"Washington's Assault on American Expats"
This is the title of an article on the Opinion page of yesterday's Wall Street Journal(written by William McGurn who writes the "Main Street" column regularly). It details one of the lesser known aspects of the Dodd Frank bill, lesser known to average Americans but very well known now to U.S. citizens working or retiring abroad. Two of my friends doing so told me about as much as six months ago, but other than an odd paragraph here or there, this is the first full article that I have seen published on the punitive and damaging aspect of the law.
It was inserted into the legislation at the behest of Carl Levin and written by his staff. Already the U.S. is the only developed nation in the world that taxes its citizens on income they earn abroad, income that they have already paid local taxes on. These new laws require detailed reporting of assets by all citizens with more than $10,000 of assets in accounts where they live and work. It also has incredibly onerous requirements for reporting by any financial institution that deals with American expats, replete with penalities and significant fines for those who do not comply with these tedious and intrusive rules. In the interest of perhaps finding the Mark Rich types of the expat class, this law punishes all expats. Many foreign financial institutions are now dropping all of their U.S. clients rather than face the cost and risk of compliance.
The opinion piece in the WSJ details all of this as well as making the case for the productivity and culture carrying roles that these U.S. citizens represent. How do we sell our products and develop new global expertise and opportunities if the reward is a punitive tax and regulatory structure. It's in some ways the mirror image of the immmigration rules that make the U.S. send home highly educated foreign students as they leave our finest institutions, taking their talent and skills with them.
It is a really bad piece of legislation that needs to be revised as soon as possible.
The lingering worry when one reads the description of this minor piece of the Dodd Frank bill is that the Health Care Bill and the Dodd Frank bill, in the immensity of their requirements, are replete with rules that turn on the peccadillos, biases, and resentments of the Democrats that fashioned these bills. These "minor" inserts may serve no purpose in advancing the valuable intentions of both bills, but they were allowed to be included in order to satisfy one politician after another.
The legislation on expats is horrific. How much more is in these bills that serves no real purpose relative to the advertised intent of these bills, and when will it all surface beyond those who are directly affected, penalized, or harrassed?
It was inserted into the legislation at the behest of Carl Levin and written by his staff. Already the U.S. is the only developed nation in the world that taxes its citizens on income they earn abroad, income that they have already paid local taxes on. These new laws require detailed reporting of assets by all citizens with more than $10,000 of assets in accounts where they live and work. It also has incredibly onerous requirements for reporting by any financial institution that deals with American expats, replete with penalities and significant fines for those who do not comply with these tedious and intrusive rules. In the interest of perhaps finding the Mark Rich types of the expat class, this law punishes all expats. Many foreign financial institutions are now dropping all of their U.S. clients rather than face the cost and risk of compliance.
The opinion piece in the WSJ details all of this as well as making the case for the productivity and culture carrying roles that these U.S. citizens represent. How do we sell our products and develop new global expertise and opportunities if the reward is a punitive tax and regulatory structure. It's in some ways the mirror image of the immmigration rules that make the U.S. send home highly educated foreign students as they leave our finest institutions, taking their talent and skills with them.
It is a really bad piece of legislation that needs to be revised as soon as possible.
The lingering worry when one reads the description of this minor piece of the Dodd Frank bill is that the Health Care Bill and the Dodd Frank bill, in the immensity of their requirements, are replete with rules that turn on the peccadillos, biases, and resentments of the Democrats that fashioned these bills. These "minor" inserts may serve no purpose in advancing the valuable intentions of both bills, but they were allowed to be included in order to satisfy one politician after another.
The legislation on expats is horrific. How much more is in these bills that serves no real purpose relative to the advertised intent of these bills, and when will it all surface beyond those who are directly affected, penalized, or harrassed?
posted by John Borden at 3:55 PM
1 Comments:
well as a new expat in the US I just came to understand the impacts of Dodd Frank on me and your article is the first (only so far) which I have found on the subject (I could not access the one from the WSJ).
To answer your question in the last sentence of the arcticle, probably never since the category of people it applies to (foreign expat) is small and non voting.
Right now I am in the situation which is described where the bank which holds my corporate savings and my retirements saving preferred to completely forbid any investment from a US person (me in this case) since I am also non eligible for a 401K this means during the 3 years of my expat I won't be able to save for retirement nor be able to take advantage of my company's matching policy for such saving.
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