GENEVA, SWITZERLAND – Fairness was the big word in the annual State of the Union address delivered by US President Barack Obama, who focused on keeping the American Dream alive. The speech serves as a reply to Republican candidates campaigning for the November 2012 presidential election and it provides the Democrats’ agenda for the year ahead. “We can either settle for a country where a shrinking number of people do really well, while a growing number of Americans barely get by. Or we can restore an economy where everyone gets a fair shot, everyone does their fair share, and everyone plays by the same set of rules,” said the president in the speech widely viewed on television Tuesday night (ed. note: viewing figures are not yet available, but Bloomberg has analyzed trends for these speeches).
Links to other sites: CNN, Guardian, UK, LA Times, Miami Herald, Minnpost, White House
World’s banks are starting to wake up to the administrative nightmare it could pose
GENEVA, SWITZERLAND – American Citizens Abroad (ACA), with InterNations, a global expats social network, will be holding a fourth Town Hall meeting in Geneva Wednesday evening (16 November, 18:30-21:30, Webster University, Bellevue/GE) to address tax issues for US citizens, in particular to bring them up to date on Fatca and FBar obligations and the reported heavy penalties for non-filers. Democrats Abroad and Republicans Abroad are supporting the town hall meeting.
Ed. note: see GenevaLunch feature articles on previous town hall meetings and US overseas citizens’ tax obligations.
Fatca is the Foreign Account Tax Compliance Act. Financial institutions around the world will be obliged starting in 2014 to comply with Fatca or refuse to accept US citizens as clients. US citizens will be required to file a new, additional form that is part of the Fatca legislation starting with their 2011 fiscal returns.
Financial industry fears heavy impact of US legislation comes at a bad time
Banks around the world are starting to wake up to what Ernst & Young calls the “completely new and extended information and reporting systems” that will be required by Fatca. RiskNet recently wrote that “If the US’s proposed wide-ranging tax law comes into force, financial institutions across the globe could experience operational upheaval and enormous compliance costs, alongside potential reputational and systemic issues.”
Wednesday, the Swiss Private Bankers Association referred to “a Kafkaesque tax reform being drawn up by the USA, known as Fatca”, reflecting opinions voiced by other, non-Swiss bank groups.
CPIFinancial warned 16 November that “ll banks and life insurance companies which have US source income or handle US source income will be affected since all US source income might be subject to 30 per cent US withholding tax if they are not Fatca compliant.”
ACA goes public with campaign to repeal Fatca
ACA has launched a public campaign to have Fatca appealed. “Starting in 2014 (moved from 2013), foreign financial institutions will be required by the US government under the Foreign Account Tax Compliance Act (Fatca) to report information regarding accounts of US citizens to the IRS. This law requires foreign financial institutions (FFI) such as your local bank, stock brokers, hedge funds, pension funds, insurance companies, trusts, etc. – to report directly to the IRS all their clients who are “US persons” (citizens and green card holders living in the USA or abroad). The penalties for the institutions that do not cooperate are steep.”
Rami Schandall says in the text with a public online petition to scrap Fatca:
“IRS efforts to chase tax cheats are netting another group entirely. Americans, green card holders, and dual citizens living abroad, face the threat of prohibitive fines for simply failing to file with the IRS, when many are unaware they were required to do so. This aggressive cash grab can devastate the lives of law-abiding citizens who already pay high taxes in their country of residence.
GENEVA, SWITZERLAND – Credit ratings agency Moody’s announced 13 July that it will review the US debt rating, since the country is not yet making significant progress on resolving the budget and debt ceiling crisis that could lead to a US default 2 August if not resolved soon. The announcement was followed a few hours later by President Barack Obama walking out of heated talks between Republicans and Democrats. It also prompted the head of the US Federal Reserve, Ben Bernanke, to say that a default would constitute a major crisis that would send ripples through the financial world.
“The review of the US government’s bond rating is prompted by the possibility that the debt limit will not be raised in time to prevent a missed payment of interest or principal on outstanding bonds and notes. As such, there is a small but rising risk of a short-lived default.
“Moody’s considers the probability of a default on interest payments to be low but no longer to be de minimis. An actual default, regardless of duration, would fundamentally alter Moody’s assessment of the timeliness of future payments, and a Aaa rating would likely no longer be appropriate. However, because this type of default is expected to be short-lived, and the expected loss to holders of Treasury bonds would be minimal or non-existent, the rating would most likely be downgraded to somewhere in the Aa range.”
Links to other sites: BBC, Financial Times, Moody‘s, Washington Post
Protesting to support Wisconsin workers, in Geneva, Switzerland, 4 April 2011 (photo, Maya Samura)
Geneva, Switzerland (GenevaLunch) - A small group of about 50 people, mainly Americans, responded Monday 4 April to a call from Democrats Abroad to march in solidarity with workers in Wisconsin, USA.
The group gathered at the United Nations plaza, and included people from the International Labour Organization and Swiss unions.
Government workers in Wisconsin have been at the centre of a tug of war between the state’s Republicans and Democrats over a new law that, according to Associated Press on NPR, would “force public employees to pay more for their health care and pension benefits, which amounts to an 8 percent pay cut. It also would eliminate their ability to collectively bargain anything except wage increases no higher than inflation.”
Democrats Abroad and others protest in Geneva in support of Wisconsin's state workers
A judge rule Friday 1 April that the law must be put on hold for two months while she studies whether it was passed legally and published correctly.
The proposed law prompted sit-ins and protests in the state capital of Madison for weeks, with thousands of workers from other states providing support. It was finally passed when Democrats left the state to avoid a vote and Republicans found a work-around that they believe allowed them to legally vote for and pass the law.
Continuing protests included about 1,000 groups internationally who marched in their support 4 April, according to Maya Samara of Democrats Abroad in Geneva.
Republican lawmakers in the state of Wisconsin have dramatically curtailed the collective bargaining rights of state workers in what National Public Radio calls “one of the strongest blows to the power of unions in years”. The measures were pushed through with sudden political maneuvering. The vote, after a standoff of nearly a month, sent thousands of angry protesters to the state capitol. Madison, the capital of the state, has been the scene of protests, for days, by tens of thousands of people as the acrimonious debates wore on.
Links to other sites: Fox News (with AP), Los Angeles Times, Milwaukee Journal Sentinal, NPR
US President Barack Obama says that he “wants to get something done this year” about health care reform, and will address Congress in a major speech 9 September to clarifiy his ideas about the best way to move forward. He promises to “make sure that Democrats and Republicans understand that I’m open to new ideas, that we’re not being rigid and ideological about this thing, but we do intend to get something done this year”, he said in an ABC news interview 8 September.
Health care reform has been bogged down in both houses of Congress, where Obama’s Democrats have solid majorities, by recalcitrance on a “public option”, a public health insurance system alongside the private system.
Newt Gingrich, former Republican speaker of the House in the 1990s says in an interview 8 September with NPR, that his advice to Obama is to break health care reform up into five or seven manageable bills, each addressing a separate issue. “I think if they would take — and this is what I suggested to Mrs. Clinton (in 1993, when Hilary Clinton tried to introduce health care reform, ed. note)— if they would take five to seven smaller bills, take one on litigation reform to lower the cost of defensive medicine and to save billions of dollars; take one on fixing Medicare and Medicaid so we are not paying billions to crooks who are not delivering services; have one on prevention and wellness; have one on better practices. You could pass five to seven bills and, collectively, they would add up to an enormous amount of change.” BBC, NPR, Reuters
The Democratic party won a decisive victory in Japan, defeating the ruling right-wing Liberal Democrats, the first time since 1955 that another party has taken a majority. The Democrats are now in a position to put into place their liberal plans to provide more social services. They have also said they would like a less subservient relationship with the US and will look at removing US military bases. Financial Times, National Public Radio, Sydney Morning Herald
Al Franken was named by the US Supreme Court as the winner of the very close and hotly contested US Senate seat race in Minnesota, giving the Democrats 60 seats in the Senate – a filibuster-proof majority “at a time of controversial health care reform measures and unprecedented climate change legislation,” reports MinnPost.
California legislators in the US were battling to keep the state from defaulting on its debts, unable to pay its bills, and from slashing many programmes. Governor Arnold Schwarzenegger has proposed $16 billion in cuts in order to close a $24b deficit. Democratic legislators have proposed tax increases, spurned by Republicans. The Obama administration has refused to bail the state out for fear of sending a wrong signal to other states in difficulties. California is the world’s eighth-largest economy, and has been particularly hurt by the downturn. Its revenues are heavily dependent on income taxes. Reuters, WP, Bloomberg
