The U.S. Foreign Account Tax Compliance Act, or FATCA, comes into force this summer. The law will require financial institutions outside the United States to identify and report their American customers or face punitive taxes on their U.S. investments.
This has created pressure on banks to pressure national governments to make sure they can do so legally.
In Canada, officials are negotiating an arrangement under which banks would report suspected Americans to the Canadian Revenue Agency, which would in turn pass the data on to the IRS.
In Canada, it seems unavoidable that a decision about FATCA will lead to a serious debate about national sovereignty – which the NDP seems to be positioning itself for.
In the United States, the Republican National Committee’s vote to oppose FATCA has given the issue a sharply partisan form.
(I’m intrigued to see the NDP and the Republican National Committee on the same side of any issue, but there you are.)
One of the better sources for understanding FATCA and other issues around taxation and citizenship is a blog called The Franco-American Flophouse, written by Victoria Ferauge, an American who lives outside Paris. Ferauge’s writing about FATCA (and other things) is wise and careful, and worth your time.
On Friday, she wrote:
It is interesting to see just how far and how deep the meme “American abroad = rich tax evader” has sunk into the American mindset. Americans abroad – the au pairs, English teachers, translators, NGO workers, computer programmers, artists, writers, university professors, managers, musicians, and retirees – are rightfully a bit confused. Are these journalists and commenters really implying that the only Americans abroad are rich tax-evading champagne swillers and yacht owners? Please, homelanders, stop and think for a moment and use your common sense:
Since when do billionaires watch other people’s children, teach English or grade undergraduate papers? … Hate to break the bubble, folks, but Americans abroad are just as diverse as Americans in the homeland. We come in all shapes, sizes, colors, creeds and (yes, Virginia) income levels. And however we came to cast ourselves on distant shores, the reality is that most of us have to work for a living. Just like you.
Get weekly money news
At least in Canada, census data about resident U.S. citizens seems to bear this out. (I’d be interested to see equivalent data for a European country.)
The 2006 census found about 300,000 self-identified U.S. citizens in Canada, many of whom were dual citizens.
This graph shows only a very modest correlation between median family income in a postal area and the percentage of resident U.S. citizens:
It looks a lot like this scatterplot graph of median family income in a postal area and English spoken as a native language (in this case Quebec is excluded):
Looking at maps of U.S. citizens by postal code, the strongest connection – not at all surprisingly – is with border areas. In Ontario, St. Catharines/Niagara Falls, Windsor and Sarnia, as well as Kenora, have concentrations of U.S. citizens. None are areas with median family incomes noticeably above the national average.
(Within large cities in Ontario, at least in Toronto and greater Hamilton, U.S. citizens do track income patterns to an extent, a pattern also seen in Vancouver.)
But Canada’s strongest concentration of U.S. citizens is in western New Brunswick along the border with Maine, where median family incomes are well below the national average.
Comments