"It is a sign of total arrogance on the part of the U.S. to feel it can impose its rules on the rest of the world."

So says Jackie Bugnion, as quoted in a recent Wall Street Journal piece about the effects of the HIRE Act, the latest piece of legislation which treats American expatriates as criminals and marks.

The act, which I have not yet read, requires foreign banks to turn over information about their U.S. customers if the banks want to operate in the United States. Some foreign banks are consequently refusing to do business with Americans. The bill also contains provisions which would potentially make Americans unemployable in the financial operations of foreign companies, because the U.S. government demands information about the accounts to which the citizen has access, a commenter notes.

This will only get worse. Someone has to pay for the U.S. government's spending, and expats are the obvious target. Few congressmen will care, and most voters will view "unpatriotic" expats with distaste. You'd think American businesses would object, but, on the other hand, why would they want foreign competitors competing for personnel or investment?

An excerpt:

The U.S. government – under a new law incorporated in the Hiring Incentives to Restore Employment Act signed by President Barack Obama on 18 March 2010 – is demanding that international financial institutions reveal which of their clients are U.S. citizens with accounts of more than $50,000. Foreign banks are, in effect, being asked to act as the international enforcement arms of the Internal Revenue Service. Those banks that don't comply will be subject to a 30% withholding tax on all payments made to them in the U.S. Many banks and wealth managers have decided it is far easier to politely show their U.S. clients the door. . . . .

The Hire Act is only the latest in a raft of different laws aimed at American expats, American residents with off-shore accounts and the institutions that service both groups. Jay Krause, a partner at the law firm Withers, says: "The difficulties that American expats face predates the HIRE Act. But the new law will take it to a whole new level. I think that it is the most remarkable piece of tax legislation ever enacted."

The U.S. government already taxes expatriate citizens on their worldwide income regardless of where it is earned or where they live, making them the only people in the developed world who are taxed in both their country of citizenship and country of residence. Many expats complain that these rules are getting tougher and the penalties more draconian by the year.

I've blogged in the past about how the state and local governments in California are pricing themselves out of the market for residents, seemingly unaware that people can leave. The federal government also needs to be aware that, while the current number of persons renouncing their U.S. citizenship is small, internationally minded people can only take so much.