Numerous media reports in recent weeks have cited the potential importance that the expat vote could play in tomorrow’s US presidential election, which many experts say is too close and unpredictable to call. Yet although Democratic and Republican party activists in countries around the world have been tirelessly campaigning on behalf of their candidates, anyone trying to find definitive policy statements from the candidates themselves on some of the key issues of concern to American expats is likely to struggle, International Investment has found.
It should be noted that at this point, with the actual election just a day away, many if not most expatriates will already have cast their votes.
While it’s possible that campaign officials have been too busy dealing with the day-to-day events of the campaign in recent months to address the expatriates’ concerns, some observers point out that the complexity of such issues as the Foreign Account Tax Compliance Act – which was signed into law by President Obama in 2010, and is defended by US Treasury Department officials as an important weapon in cracking down on tax evasion by Americans – almost certainly has made the candidates wary of speaking out.
A statement that might strongly appeal to expatriate voters, goes this line of thought, could stand a good chance of being misinterpreted by Homeland voters (and seized on by the candidate’s opponent) as, for example, evidence that the candidate was proposing to “go easy” on tax crooks, in the case of expressing a willingness to support changes to FATCA.
An early statement on FATCA issued by Hillary Clinton’s office during the primary elections, for example, quotes her as saying, “I understand that this is an extremely important issue – and [that it] is creating disruptions in the basic, day-to-day lives of everyday Americans living abroad…[but] this is a complex area, and we need to make sure we don’t create additional unnecessary burdens.
“I am committed to working with Americans living abroad and members of Congress to find the right solutions.”
Clinton’s statement, which was part of a seven-question questionnaire of the three Democratic Primary candidates on the website of the Democrats Abroad, stopped short of endorsing what some are calling the “Same Country Safe Harbour” exception (or simply the “Same Country Exception”), which the Democrats Abroad as well as the American Citizens Abroad have both endorsed as a means of making FATCA less onerous for expats, while retaining the law’s ability to go after genuine tax evaders.
As reported, under the ACA’s Same Country Exemption, banks in any country in which US expatriates are genuinely resident, and which hold the ordinary bank accounts of these US individuals, should be able to treat these accounts as though the holders were not Americans holding offshore accounts (thus meaning that they would not need to be reported to the US tax authorities, as would be required under FATCA).
Also under this exemption to FATCA, such individuals would not be required to list their local bank accounts when filing their IRS Form 8938, which is a “Statement of Specified Foreign Financial Assets”.
A London-based Democrats Abroad spokesman says that in March, ahead of the Democratic primary, Clinton sent a message to Democrats Abroad in which she pledged her “support” for “an effective Same Country Safe Harbour proposal”, that would give relief to “law-abiding” expats “without weakening our rules against tax cheats”.
“I’ll work hard to fix this critical problem for you,” Clinton added.
‘Repeal FATCA, FBAR’
Although neither Donald Trump nor the Republican party may have issued a specific position statement for expatriates, a spokesman for the Republicans Overseas noted that the party’s official platform, adopted by the Republican National Convention in Cleveland in July, “includes an explicit call for the repeal of FATCA and FBAR [Foreign Bank Account Reports], and for the adoption of residence-based taxation and the abolition of citizenship-based taxation”. These positions were “introduced and passed with the active involvement of Republicans Overseas,” he added.
As reported, elements in the Republican party have opposed FATCA almost since its inception, and in September, a Republican member of the US House of Representatives, Mark Meadows of North Carolina, introduced a bill aimed at repealing it.
The Republicans have also been the ones, says Marc Zell, co-chairman of the Republicans Overseas Israel, who, in addition to initiating legal challenges to FATCA in the US, have also mounted a Supreme Court challenge to the law in Israel, “[where we] are still awaiting a definitive opinion, after having secured a three-month stay in the enforcement of the FATCA data provisions, as a result of a lawsuit and a grass-roots campaign against the Iraeli Tax Authorities, and in France, where our efforts have brought about the appointment of a legislative commission to review the entire issue”.
Zell, a lawyer with the Jerusalem law firm of Zell, Aron & Co, also challenges the contention that the Republicans had not has not issued “specific statements for expatriates”, when the party’s platform “includes planks aimed specifically at expatriates”.
“Moreover Republicans Overseas, which is closely tied to the party, has been leading the fight against FATCA, FBAR and CBT,” he adds, abroad as well as in the US.
The proposal to change the US tax system to a residence-based, rather than citizenship-based, system enjoys widespread support informally among US expatriates of both parties, and is also backed by the ACA, which, in its support of such a change, notes that it’s not only the system used by every other country in the world except Eritrea, but is also the system used by “every one of the 50 [US] states”.
‘2.6 million eligible voters’
Both parties’ overseas operations stress, in their campaign literature aimed at expats, that their candidate would be the best choice for Americans overseas, who are believed to number as many as 8.7 million, although no one knows for sure how many there are. Some 2.6 million American expats are said to be eligible to vote, but only around 5% of these voted in 2012, compared with a 57% turnout back home that year.
What both parties are well aware of is that the balance of the election of George W Bush in 2000 is said to have been tipped by overseas votes – making it important for them to get out the American vote tomorrow, as well as to ensure that this vote actually ticks the box desired by the party doing the get-out-the-vote campaigning.
That said, if the candidates are concerned about the expat vote, the lack of emphasis on expat issues on the part of the candidates suggests that they may be counting on party allegiance, rather than actively addressing issues of direct concern to expats like FATCA, to bring home the expat vote.
‘No response’ from candidates
In August, as reported, the non-profit, Washington, DC-based American Citizens Abroad advocacy group wrote to the two main party candidates as well as to the two leading independent candidates, asking for their positions on eight key issues “affecting Americans living and working overseas”, as it explained in a press statement.
However, as ACA executive director Marylouise Serrato told International Investment last week, unlike in previous election years, the organisation didn’t receive responses from any of the candidates to its letters.
“It is not clear why there was no response,” she added. “You would need to ask the individuals we sent the requests to. We did try to follow up with phone calls, but nothing came of that either.
“The first hurdle was to identify the person within each of the candidates’ retinues who was responsible for handling these kinds of requests.”
Summing up, Serrato said, “We haven’t seen any official statement by either party or candidate that says ‘this is concretely what we’re going to do for the American community abroad if we get elected’.”
In addition to FATCA, the Same Country Exemption to FATCA, FBARs and the matter of citizenship-based taxation, other key issues of concern to American expats include:
* HR 3078, “Presidential Commission on Americans Overseas Act”, introduced by New York Democratic Representative Carolyn Maloney, which is a call for a comprehensive study that would investigate how the US federal government and its regulations serve the country’s expatriates.
* A newly-introduced law enables the US government to revoke the passports of anyone who is found to owe a certain amount in back taxes; some expat lobby groups argue that this is unnecessarily harsh for expatriates, and that the State Department rather than the IRS should have the final say such a situation, where expat Americans are involved.
* A piece of 1983 legislation known as the Windfall Elimination Program (WEP), which was designed to reduce Social Security payments for those Americans who receive State pensions, is also said to be catching the foreign pensions earned by expatriates, and thus is reducing what they say should be full benefits from the US Social Security system they have paid into fully. Overseas organisations have sought the candidates’ position on the question of whether this problem should be addressed, and changed in such a way as to no longer regard expats’ non-US pensions as covered by the WEP.