MOSCOW, September 22 (RIA Novosti) - The impact of the Foreign Accounts Tax Compliance Act (FATCA) on the lives of hard-working, law-abiding middle-class Americans, who settled outside the US, is dramatic and devastating, a new survey found.
According to the survey, “FATCA: Affecting Everyday Americans Every Day”, conducted by Democrats Abroad, overseas Americans are forced to live in an atmosphere of lingering financial uncertainty. Their family relationships are often strained, business and employment opportunities have become severely limited. Several respondents even reported that they feel like “second class [citizens]” or criminals although they did nothing wrong.
It should come as no surprise then that some expatriates consider renouncing their US citizenship. “I faithfully meet my tax obligations every year but this nonsense is forcing me to actually consider expatriation.” Indeed, increasing number of Americans relinquish their passports, Forbes states.
Passed in 2010, FATCA requires Foreign Financial Institutions who hold accounts of Americans living abroad to report their clients’ accounts to the Internal Revenue Service (IRS). Those, who fail to do so, are subject to a 30% withholding tax by the US. These onerous laws apply to all Americans, their spouses and green card holders and are adversely affecting many of them in various ways.
For instance, one in six Americans said that their checking, savings or retirement accounts had been closed following FATCA’s implementation and the study stated 12.7 percent failed to open any type of account. Needless to say, those accounts are essential for maintaining everyday life.
Moreover, Americans living outside the US also reported that they were passed over for a promotion or a job (5.6 percent) that they were otherwise qualified for simply because reporting requirements imposed by FATCA are very hard and costly to meet. Clearly, employers find it easier and less expensive to hire less qualified non-Americans who don’t have to burden them with difficult tax requirements.
Additionally, countless business opportunities have been lost. “I cannot open a business without local partners and no one is foolish enough to go into business with an American given the privacy issues and the unwarranted access the IRS wants to their finances,” one respondent said. “[I was] told they did not want an ‘American person’ and refused to recognize my EU citizenship. Too costly, complicated and dangerous, they said,” another one added.
Furthermore, numerous family relationships have been destroyed because of FATCA. 2 percent of respondents reported that they divorced or separated from their partner following FATCA implementation. “My German ex refused to marry an American because of filing requirements. So we split up,” said one expatriate.
Some examples of FATCA affecting lives of overseas Americans are truly heartbreaking. “The FATCA has caused enormous friction in my marriage. My non-US spouse is refusing to let the US government know about his salary/earnings/savings … and I therefore cannot fill out all the necessary paperwork. Moving to separate bank accounts would leave me very vulnerable as I have no income of my own and according to Belgian law would have no right to access my spouse’s accounts. It is very stressful to be so beholden to my husband as well not in compliance with my own government,” an unemployed stay-at-home mother lamented.
It is important to note that the majority of those, who took part in the survey, insisted that they support efforts to fight tax evasion. But those efforts should target criminals. “The government is putting a lot of time, effort, and resources into pursuing people who are not criminals while the real culprits sit safely and comfortably in the US.”
6,552 Americans living outside the US took part in the anonymous global survey, conducted by Democrats Abroad, the overseas arm of the US Democratic Party, in June and July 2014.