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Here’s a Major Issue That Should’ve Been Addressed During the Foreign Policy Debate

Oct. 22, 2012 11:04pm Becket Adams

The third and final debate Monday night between President Barack Obama and Republican presidential candidate Mitt Romney focused almost exclusively on the growing unrest in the Middle East.

However, while one would be remiss to disregard, say, the recent violence in Benghazi or Syria during a debate on foreign policy, we feel the presidential face-off ignored an important and particularly troubling trend: The growing number of Americans who have chosen to renounce their citizenship in favor of countries with a less burdensome tax code.

You may recall, for example, Facebook co-founder Eduardo Saverin who made headlines back in May when, just before Facebook made its disastrous Initial Public Offering, he decided to give up his U.S. passport and become a resident of Singapore.

As Singapore has no capital gains tax, the decision will end up saving Saverin a great deal of money. Of course, and not too surprisingly, a few people were upset that he decided against renewing his citizenship. And by “upset,” we mean a few politicians went so far as to try to block him from returning to the U.S.

But here’s there thing: He’s far from alone.

“Renouncing citizenship is an option chosen by increasing numbers of Americans. A record 1,780 gave up their U.S. passports last year compared with 235 in 2008,” Bloomberg reports.

And if you think that’s bad, wait until the much-dreaded Foreign Account Tax Compliance Act (FATCA) takes effect January 1, 2013. Some analysts predict FATCA will boost the number of renounced U.S. citizenships exponentially, especially among Americans living abroad.

“[U]nder the FATCA legislation, the U.S. will require all of its citizens to report their worldwide assets and earnings to the Internal Revenue Service (IRS), regardless of where they live, how long they have lived there, or whether any money is owed,” Georgina Lavers reports.

“Similarly, foreign financial institutions will also be required to disclose such information of any American clients that they may have,” she adds.

Nigel Green, chief executive of the deVere Group, a financial consulting firm, backs up this claim:

Over the last six months, we have received a 22 per cent increase in the number of enquiries from American expatriates around the world who tell us that they are considering the drastic step of switching their homeland citizenship to that of their adopted countries.

The majority of these US expats are being prompted to consider this due to the complexity of the reporting process to the IRS, plus the threats of heavy penalties, including for previous, inadvertent non-compliance.

This sense of anxiety is compounded by the fact that a growing number of Americans are being left stranded by their foreign financial institutions as all banks and wealth management firms will also have to declare the assets of their American clients – and this process is perceived as too costly and burdensome, meaning many are refusing to deal with US citizens.

But wait! There’s more: According to Green, foreign firms have recently started to turn down American applicants for jobs where signatory authority is required.

Why? Because those accounts would be subject to the new tax legislation.

“The fact that a growing number of the six million US citizens who happen to live overseas are being refused bank accounts outside America, or that they are being turned away from jobs as that will mean opening up firms’ accounts to U.S. bureaucrats, or because it could very well discourage foreign companies from doing business with American ones, is clear evidence that this legislation has serious, unintended negative consequences,” Green told TheBlaze in an email.

Representing those with an outside perspective, Green explains why some Americans would choose not to renew their passports.

“Many international observers believe that FATCA is a step too far. Some foreign governments and foreign financial institutions have hinted that they are not prepared to do the work of, or act as ‘de facto’ agents for, the Internal Revenue Service for many reasons,” Green told TheBlaze.

“It is easy to see why for some expats FATCA may be the straw that breaks the camel’s back as the U.S. is the only developed nation in the world which taxes its citizens on income they earn abroad,” Green told TheBlaze.

But let’s circle back to the very beginning of this article. Why should this be a “foreign policy” issue?

Think about it: The U.S. is losing a record number of businessmen and entrepreneurs to countries with lighter tax burdens. Who do you think is more likely to benefit from this transfer of wealth and talent?

Yes, the president and Gov. Romney spoke at length about trade with foreign countries, but they would have done well to address the fact that increases in competition in said countries may soon be attributed to the fact that some of them are on the receiving end of a tax-related exodus of talent.

“FATCA is overly complicated and far too onerous for both the individual and the foreign financial institution. A simpler and fairer tax system for U.S. expats is required as these people are, to all intents and purposes, global ambassadors for America,” Green’s email to TheBlaze reads.

“With a staggering 95 per cent of the world’s consumers living outside America, expats play a vital role for the U.S. economy, especially when it comes to promoting the exports of goods and services,” the email adds.

Follow Becket Adams (@BecketAdams) on Twitter

Front page photo source courtesy the AP. This story has been updated.

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Comments (32)

Fatca_Fallout
Posted on October 24, 2012 at 2:28pm
For Homelanders that don’t understand the Citizenship taxation issues related to Americans abroad, I would recommend this slightly funny and not too long video. It will clearly point out the dilemmas of the American trying to live a normal life abroad. http://www.youtube.com/watch?v=CfWk6yRdwMo

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Fatca_Fallout
Posted on October 24, 2012 at 2:25pm
It is difficult it is for Americans who live and work abroad, stay compliant with the unique and very complex US Citizenship taxation rules. FATCA is truly the final straw that is locking them out of normal banking accounts. For those who do not get this, let me put it to you this way…

What are your origins and where did your family came from to America originally? Ireland? Italy? Germany? Russia? Philippines? Every new immigrant to America is an expat from their land of birth! So how would they feel if Ireland or Italy or Germany decided to start sending them forms to fill out even if they owed nothing? And threatening Draconian penalties if you non willfully failed?

How would you feel if you actually owed something? Would you feel obligated to pay? Be honest with yourself. Or another way to think about it. What if you moved from high tax California to no tax Nevada. Would you be obligated to pay taxes back to California because you were born there? Get it?

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bubblebustin
Posted on October 24, 2012 at 12:20pm
It’s becoming clear that the US government and many of its people wish to punish its own citizens living abroad. This kind of masochistic behaviour will only serve to weaken the US. Fortresses keep people in as well as out.

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robino
Posted on October 23, 2012 at 1:22pm
In all three debates I got from Obama that his strategy is to punish the companies who are trying to escape from the USA.
I got from Romney that his strategy is to make the USA a place where companies want to escape to.

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- SwissPinoy
  Posted on October 24, 2012 at 1:12pm
  Both may be right and/or wrong. If a company has the ability to invest abroad into emerging markets, it may produce wealth that could be further invested at home. Tax rates and regulations can have a strong impact on how companies are created, grow, relocate.
  
  Report this comment
dukeofpaducah
Posted on October 23, 2012 at 9:41am
Regardless of the issues, obama is a joke. He is a liar, and a phony. He cares NOTHING about the American people, and so many don’t see it. God help if this poor excuse for a president gets reelected.

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TROLLMONGER
Posted on October 23, 2012 at 8:25am
Woulda, Coulda, Shoulda……you know the right wingers are desparate when they start talking in past tense…LOL!

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- mikem1969
  Posted on October 23, 2012 at 9:07am
  The fact of the matter is troll boy is that your messiahs policies are moving more and more money and talent over seas further destroying this country which is the liberal progressive goal.
  
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DigitalLiberty
Posted on October 23, 2012 at 7:52am
Who is John Galt?

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banjarmon
Posted on October 23, 2012 at 1:41am
You can tell the Greatness of a country by how many people want to get into it, NOT by how many want to leave it!!!

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- 1st a Father
  Posted on October 23, 2012 at 2:44am
  It really doesn’t matter who won this debate.
  
  I have an aunt who believes that anything anyone comes up with against Obama is a lie and comes from racial prejudice. Absolutely illogical, but yet the truth. There are many who voted for Obama last time who will continue to deny they made a mistake. We have to cancel-out such people’s votes.
  
  I firmly believe our only hope of ousting Obama is to convince all our conservative friends to get out and vote. Don’t waste your time on the those who cannot see. I’ve helped my 3 voting age children see the importance of voting for Romney this election and made sure that each of them is registered and I will personally drive them to the polls if needed. This is not a brag, it is merely an example of what must be done.
  
  I will be at the polls for early voting tomorrow. How many of you will be taking someone else to the polls who didn’t vote in the last election? I’ll have 3 new voters at the polls, how about you. Activate your friends now.
  
  It may be your last chance to bring someone into the fold of sanity. In my state, tomorrow is the last day to register, to be able to vote in this election.
  
  Report this comment
- The_Jerk
  Posted on October 23, 2012 at 5:50am
  The moochers and looters are killing us.
  
  Report this comment
- Tornado76
  Posted on December 31, 2012 at 11:53pm
  I TOTALLY DISAGREE!! Just because so many people are trying to ENTER the United States, does not mean it’s a “Great Country”. The majority of those people were not born in the US, and have never previously lived in the US. Therefore, they’re trying to enter the US based on Fictional Stories they’ve heard or seen in the News, or on television. They have NO CLUE how crooked the US can be when it comes to money!!
  
  The US Tax Laws get more ridiculous year-by-year! I completely understand why so many people have become Expatriates, especially if they live abroad because of their employment. I want to know how the US can “require” Foreign Financial Institutions to report their US Customers. That should NOT BE ALLOWED! It’s just another case of the USA trying to “RUN THE WORLD”. It’s no wonder why so many Countries ABSOLUTELY HATE THE UNITED STATES!!
  
  FYI… The number of US Renunciants is actually INCREASING every year. In 2008 there were approximately 235 US Citizens that Renounced their Citizenship. In 2011… There were 1,781 Renunciants!! Also, it used to be FREE to Renounce a US Citizenship. BUT, in 2010 the US started charging $450 to Renounce Citizenship!! WTF is that about?? The Government is Bitter. And before anyone says it… I absolutely DO INTEND to become an Expatriate. I’m embarrassed to be American!! We can’t even travel to SEVERAL Countries because they HATE the US so bad!! They will kill us just because we’re American!! GET A
  
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LeadNotFollow
Posted on October 23, 2012 at 12:37am
.
Romney should have brought up the fact that more of our soldiers have been killed during Obama’s four year term, than all eight years of Bush.

Also, Romney should have told Obama that Russia is still a major threat. That Russia just tested an Intercontinental Ballistic Missile two days ago.

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KidCharlemagne
Posted on October 23, 2012 at 12:35am
The ONE issue that is NEVER mentioned in presidential debates any longer…..

…….the United States Constitution!

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- LeadNotFollow
  Posted on October 23, 2012 at 12:51am
  .
  God was ignored and left out of the last debate also.
  
  Report this comment
- tzion
  Posted on October 23, 2012 at 7:54am
  @Kid
  Romney mentioned during the first debate.
  
  Report this comment
KevINtampa
Posted on October 23, 2012 at 12:10am
It’s what is not talked about, in any of the debates, that tells us the most about these candidates.

1. The once temporary Patriot Act measures. I want to know if either of these candidates see the Patriot Act as still being a temporary measure or should the American people now recognize that unwarranted surveillance of the finances, phone calls, and emails by federal government agencies is a permanent situation?

2. We know how Obama feels about the NDAA act he signed on December 31st. Does Romney agree that the American federal executive should have the authority to arrest, detain, and hold indefinitely any person including an American citizen with out notifying law enforcement, their families, our their attorney?

3. CISPA was highly criticized by the public and a motion to pass it in the legislature failed largely because of extremely well known and recognized online boycotts. The President has said he wants it. What is Romney’s position on CISPA as well as his position on an Internet kill switch?

4. Some think an internet kill switch is an impossibility. Many thought that a kill switch on radio and TV was impossible, and yet last November a cable, satellite and radio kill switch went live when the AES was activated. What is Romney’s position on turning over broadcast control from private companies over to the federal executive branch?

5. Why were none of these issues covered in ANY of these debates?

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- Smokey_Bojangles
  Posted on October 23, 2012 at 12:59am
  Because Both Candidates support them yet can not defend them.
  
  Report this comment
- DigitalLiberty
  Posted on October 23, 2012 at 8:04am
  Re: Internet Kill Switch. At this time, because the US infrastructure (especially design) is so old, implementing a kill switch is not hard. CenturyLink is already routing all of their DSL traffic through gateway proxy servers for high use websites (especially news). It’s trivial to inject false news as well as block access. As long as the FCC colludes with specific industry, don’t expect much change. But change IS coming.
  
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nzkiwi
Posted on October 23, 2012 at 12:07am
This is a reflection of Glenn Beck’s “ten guys in a bar” anology that he put forward a short while ago.

The wealthiest guy is leaving the party because of the blatant unfairness of the taxation.

A few of them have come to New Zealand, and frankly we are very pleased to see such talent arriving on our islands. I feel very sad for America, though. It is the American system that educated and encouraged them.

Unfortunately it is also the American government which is chasing them away.

Foir what it’s worth, if I wanted to leave my country permanently. I would want to move to America. Unfortunately, I would bring little with me but my idealism and vote.

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BasketFullOfPuppies
Posted on October 23, 2012 at 12:04am
One of the first things Romney should do, when he wins, is to get Congress to repeal FATCA(T) and offer real Americans an amnesty program to get them to return. We’re going to need these people to rebuild the country after all the damage that BO has done.

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- bubblebustin
  Posted on October 24, 2012 at 12:08pm
  @basketfullofpuppies
  For the many US persons living abroad effected by citizenship based taxation, it’s not a matter of ‘returning’ to the US, as they have never been there. For instance, my husband was born in Canada and is a US citizen through his American father. Like the hundreds of thousands or perhaps millions of US citizens like him, he is expected to pay US taxes purely on the fact that he ‘inherited’ US citizenship. I am a US citizen, moved to Canada at 12, have never worked in the US and expected to still pay US taxes. And paying taxes to a country we don’t live in is what we did after we sold our house in Canada. It’s becoming clear to US persons living abroad that the US government and many of its people hate and wish to punish US persons for the mere fact that we live outside the US.
  
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- SwissPinoy
  Posted on October 24, 2012 at 1:21pm
  I was actually considering retiring to the US in about 30 years. I even got a mortgage for a house in Florida this year for that purpose. Yet, now with Americans abroad having no representation while being kicked out of banks, denied securities and burdened with complex paperwork with no sign of improvement ahead, I abandoned the idea of retiring to the US and renounced instead.
  
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destrecht
Posted on October 22, 2012 at 11:30pm
Wow. going galt, anyone?

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petty1699
Posted on October 22, 2012 at 11:28pm
Why hasn’t anybody brought up the fact that Obama has exempted four countries from the Child Soldier Prevention Act of 2008. On September 25th he said the practice of child soldiers was evil and barbaric, three days later he’s exempting countries from the law so that he can supply them with money and weapons? By his own standard, he is evil.

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voting-for-romney
Posted on October 22, 2012 at 11:20pm
Renouncing your citizenship is not a answer, and probably not what someone who actually wanted to do what this article suggests you would do? It would much easier to hold your wealth in foreign countries with legal proxies that combine punishing “trigger agreements” protecting against unfair treatment of investors, which means a lot of foreign investment and transfer of wealth is still there, just not easily found or tapped into?

What you are more likely to see, is people giving up their dreams to create wealth, because, they know how to survive, what makes you think they will go to all that trouble to go live in a foreign country, when they can avoid taxes at home by not creating wealth? You can’t write those articles, because no one is going to embarrass themselves or ruin their reputations by being interviewed for such articles, we just know for a fact they are out there?

The only way to debunk those theories is to have a fair and reasonable taxes to begin with?

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- Libermerican
  Posted on October 23, 2012 at 3:03pm
  I agree they shouldn’t have to renounce their citizenship. As long as they have no income (living off of savings/investments), they don’t have to file a tax return. Just stop filing. Perfectly legal, and solves the problem.
  
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- bubblebustin
  Posted on October 24, 2012 at 12:12pm
  @Libermerican
  Wrong. US persons (also includes green card holders) living abroad must file US taxes every year regardless of what their earnings are.
  
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- SwissPinoy
  Posted on October 24, 2012 at 1:29pm
  The core reason why Americans living abroad are renouncing is because many stateside Americans insist that renouncing US citizenship is not the answer. It is the inability for many stateside Americans to understand why Americans abroad are renouncing which is the cause of the problems leading to renunciations. If renouncing US citizenship is to not be the answer, then more stateside Americans must learn to understand and accept that renunciations are the direct result of their own actions. In other words, if one doesn’t want for Americans abroad to renounce, then accept that the current system is flawed and change it. Until then, Americans living abroad will continue to renounce since stateside Americans are encouraging such.
  
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Chromo200
Posted on October 22, 2012 at 11:15pm
Another way to tax your money .. Wonder who authored it.

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Jenasus
Posted on October 22, 2012 at 11:13pm
Google – Iron Mountain Blueprint for Tyranny Full RARE Video – and watch the video and you will know why Americans with money are leaving America.

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