GOP Woos Americans Abroad, Democrats Tell Them to Get Lost

Jim Jatras

Politics, Americas

This tax law is hurting American citizens overseas.

American citizens who live outside the United States are one of the least visible constituencies in U.S. politics. This is despite the fact that, at up to nine million people, they are more numerous than the populations of all but about a dozen of our fifty states.

The Obama years have been tough for American expatriates, or “expats.” The prime culprit is the so-called Foreign Account Tax Compliance Act (FATCA). Supposedly aimed at “fat cat” tax cheats with money stashed abroad, FATCA includes not a single provision targeting actual tax evasion. Instead, FATCA creates a wholesale NSA-style information dragnet requiring under threat of sanctions, all non-U.S. financial institutions (banks, credit unions, insurance companies, investment and pension funds, etc.) in every country in the world to report to the IRS data on all specified accounts of U.S. persons (but not corporations). No proof or even suspicion of wrongdoing is required.

Hoping to avoid sanctions threats and crushing compliance costs, institutions around the world have been dumping American clients, making it increasingly difficult for them just to open a checking account and pay their everyday bills. Businesses once eager for our expats’ expertise now shun them because FATCA imposes U.S. regulatory oversight of companies in which Americans exercise signature authority.