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Another more basic factor behind this phenomenon is prob just demographics. All of East Asia and SE Asia, most of Central and South Asia, the birth rate as measured in total fertility rate has fallen fast in past 20 years, way below even many Western countries. As result most of Asia is already seeing massive labor shortages that just get bigger every year. This causes wages to rise across Asia, and this is big factor in encouraging Asians to stay in their home countries, or to migrate to other Asian countries instead of going to the US. Asian-Americans meanwhile, since they often speak the language and have cultural connections but also international experience, have especially huge opportunities to fill the Asian labor shortages with massive salaries, so that's a huge draw on them going back. Even the few Asian countries like Philippines and Vietnam that used to have higher birth rates are falling fast, and India's TFR is dropping like a stone so they have less surplus labor, and the extra labor they do have is inclined to go elsewhere in Asia instead. Even the Muslim countries in Asia have very fast falling birthrates, even Afghanistan and Pakistan which have been higher than the others are seeing this. This is one of the big underling factors both behind Asians staying in Asia and more Asian-Americans going to home countries.
Quite true, you've identified a big long term phenomenon here that will do a lot to shape the future demographics of migration in North America and across the world. An ex colleague of mine working in stats collection offices has been seeing this, both China and India are starting to receive immigrants as much as sending them out, and as their birth rates stabilize and fall further and wages rise, there's both a disincentive for the native born to leave and also a draw for other immigrants, especially from elsewhere in Asia to go there instead. Increasingly, immigration to the USA, Canada and Australia is going to be from the Muslim world, Africa and Latin America simply due to sheer demographics and development reasons.
Last edited by Corascant; 06-11-2017 at 03:11 PM..
Why did they come here for a better life? I have had a horrendous experience with them in a hospital. They have no human rights laws so they bring that policy here and they wonder why they get treated like s**t.
I checked up on some references after EllisBell posted and China is still listed as a territorial-based taxation country unlike the United States and Eritrea (which are listed as the only two to do citizenship-based taxation). While it is true that China and tons of other countries tax their overseas citizens on income and assets gained within the home country, I'm not sure that's unusual. What's bizarre about the US and Eritrea is that they tax their overseas citizens (and, for the US, green-card holders) on income and assets made entirely within other countries-- in other words, income that has had no connection to the US at all. For example, let's say an American citizen working for a foreign company (say, Louis Vuitton) gets transferred to HQ in France. Naturally that American now has to pay French taxes on a French paycheck, and practically any other country would just leave it at that, but the US also requires you to file taxes in the US for income made entirely overseas.
Theoretically if one makes below a certain threshold overseas, you can just write off the US-based portion of the tax burden. But in practice that fails due to Fatca since 1. the threshold is ridiculously low (hasn't been adjusted for inflation in years) and so Americans get double-taxed, and 2. the real kicker-- Fatca allows for heavy financial penalties to be levied even on American citizen expats who don't actually own any taxes, due to minor errors with things like paperwork filings or currency conversion, we're talking tens of thousands of dollars! These outrageously unfair administrative penalties are the real reason so many American expats are turning in their passports and getting new ones-- just dealing with the currency conversion factor alone is not only time-consuming, but extremely expensive in the accounting. Essentially it means that, say, some American-born English teacher working abroad in Egypt-- who obviously wouldn't make enough to owe US taxes-- still has to fill in a constant stream of FBAR forms with exactly correct currency conversions, or face heavy fines of $10,000 or more despite owing no taxes. The accounting fees alone would eat up the whole salary of the English teacher abroad. This is the real injustice of Fatca, it does nothing to go after actual tax cheats like Mitt Romney or Leona Helmsley living in the US but stashing billions abroad, while it penalizes normal working and middle class American citizens and immigrants on green cards, just trying to make a living working overseas. China doesn't do this-- I've had a number of Chinese workers in businesses that I've worked for, and they don't get taxed on businesses or earnings operating in the US.
And Fatca gets still worse, where it gets really ridiculous is that the US also requires an American "person" (again, can be just a green card holder) to have all banking and financial records turned over for spouses as well, even foreign bank account statements which have to be translated and currency conversions made. If this isn't done (and due to common sense privacy laws it's almost impossible to comply with), the US Feds threaten to withhold up to a third of transactions that the foreign banks are owed-- that's right, the US actually threatens to default on obligations owed to foreign banks if they don't comply with this outrageous invasion of privacy and turn over documents for people who haven't spent a day in the US! This includes, for example, a number of Canadian citizens who've never grown up or gone to the US, but if they have a single American parent (or their parents gave birth to them on a vacation in the US), they're technically an American citizen, and their banks overseas have to turn over everything on them. As a result, banks overseas increasingly are just closing the accounts of US expats or even foreign citizens who just happen to have an American parent or have been born in the US-- that is, they've never even used any services within the US (schools, infrastructure, anything). This poorly thought out mess of a law is having disastrous impacts, above all for the US. And China, again, doesn't do anything like the above to its own citizens earning money overseas.
That's the source of Fatca's damage to the US economy and the heart of the law's stupidity-- it's causing enormous harm to millions of normal, law-abiding citizens for the sake of gaining a few hundreds of millions of dollars, while on net losing hundreds of billions of dollars for the US in forfeited export revenue and immigrant entrepreneurialism.
Fatca is causing the US export industry to be utterly slaughtered, and it's the real reason the US trade deficit keeps exploding worse and worse every year. The "strong dollar" excuse is ridiculous-- the US has had much stronger exports in the past with much stronger dollars even though we had far less to export. In 2016 oil and natural gas-based exports alone gave the US tens of billions of dollars in extra export income compared to a decade ago and yet the trade deficit grows even higher? That's because the real reason for the devastating US trade deficit is Fatca, it's making it impossible for our exporters to do their jobs. Exporters by their nature have to live and work overseas and have a large portion of their staff do the same, but Fatca is making it impossible for them to even hold a bank account in the countries where they're selling American goods, while forcing unmanageable extra costs on them simply for filing all the FBAR paperwork. So Fatca is single-handedly killing the USA's export golden goose.
And again, maybe even worse, Fatca is driving away immigrant entrepreneurs who've been the lifeblood of the US economy. Like American expats, immigrant green card holders have to file mountains of paperwork even on assets and earnings earned entirely overseas (generally in their home countries). And since almost all immigrant businesses are funded in part by capital from relatives, friends and investors overseas, Fatca's FBAR paperwork is in effect making it absolutely impossible for immigrant business startups to get the necessary capital for their businesses. Like I said in Texas where I used to be centered for work, entire communities of productive Asian-Americans like the large Indian and Chinese-American communities there have simply picked up and gone back home, often including their US-born kids, due to Fatca making it impossible for them to run their businesses. And recently I learned that in LA, OC and other parts of California, where I grew up in part, the very productive Korean, Chinese and Vietnamese-American communities are also being forced to close their businesses and go back home since Fatca is making it impossible for them to get necessary capital for their businesses or avoid outrageous fines for trivial currency conversions of assets held entirely in their home countries.
Fatca is an epically stupid law and both Dems and Republicans have made noises about abolishing it, but neither party actually does anything about it. It just shows again that the US political system and political parties aren't actually working for the people they supposedly represent.
Chinese citizens and businesses do have to pay income taxes on income made in other countries. It's not as enforced as the US, but there are multiple articles out there that China is starting to crack down on this. The only difference is that they do not tax Chinese residents (who are not citizens) foreign made income, but there are very few Chinese (permanent) residents (only a few thousand).
Many Chinese probably don't even know they are supposed to tax their overseas income, the whole Chinese tax system is ridiculous and is rarely enforced, even in China. Me and my wife (who is Chinese) knows very few people who pay taxes. But that doesn't mean the laws aren't technically there, and China is starting to enforce these laws.
I make a decent amount of income overseas, in China, and it really makes me think about immigrating to somewhere like Australia where I don't have to worry about being taxed on foreign incomes. It's an absolutely ridiculous tax system to tax foreign incomes. I don't see the US changing that anytime soon either.
Why did they come here for a better life? I have had a horrendous experience with them in a hospital. They have no human rights laws so they bring that policy here and they wonder why they get treated like s**t.
Very sorry to hear that. Do you mean they mistreat the staff or each other, in US hospitals? (not questioning your experience in any way, just trying get a better handle on it)
Chinese citizens and businesses do have to pay income taxes on income made in other countries. It's not as enforced as the US, but there are multiple articles out there that China is starting to crack down on this. The only difference is that they do not tax Chinese residents (who are not citizens) foreign made income, but there are very few Chinese (permanent) residents (only a few thousand).
Many Chinese probably don't even know they are supposed to tax their overseas income, the whole Chinese tax system is ridiculous and is rarely enforced, even in China. Me and my wife (who is Chinese) knows very few people who pay taxes. But that doesn't mean the laws aren't technically there, and China is starting to enforce these laws.
I make a decent amount of income overseas, in China, and it really makes me think about immigrating to somewhere like Australia where I don't have to worry about being taxed on foreign incomes. It's an absolutely ridiculous tax system to tax foreign incomes. I don't see the US changing that anytime soon either.
That is interesting thanks for clarifying, I wonder if there are also otherwise obscure technical or semantic differences that have caused the international accountants to still label China "territorial-based" vs "citizenship-based" in its taxation system, for example in the jurisdiction that's assigned to the income. I do recall some Chinese colleagues saying they paid home-based taxes on US income that was received from companies where a Chinese investor or firm had a significant stake. It was a bit confusing but as I understood it, their paycheck technically did originate from a company under Chinese jurisdiction and since they (for part of the year) were back and forth in China, I guess there was some technicality that still made it "territorial" taxation, though as I recall this was explained from the start so there wasn't ambiguity on where they were paying their taxes. And even in one case where one of my colleagues did wind up owing some back taxes in China for income made while in the US, it was a minor hassle and a reasonable (reduced) amount. Absolutely nothing like the ridiculous and grossly unjust "administrative penalties" that Fatca imposes for minor paperwork or currency conversion errors even when no back taxes are owed, which hit exporters, small businesses and backpacking English teachers very hard while doing nothing to strike at the offshore tax havens that were supposedly the goal of Fatca. That's a big reason for the frustration with Fatca it seems like, Americans working abroad just aren't sure what the deal is without paying thousands of dollars for extremely expensive accounting help, and even then often wind up owing thousands more in administrative fees without actually owing any taxes! Damned if they do, damned if they don't.
Seems like in any case the Chinese tax authorities are far less intrusive when it comes to foreign bank records, which IIRC is the main problem with Fatca and a big reason why so many American expats are turning in their passports and replacing it with EU or eg Brazilian or Argentinian citizenship. That provision of Fatca is totally nuts and is really leaving the expats (and recent immigrants) with no choice. Demanding that foreign banks turn over all their records on Americans and their foreign spouses-- and forcing the foreign banks to take on the expense, with the threat of default on obligations owed by the US-- seems like not only a violation of international law, but an utterly impossible and expensive demand on foreign businesses. It's another example of how Fatca seems like a law passed by delusional fools living in their own world, with no concept of how exporters or businesses work (and what their expenses are) in the real world. If Fatca wants foreign banks to turn over so much information on US clients, there should be a clear provision that the US will fund or at least refund the costs of such transactions, since this can be a considerable expense for a foreign bank and it's understandable that they're closing accounts on US citizens. Including, worst of all, hundreds of thousands of Canadians who never even set foot in the US and never used US public resources, but are arbitrarily declared "US persons" due to having an American parent. Totally arbitrary and ridiculous.
I don't know the tax regimes of other countries in detail, but in my own experience working abroad, the United States is the only country that has hundreds of thousands of its own citizens actively working to shed citizenship in their home country, and it's all due to FATCA so all the hatred and rage against that law would appear to be amply justified. In France last year there was a 3-year waiting list of American expats going to the embassy to renounce their US passports and replace with French or Belgian EU passports, so much so that they had to bring on extra staff to deal with the backlog. I have never, ever seen this phenomenon for citizens of other countries, not even those fleeing ultra repressive regimes like Somalia or Venezuela, they almost always keep their native citizenship too.
The only answer to this is that obviously, the other countries even with repressive regimes, don't make ludicrous tax demands on their citizens earning money overseas. This in turn is a big net gain for them economically since their overseas citizens return the favor by sending home remittances. Whereas the United States is pushing away its expat and new immigrant populations with FATCA. There was a study done by I think British and Australian economists last year on FATCA, reported on in the Financial Times, showing that FATCA since it was enacted has cost the US economy more than $1.5 trillion in lost investment, exporting business, remittances from overseas Americans to family back home, closed businesses- all the new immigrants closing up shop since they don't want to deal with the FBAR reporting requirements for foreign capital holdings- lost tax revenue and lost partnerships with overseas traders.
You guys have covered some of the damage from FATCA but I think maybe it's worst damage is more subtle but getting worse every year- it's crippled the American business initiation machine and completely altered the US immigration stream, so rather than receiving mostly entrepreneurial, ambitious, innovative immigrants the way America used to, instead FATCA is driving out the entrepreneurs and causing the US to receive overwhelmingly unskilled refugees and welfare recipients who suck up taxpayer resources while contributing little in return. The data bears this out, advanced degree recipients with a lot of startup capital used to overwhelmingly seek green cards in the US and start businesses, but now they're overwhelmingly returning home. This was a bit of a trend before hand but it accelerated extremely fast after FATCA was passed- another article in The Economist pointing this out- because FATCA puts outrageous burdens on foreign-born entrepreneurs while even driving away American-born entrepreneurs who have connections abroad, which is most businesses these days.
I see this happening a lot in both Europe and Asia, the very best and brightest immigrants who once would have started up Fortune 500 companies in America, are instead leaving the USA or avoiding it altogether, instead getting citizenship in the EU, Brazil, Ecuador, Argentina, Panama, Chile, Uruguay, the former USSR or tons of countries in Asia. Say what you want about the EU, they've been smart enough to stick with territorial taxation instead of US-based citizenship taxation- the same with Asia and Latin America- so you only pay taxes where you earn money, no FBAR's or dumb accounting fees to file back in your home country if you didn't earn money there. This is very attractive to the smartest entrepreneurs and that's why they're more and more are choosing Europe, Asia or Latin America, despite their flaws, over the US. FATCA is imposing too much of a burden or business risk and successful business starters can lose their shirts due to all the traps and penalties with FATCA, and so it's likely a big factor in what the OP is seeing with Asian-Americans going back to Asia. It's certainly a big factor in smart Europeans going back to Europe. Again, look at the major long-term immigration sources to the US these days- not the short-term sources just sending students over- the top sending countries or those with biggest growth in immigration to the US are failed states full of unskilled refugees like Venezuela, Somalia, Iraq, Afghanistan, Congo, Ethiopia, Burma, Eritrea, Egypt, Pakistan and Honduras. Immigration from Europe to the US is basically nonexistent, in fact the balance is mainly in the reverse direction these days, while a lot of reverse migration has been happening to Asia too, with only the Muslim countries with failed governments being net large senders to the US anymore. They come mainly for US welfare instead of entrepreneurial ambition, so FATCA doesn't matter to them. OTOH FATCA makes it not worth the hassle for the more entrepreneurial ones to come here. It's a suicidal law, the USSR in 6 decades never did half the damage to the US that it's doing to itself with FATCA.
A lot of Filipinos been caught up in this problem with the FATCA act too, for example an aunt of mine, naturalized US citizen who had a profitable restaurant had to close it because the tax authorities fined her heavily because they said she did not correctly report the value of all the appreciated assets she had back in Philippines or the investments from Filipinos back in PI. Even though she owed no taxes at all, and all her assets in PI were from property and friends and family investments that was solely in Philippines, not earned in the US at all. and still they come and fine her severely for technicalities because she didn't correctly calculate a couple PHP to dollar conversions on real estate income for property entirely in Philippines! This just stupid and it's nothing more than a big money grab by US government against law abiding hard working people, because authorities don't want to go after the real tax cheats cause they're billionaires who bribe and contribute to the political campaigns, so they go after hard working small businesses owners and especially immigrants instead with FATCA, easier targets. Mark Zuckerberg and Bill Gates get away with paying less percent in taxes than janitors, put a ton of money in Bahamas or Caymans, yet IRS doesn't go after them because they just bribe Senators.
My aunt worked 100 hours a week for 14 straight years to get her business off the ground and she didn't have a lot of family money to start with like Zuckerberg or Gates, she truly was rags to riches, working hard every day starting with nothing. She was a big donor to local charities and she provided employment to dozens of American citizens, so then US government shows it's "gratitude by forcing her to pay $20,000 in accounting fees for assets based entirely in PI, and then fines her heavily anyway for calculation errors even though she owe not taxes? And the US is going to lose far more than it ever gain by treating good people like dirt and corruptly fining them money like this, she was so mad about it that she sold her restaurant and now she and her kids are moving out of the US, going first back to Philippines before resettling in France. So all their investments and new jobs will be in Europe economy instead of USA. Who came up with FATCA? Dumb law and targeted at all the wrong people, good hard working Asians certainly won't come to America anymore because of it, they have a lot better alternatives with countries who won't milk them and their businesses dry over technicalities.
So I think it's fair to say that Fatca is indeed one of the additional factors responsible for this phenomenon, maybe not a major one but for small-business owners and entrepreneurs no doubt, it's got to be pushing a lot of them back to Asia. Which is a shame, because this law is effectively pushing away the very talent the US needs most.
Amero, since it sounds like you've been in Europe a lot, have you also been seeing a lot of younger Euro-Americans returning to Europe in parallel to the Asian-American phenomenon? I realize it's a much smaller population than 2nd-gen Asian-Americans going back but I figured it might help shed light on the Asian phenomenon esp if researchers there have been collecting data on it.
The asians came her looking for the American Dream. Long gone ....no dream now just reality.
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