From BBC News Magazine dated yesterday comes an insightful article focusing on why increasing numbers of Americans are giving up their US citizenship. Focusing attention on US authorities attempting to recover an estimated $100 billion in annual tax revenues from some 6 million US citizens residing abroad, the article draws attention to FATCA (Foreign Accounts Tax Compliance Act). This Act from 1 July 2014 will require all financial institutions worldwide to report directly to the IRS the financial holdings and income from the holdings of Americans with $50,000 or more in their accounting systems. The congressional stick is to impose the sanction on any foreign financial institution failing to comply of being cut off from the US financial system.

While FATCA came into effect for Americans abroad in 2011; that is to say, it required that a Form 8938 be filed with tax returns of any US person with foreign financial holdings meeting certain thresholds, US citizens and deemed residents are finding themselves facing dilemmas. These dilemmas include being denied foreign banking privileges by those institutions unwilling to comply with the FATCA. They also include being denied credit and even job opportunities abroad.

But what if you are married to a non-US person? If you are unable to have joint custody on a foreign financial account with say your French spouse and he dies, then what?

One expatriated American was so upset at the intrusiveness of reporting bank account information to IRS that she couldn't sleep. Already the cost of hiring professional tax preparers to do her annual US tax returns and the FBARs was costing her nearly $2,000 a year with the prospect of FATCA more than doubling those fees. After living many years abroad, she no longer introduces herself as American even if in her heart she still feels those ties.

Another American married to a Frenchman asks whether her bank accounts will be closed or whether she will have to be removed from her husband's accounts. As an unemployed person recovering from breast cancer, she had to pay $1,000 to accountants this year for tax help. But with strong ties to parents in the Pacific Northwest, she is not ready to make that appointment at the US Embassy.

In the years before the writer completed a Masters degree in tax accounting, he worked as an inspector at General Dynamics (GD).  This was in the era that preceded the highly touted 401(k) plans.  At that time a GD employee could pay into the company retirement program.  For each one dollar contributed GD would contribute two dollars.

In the 1980s the 401(k) was introduced as a supplement to company pension plans.  This was exciting news as a way of boosting retirement income in old age or those golden years when the physical body begins protesting too much activity.  However some of America's top executives were not lost on seeing these investment vehicles as a great pension saving's alternative for employers.  Not surprisingly from 1990 to 2010 America's share of private sector employees in traditional pension fell from 42% to 22%.

Statistically the 20% of America's most affluent had 88% in 401(k) savings accounts and averaged $308,674 in 2010.  At the same time, the middle class representing 52% of Americans had on average $34,981 in retirement savings accounts, leaving the poorest 20% with just $7,543 on average.

Such unequal consequences can be blamed in part to a shrinkage of real paychecks as well as rising indebtedness.  Nevertheless the outcome in the second decade of the 21st century is that the many retirees who could once depend on retirement pensions from employers must now continue to work well beyond 65 years of age.

Meanwhile, according to the Institute for Policy Studies, 71 prominent CEOs are campaigning to trip Social Security and other entitlement programs in order to address the debt crisis at the federal level. A dozen of these CEOs have over $20m in their pension accounts. The Institute calculates that at age 65 these dozen would be entitled to a monthly retirement check of $110,000 for life if they converted their holdings into an annuity. - Other Words, 11 September 2013

Today is the 12th anniversary of 9/11; another date that shall live in infamy in the minds of many Americans. The writer remembers visiting New York City with his sons in June of 2001. On a Saturday morning they were greeted with clear skies and cool weather and little traffic, conditions that beckoned to us to see the sites in the Big Apple.

We took the metro probably to the Whitehall Street stop as this was nearest the Staten Island Ferry.  Hopping aboard the ferry at the Whitehall Terminal (Manhattan), we rode across the water to the St George Terminal on the island. The day was glorious and we snapped pictures of the Statue of Liberty as the ferry passed near Liberty Island. Crossing the waterway that morning, the twin sentinels of the city's financial district glistened in the skyline. Going and coming on the ferry, we snapped photos of those doomed structures.

Three months later, the writer had just exited the American Embassy in Lisbon, Portugal to find himself confronted by a host of news media people that crowded him about his sentiments concerning the destruction of the Twin Towers only a few hours before.  While he pondered whether some fanatical group might be bent on launching a world-shaking conflict or merely seeking to terrorize Americans on the home front, he replied that no race is superior to another and that we as a planetary people must find common ground to resolve differences lest grievances escalate into horrible conflicts.

While 9/11 prompted America's political leaders to step up military conflicts abroad, a sense of over-protectionism settled in that has seen the Patriot Act intrude on the privacy of Americans at home and abroad. But fear and suspicion do not ultimately safeguard a nation, a people or a society.  What is required is to build bridges between peoples. Otherwise the fracturing in the end imposes isolation on every member of every society.

My grandfather Avery lived a rural life in the central Missouri hill country.  A man who worked hard to raise two sons and a daughter before and during the Great Depression, people knew him as someone in whose word you could trust under any circumstance.  In 1961, at 71 years of age, he told me wistfully that a kind of golden era in America had passed – an era when Americans could do business on a handshake.  In his maturing years, Avery never had to sign contracts filled with pages of indecipherable jargon.  Customers and creditors only wanted his handshake, and his word.

Some thirty years later, Francis Fukuyama, in his book Trust: The Social Virtues and the Creation of Prosperity, referred to the concept of “social capital” as the ability of people to work together for common purposes.  Just as financial capital facilitates productive capacity, people facilitate social capital by trusting each other to fulfill commitments.  Such trust requires integrity and justice as its underpinnings.

Following a decline in social capital after World War II, an often bewildering array of control systems and legal requirements gradually superseded trustworthiness in public dealings.  The unhappy result found people occasionally alienated from, mistrustful of, and compromised by each other and their institutions.  Fukuyama warned that this loss of social capital meant a decline in the American economic system.  He wrote:

The decline of trust and sociability in the United States is also evident … in:  the rise of violent crime and civil litigation; the breakdown of family structure; the decline of a wide range of intermediate social structures like neighborhoods, churches, unions, clubs and charities; and the general sense among Americans of a lack of shared values and community with those around them. … Already the United States pay significantly more than other industrialized countries for police protection… (The U.S.) also pays substantially more than does Europe or Japan to its lawyers, so that its citizens can sue one another.  Both of these costs, which amount to a measurable percentage of gross domestic product annually, constitute a direct tax imposed by the breakdown of trust in society.

More than a half-century ago the author Horace Holley astutely viewed this same social fragmentation as weakening the fabric of American culture:  “The individual has become engulfed in struggles of competitive groups employing different weapons to attain irreconcilable ends.” 

Ttrustworthiness as essential for the stability, the well-being and security of the entire human race.  This ennobling quality signifies reliability, loyalty, faithfulness, uprightness and honesty.  And trustworthiness, as my grandfather Avery demonstrated, underpins the essence and the practice of justice.

Whether viewed socially, economically, financially, politically, regionally or nationally, injustice destroys mutual trust.  The widespread, unjust exploitation of people tears at the fabric of society and contributes to impotent rage and volatile acts of defiance.

My grandfather lived a life of moral integrity and justice.  In his close-knit community, neighbors became life-long friends.  In difficult times you could count on them to come to your aid.  Through their closeness, whatever you needed they would willingly give.  Of course, those Missouri hill-country folks lived in simpler times, and in an imperfect world.  But somehow they grasped the idea that trust, justice and moral uprightness lie at the core of human happiness.  If they could impart their life experience to our present generation, they would ask us to simply treat each other with fairness, and then see what happens. - http://bahaiteachings.org/a-system-of-trust

In the second quarter of 2013, some 1,130 Americans expatriated.  While the number of taxpayers relinquishing citizenship and Green Cards is on the increase, US tax rules are increasingly designed to discourage expatriation for purposes of tax avoidance.  For instance, a Covered Expatriate's worldwide assets must be valued both at cost and fair market value to arrive at a sale price as though the assets had been sold.  Then a tax is assessed on the assets that may be paid out over a number of years. 

But for many expatriating Americans, the driving force to give up ties to the United States rests on the menace of IRS penalties, the avoidance of multiple filings (both US and foreign country) and quality of life.  None of these criteria has anything to do with tax avoidance.  

Socially Americans are very well organized. Over time they have competitively created a well-oiled system of convenience.  Goods and services flow with marvelous swiftness and predictability.  The infrastructure is likely the best in the world.  Neighborhoods are attractive and kept apart from business establishments.  In other countries, residents may be confounded by the lack or dependability of services.  Getting around may require passing through tortuous systems of roadways.  Messy shops may be nestled among pristine homes. And taxes may be higher. So what is this business of quality of life?

The American system is often more stressful in ways unknown to the European, the Latin or the Asian.  Americans face a daily fare of exorbitant health care costs, of confusing merchant guarantees and offerings, of contracts laden with indecipherable legal jargon, of murderous rampages in public places, of political crises threatened by retaliation, or of financial want in the midst of plenty.  It isn't that Americans are generally unfriendly or impassive. And it isn't that one should simply abandon this country to an uncertain fate. It is merely that these unnerving conditions are less prevalent in other first world countries. 

So an American, let us say in France, who pays less than $30 to see a medical doctor or $40 for the prescription that costs $400 stateside, relishes a life that does not assail his sensibilities.  Amidst settled surroundings, he has time to delight in nature, to read a novel over a cup of expresso, or to visit with friends. Because he is not distracted stateside over some breaking news report, another merchant notice, a negative report to the credit bureau, a regional shooting, some graduating and unemployable student saddled with a student loan, fires or floods from global warming, or a prescription renewal, he relishes the quality of his life abroad.