Statement of Roger Conklin, Retired International Sales and Marketing Executive: The Negative Consequences of Citizenship-based Personal Taxation on the Competiveness of American Companies and the Resulting Destruction of Jobs for American Workers
This is an open paper given by our friend, Roger Conklin, to the House Ways and Means Committee.
Here are some other recent comments from Roger about FATCA, the trade deficit, and the problems that are caused by double taxation:
FATCA is the straw that breaks the camel’s back. The US government started piling them on with 1962 legislation which taxed just a handful of the very rich abroad – movie stars filming in Mexico. So they came home. But the Tax Reform Act of 1976 brought back hundreds of thousands of middle class Americans abroad who always insured a healthy US trade surplus. The largest-ever US trade surplus was in 1975, but when hundreds of thousands of overseas Americans were hit by a ton of bricks, they abandoned ship and the US trade balance immediately went negative. There has never been even one trade surplus since 1975 and our cumulative trade deficit since 1976 now exceeds $9 trillion!
I had been running a company in Brazil penetrating a new market for American products. When that Act was signed my combined Brazilian plus US tax shot up to 81% more than any non-American with my exact same income and family status. I could not survive. I closed out work in process, shut down the company and came home to start a new career.
A French company moved in, hired most of our employees and 8 years later was importing $1 billion in French products into Brazil to support that market. The US share of that market dropped to near zero. This happened around the world and that is why the 100-year period ending in 1975, during which the US recorded trade surpluses for 95 of those 100 years, overnight was transformed into our current perpetual trade deficit.
With FATCA, on top of being subject simultaneously to two very different and incompatible sovereign tax systems, there will be few Americans left abroad. The draconian FATCA rules obligate foreign banks to provide detailed reports on their accounts of US citizens, in open violation of the privacy laws of the countries where they operate. Rather than comply and risk massive penalties imposed by their governments, they are closing down accounts of American persons. Without an account to deposit their paycheck or out of which to pay their rent, they cannot survive. So it is either pack up and come home or renounce US citizenship. To those with foreign spouses renunciation is their likely choice because obtaining a visa for the spouse to immigrate to the US and start life over from scratch is rarely a viable choice. Being uprooted after 10, 20 or more years and forced to start over in a different country is absolutely inhumane. Yet that is exactly what FATCA does to middle class Americans living abroad.