Many of you readers may be unaware of a few provisions that were slipped into the HIRE Act signed by President Obama back in 2010. Two key elements seem more aimed at Americans living outside the US than at jobs creation but are having sweeping effect on all foreign investment options for Americans, whether living in the US or abroad.
Under the guise of improving employment opportunities, the FBAR (the Foreign Bank Account Reporting) Act and the FATCA (the Foreign Account Tax Compliance Act) have put tremendous international pressure on many foreign financial institutions, forcing them to become tax compliance offices of the US and IRS. Don't get me wrong, I am not a tax evader, nor a millionaire and most American citizens living abroad or simply with investments abroad are not tax evaders. The net result of these two new tools being used by the US government on every US citizen who owns any asset abroad should clearly be illegal and is a direct attack on our personal freedom as Americans. FBAR required the reporting of foreign bank account holdings, just as we all are required to report any income earned.
The problem with FBAR is that rather than relying on our citizens to report their foreign accounts, we are FORCING foreign banks to act as our reporting agents. The net result is that many foreign banks are now refusing to open accounts for American citizens. With the fiscal mismanagement we have both with managing our debt and with our monetary system, I can't put money in our banks without losing value for every dollar deposited. Currently the inflation rate is higher than bank interest. So to avoid any capital flight, our government has made it very difficult for us to deposit our money in any foreign banks though many are paying attractive interest.
The next phase of our loss of freedom is FATCA. Under FATCA, if I as an American withhold reporting any significant foreign assets I may have (even if I did not realize I had to report them) I am subject to annual penalties of $10,000 per year plus interest or $30,000 per year penalty if I willfully did not report them. So the IRS has a tool to force nearly every foreign financial institution to not want my US based investment in their financial institution, again simply because of the unbelievable demands on reporting put on these institutions.
In fact the law is written that if any foreign financial institution does not reveal the holdings of EVERY American citizen with holdings in that institution, the US will withhold 30% of EVERY TRANSACTION going to or from that institution. So the US Government is doing their best to keep me from being able to exercise my constitutional freedom to invest my money (that I have already paid income tax on) anywhere but the US. I urge every one of you to demand the repeal of FATCA, another huge loss of freedom for Americans living both in the US and abroad. Even if you don't live abroad, you are still liable for this $10,000 per year penalty simply for not reporting an investment you might have in a foreign country, even if you unwittingly did not know you had to report it.
I am not a tax evader, a money launderer or a bad person. I am merely alarmed as our government continues to attack our freedom, restrict our capital and mismanage our monetary supply. As the government continues to print dollars like toilet paper, they are eroding the value of my life savings. Sure they can pay off our huge international debt with lower valued dollars but in the meantime I sit and watch as the value of our currency gets weaker and weaker and the value of my life savings continues to erode. When I was a kid, a Canadian dollar was worth 70 cents US. Now they are about even....