. Ha. He will join some private firm where he will show prospective clients how to break or manipulate the same law he wrote for a hefty fee of course. Why do you think they write these absurd legislation?
Phil, what is your schedule in Dubai? -
I arrive late afternoon of the 30th of May and am there through June 3. I have the usual assortment of meetings.
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“The people I met with yesterday are the hired help”
So is there any way to talk to the people who have the power to change things.
I may be naive, but I don’t understand why it is so difficult to make amendments to a law to fix what does not work in it, and do it quickly to limit the damage that it is currently making. -
@Chris,
The people with the power to change things care about one thing: getting re-elected. That means you must come in with more votes (or more money to buy votes) than the other side.
This is not hidden. It is explicit in the conversations. One of the proposals from the State Bar of California quite clearly was something that is sane to everyone on the planet except the affected industry. We were asked — twice that I heard — who we could organize as a lobby to counteract the industry that would be put out of business by our proposal. Failing that, our efforts were pointless. Logic and sanity rarely prevail.
If ACA, for instance, wants to push its views, they should pitch their recommendations in terms of jobs for Americans — jobs abroad. (This was a suggestion from someone at the Senate Finance Committee who knows and seems to be sympathetic to ACA’s agenda). That is something that helps on the “get votes” side of things for a random Senator or Representative.
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There is a new article in NY Times that features some IBS members.
http://www.nytimes.com/2012/05/11/us/11iht-expats11.html?pagewanted=1&ref=global
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Regarding “care about one thing: getting re-elected. That means you must come in with more votes (or more money to buy votes) than the other side.”
You are absolutely right Phil. If people don’t understand this fundamental issue, they should take the time to listen to This American Life podcast done in connection with The Planet Money guys. It is very good. Even if you know this intellectually, this story points out some of the details of the perversity of the problem that even I did not fully appreciate.
It is called… Take the Money and Run for Office. http://bit.ly/Huw2Ng
Now, what I don’t understand is why these guys @ PM are NOT reporting on FATCA or the 3 year offshore jihad. That confounds me.
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New information on DATCA… the domestic version of FATCA…
Looks like there is some continued push back by Congressman Boustany out of Texas.. He is still looking for replies from Geithner. http://bit.ly/Jtb5AS
So this answers the $64,000 question I have had for months: Did he ever get an answer to his first letter? It would appear it was only a perfunctory letter, and that he did not receive what he was asking for.
Geithner appears to be stonewalling him, just like IRS Commissioner Shulman stonewalled Nina Olson of the TAS when she issued her Tax Advocacy Directive (TAD).
What a classic bureaucratic maneuver. After requiring the entire U.S. Banking industry to report on interest on trillions of dollars of non resident deposits, so it can trade it in the FATCA reciprocal agreement, it is NOT “a significant regulatory action”, so says Geithner. Only the best and the brightest could come up with that dismissive of a brush off. You can’t make this stuff up!
One wonders, in an election year, if this lack of responsiveness to Congress will become a political issue. One can only hope. The only way to help FATCA be the still born child of Carl Levin, is to remove the reciprocity forceps that this DATCA provides.
This could shape up to be an interesting fight, if Congress has any “you know whats.”