EXCLUSIVE:
Hoping to woo voters overseas in time for the 2016 presidential election, the Republican National Committee is poised to join Sen. Rand Paul’s fight to restore privacy rights and financial relief to nearly 8 million U.S. citizens living abroad, The Washington Times has learned.
The Republicans Overseas project would make a concerted effort to register citizens abroad as GOP voters while the RNC steps up pressure to reverse a provision that Democrats pushed through Congress in 2010 that critics say stripped Americans overseas of certain financial privacy protections.
A resolution to repeal the law has won the support of key RNC committee members and is slated for a vote during the party’s annual winter meeting this month. Key Republicans said the move could give the party a leg up in the race for overseas votes, a bloc that Democrats have dominated in recent years.
The issue involves the Foreign Accounts Tax Compliance Act that the Democrat-led Congress enacted in what sponsors said was an effort to target tax evasion by U.S. nationals abroad.
The law empowers the Internal Revenue Service, without warrants, to require foreign banks to provide information about the bank accounts of overseas Americans. That burden has caused some foreign banks to stop offering accounts to Americans.
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As a result, many U.S. citizens say they are having trouble establishing bank accounts overseas. Some even have renounced their American citizenship to avoid compliance with the law.
Time magazine reported a sevenfold increase in the number of Americans renouncing their citizenship from 2008 to 2011, and the banking law was blamed for some of that. Renunciations by citizens abroad surged to a record last year, and some cited the banking law.
Mr. Paul, a freshman Republican from Kentucky, has led the battle to reverse provisions in the 2010 law that he says violate citizens’ right to privacy. The RNC effort goes further, seeking an outright appeal of the law.
Overseas objections
The State Department in May estimated that 7.6 million U.S. citizens live and work in other countries. Organizers of the RNC effort believe the GOP could win support from Republicans, independents and some Democrats living abroad who resent the financial and privacy impact of the 2010 change.
“The law as it stands forces U.S. citizens to make a modern day’s ’Sophie’s choice’ between their love for their country by not renouncing citizenship and their love for their families by continuing to provide for them without banking services,” said Solomon Yue, a prominent RNC member from Oregon who is leading the charge on the issue.
Obama administration officials continue to defend the law. Robert Stack, deputy assistant Treasury secretary overseeing international tax affairs, said in a September blog post that the U.S. law is “rapidly becoming the global standard in the effort to curtail offshore tax evasion.”
He dismissed what he called myths about impacts of the Foreign Accounts Tax Compliance Act, including that it imposes “overly costly” and complex regulations on banks, that U.S. citizens living abroad will be outcasts in the international banking market, that foreign banks have become extensions of the IRS, and that expatriate Americans will give up their citizenship in droves to escape the law’s reach.
“U.S. taxpayers, including citizens living abroad, are required to comply with U.S. tax laws,” Mr. Stack said. “Individuals that have used offshore accounts to evade tax obligations may rightly fear that [the Foreign Accounts Tax Compliance Act] will identify their illicit activities. Yet a decision to renounce U.S. citizenship would not relieve these individuals of prior U.S. tax obligations, and might well create additional” tax obligations.
Rep. Carolyn B. Maloney, New York Democrat, and Rep. Mick Mulvaney, South Carolina Republican, co-chairs of the congressional Americans Abroad Caucus, last month petitioned the House Financial Services Committee to look into complaints that Americans living overseas were being denied banking services because of the law.
RNC resolution
The RNC, at its Jan. 22-25 meeting at the Renaissance Hotel in Washington, is expected to pass a resolution calling for repeal of the law.
A repeal petition is the brainchild of RNC members who have taken the lead in forming the Republican Overseas organization.
“For many years, the Democrat Party used its overseas group, Democrats Abroad, as a political weapon against our candidates in elections,” said Arizona RNC member Bruce Ash, chairman of Republicans Overseas.
“In fact, just last month when Cory Booker won his U.S. Senate contest in New Jersey, he proudly thanked Democrats Abroad who helped him win his election,” Mr. Ash wrote in a letter to fellow Republicans.
Democrats, in fact, appear to have a considerable head-start in wooing voters living in foreign countries. with Democrats Abroad marking its 50th anniversary this year. The group has chapters throughout Europe, the Americas, the Middle East, Africa and Asia, as well as a support office in Washington.
Mr. Ash said the legal provision in FATCA violates overseas Americans’ right to privacy by “seizing 30 percent of their bank deposits without due process, and by causing foreign banks to deny financial services to overseas Americans as clients in order to avoid incurring the extra costs of complying with the U.S. law.”
Mr. Ash said the foreign banks face “increased costs associated with IRS reporting requirements. As a result, those Americans are forced to choose between their citizenship and their right to privacy and livelihood.”
Mr. Paul’s more limited bill seeks to repeal what he calls the “anti-privacy provisions” of the law. He argues that far from accomplishing its goal, the law “infringes upon basic constitutional rights. … Private data of anyone considered a ’U.S. person’ would have details of their financial assets provided to the IRS without a warrant requirement, suspicious activity report or any other allegation of wrongdoing.”
Mr. Yue’s repeal resolution has attracted 26 co-sponsors, including the entire nine-member RNC Resolutions Committee. The early support almost guarantees passage by the 168-member RNC.
In a sign of business community support, the World Council of Credit Union, with 200,000,000 members and 56,000 credit unions in 101 countries, has endorsed the resolution.
Mr. Yue, born and raised in communist China, said the issue hit a raw nerve with him. “I escaped Chinese communist tyranny in 1980 and worked hard to earn my U.S. citizenship as an international trade economist. My American passport is my freedom. I just can’t imagine giving up my U.S. citizenship since I have no place to go.”
• Patrice Hill contributed to this report.
• Ralph Z. Hallow can be reached at rhallow@gmail.com.
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