Now its Transnational: Is the Fight on the FATCA Front about to Reach a Climax?




With July 1st as go live for FATCA — the contested US Foreign Account Tax Compliance Act — many of the affected question whether Washington has the right to force  “U.S. persons” to report and pay taxes on income and assets abroad.

Many US citizens abroad would welcome some taming of  American FATCA Power

Many US citizens abroad would welcome some taming of American FATCA Power (Credit: Screengrab)

According to Victoria Férauge, a Paris-based writer who edits the Association of American Residents Overseas, (AARO’s) newsletter and her own widely read The Franco-American Flophouse blog, unease about the steamroller approach adopted is spreading.

Transnational Politics: Fighting on the FATCA Front

“Political transnationalism is often characterized as from above (outreach by government) or from below (migrant-initiated).””Discussions of political transnationalism usually draw on research on South-North migration…with the result that many of the broader explanations for transnational engagement have an underlying assumption of South-North migration.  These assumptions do not hold in the case of Americans – North-North migrants…”

Dr. Amanda Klekowski von Koppenfels
Migrant or Expatriates? Americans in Europe

Transnational political activity on the part of developed country migrants in North America, Europe and Asia has not been the subject of much interest by academics working on international migration. It’s not even on the radar in the local or international media.  And yet, in the case of US migrants, it’s been going on pretty continuously since the 1950’s.  For the French abroad (over 100,000 in the US by the way) they have had direct representation in the national homeland parliament since 2004.  Both groups have the right to vote in their home countries and, if they are duals, the right to vote in both countries.

Both Americans abroad and the French abroad (not to mention any other migrant group) have broadly very similar political options before them.  They can work to influence politics both back in the home country and in the host country.  Or, in the case of duals, they can be very effective political actors in both countries of citizenship.  They can also appeal to supra-national organizations like the EU or internationals organizations like the OECD or the UN.

The Foreign Account Tax Compliance Act (FATCA) has generated a lot of controversy and a fair number of unintended consequences on a global scale.  Out of the outrage over the “collateral damage” has come political activity on the part of, not just US citizens abroad, but also migrant groups within the US because both are deemed to be US Persons by the American government. (Yes, a “US Person” can be, and quite often is, someone who is NOT a US citizen).

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So just as Americans around the world are experiencing banking discrimination, so too are migrants, legal residents, in the US who are seeing their bank accounts being closed in their home countries just because they live in the US or have some connection to it.  This is a particularly pernicious problem for STEM migrants – those much sought after “highly qualified migrants in the US – who had accounts in their home countries where they lived and worked and paid taxes long before they ever moved to the US

Let’s take a look at some of the political activity on the part of both US Persons inside and outside the US.  It’s an interesting mix of initiatives, court cases and appeals to elected representatives.

Alliance for the Defence of Canadian Sovereignty (ADCS): This is a coalition of US Persons who live in Canada:  American citizens (many duals) and Green Card holders; “Accidental Americans” who just became aware that they are, in addition to being Canadian, also US citizens; and individuals who believed that they had lost their US citzenship when they became Canadians back in the 1960’s/1970’s and who are now facing questions about their citizenship status.  Because the US and Canada share a very long, relatively porous border, Canada has one of the largest “US Person” populations in the world (estimated at well over 2 million).

ADCS is fighting the “extraterritorial application of U.S. law in Canada.” Whatever their connection to the United States, they are Canadians living in Canada, they say, and as such should not have to live as second-class citizens with fewer privacy rights than their compatriots. FATCA, they argue, “violates the Canadian Constitution in general, the Canadian Charter of Rights in particular, numerous other laws of Canada, the principles of Canadian democracy and the fundamental rights of all Canadians.”  They are fighting back by taking the Government of Canada to court.

What is fascinating here is that political support for their position is coming from the Green Party of Canada (definitely Left-wing/progressive) which is hardly a bastion of support for international tax havens or tax evasion/avoidance.Republican Overseas:  The two major political parties in the US have branches which are committed to organizing Americans outside the US:  Democrats Abroad and Republicans Overseas.  Both are working on FATCA but from different angles.  DA is arguing for reform while RO is working for repeal by the US Congress and on a challenge to FATCA in US court.

The last is very interesting because like the Canadian challenge this is a challenge based on citizens’ rights but, in this case, it’s the rights of Americans under the U.S. Constitution (wherever they live) that they are defending.

The lawyer, Mr. James Bopp, Jr (a very well-known US “superlawyer”) they retained has said, “It is our preliminary opinion that the potentially meritorious claims are a violation of the treaty power, an 8th Amendment Excessive Fines Claim, and a 4th Amendment Search and Seizure Claim. We believe that these three claims form the basis for a successful suit that would stop the damage that FATCA and FBAR have inflicted on U.S. citizens.”

Stay tuned because this one promises to be interesting.  While Americans abroad do not have direct representation in Congress like the French abroad, this does not mean that they are completely without influence in US elections.  Dr. von Koppenfels notes that there have been at least 5 recent homeland elections that were “tipped” because of overseas ballots.  THE reason in all 5 cases that a Democrat or Republican won was because of the overseas vote which made Americans abroad the “deciders”.

Since 2014 is an election year (called “mid-term elections”) with many US Congressmen and women facing re-election battles, the big question (or fear) is how Americans abroad will vote.  Will the RO efforts have an impact and will Americans abroad favor the Repubs over the Dems?  Hard to say but there certainly is an opportunity there and given the widespread anger against FATCA it seems likely that many Americans abroad will favor the political party that is perceived to be working hardest in their interests.

Congress/National & EU Parliaments:  There are representatives in national and supra-national parliaments who are working to defend their constituents who are living the negative consequences of FATCA.  Lots of letters, lots of email from the people they represent and in turn these reps are doing their job by bringing the situation to the attention of other lawmakers, government agencies, and the media.

Jaime Herrera Beutler is a US Congresswoman (Republican) who represents the 3rd District in Southwest Washington State (US West Coast).  She has been raising questions in hearings based on mail she has received from her consituents – US citizens living abroad facing banking discrimination.  She clearly takes the mail very seriously and you can see her here raising questions to the new IRS commissioner.

Sophie in’t Veld, a MEP (Member of the EU parliament) from The Netherlands has been very active in defense of dual citizens and the privacy rights of Europeans.  Her party is the social liberal partyDemocrats 66 (part of the Alliance of Liberals and Democrats for Europe.)  Go here for her remarks at the EU public FATCA hearing last year.

Frédéric Lefebvre (UMP) represents the French abroad in North America (Canada & the US). Following contact he had with a number of his constituents in the US – French citizens who had their bank accounts in France closed as a result of FATCA –  he started speaking out on their behalf.  The Huffington Post recently published an article he wrote called FATCA:  a Reminder of the Social Role of French Banks (French version here).  He also met recently with two dual French/US citizens and a report of that meeting was just published here.

Quite a lot going on.  What they all share, of course, is that they are working though the political/legal systems in each country on what is clearly a transnational/cross-border/international issue.  Different angles of attack (sovereignty, guaranteed constitutional/Charter/EU liberties, and migrants’ rights) certainly, but what I notice immediately is that it is impossible to take all of this activity and place it in a box that says Right-wing versus Left-wing or Conservative versus Progressive.

An interesting example of international political action “from below” – it was not governments or political parties who led the initial fight against FATCA – it all started with migrants/expatriates taking action and organizing themselves, and then raising their concerns to people in the political realm.

How will it end?  I have no idea but I contend that it is one of the best shows on earth right now and I am astounded that it passing unperceived.

Perhaps all politics isn’t local after all.
Report by Victoria Férauge

 

Acknowledgement:

Reprinted by kind permission of Victoria Férauge, who owns the copyright, and the The Franco-American Flophouse .

victoriaferauge FATCA: France US to Ratify Agreement

Author: Victoria Férauge
Born in Seattle, USA. Victoria Férauge has lived on 3 continents (North America, Asia and Europe) and describes herself as “country agnostic”. Mother of two she believes in “assignments, not jobs … networks, not companies” and is “passionate about technology, culture, language.” She blogs from Paris about life and fitting in as an American-born mother married into a French family and working professionally with French colleagues.

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