On ’real’ Canadians and how Freeland could have responded to McQuaig

Why does the NDP star candidate like FATCA?
MACLEANS-FREELAND-08.06.13-TORONTO,ON: Toronto-Central Liberal party leader candidate Chrystia Freeland holds a casual meet and greet event on Bay Street in an effort to let possible supporters and voters get to know her character and stance on politics.
Photo by Cole Garside

The first round of Linda McQuaig vs. Chrystia Freeland went to McQuaig, according to most of my colleagues who followed the Toronto Centre by-election debate last Friday (if you haven’t, you can watch it here). A book author and veteran of the Toronto Star McQuaig, who’s running for the NDP, is as much of a political neophyte as Freeland, the Liberals’ pick and also an acclaimed journalist with a bestselling book. But McQuaig seemed a more experienced, agile debater, as Anne Kingston points out here, delivering verbal blows left and right that Freeland seemed unwilling or unable to reciprocate.

There was one side of Freeland, in particular, that McQuaig kept poking: Her supposed un-Canadianness. “Toronto is my home, I’ve lived and worked here all my life,” McQuaig noted in her opening remarks. It was a clear side swipe at Freeland, who’s been abroad for years in Russia, the U.K. and the U.S., and settled down in Toronto Centre only recently. Later on came McQuaig’s straight-out jab: “You’ve been there in Manhattan, hanging out with the rich,” McQuaig told Freeland, speaking, for those in the know, about her competitor’s former gig in New York and her recent book on the ultra-rich.

I suspect Freeland chose not to respond in kind. Because if she’d wanted to, there was an obvious line of attack. For all her fondness of being a true Canadian and disdain for hanging out in Manhattan, McQuaig has publicly praised a controversial U.S. law that might end up encroaching on the constitutional rights of a good many Canadians, including, possibly, Freeland and her family.

I’m talking about FATCA, which stands for the Foreign Account Tax Compliance Act, a little-known piece of U.S. legislation that passed in 2010 and should enter into force in Canada next year. (More on that here.) FATCA would require Canadian banks to turn over to the IRS the financial account details of anyone in Canada who might owe taxes to the U.S.

The idea behind FATCA was a good and important one: Catch the fat cats who’ve been skirting U.S. taxes by stashing their money abroad. But the law is designed in such a way that its practical results are quite different. In Canada, FATCA wouldn’t just go after the Canadian accounts of people who live in the U.S. It would go after the Canadian accounts of Canadian citizens—and they don’t need to be rich—who happen to have some sort of link to the U.S. This isn’t Canadians who hold a U.S. passport or green-card. It could be Canadians who were born just south of the border, even though they spent the rest of their lives north of it. It could be Canadians whose grandparents were American. Or any single-passport-holding Canadian who has, at some point, had a U.S. address or a SSN. FATCA would force our banks to sift through their client data to extract the private banking information of these Canadians and pass them on, via the CRA, to the IRS.

This kind of snooping could turn out to unconstitutional under the Canadian Charter of Rights and Freedoms, which protects privacy and liberty and forbids discrimination based on “national or ethnic origin.” And among the many whose rights might be trampled over would likely be Freeland, who must have a SSN, if not a green card, and certainly had a U.S. address. It would also include Green Party Leader Elizabeth May, who was born in Connecticut, and probably other MPs.

Is Linda McQuaig really in favour of letting the U.S. peek into private bank across the nation and, here and there, Parliament Hill as well? That’s unclear. In her own book on the super-rich and inequality, she and co-author Neil Brooks write that: “The reporting requirements in FATCA, assuming they survive the lobbying onslaught, could go a long way toward preventing U.S. citizens from hiding money offshore.” However, the two quickly go on to note that there might be better and most cost-effective ways of doing the same thing. In a Toronto Star column earlier this year, McQuaig wrote that “Even the U.S. Congress passed a sweeping law, to take effect next year, requiring foreign banks to report all assets held by their U.S. clients to U.S. tax authorities.” But again, she rapidly moves on to present an even better idea to catch the fraudsters.

Perhaps McQuaig simply meant to endorse the good idea behind FATCA and not how it has actually been designed. Her apparent lack of attention to the devil in the detail, and how this law targets not just dodgy millionaires and billionaires but middle-of-the-road Canadians who do not live in the U.S., is troublesome. An aspiring MP should know that the road to awful legislation is paved with good intentions.

That’s one sharp jab Freeland could have delivered in response to the just-visiting-Canada attacks. I can see, though, why she might have chosen not to go down this road. FATCA, for one, is a complicated thing to explain in a 30-second soundbite. Besides, talking about FATCA would have kept everyone’s attention on the fact that Freeland has been absent from this country for many years without clearly turning that from a perceived liability into a point in her favour. Sensibly, she preferred to focus on how her “international experience” will be an asset in her work on Parliament Hill. Finally, I think Freeland, once a high-powered Reuters editor who has been attacked for laying off some people, wanted to play down her tough side. Instead, she appeared to be trying hard to come across as the “nice person” one debate caller said she seemed to be.

Still, if not Freeland, someone else should ask McQuaig to come clear on her stance on FATCA. I, for one, would be very interested in what she has to say.