Connections

Due to be idiotically busy right now, here's something I wrote many years ago. It was just a strange train of thought which occurred to me back when Americans were being beheaded in the Middle East and a lot of people were still screaming "kill the Arabs". I know it's a sophomoric piece of writing, but I did like the underlying sentiment.

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He sits at the table, shoving another forkful of tabouli in his mouth and smiling at his son struggling to learn how to use the fork. His wife is dead, killed by an American bomb, and he considers his son a gift from Allah. He has no remorse for filming the beheading of an American that morning.

He glances out the window and notices a light on the house across the street. In that house, an Iraqi businessman is on the phone, frantically trying to convince an American colleague not to pull out of their joint venture. The American sits in his office in Los Angeles, his mind drifting back to a brief relationship with a Costa Rican woman he met while in college. Unbeknownst to him, she became pregnant with his child.

His daughter is running down a beach in Costa Rica, laughing with her friends, wearing running shoes put together by a Malaysian man who is now standing in a factory, watching the needle plunge in and out of the leather, ready to pull the shoe and glue on the sole. He doesn't know about the latest American beheaded in Iraq. Instead, he's mentally composing a love poem. He will go home tonight, as every night, and recite it to his wife before the two of them drift off to sleep.

The far-reaching damage of Rep. Tierney's bill

Amongst non-expats, there appears to be some misunderstanding about the serious nature of Representative John Tierney's attempt to bankrupt expats.  Expats have first-hand knowledge of the damage this will cause, but Tierney doesn't seem to understand. This is frustrating as hell because I like Tierney. I like his politics and I support many of the causes he stands behind. The problem is that he's dead wrong on this one. I'm hoping he just doesn't understand the full implications of this bill and will change his mind when he does (side note: he opposed SOPA. There's some meta-irony going on here).

Some people are claiming that the US tax treaties will protect us, but they won't. Victoria Ferauge wrote about paying US taxes on a French bought with a French loan and paid for with a French salary and there was no tax treaty or Foreign Earned Income Exemption to protect her.

Many expats live in Argentina
Photo by Pablo D. Flores

But look at that tax treaty list. Count them. Only a third of the countries in the world even have tax treaties with the US. There's actually a decent-sized US expat community in Argentina and you'll note that Argentina is not on the tax treaty list. Americans have a 35% income tax in Argentina. If Tierney's bill passes and they have a modest US income, their tax rate could easily exceed 60%. Tierney will bankrupt them.

But consider a far, far worse scenario: Dubai.

Dubai is an emirate in the United Arab Emirates (UAE). Here are a few interesting facts about them.

• They do not allow foreigners to claim citizenship.
• They are well-known for seizing the passports of indebted expats in Dubai (preventing you from leaving the country).
• There are a lot of indebted expats in Dubai.

So you're in Dubai, you have some debt, Tierney's bill passes and all of a sudden, your income drops dramatically. They take your passport and you are never leaving Dubai. You don't have the option of returning to the US. You can't take citizenship in Dubai to escape the US debt. You're trapped. It's happening in Dubai today; with Tierney's bill, it will only be more frequent (I've read of one couple in Dubai whose children can't go to school because the couple can't afford it but their passports were seized).

Representative Tierney genuinely seems like a nice person, but he's going to hurt Americans the world over with this one.

Congressman John Tierney (D-MA) wants to bankrupt US expats

Congressman John Tierney, D-MA
Public Domain Image

Hi Reddit! Be sure to read my update about Tierney's bill. It's been referred to the House Ways and Means Committee.

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I could be facing a top marginal tax rate of 60% next year. Either I move back to the US or I renounce my citizenship. I may have no other legal options under a proposed US law (unless I want to move my family into a one-bedroom flat and live on rice and beans).

Congressman John Tierney has proposed the Tax Equity and Middle Class Fairness Act of 2011. You can read the full bill if you like.

A "Middle Class Fairness Act" sounds all well and good, but as you know, the titles of bills and their contents are often at odds with one another. He wants to remove oil and gas tax breaks. He wants to remove timber subsidies (is destroying the US timber industry good or bad? I can't remember). He wants to remove coal tax breaks (hallelujah!).

He also proposes "Removal of the foreign earned income exclusion which allows U.S. citizens living overseas to avoid paying taxes ($5.4 billion in 1st year)."

Here are a few interesting interesting points:

First, I pay taxes. Lots of them. I live in Europe. These aren't exactly tax havens over here. He probably meant "avoid paying US taxes", but as Congress is systematically stripping US expats of the benefits of their citizenship, I can't see many expats being happy about this.

Second, where did that "$5.4 billion in 1st year" figure come from? Given that the US Census, despite being required to in our Constitution (Article 1, Section 2), refuses to count Americans living abroad, we don't actually know how many US expats there are. How can we claim that we'll earn $5.4 billion when we don't even know where that money is coming from?

When I told my wife about this bill she was shocked and the first thing she said was "we'll have to move to the US."

I haven't lived in the US in years. I have a life here in Europe and I don't want to give it up, but I don't see what my options would be. I can't (yet) apply for French citizenship and while that does not legally block me from renouncing my US citizenship, I'm still not keen on giving it up. My other options are trying to hide from the IRS for the rest of my life or reducing my family to poverty.

It's entirely possible that the US-France tax treaty may shield me from the bulk of this, but as I'm hardly a lawyer and in trying to read through that, my eyes glaze over. And I see from consulting the list of US tax treaties that fewer than one third of the countries have have a tax treaty with the US. Given that many expats are paying in excess of $2,000 just to file a tax return (another charming "tax" to deal with), this is only going to increase our burden. And please note that many of these treaties reduce double-taxation but do not eliminate it, and the treaties generally only protect some types of income, not all. Further, while Americans on US soil have plenty of accountants to turn to, we have far fewer in Europe and we have more laws we have to deal with, making it even more of a red tape nightmare.

Johnny Depp left France
due to double taxation.
Photo by Arnold Wells

So imagine an American living in the Netherlands where the top marginal rate is a confiscatory 52%. Add in the top marginal rate of the US and you're looking at a top tax rate of 87%. Of course, most Americans with professional careers in the Netherlands would only be facing a top marginal rate of 77%, so that's not too bad, right?

This law won't pass because it's attacking Oil, Gas and Coal and they have enough money to destroy this. For once, I'm glad that the US Supreme Court has said companies are allowed to donate unlimited amounts of money to political campaigns. That's completely immoral, but I don't know what I'll do if this law is passed.

Tierney's bill is going to force a lot of Americans to move back to the US or renounce their citizenship. What a nightmare.

If you've got nothing to hide ...

Pardon the disjointed post. It's actually sort of two posts and I'm rushing to get it out here, particularly since I missed Wednesday's post.

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This Financial Times article was quite disturbing. It mentions a large (unnamed) A Asian bank which is considering no longer handlg US Treasury Bonds. It's not because they're afraid the US will default. It's because they're afraid that they can't afford to comply with FATCA.

Author Unknown, Possibly 'Shopped
But if it's fake, it's still real

It's one thing for the IRS to declare that it all financial institutions in the world come under its jurisdiction. It's another thing entirely if the world banking industry decides to divest itself of US assets. Yes, this would be very painful, financially, for these institutions, but when they consider turning over their information to the US to be so expensive (and it's often illegal for them to turn this data over to foreign governments) that no longer doing business with the US is seen as a better option, we have a serious problem.

First, I can't even begin to understand the level of arrogance which led US politicians to think that they can command the entire world financial industry to bow to US interests. However, it looks like there's a quid pro quo going on. It looks like we're going to go ahead and possibly require our banks to report to foreign governments.

Update: this was a draft of a post I started a while ago and failed to get online. Now I've read that the US has reached an agreement with five countries to share bank information. This is a far better approach because it's being done government to government instead of IRS to private companies world-wide, but still, it's very disturbing. When is this "information sharing" going to stop? Just how much information are governments going to agree to send to each other about every private citizen's activities? I don't like this trend at all.

What's even more disturbing is that this has been used to sidestep European privacy laws:

The United States and the five European countries said Wednesday that they would get around the secrecy problem by having financial institutions share data with their own governments, which would then share with Washington.

It reminds me of articles I've read about US government agencies legally buying information about private citizens that would be illegal for them to collect it directly.

Moving overseas with a criminal record

Sitting here in Paris, having a croque-monsieur for lunch. Basically a croque-monsieur is a glorified hot ham and cheese sandwich, but like many French foods, it tastes far better than what you're eating. Did I mention the food here is damned good? The French just don't understand beer or fried food, but the rest of it often makes non-French food seem like prison gruel.

Does this kill your expat dreams?
Photo by Tim Pearce

Speaking of which, how do you move overseas with a criminal record? I get asked this from time to time and always answered "I don't know". I had assumed it would be pretty much impossible as many countries are very picky about who they let in. Then I found out about Spencer Global, a Chilean law firm which specializes in helping the international community in Chile.

They claim that you can move to Chile with a criminal record:

Criminal background checks and police records are only required when applying through the Chilean consulates or embassies for visas to Chile. The department of immigration in Chile does not require criminal background checks, police records, FBI criminal reports when applying for visas in Chile.

The reason for the difference is that the department of immigration in Chile and the department of foreign ministry in Chile that operates the Chilean consulates and embassies are two different offices with distinct internal procedures. The recommend method for applying for a residency visa, including work visas and student visas, by the department of immigration in Chile, is to first enter the country under a tourist visa and then apply directly through their office where you will be living in Chile.

That's very interesting news. It goes on to say that even if you do apply for your visa through the foreign ministry, you may still be allowed in the country if it wasn't a serious crime. Forget murder, but maybe if you were busted for a joint?

For many would-be expats, this is fantastic news. I keep hearing rumors that some countries don't do background checks and that others don't care so long as you're not currently wanted, but this is the first time I've stumbled across information that is a bit more credible than "I heard from a friend that ..."

If you have any more information about this, post below! I'm sure there are quite a few people who would like a fresh start and discover that the French Foreign Legion isn't what they thought it was.

Want to teach overseas? Try England!

Photo by woodleywonderworks

I realize most readers aren't qualified teachers, but maybe it will be incentive for you to pick up that certificate.

The Training and Development Agency for Schools, a UK government agency, has an Overseas Trained Teacher Programme, also known as the OTTP.  Various teaching roles are on the UK Occupation Shortage List and this makes it much easier to get work over there. You need to apply at a school and, if they are willing to offer you a position, you can work in England for up to four years as an "unqualified teacher" until you get qualified. Financial aid, while not guaranteed, is available to help you with your qualifications.

Note that you'll be hired as an "unqualified teacher" and if they stick with standard pay scales, your salary may be pretty bleak.

• London fringe: £16,856–£26,052
• Outer London: £18,789–£27,992
• Inner London: £19,893–£29,088
• Rest of England and Wales: £15,817–£25,016

Note, however, that those are minimum salaries. You may be able to negotiate to a higher end of the range. But hey, you didn't get into teaching for the lavish lifestyle, did you?

Read my work permit series to get a better understanding of how to improve your chances of a job offer and a better salary.

The State of the Exile

Photo by Srthnow

Last month this blog had well over 13,000 views, making it the most popular month so far. It's a far cry from an A-list blogger but it's enough that I know it's more than just my friends, families and colleagues are reading it. That means I need to take a bit more care with my writing, but with a new job, a new country, a one year old baby and and writing a book, I'm finding it very hard to maintain the standards on this blog.

This is why some of my later posts have been "personal" bits; I don't have to do as much research on those. Of course, it's entirely possible that regular readers like the tone the blog has taken in the past couple of months; I've no real way of knowing. I was particularly concerned that my Obama is not a Socialist post would put people off, but it didn't. I did throw in a touch of the "non-US" point of view there, but it was skirting the edge of material which is appropriate for this blog's subject matter. On the other hand, I have a lot of that material and if I feel I could do a better job of rewriting in such a way that it gives you a sense of the world, but there are limits. No matter how much I like my cavemen post, it's just not going to work here.

I still have a large backlog of posts to create on Panama, changes to the European Blue Card system and many other areas, so there's still going to be "how to become an expat" posts, so don't worry about that. I just need to find the time to juggle everything going on in my life right now. Thanks for your understanding.