The US government seems to be applying a pincer movement—or a military maneuver where the flanks of the opponent are attacked simultaneously in a pinching motion after the opponent has advanced towards the center of an army which is responding by moving its outside forces to the enemy's flanks, in order to surround it (Wikipedia.org)—to its own citizens, by imposing repressive tax laws that restricts capital movements outside the US.
Now even wealth management firms are advocating wealthy Americans to FLEE the US.
From Bloomberg,
Go away, American millionaires.
That’s what some of the world’s largest wealth-management firms are saying ahead of Washington’s implementation of the Foreign Account Tax Compliance Act, known as Fatca, which seeks to prevent tax evasion by Americans with offshore accounts. HSBC Holdings Plc (HSBA), Deutsche Bank AG, Bank of Singapore Ltd. and DBS Group Holdings Ltd. (DBS) all say they have turned away business.
“I don’t open U.S. accounts, period,” said Su Shan Tan, head of private banking at Singapore-based DBS, Southeast Asia’s largest lender, who described regulatory attitudes toward U.S. clients as “Draconian.”
The 2010 law, to be phased in starting Jan. 1, 2013, requires financial institutions based outside the U.S. to obtain and report information about income and interest payments accrued to the accounts of American clients. It means additional compliance costs for banks and fewer investment options and advisers for all U.S. citizens living abroad, which could affect their ability to generate returns.
“In the long run, if Americans have less and less opportunities to invest overseas, it would be a disadvantage,” Marc Faber, the fund manager and publisher of the Gloom, Boom and Doom report, said last month in Singapore.
The almost 400 pages of proposed rules issued by the U.S. Internal Revenue Service in February create “unnecessary burdens and costs,” the Institute of International Bankers and the European Banking Federation said in an April 30 letter to the IRS, one of more than 200 submitted to the agency. The IRS plans to hold a hearing May 15 and could amend how and when some aspects of the rules are implemented. It can’t rescind the law.
Obviously the Obama administration’s ploy has been to coercively capture resources of Americans through more policies of financial repression channeled through inflationism (negative real rates and QE), taxes, bank regulations, anti money laundering laws and capital controls
More from the same article…
“Bank accounts, investment accounts, mortgages and insurance policies are being refused to American clients, and those with accounts are seeing them closed or have been threatened with closure,” Marylouise Serrato, executive director of American Citizens Abroad, a Geneva-based organization, wrote in an e-mail.
U.S. citizens who live in countries that aren’t served by U.S. banks may find themselves unable to bank at all, and implementation of the law in its current form could cause collateral damage to American businesses abroad, she said.
“Americans either will not be allowed to enter into international partnerships or live and work overseas, and will be replaced by foreign nationals who do not have these limitations,” Serrato wrote. “The extensive reporting requirements of Fatca will be destructive to those who wish to do business internationally as well as to those Americans who are legitimately living and working overseas.”…
While that may be easy for Americans in Singapore, those who live elsewhere face obstacles. Before Fatca, U.S. citizens in Bangkok or Manila could find investment opportunities through non-U.S. banks such as HSBC. Now their only option is to fly to cities where U.S. firms operate.
Limited Choices
If Americans choose to bank with a non-U.S. firm such as HSBC, their investment choices are limited. At the HSBC branch in the bank’s Asia regional headquarters in Hong Kong, Americans can hold only savings deposits. They’re prohibited from opening accounts to trade local stocks or buy products available to non- U.S. customers, including 45 equity funds investing in China or other geographies and industries. There’s only one comparable emerging-markets equity option available on HSBC’s U.S.-based investors’ website.
Financial institutions that choose not to accept American customers still must determine whether new or existing clients are so-called U.S. persons in order to comply with Fatca, according to Michael Brevetta, director of U.S. tax consulting at PricewaterhouseCoopers LLP in Singapore.
The definition includes citizens, green-card holders and non-Americans deemed U.S. residents by being present in the country for at least 183 days over a three-year period, which makes them subject to U.S. tax on their worldwide income, according to the IRS.
Compliance Costs
The compliance costs for banks, asset managers and insurance companies “could stretch into the billions of dollars,” Brevetta said. Private-banking firms in Hong Kong and Singapore already have operating costs between 88 percent and 90 percent of their revenue, compared with 70 percent at Swiss banks, PricewaterhouseCoopers estimated in a September report.
Penalties for not complying will be stiff. Non-U.S. firms that don’t make required disclosures will be subject to 30 percent withholding of certain dividends, interest or proceeds from the sale of assets they or their customers receive from U.S. sources, according to Baker & McKenzie’s Weisman, who has conducted workshops and seminars on the proposed rules for current and potential clients in Hong Kong and Singapore.
Wow. The above essentially signifies as the proverbial “writing on the wall” of the growing desperation by the US government over her unwieldy state of finances due to a bloated and unsustainable welfare-warfare economy.
Not only will US citizens be restricted access to foreign financial institutions, such tax laws are subtle manifestation of protectionism as overseas investments from US investors will be severely limited. [As one would note, foreign banks have been in retaliation to the encroaching protectionist US tax laws by denying Americans access]
President Obama’s nationalist-protectionist rhetoric over BPOs is apparently being realized via arbitrary tax laws. Yet protectionism will only compound to the nation's fragile economic conditions.
F. A. Hayek once warned that Americans are headed towards the road to serfdom. His admonitions appear as becoming a reality with the deepening of America’s police state aside from snowballing political and economic fascism, signs of which the US could be in a slippery slope towards dictatorship.
Yet such laws will have adverse consequences. This should incentivize, not only more tax avoidance measures, but also prompt wealthy Americans to consider giving up on their citizenship.
True, US government has made the exit option a burden. There have been reported incidences where the US government has denied applications by Americans wishing to renounce their citizenship (Sovereign Man).
Limiting people's actions increases political destabilization. Again all these seem to square with record gun sales, polls where gold seen as the best investment option, ballooning sales of home safe and even a report where the US government has been preparing for a “civil war”.
Political risks has certainly been mounting in the US as political and economic repression suggest that the US has been increasingly at war with their citizens.
I recall that after college graduation, a relative who is a resident of the US encouraged me to emigrate to the US and apply for American citizenship. Now I realize that this decision of mine to say NO may have seemed worthwhile or the right decision.
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