The unbanked and Jubilee

Many credit unions and especially the World Council of Credit Unions (WOCCU) work with the unbanked, those people who are so poor, that banks have no interest in their measly little collection of pennies, if that.

When organizations like Jubilee, which does some wonderful work among the poor, came out for FATCA with the mistaken notions of what it is and what it does, they had no idea FATCA was threatening 7 million American expats around the world who can no longer bank where they live and have to make horrible choices such as moving back to the US, losing power over all their funds, closing their businesses, losing their homes. I suspect they did not understand the implications. No moral organization would put so many people in jeopardy.

However, right now seven million Americans, those that live overseas, are in danger of being unbanked as well.

Why?

FATCA, the Foreign Account Tax Compliance Act.

Congress was convinced that some $120 billion in taxes is not being collected from expats. That figure has never been verified. It has become gospel. Like the number of expats who have renounced and are not listed in the official State Department figures, it is very likely bogus. Math experts more competent with numbers than I figure it is impossible.

The US and Eritrea are the only two countries that tax citizens for everything they earn no matter where it was earned, no matter that is has already been taxed where they live. Although there is an exemption for earned income, unemployment, capital gains, pensions, insurance payments are double taxed.

Expats spend several thousands each year to make sure they are in compliance. A large majority end up not owing US taxes at all because all their income is salary. Expats pay taxes where they live so despite the claims about no double taxation, that too is a myth.

Expats are also expected to file FBars, reporting their overseas bank accounts. The fine for not doing it is 50% per year not filed. Thus, if there's an account with $30,000 and the person hasn't filed for five years because they never heard of it (which is why all expats should use highly trained accountants who know the ever changing US requirements) Their penalty would be $75,000. Few expats can afford that despite the myth they are all rich.

Banks around the world are closing accounts of American expats. They are calling in mortgages. Those expats with spouses who are not American can sign everything over their spouse to have access indirectly to banking. People are scrounging around trying to pay mortgages in full that are being called.

Only dual citizens can renounce and the question is when not if when a group of duals are together. They are afraid of their birth country which has the power to destroy them for all the wrong reasons.