# How many US expats are there, anyhow?



## Bevdeforges

Since we don't have a "lounge" section here in the tax forum, I thought I'd just float this one as a semi-off-topic thread.

We periodically get into "discussions" about just how many US citizens there are living overseas - relative to how many tax returns the IRS claims to receive from overseas addresses. But the fact is that no one has a good handle on how many overseas taxpayers there actually are. The figures you hear bandied about are compilations of the individual consulates' estimates in the absence of any real "solid" data. (And to my knowledge, the consulates don't seem to share their data regarding the number of passport renewals they process, nor the numbers registered with the consulate, etc.)

Anyhow, the reason I brought this up is that our local "newcomers' group" here in France has been moaning for several years now about the lack of new anglophone arrivals in the area (mainly to help with anglophone activities, which are very popular here). My sense (and I admit it's not based on anything particularly solid) is that there are fewer and fewer Americans leaving the US to install themselves permanently overseas. Maybe it's different in other parts of the world, but Europe just doesn't seem to be a destination these days for corporations sending executives overseas, nor for retirement abroad.

Yet, the estimates for the total American diaspora has increased from "2 to 4 million" some 20 years ago to more than 6 million today. How sure are we that the numbers of US citizens abroad are increasing like that? Maybe that estimate of only 2.2 million American citizens resident outside the US is closer to the actual figure. But OTOH, how on earth would be ever find out just how many potential US taxpayers there are outside the US? 
Cheers,
Bev


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## iota2014

"U.S citizens living overseas" and 

"potential US taxpayers outside the US"

are two different (though overlapping) categories. An unknown number of people outside the US have US citizenship. Some file, some will never file, some will file just sufficient to renounce.

Presumably TIGTA should have access to the counts for Groups 1 and 3. Counting Group 2 is more difficult, and long may it remain so.


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## Bevdeforges

iota2014 said:


> "U.S citizens living overseas" and
> 
> "potential US taxpayers outside the US"
> 
> are two different (though overlapping) categories. An unknown number of people outside the US have US citizenship. Some file, some will never file, some will file just sufficient to renounce.
> 
> Presumably TIGTA should have access to the counts for Groups 1 and 3. Counting Group 2 is more difficult, and long may it remain so.


Who is TIGTA? 

Actually, I think the first step is probably to define just exactly who or what we're trying to count here. 
Cheers,
Bev


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## iota2014

Bevdeforges said:


> Who is TIGTA?


https://www.treasury.gov/tigta/




> Actually, I think the first step is probably to define just exactly who or what we're trying to count here.


Who did I miss? Filers, non-filers, renunciants...


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## Nononymous

iota2014 said:


> Who did I miss? Filers, non-filers, renunciants...


US citizens classified as enemy combatants held in secure offshore facilities under US military law. 

But they likely just fall under "non-filers" so I'm not sure if it counts.


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## iota2014

Hmm. Would they be allowed to not file?


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## Nononymous

iota2014 said:


> Hmm. Would they be allowed to not file?


Well they'd never be allowed to have a file, so how could they?


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## iota2014

nononymous said:


> well they'd never be allowed to have a file, so how could they?


Very true.


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## Bevdeforges

iota2014 said:


> Who did I miss? Filers, non-filers, renunciants...


Was thinking more in terms of US citizens actually resident overseas. Plenty of those who don't have to file included in that cohort. Includes kids too young to have to file, retirees with inadequate income to file, miscellaneous overseas residents with inadequate income to have to file (a cohort in which I am proud to include myself this year and last). 

I suppose we could limit it to those resident overseas who would or could fulfill the physical presence test or the bona fide resident test. But the point isn't filers or non-filers, but simply to enumerate US citizens resident overseas. I'm beginning to think that the number is simply impossible to know.
Cheers,
Bev


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## iota2014

Bevdeforges said:


> I suppose we could limit it to those resident overseas who would or could fulfill the physical presence test or the bona fide resident test. But the point isn't filers or non-filers, but simply to enumerate US citizens resident overseas. I'm beginning to think that the number is simply impossible to know.


Which is as it should be.


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## maz57

iota2014 said:


> An unknown number of people outside the US have US citizenship. Some file, some will never file, some will file just sufficient to renounce.


The expats I know personally here in Canada (well enough to have some idea of their US tax situation, at least) exclusively belong to the will never file and the file only to renounce categories. Most of these people and for sure all their children (even though they know they are technically US citizens), laugh at the suggestion they should be filing US tax returns. A few took the trouble to renounce but most just ignore the whole stupid business.

That's why I don't think the renunciation numbers will ever grow large enough to move the needle inside the US. These people left, never looked back, and couldn't care less what the US government thinks about anything at this point in time.


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## iota2014

Logically, at some point renunciation numbers should peak, and then decline to somewhere around pre-FATCA levels.


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## maz57

iota2014 said:


> Logically, at some point renunciation numbers should peak, and then decline to somewhere around pre-FATCA levels.


True, but because of the US government's two pronged strategy of charging the outrageous fee and delaying by limiting the number of available appointments, I don't expect the annual numbers will ever climb much higher than they are right now. So it will be more like a long, low hill than a Matterhorn. 

The government will continue to argue that the numbers themselves show that FATCA and CBT are not adversely affecting the majority of expats and the ones who do renounce are just a few disgruntled crackpots.


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## BBCWatcher

The government might not be wrong.


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## maz57

And...the government might not be right.


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## maz57

Most people who leave the US for good probably just walk away and ignore the whole sorry mess. If they could renounce at a reasonable price and within a reasonable time frame, they would; but thanks to the US government they can't. Before FATCA none of this was even necessary. 

The numbers will never reflect those who have chosen the obvious and most direct path to freedom. Once that second passport is firmly in hand they cease to be US expats. As someone posted on another forum: "the era of the US expat is D_E_A_D".


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## BBCWatcher

As I've written before, I don't think the U.S. government is at all worried about the alleged negative consequences of a core tax principle it adopted in 1862. The United States has done rather well over the past 154 years. "Working as designed," I'd say.


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## Nononymous

If the US is willing to ignore those who walk away, those who walk away will be more than happy to continue ignoring the US.

And really that's what happens with most non-resident duals, with a few rare exceptions like Boris Johnson. The US doesn't see a dime from them (whether they owe anything or not) and either isn't able or doesn't try very hard to pursue them.


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## maz57

BBCWatcher said:


> As I've written before, I don't think the U.S. government is at all worried about the alleged negative consequences of a core tax principle it adopted in 1862. 154 years.


Based on the evidence, I'd have to say you are absolutely right. Nothing beats a modern tax code that aligns with the rest of the world!


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## maz57

BBCWatcher said:


> The United States has done rather well over the past 154 years.


All empires did very well until eventually they didn't. Now they're history.


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## maz57

BBCWatcher said:


> "Working as designed," I'd say.


Which is to say it (CBT) doesn't work, because it was a flawed concept from the very beginning.


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## Bevdeforges

maz57 said:


> Which is to say it (CBT) doesn't work, because it was a flawed concept from the very beginning.


Maybe, but I've always had the feeling that the reliance on "voluntary compliance" is part of the system. They honestly don't seem to care all that much about the "little guys" outside the US as long as they make some sort of good faith effort. And actually, even if they don't - as long as they don't owe much of anything anyhow.
Cheers,
Bev


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## iota2014

Bevdeforges said:


> Maybe, but I've always had the feeling that the reliance on "voluntary compliance" is part of the system. They honestly don't seem to care all that much about the "little guys" outside the US as long as they make some sort of good faith effort. And actually, even if they don't - as long as they don't owe much of anything anyhow.


They don't rely on "voluntary compliance" within U.S. borders though. Quite the opposite.

The difference is that within U.S. borders the IRS has easy access to the information needed to prosecute, and easy access to a justice system which presumes the IRS is right. In other countries, the IRS has neither of those advantages. There's no point in pursuing anyone unless the case looks likely to be both profitable and provable. That's why they don't care.


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## BBCWatcher

So far the available evidence is that a (mild) CBT is a wild, raging success. The most successful country in history has it -- the only superpower, the largest economy, the most culturally influential country, the most billionaires, etc., etc. In fact, it's impossible to disprove the hypothesis that CBT is an essential, vital, critical prerequisite for a nation's global leadership.

Maybe, just maybe, the United States has been doing something right for the past 154 years. It's at least difficult to argue with success. If you want to start to develop a semi-_persuasive_ argument, find at least a few people the United States "lost" who are scary-exceptionally inventive, creative, and productive who could have substantially advanced the national interest. Earl Tupper, Eduardo Saverin, and Tina Turner aren't good candidates.


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## Bevdeforges

You have an odd definition of "success" IMO. CBT is what it is - but there is no way to find out whether a significant portion of those subject to US taxation solely due to their citizenship are actually filing tax returns, much less actually paying anything into the system. (Not if we have no idea how many US Citizens/potential taxpayers there are out there.) And to what extent it is "beneficial" to the US to have up to two-thirds of those overseas returns that are filed netting the public coffers little or no actual tax payments. Then there is the matter of how much of whatever taxes are derived from overseas taxpayers is from foreign sourced income vs. people paying taxes on their US sourced revenue (which could just as easily be collected via non-resident tax collection methods).

It's not a contest. And it's arguable whether the method of taxation has anything to do with notions of the "degree of grandeur" of the US or any other country. 
Cheers,
Bev


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## JustLurking

BBCWatcher said:


> ... In fact, it's impossible to disprove the hypothesis that CBT is an essential, vital, critical prerequisite for a nation's global leadership.


You are coming across as unhinged. Correlation is not causation, for a start.


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## maz57

BBCWatcher said:


> So far the available evidence is that a (mild) CBT is a wild, raging success. The most successful country in history has it -- the only superpower, the largest economy, the most culturally influential country, the most billionaires, etc., etc.


You forgot the most indebted and the most expensive health care delivery system, but I don't see the connection between CBT and any of these things. The US (and presumably your) definition of success is considerably different from mine. That's one reason I left.




BBCWatcher said:


> In fact, it's impossible to disprove the hypothesis that CBT is an essential, vital, critical prerequisite for a nation's global leadership.


Didn't get Eritrea into the club and the other global leaders don't have CBT. Again, no connection, so there's nothing to prove or disprove.



BBCWatcher said:


> Maybe, just maybe, the United States has been doing something right for the past 154 years.


At least, on balance, more right than wrong. Now the pendulum seems to have swung the other way.


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## BBCWatcher

JustLurking said:


> Correlation is not causation, for a start.


No, but it's a prerequisite. Which is a bit of a problem for those arguing against CBT. If CBT were so detrimental to national success, where's _that_ correlation?



Bevdeforges said:


> You have an odd definition of "success" IMO.


Oh? Tax policies are about raising revenues for publicly provided goods and services, to support national interests and the general welfare. There's no serious debate that the United States has been wildly successful in advancing its national interests and its general welfare. (It also happens to have the lowest total tax burden as a percentage of GDP in the developed world.) A sucessful argument against CBT cannot ignore these facts.

I'm challenging those of you who are against CBT to come up with better, stronger arguments. The ones I've read so far are quite weak and obviously haven't worked. "I don't like it" isn't a strong argument.


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## Bevdeforges

BBCWatcher said:


> Oh? Tax policies are about raising revenues for publicly provided goods and services, to support national interests and the general welfare. There's no serious debate that the United States has been wildly successful in advancing its national interests and its general welfare. (It also happens to have the lowest total tax burden as a percentage of GDP in the developed world.) A sucessful argument against CBT cannot ignore these facts.


Tax policies are about raising revenues for public services, yes. The US may well have the lowest total tax burden, but it also offers pretty p. poor levels of public services and no one is denying that the US infrastructure is crumbling for want of routine maintenance. If you add to the taxes Americans pay, what they have to shell out for medical services (co-pays, deductibles, insurance premiums, et al), retirement funds and tertiary education, most of which is covered in comparable first world states, I suspect the "success" of the US tax system could be called into question.

But honestly, the issue of CBT or not has nothing to do with those arguments.
Cheers,
Bev


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## JustLurking

BBCWatcher said:


> No, but it's a prerequisite.


It isn't. Refer to this logical fallacy for why.



BBCWatcher said:


> If CBT were so detrimental to national success, where's _that_ correlation?


In a similar vein, feel free to provide arguments showing that CBT has _not_ in fact held back the US from being _more_ "successful" (where "successful" here follows your own narrow definition).


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## maz57

BBCWatcher said:


> If CBT were so detrimental to national success, where's _that_ correlation?


I don't recall anyone here making that argument. However, CBT is unquestionably detrimental to US expats and it is detrimental to other countries because it diverts a portion of their wealth to the US. FATCA is detrimental to foreign financial institutions because it is costing them billions to implement.

CBT may have been "on the books" for 154 years but until very recently it has been practically unenforced. I wouldn't be in such a hurry to declare that it won't be detrimental to the success of the US. Over time, the US will either officially or unofficially lose a large percentage of its expat population (you know, all those mini ambassadors) and other countries will find ways to push back against US manipulation and extortion. Already alternate financial systems are being established over which the US has no control. To the extent the US dollar ceases to be the world reserve currency, the US will find itself in a much worse position.


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## maz57

BBCWatcher said:


> Oh? Tax policies are about raising revenues for publicly provided goods and services, to support national interests and the general welfare. There's no serious debate that the United States has been wildly successful in advancing its national interests and its general welfare. (It also happens to have the lowest total tax burden as a percentage of GDP in the developed world.) A sucessful argument against CBT cannot ignore these facts.


No doubt he US has managed to advance the welfare of the wealthiest portion of its population but a very large number of less wealthy US residents are falling further and further behind. Along with that lowest total tax burden goes an astronomical annual deficit. The US really needs to tax more and spend less, not a message any US politician wants to try to sell. If the US government didn't have what no other government in the world has, the exclusive right to print the world reserve currency, the picture would be a total disaster. The present US Ponzi scheme is unsustainable. CBT has nothing to do with any of this; even if the US could figure out a way to confiscate the entire net worth of every expat it would do nothing to fix these structural problems.


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## BBCWatcher

JustLurking said:


> In a similar vein, feel free to provide arguments showing that CBT has _not_ in fact held back the US from being _more_ "successful" (where "successful" here follows your own narrow definition).


The political burden to bear is among those who are trying to make the argument to change a status quo core tax policy that has endured, even thrived, for 154 years.



maz57 said:


> However, CBT is unquestionably detrimental to US expats and it is detrimental to other countries because it diverts a portion of their wealth to the US.


The first part is not unique to (relatively well-to-do or better) U.S. expatriates (living in comparatively lower income tax jurisdictions). _Taxes_ are "detrimental" to everybody who pays them. "Get in line" with that complaint. The second part certainly seems like a feature not a bug.

....No, still very weak arguments here. Sharpen them well if you hope to persuade Congress. Good luck.

For the record, I don't think there's a persuasive political argument against this particular core tax principle. In 154 years nobody has come up with one, and I doubt I could do any better. However, I think there are reasonably persuasive arguments for making tax filing and compliance easier for everyone, including for U.S. persons living overseas, and for streamlining exit procedures for those who do not want the package of rights, privileges, obligations, and responsibilities associated with U.S. personhood. For example, it might be possible for the U.S. to deem residents of comparatively higher income tax jurisdictions as U.S. tax compliant if they're willing to sign a simple statement swearing to that effect. This is more or less the "Form 1040XP" concept.


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## maz57

BBCWatcher said:


> The first part is not unique to (relatively well-to-do or better) U.S. expatriates (living in comparatively lower income tax jurisdictions). _Taxes_ are "detrimental" to everybody who pays them. "Get in line" with that complaint. The second part certainly seems like a feature not a bug.
> 
> ....No, still very weak arguments here. Sharpen them well if you hope to persuade Congress. Good luck.


I'm not talking about tax owed, because most US expats don't owe tax. I'm talking about the endless, expensive, stupid form filing, the pointless remote financial control which accomplishes nothing, and the totally unnecessary problems FATCA and CBT are causing for expats with their local financial institutions.

I don't believe the taxes I pay to Canada are detrimental to me because I actually get services in return, not the least of which is a fine, fully functional health care system. I might quibble with a few details but, in general, I'm a beneficiary. 

As for persuading Congress, a group which can't even agree on the time of day, I don't give a damn; its not my problem any more.


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## BBCWatcher

maz57 said:


> I'm talking about the endless, expensive, stupid form filing, the pointless remote financial control which accomplishes nothing, and the totally unnecessary problems FATCA and CBT are causing for expats with their local financial institutions.


So, to net it out, less of Intuit's lobbying influence on Congress, and more and a better funded IRS. I support that combination.

The ship has well and truly sailed on FATCA, in part because FATCA was/is never only about tax compliance. Congress can probably agree to consolidate FinCEN Form 114 and IRS Form 8938 (and perhaps also IRS Form 3520) into a single, streamlined, simplified form, preferably with some OECD awareness. But the days of citizens of developed economies stashing undeclared money overseas are slowly but inexorably drawing to a close, and not just among Americans. Americans just happened to push the party along, that's all.



> I don't believe the taxes I pay to Canada are detrimental to me because I actually get services in return, not the least of which is a fine, fully functional health care system. I might quibble with a few details but, in general, I'm a beneficiary.


That isn't what tax systems are for. Most orphaned infants don't pay taxes, and Bill Gates can never consume enough publicly provided healthcare to equal his tax contributions. Tax systems are solely to raise revenue to support government and thus civil society, period. They are not, nor should they ever be, transactional in nature. If you feel otherwise then you're buying into an argument that happens to be self-serving for wealthy people. Even though I do pay significant U.S. income tax on non-U.S. source income, and ostensibly I should be sympathetic to that sort of "me for me" argument, no, it's rubbish.


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## maz57

BBCWatcher said:


> The political burden to bear is among those who are trying to make the argument to change a status quo core tax policy that has endured, even thrived, for 154 years.


Huh? You must be joking. I think that CBT can be more accurately described as having languished unused buried deep in the US tax code for 154 years. Heck, the US didn't even have an income tax until when, 1913? Most people never heard of CBT and they ignored it if they did know about it because it was (and continues to be) fundamentally unenforceable. 

Even with the rolling out of FATCA that is still pretty much the case and people are already figuring out new and better ways to sidestep the whole unworkable mess. I expect the new war on expats will enjoy a level of success comparable with the ongoing war on drugs for the last 50 years and we all know how well that one has worked out.


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## BBCWatcher

maz57 said:


> I think that CBT can be more accurately described as having languished unused buried deep in the US tax code for 154 years.


No, it was the very first loophole (with or without quotation marks, as you prefer) Congress closed in the very first U.S. personal income tax -- the first defect Congress saw and corrected. CBT was a core, central component of the Revenue Act of 1862 (back in the days when legislation contained very few words), which replaced the Revenue Act of 1861. It certainly wasn't an afterthought or a minor issue. Moreover, the Supreme Court decided Cook v. Tait in 1924. _Obviously_ it wasn't a deeply buried provision if it was so important to Congress back in 1862. It also was extremely important to the plaintiff(s) that brought their case to the U.S. Supreme Court, a case the U.S. Supreme Court took and decided in 1924. (The Supreme Court takes very few cases.) There's nothing hidden or obscure about this core tax principle. That's just not a viable or accurate argument, that this was some "accident."



> Heck, the US didn't even have an income tax until when, 1913?


The first U.S. income tax dates back to the Civil War (Revenue Act of 1861). It was suspended in 1872. Congress tried to reintroduce the income tax in 1894, passing legislation that the President signed but the Supreme Court overturned. It's rare that Congress and the states act to overturn something the Supreme Court does, but they did with the passage of the Sixteenth Amendment. The Sixteenth Amendment was ratified in 1913, and Congress didn't waste any time in passing the Revenue Act of 1913 to reestablish the income tax (including the core tax principle of CBT again).



> Most people never heard of CBT and they ignored it if they did know about it because it was (and continues to be) fundamentally unenforceable.


Oh, it's not "unenforceable." It's getting more enforceable all the time, as it happens. And there are _plenty_ of laws Congress has passed that are much, much less enforceable than the U.S. tax code as it applies to non-U.S. source income received by U.S. persons overseas.

The limited evidence available suggests it's at least reasonably enforceable. There is a modest surge-let in the number of U.S. citizens (and U.S. permanent residents) renouncing or documenting relinquishment of their statuses, many (but not all) for tax reasons. That tends to suggest reasonable enforceability.

Note that the degree of enforceability is not a prerequisite to whether Congress and the President pass legislation. It isn't even particularly important. Osama Bin Laden violated lots of U.S. laws, but for an awful long time those laws were not enforceable against him...until they were. It doesn't mean they were bad laws or that they shouldn't have been passed. That, too, just isn't a strong argument and hasn't persuaded Congress in the past.


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## Bevdeforges

We do seem to be getting pretty far afield of the topic here. But for all the arguments about CBT, I would have to say that it hasn't really been much enforced until the mid-1990s. So, at least as far as enforcement is concerned, it's something of an "afterthought."

The key thing is, still, that no one actually knows how many US citizens (by anyone's definition) there are outside the US. And frankly, no one is doing anything to find out, either.

To be honest, it's painfully easy to stay off the radar for those overseas citizens who have little or no US source income. The main result of FATCA has been to complicate the issue of opening bank and other sorts of financial accounts for those with US citizenship, even in their country of residence.

It would be interesting to know whether all the excess reporting for FATCA has brought in any additional taxes from overseas residents. It obviously hasn't had any effect on at least one of the current presidential candidates, who no doubt has plenty of big bucks stashed in tax havens around the world. And this is the sort of thing that makes the overseas citizens resolved to just duck under the radar rather than pony up the fee to renounce.
Cheers,
Bev


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## BBCWatcher

Bevdeforges said:


> It would be interesting to know whether all the excess reporting for FATCA has brought in any additional taxes from overseas residents.


The Congressional Budget Office thinks so, to the tune of $8 billion over 10 years as I recall. There is no real prospect to repeal FATCA, and any such effort would run into CBO budgetary scoring headwinds. That is, a repeal would have to be accompanied by some other revenue raising measure to offset the revenue loss.

Interestingly Americans seem to be a pretty honest bunch in these terms. The Panama Papers haven't fingered too many Americans yet. Maybe that'll change -- that story is still being developed -- but a provisional "kudos" to my fellow Americans.


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## iota2014

There's apparently a treaty - oops, sorry, an "agreement", that makes Panama a risky place for Americans to stash funds.

No US Names in Panama Papers Leak- Why Not?

Americans tend to use BVI I believe.


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## iota2014

Bevdeforges said:


> We do seem to be getting pretty far afield of the topic here. But for all the arguments about CBT, I would have to say that it hasn't really been much enforced until the mid-1990s. So, at least as far as enforcement is concerned, it's something of an "afterthought."
> 
> The key thing is, still, that no one actually knows how many US citizens (by anyone's definition) there are outside the US. And frankly, no one is doing anything to find out, either.
> 
> To be honest, it's painfully easy to stay off the radar for those overseas citizens who have little or no US source income. The main result of FATCA has been to complicate the issue of opening bank and other sorts of financial accounts for those with US citizenship, even in their country of residence.
> 
> It would be interesting to know whether all the excess reporting for FATCA has brought in any additional taxes from overseas residents. It obviously hasn't had any effect on at least one of the current presidential candidates, who no doubt has plenty of big bucks stashed in tax havens around the world. And this is the sort of thing that makes the overseas citizens resolved to just duck under the radar rather than pony up the fee to renounce.


As I understand it, FATCA was intended to find the uncompliant money, not the uncompliant citizens. Most US citizens abroad, compliant or non-compliant, don't have much taxable money so aren't worth chasing. Unfortunately FATCA like most US laws seems to have been drafted without a thought for any unintended consequences, such as turning US citizens into financial lepers or precipitating a global banking crash through the punitive withdrawal provisions and the demand for banks to violate local data protection law.

Fortunately, France, Germany, Italy, Spain, and the UK took action to avert the risk of a crash, negotiating with the US to legalize the reporting, in return for removal of the withdrawal sanction. (https://www.gov.uk/government/news/...ational-tax-compliance-and-implementing-fatca). Which also seems to have eased somewhat the understandable impulse on the part of the banks to shoo all Americans out the door, thus lessening (perhaps) the need to renounce. For most CBT-compliant US citizens, FBAR reporting requirements put FATCA in the shade. As long as it's possible to carry on with normal banking, FATCA's not necessarily going to make much difference for those who wish to be compliant. Only for those who don't. Is my guess.


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## iota2014

iota2014 said:


> Fortunately, France, Germany, Italy, Spain, and the UK took action to avert the risk of a crash, negotiating with the US to legalize the reporting, in return for removal of the withdrawal sanction.



Plus, of course, the as-yet-unauthorized and largely unimplemented US commitment to reciprocate.

It might be easier to get Congressional agreement for CRS (which is inherently reciprocal and multilateral) than for FATCA reciprocity, which would only snitch on US Persons. If so, CRS may eventually supercede FATCA.


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## iota2014

BBCWatcher said:


> The Congressional Budget Office thinks so, to the tune of $8 billion over 10 years as I recall.


 A 2012 NY Times article quotes a similar-ish figure, but from a rather different perspective:


> Even with the penalties, Fatca is not expected to raise significant revenue for the U.S. Treasury; the Congressional Budget Office forecasts a take of $8.7 billion over 10 years. That is barely a rounding error in an annual budget of more than $3 trillion, and accountants and lawyers treat the estimate with extreme skepticism, anyway.


http://www.nytimes.com/2012/12/03/business/global/03iht-srtaxfatca03.html?_r=0


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## iota2014

iota2014 said:


> Plus, of course, the as-yet-unauthorized and largely unimplemented US commitment to reciprocate.


And plus, also, the agreement that FATCA in IGA countries should be implemented via the existing bilateral tax treaties. Thus forestalling any future unilateral US impulses to tighten the thumbscrews without bothering to consult with the relevant Competent Authority.


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## celticweb

Citizenship tax for US persons is what we have to work but does this unique citizenship based tax system really work? It only appears to work because only two countries are practicing it.

What would happen if the whole world adopted citizenship based taxation? and the whole world made everyone automatic citizens based on birth or your parents birth place? I would possibly have to report to Italy too because one of my grandmother was born there and that would have made my mother an automatic citizen and then me. Wouldn’t Obama possibly have to report to Kenya? Wouldn’t this cause global financial chaos? I think it would.

As far as Fatca, if it's intended purpose was to make non-compliant people aware, I suppose it is serving its purpose because I became aware. But there are better ways to educate people then causing hardships in their every day lives as being Collateral Damage for a law meant to go after someone else.

I don't serve any purpose for the USA. I work and live here and so far all my income doesn't produce any tax for the USA. I also am not entitled to or taking anything from the USA. The USA should not expect anything from me and I shouldn't expect anything from the USA. When my family moved back to the UK when I was 13, i came with no assets. What I achieved, i achieved here in Britain. 

Even if there was a bit of tax to pay every year, this would not particularly bother me. i don't mind helping out the economy of my birth place but all I am doing is helping accountants make money through filing complicated forms that owe no tax.


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## iota2014

celticweb said:


> As far as Fatca, if it's intended purpose was to make non-compliant people aware, I suppose it is serving its purpose because I became aware. But there are better ways to educate people then causing hardships in their every day lives as being Collateral Damage for a law meant to go after someone else.


A lot of people have tried to figure out what was FATCA's intended purpose. 

An interesting article at LexisNexis® Guide to FATCA Compliance (Chapter 1, Background and Current Status of FATCA) by William Byrnes, Denis Kleinfeld, Alberto Gil Soriano :: SSRN quotes the then IRS Chief Counsel:


> William J. Wilkins, Chief Counsel for the IRS, testified before a Subcommittee of the House Committee on Ways and Means on November 5, 2009 regarding the purposes of FATCA. He testified that the overarching goal was to require U.S. taxpayers to report global income in order to reduce illegal and intentional tax avoidance. Once money is transferred outside the U.S., the difficulties escalate for the IRS to validate that taxable income is correctly reported. With reference to offshore income reporting, Chief Counsel Wilkins outlined several areas of concern for the IRS. One particular area of concern was the ability of U.S. taxpayers to intentionally avoid reporting global income on their indirect investments made through foreign entities.
> The specific challenge for the IRS was that international financial institutions (intermediaries) lack the formal obligation to report on non-U.S. source income of a U.S. customer. Chief Counsel Wilkins explained the current reporting obligations reveal inadequacies in two respects. He stated,
> 
> 
> 
> First . . . there is generally no obligation to report the non-U.S. source income of a U.S. customer that’s not paid within the United States, or to report the gross disposition proceeds of a U.S. customer who does not communicate with the institution from within the United States.
> Second, a foreign corporation or other foreign entity is normally not subject to Form 1099 and back-up reporting and withholding rules that apply to U.S. persons, even if that foreign entity is owned by a U.S. taxpayer who does have the obligation to pay tax on the entity’s income.
Click to expand...

For what it's worth.



> Even if there was a bit of tax to pay every year, this would not particularly bother me.


It would annoy the hell out of me. Not one penny, is my position.


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## maz57

FATCA was tacked on to the back end of the HIRE Act of 2010 to act as the "pay for" the "tax expenditures" contained within the act. At the time, the FATCA concept was the as yet unborn brain-child of a few Congressional zealots and they seized upon this golden opportunity to slip it unnoticed into a bill which most Congressmen were in favor of. The FATCA proponents were thinking about US residents who were stashing money in offshore accounts. The resulting unintended collateral damage to the US expat community is well documented by now but Congress is totally uninterested in addressing those problems.

US law required (and still does, as far as I know) any new spending bill to include a means of paying for that new spending. Most who voted in favor of the new bill didn't even know that FATCA was included and didn't have a clue what was in it. Its merits were never debated openly and that 8 billion over 10 years figure was conjured out of thin air because no official study of its revenue raising efficacy was ever done.

FATCA itself contains nothing which commits the IRS to reciprocal reporting. It is a unilateral attempt to force foreign entities to discover and report US person accounts to the IRS via the threat of 30% sanctions. In fact, it contains nothing about "negotiating" IGAs; they were invented later by the Treasury Department as it tried to figure out how to actually implement the unwieldy bombshell dropped in its lap. If it weren't for the fact that most international transactions clear in US dollars through the SWIFT system, FATCA would have no leverage at all on foreign financial institutions. This may turn out to be FATCA's most unintended consequence of all. Other countries are already creating new international payments settling systems which sidestep the US and the US dollar completely. There is a considerable appetite for an alternative to US bullying, manipulation, and undue influence; FATCA is merely the latest insult.

It will take many years for this to all play out and it may well turn out to ultimately work to the disadvantage of the US, all for a paltry $800,000 million per year (if you can even believe that number).

BBC is absolutely right about one thing. There is virtually no prospect of repealing FATCA so whatever happens will happen, for better or worse.


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## iota2014

maz57 said:


> FATCA itself contains nothing which commits the IRS to reciprocal reporting. It is a unilateral attempt to force foreign entities to discover and report US person accounts to the IRS via the threat of 30% sanctions. In fact, it contains nothing about "negotiating" IGAs; they were invented later by the Treasury Department as it tried to figure out how to actually implement the unwieldy bombshell dropped in its lap.


The IGA emerged as a result of negotiation between the US (on the one hand) and France, Germany, Italy, Spain, and the UK (on the other hand). The US might like to claim it was invented by the Treasury Dept but it wasn't. The five countries proposed it, to rescue the banks, and they came out on top. 



> BBC is absolutely right about one thing. There is virtually no prospect of repealing FATCA so whatever happens will happen, for better or worse.


I personally think the US might decide to switch to CRS. Time will tell.


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## celticweb

The only thing Fatca has accomplished for me is making me learn of the requirements and making me contemplate renouncing and costing me money to find out I actually owe no tax and invading my privacy and causing me problems in my daily life. 

My non-US partner is extremely unhappy that we cannot hold joint accounts without his personal information being reported to the FinCEN unit at Treasury. My only option to lead a normal life is to give up my American citizenship, something I had no desire to do until now, but I feel I am being coerced to do so. I see US persons living overseas now as being tremendously disadvantaged by US tax and compliance policies and basically what you save in one country, another country takes away. 

Also what about data security? How secure are the systems which store and transmit all of this data on American Citizens? I shudder to think what could happen if the system was hacked.

Regards paying a bit of tax, i mean a bit (small amount). My sister is there with her family so I don't see that as that much of a hardship. of course rather not file or pay accountants or tax to what i see as being a foreign government.


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## Nononymous

It's a rainy Sunday so I will weigh in. 

One can debate this until one is blue in the face, but FATCA and CBT are not likely to change in anyone's lifetime. However, I personally don't care too much because it's so easy to ignore.

If one is a US citizen only, living abroad as an expat for a period of time, with connections back to the US and possibly intentions to return, then it probably makes both financial and emotional sense to remain tax compliant.

If one were only born in the US and left as a child (such as myself) or emigrated many decades ago and acquired a second citizenship through naturalization, with no intent to return (such as many of my parents' friends) then what possible incentive does one have to bother with compliance? There is no carrot (unless you qualify for some sort of free money) and really not much of a stick.

FATCA is easily avoided in Canada, banks aren't doing much if anything to vet existing customers, nor do they verify the truthfulness of answers to citizenship questions. In Europe it's more complicated; if a US citizen finds themselves being denied banking services, they might have to bite the bullet and pay $2350 to renounce, though that does not mean they need to bother with the tax compliance or exit procedures.

I suppose my question, for fans of CBT and compliance (BBC et. al.) is simply as follows: I have no intention of moving to the US, where I lived for a few years as a child and later as a graduate student (at no cost to the US public purse). If present trends continue it's quite likely that I would one day owe the US a fair sum of money for capital gains on the sale of a primary residence (say $50k for the sake of argument, but it could well be higher). Other than the dubious satisfaction of knowing that I am not violating US law, what possibly interest do I have in sending that cheque to the IRS? 

To repeat: please explain to me why I should send my money to the US. I can't for the life of me think of a good reason.

Yes, one can renounce. I personally find the barrier offensively high - both the fee and the compliance paperwork, should one choose to exit the tax system - so prefer to simply remain off the radar. The risk of detection is low, and the risk of collection is (currently) nil.


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## maz57

Nononymous said:


> To repeat: please explain to me why I should send my money to the US. I can't for the life of me think of a good reason.


To that I would add: why should I waste time and money every April filling out a bunch of ridiculous forms to send off to a foreign government with which I have no relationship and which will not benefit me in any way, shape, or form?


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## iota2014

> I suppose my question, for fans of CBT and compliance (BBC et. al.) is simply as follows: I have no intention of moving to the US, where I lived for a few years as a child and later as a graduate student (at no cost to the US public purse). If present trends continue it's quite likely that I would one day owe the US a fair sum of money for capital gains on the sale of a primary residence (say $50k for the sake of argument, but it could well be higher). Other than the dubious satisfaction of knowing that I am not violating US law, what possibly interest do I have in sending that cheque to the IRS?


Is there an et al? BBCWatcher is the only CBT fan I've seen, in any forum.


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## celticweb

i was coerced into spending this ridiculous money to get compliant and now I am going to be coerced into renouncing US citizenship to rid myself of the problem. 

I don't see how anyone can be a fan of Citizen tax unless they were just here not working and under the filing threshold and even then because it's not just the tax, it's the loss of so much freedom.

I made a pro and con list to keeping citizenship and by con list has 31 items on it and the pro list only 3. and of those 3, one really doesn't apply to me but it's generally a pro for most people starting out in life.

Even if they wanted to impose a citizenship tax, make it a flat rate of one pound a year. they would make more money that way.


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## maz57

celticweb said:


> Even if they wanted to impose a citizenship tax, make it a flat rate of one pound a year. they would make more money that way.


They already do, in the form of the $110 fee to renew a US passport which works out to $11 per year. That's a reasonable deal if you actually want or need a US passport. The nice thing is that paying that particular fee is optional. Other than that, the US government can go to hell.


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## BBCWatcher

iota2014 said:


> BBCWatcher is the only CBT fan I've seen, in any forum.


I'm not a "fan" of taxes in general, but I understand why they must exist. The _logic_ behind CBT is, for better or worse, unassailable at least based on the arguments tried in this forum. The bottom line is that opponents of CBT _as a principle_ want something (rights and privileges of a citizenship) for nothing. "No deal." Either take the whole deal, or don't -- that's up to you. But I'm not in favor of free riding, especially among the well-to-do.

Singapore's government figured this out last year, that their citizens and permanent residents typically live long lives. Even if they live outside Singapore, they can run back to Singapore if, for example, they require expensive cancer treatment from Singapore's public hospitals. Some of them do exactly that. Consequently, at the same time it expanded publicly provided medical coverage, Singapore adopted a CBT last year in recognition of this basic lifecycle principle. The Singapore CBT is a different construction, and you won't hear any rich people complaining about it since (unlike the U.S. CBT) it's an age-based tax rather than an income- or wealth-based one. In fact, it's rather politically inconvenient that Singapore adopted a CBT, and nobody seems to want to admit it with the possible exception of less-well-to-do Singaporean citizens and PRs living overseas. But there it is.

We can certainly quibble about the details, but I really don't see any problem with a democratically elected government deciding on its particular package of rights, privileges, obligations, and responsibilities, including a CBT. If you don't like that deal, find another one -- there are about 200 of them at least hypothetically available.


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## iota2014

Link seen elsewhere:

Map of the Week: U.S. Emigrants by Country – American Geographical Society

according to which, there are 738,203 US emigrants. No sources cited.


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## Bevdeforges

If you define "emigrant" as someone who has left with no particular intention of returning, I can almost believe the 738K figure. Quite a difference from the 6 or 7 million that is bandied about by the consulate "estimate" though.
Cheers,
Bev


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## maz57

How would they even know they have no intention of returning unless they interview them? (Well I guess if they go somewhere, live a long time, and then die its a safe be they're not returning, at least not as taxpayers!) 

Yes, the numbers are nebulous.


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## iota2014

It's hard to know what they mean. I don't think I've ever seen a graphic convey so little information. 

Very strange, for geographers.


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## bob77

CBT is not a bad idea and should be adopted by individual states as well. For example, why should someone born and educated in California but living in no-tax Alaska not have to pay California tax for the rest of her life for the wonderful education she received there? Duh!

As to hacking concerns, one would expect the IRS and Treasury have excellent anti-hack systems. If you have moved to Lithuania and the Lithuania-US link is breached and your info stolen, I'm sure the IRS will come to Lithuania to assist you.


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## celticweb

I am not convinced Fbar or Fatca system are secure. Nothing can ever be 100% secure in this day and age. Isaac Broke society reported insecure reporting systems with Fatca. there is a post about it quite recent. I don't trust for those systems to be completely secure.
We all know the biggest US military computer was hacked. In this day and age anything can be hacked.


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## JustLurking

celticweb said:


> I am not convinced Fbar or Fatca system are secure. Nothing can ever be 100% secure in this day and age. ...


Quite. I read bob77's post upthread as an invocation of Poe's law.

I'm sure he will correct me if I'm wrong to interpret it that way


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## celticweb

yes quite, i know the post was based on sarcasm.
the only way to be secure in this day and age is not to have to transmit unnecessary information. Since our accounts are not technically off shore to us, we shouldn't have to be transmitting them. 

this has always been one of the biggest concerns for me. of course the likelihood of these systems being hacked is probably slim but they can be hacked. no one can say with 100% certainty that they can't.


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