2013 November 26 Tuesday
Foreign Banks Shunning American Clients Due To IRS Regs
Americans living abroad are having a harder time getting bank accounts as some banks decide the US Internal Revenue Service reporting requirements on foreign bank accounts are not worth the trouble. This is one of the reasons why the number of American citizens renouncing citizenship has surged. The tax law change is making it harder for US citizens to do work and do business abroad.
In addition to complaints about the reports to the IRS, expats say the law is prompting several overseas banks and financial institutions to close out longstanding accounts of American clients, refuse to open new ones, and deny loans and mortgages to expats rather than face a U.S. penalty if they donít comply with the tax law.
The Leviathan must be fed. That is the long and the short of it. The Leviathan must be fed. The Leviathan will go to any lengths to get food for its growing ravenous appetite. You really can't argue with the Leviathan. Your only potential option is to escape the impacts it has on you in any way possible. Your circumstances and creativeness will determine your options for partial or full escape.
Many countries do not tax their citizens who are living abroad. US citizenship comes with a heavy (and rising) cost for those who are most skilled and productive. The people who renounce are insulted by the impositions placed on them by a distant government.
I am reminded of Cicero and other Roman citizens fleeing into exile. The same thing happened with leading citizens of Greek city states, sometimes driven into exile by a flurry of lawsuits aimed at cutting them down in political battles. The late Roman Republic especially seems relevant to understanding what is going wrong in America today. We have the same playing to the masses by promising them goodies and the same intensifying competition for power.
We are losing the sense of common identity and interests are diverging as the country becomes more diverse ethnically and in the ability and willingness of its residents to play the role of citizens.
By Randall Parker at 2013 November 26 08:23 PM
Many countries do not tax their citizens who are living abroad.
That's an understatement. Hardly any countries tax their citizens living abroad. American Exceptionalism?
"The Leviathan will go to any lengths to get food for its growing ravenous appetite."
I looked at the list of people renouncing their citizenship or LPR status in the last year. They mostly had foreign names, European or Asian. These were immigrants who decided to leave. They came, made their fortunes (or not), and decided to return home. Expect to see their numbers grow as the number of post-1965 immigrants nearing retirement age increases. They were not native-born Americans fed up with Leviathan. They weren't Latins or Africans with no decent country to return to.
Leviathan throws off an extraordinary amount of wealth. A disproportionate number of great fortunes are still made in the US. There is a huge financial advantage to living here, doing business here, and having access to the infrastructure, labor market, and subsidies that the US and its government provides, regardless of how much taxpayer money goes to waste. The US cannot allow people to earn it while living here, then leave to avoid paying taxes on it. The ability to fund that infrastructure on which their businesses have relied would crumble.
Mark Zuckerberg, for example, has paid scant little in taxes on the fortune he has made. Facebook paid no taxes last year, and Zuckerberg pays no taxes on his Facebook stock until he sells it. To allow him to rack up a fortune while living here, then move to Bermuda or wherever to avoid paying taxes would be insane. Zuckerberg probably could not have built and staffed Facebook from Bermuda, and Facebook has a relatively small number of employees compared to Google or Microsoft or Amazon.
Take Zuckerberg's former business partner, Eduardo Saverin. Saverin is Brazilian by birth. His family fled to the US after Saverin's millionaire father claimed his son had been targeted for kidnapping. Saverin became a citizen not long after his 18th birthday, and attended Harvard, which receives hundreds of millions in US grants to fund its research operations. After making his billions at Facebook, Saverin left the US for Singapore, in order to avoid paying taxes to the country which had offered him refuge; to the country without which he would never have co-founded Facebook, never have become a billionaire.
Of course as we import more poverty and more voters inclined to vote socialist the advantages to living in the US will shrink greatly. It's not Leviathan, per se, we need to worry about - it's the imported poverty and political radicalism that drives Leviathan. But guess which billionaire is most actively pushing for the increased importation of poverty? See above.