FATCA: How American Babies Overseas Are Ensnared In Government Tax Net
In a way, this is a boring story about a seemingly rare problem. It’s about banks, federal law, taxes and people who go to great lengths to avoid paying their taxes. The law is called FATCA.
But if you can wade through a bit of the boring information, it’s also a story about the meaning of roots, heritage and mother’s heartache when an unlikely source threatens to sever those roots. It’s about feeling abandoned by the people who are supposed to protect you.
Banks. Never did I imagine, as my belly swelled with each of my babies, that banks would have the power to define my children’s identities or that a bank’s reach would dislodge my girls in a subtle slice separating them from our heritage, from my home, from parts of me that made me who I am.
You see, I’m a U.S. citizen who happened to fall in love with someone who is not. My husband is Swiss and we decided to start our family in his home town, near his job that had more stability than mine, that had better health insurance and vacation plans (that meant more and longer family visits) and good schools. Our two little girls would be the beneficiaries of the best of both of our worlds — they have dual citizenship.
Aside from the typical exhausted mom stuff, some postpartum mood issues and the homesickness felt by anyone who lives far away from their families, life for us is good. I imagined my girls’ lives filled with amazing opportunities. I dreamed of the advantages we could provide for them, the chance to experience life in Europe and the United States, doors wide open for them to consider the vast education and creative opportunities in two countries, learning lots of languages, the support and knowledge they would garner from two families steeped in two unique cultures. I had no idea that they would be ensnared in their own government’s net to catch tax cheats before they could even talk.
Our youngest daughter was probably a couple of months old in 2013 when I called the bank to open a savings account for her. A few days later they called back with news that seemed at the time merely annoying. A U.S. law that would go into effect the following year had put a crushing pressure on international banks if they dealt with American clients. She explained that the bank was, like many others, following a policy to deny accounts to Americans, even if this was for an infant. I could open another account for myself, since I was an existing customer, and add my daughter’s name as a beneficiary. I found out later that this was a lucky compromise. Many Swiss banks were completely closing any account belonging to an American so that they didn’t have to saddle themselves with the scrutiny, cost, and exposure to penalties of the United States. I don’t know if, one day down the road, my bank will follow suit.
The law is called FATCA, Foreign Account Tax Compliance Act, and its job is to catch tax cheats. You can read about it here … if you need a cure for insomnia.
It sounds so simple. The United States is one of two countries in the world that taxes citizens living outside its borders, Eritrea being the other. Hooray for the U.S. government, it can bring money back to the battered U.S. economy. Let’s not forget that the United States is third on a list of easiest places to hide money with its own tax havens , like Delaware, where it’s easier to create a shell corporation than to get a library card. But great. I pay my taxes, everyone else should, too. Cheaters piss me off.
But the reality for my babies, for hundreds of thousands of others, is starkly different. According to this overview, between 2000 and 2009, about half a million American babies were born outside U.S. borders. That’s about the size of the city of Detroit, almost double the population of Lincoln, Neb.
My American-ness is with me no matter where I am
Being an immigrant or an expat is a challenging emotional experience, even when you are a member of a privileged group in a privileged society. But one thing I hadn’t expected was that the love I had for my own country could grow even greater. You know what they say about distance and fond hearts. When I watched our Olympic athletes compete or saw the stars and stripes painted on a house in Switzerland (I wonder if their neighbors complained about these folks’ ability to integrate!)…
… I became a mushy pile of pride, nostalgia and home sickness. My heart pounded and, once in a while, hot, sloppy tears remind me how American I am and will always be. (I actually cried tears of relief when I saw that Ernest Hemingway was still labeled an American though he lived much of his life outside its borders.) I feel, not just pride, but love, love despite my country’s faults and for its fight to be better, for its openness, for its creativity, for its boldness, for its warmth. (If you want what I consider to be a fantastic definition of love of country, check out the video below)
Celebrate the diversity that makes America, America. Share this video to show #WeAreAmerica
Posted by Ad Council on Monday, July 4, 2016
When my girls were born in Switzerland, I felt honored to be able to give them American citizenship. I am raising them with as much of their American heritage that I can provide. At this young age, that mostly includes trips every year to visit my family, feeding them my mom and grandma’s spaghetti, reading books about discovering Michigan, Skype chats with their grandpa and cousins and scraping together Halloween parties in a place that has no clue about the holiday.
At 3 and 4 years old, my girls don’t yet understand that this place they love so much, as my daughter has called it “The United States in Michigan”, where they beg me at least once a week to board a plane to visit family, may not be concerned about their ability to live as functioning members of their community.
The day I got the call that American accounts, my baby’s tiny savings account, was no longer accepted, I felt a stab in my still healing belly. I was frustrated with my bank, I was frustrated with people who try to cheat and make it more difficult for people who follow the rules. But most of all, I was hurt that my babies were ensnared in the government’s net to catch tax cheats with no help, no understanding from the institutions and policy makers who say they have our interests at heart.
The silent knife
As my eyes opened to the situation, I was hit with the shocking realization that my daughters may have to give up their American citizenship. Shortly after the conversation with our bank, news came that Tina Turner had renounced her U.S. citizenship. And then more and more people were making the gut-wrenching decision to give up theirs. This story by BBC gives a powerful overview of just how difficult it is. And I understood. My daughters can’t stay on my accounts forever. One day, a day that to my mommy-mind is coming oh so fast, my girls will be old enough to work, to have jobs, vocations, for which they will be paid. A proud milestone in anyone’s life. They will need a way to deposit their earnings, to withdraw money for expenses. To live. Yet it appears now they will have to make a choice, a choice to keep their navy blue passport or to surrender it and be treated as an outsider so that they can perform the simplest of tasks — open a bank account in their own name.
In the grand scheme of things, we are a small and perhaps seen as an insignificant piece of a massive collection. Some of our fellow Americans may not even care that a family of its citizens who live outside its borders are overlooked. But we pay our taxes, we abide by the rules, and we hold America deep in our hearts. We wave our flag on the 4th of July and bow our heads on Thanksgiving. And we become, in a sense, ambassadors, the human face of our nation represented in countries where people may only see us as Hollywood or the devastation broadcast in the news. Our ability to function as Americans does matter, whether we live in Michigan or Texas or Switzerland or Chile.
I don’t want my girls to have to give up their citizenship. But if the day comes when they have to walk into the U.S. Embassy, raise their right hands and swear an oath, an action I and their father took to declare their births when the United States claimed my daughters as part of its citizenry, I will stand with them, holding their hands and believing a little less in my country.