More than 1.5 million U.S. citizens living in East Asia are now facing a “gut-wrenching decision” of renouncing their U.S. citizenship due to the Foreign Account Tax Compliance Act (FATCA), America’s highly controversial global tax law, a new survey has found.
The poll, carried out by deVere Group, one of the world’s largest independent organizations, and its Hong Kong division, Acuma, also discovered that more than half of Americans living in East Asia now have problems accessing normal banking services due to FATCA. The poll also found that 38 percent also have experienced people and/or organizations not wanting to conduct business with and/or employ them thanks to the tax law.
More than 2,500 Americans resident in the East Asian powerhouse cities of Shanghai, Beijing, Hong Kong and Tokyo took part in the research.
FATCA “has been a hammer blow to the 8 million Americans overseas since it was implemented in 2014,” said deVere Group’s Head of East Asia, Doug Tucker. “The results of this survey underscore FATCA’s devastating effects on ordinary, hardworking U.S. citizens who happen to live and/or work abroad,” he said.
FATCA is designed to ferret out individuals who have unreported offshore bank accounts and other assets. The controversial law requires financial institutions to share information about Americans’ accounts worth more than $50,000.
“FATCA was pushed through Congress by being flagged up as a way to combat serious tax evasion. Yet not one word of this flawed law actually tackles tax evasion activity,” he said.
“However, what it does do, is make life much, much harder for Americans outside the U.S. and American businesses operating internationally,” he said.
Under FATCA, all non-U.S. financial institutions, including banks, credit unions, insurance companies, investment and pension funds, are required to report the financial information of American clients who have accounts holding more than $50,000 directly to the IRS.
A total of “54 percent of those surveyed told us that they have experienced trouble opening and/or holding a bank account outside the U.S. since FATCA’s implementation. Non-U.S. financial institutions now routinely refuse to handle American clients – even if they have been clients for years – as it is too much trouble and too costly to comply with FATCA’s onerous rules, Tucker said. “Not having access to basic banking services, such as a checking account or mortgage, in your country of residence, clearly, makes life very difficult,” he said.
“Similarly, 38 percent have encountered difficulties in their professional life – for example, people not wanting to do business with them or considering them for employment – because they are an American,” he said.
“For example, an American might not be considered for a higher-level position which has signatory powers, because then their employers/organization would also then have the FATCA burden thrust upon them,” he said.
“Bearing in mind the enormous unintended adverse consequences of FATCA, our survey in East Asia reveals that nearly a fifth (19 percent) are saying that they are now reluctantly considering renouncing their U.S. citizenship,” he said. “Extrapolated to the total number of expats, that amounts to more than 1.5 million U.S. citizens facing this gut-wrenching decision. It is hardly surprising then that two-thirds of those polled want the Trump administration to repeal FATCA as a matter of urgency.”
Official U.S. government figures echo deVere’s findings, with a record – and increasing –number of Americans abroad giving up their passports since FATCA was enacted.
“FATCA has branded Americans overseas as financial lepers and is making life impossible. FATCA is, as Senator Rand Paul of Kentucky says, ‘a textbook example of a bad law that doesn’t achieve its stated purpose but does manage to unleash a host of unanticipated destructive consequences,'” he said.
“It’s time to repeal this damaging and highly controversial piece of legislation that has had the unintended consequence of disrupting the normal lives of law-abiding Americans based outside the States.”
To be sure, the number of individuals who renounced their U.S. citizenship for the third quarter of 2016 was the second-highest in history at 1,380, U.S. Treasury Department reported.
And Forbes.com recently reported that the Foreign Account Tax Compliance Act, which was enacted in 2010, and took years to implement, is “having an impact, perhaps bigger than these expat numbers reveal.”
(Newsmax wires services contributed to this report).