How the term “US person” will give the US “de FATCA” control over other nations

By attempting to impose FATCA on the world, the US is attempting to place the world, not in its hands but in its Iron Fist.

The US is leading the world  into a frightening Orwellian future. Those  of  you who have  read  Orwell’s  1984 will recall  the importance of language. Language is used  to shape our attitudes. Language  is used as a  means to enhance and contract our understanding of issues. Hence, the importance of “Newspeak”.

Today I had  an interesting thought (a rare  event). I realized that all of the discussion of  US tax laws uses the language of “citizenship-based taxation”. This is  misleading language. US tax laws  apply to far more than US citizens. The Internal Revenue Code  speaks  of “US persons”.

US persons include: citizens, residents, Green card holders  (whether they live  in the US) and those who spend “too much time in the US”. Therefore, what we refer  to as “citizenship-based taxation” is really “US person-based taxation”. But, who or what is a “US person”?

A “US person” is anybody or anything that the US defines as a  US person.

Therefore, “US person-based taxation” is:

A system that allows the US to decide it has the right to tax anybody or anything in any place that it would like – including residents of  Canada and other sovereign countries. It is a term defined by the US in various statutes including the Internal Revenue Code. Because  statutes can be amended by Congress, the definition of “US person” can be amended by Congress. In other words, there is no permanent meaning to the term “US person”.

I repeat: what we refer to as  citizenship-based  taxation that we will call  “US person-based taxation”  which really is a system that means that:

A system that allows the US to decide it has the right to tax anybody or anything in any place that it would like – including residents of  Canada and other sovereign countries. Furthermore, it allows the US to change the meaning of US person when it wants to.

This matters in the context of the “FATCA IGA” discussion. Why? The US is attempting to enter into FATCA IGAs that will require countries to “root out” US persons. Canada is currently engaged in  FATCA discussions with the US. If we refer to this as  an issue  facing “US citizens” we are planting the seeds of indifference. Who cares about US citizens? Nobody. But, if  it  is understood that “US persons”  includes  dual  citizens and a number of other  people who are residents of Canada and no connections to the US then things might be different. Furthermore, the phrase  “US persons”, by its very nature, suggests inclusion of people  beyond US residents. All countries (except the US) tax  only residents of their  countries. Most people  regard  the notion of taxing people  who are non-residents of a country as being preposterous, ridiculous, and a joke. It  is  unquestionably immoral. Because the term  “US persons” does not restrict the definition to  US residents, the use of the term “US person” may make it easier for people to understand the problem.

Therefore, from this point on, I will describe  the US tax situation as follows:

First, the US taxes  “US persons”;
Second, a “US person” is anybody the US defines as  “US person”;
Third, US persons can include  people living in any country at  all in the world including residents of Canada;

Fourth,  the US can change the meaning of “US person” any time it wants.

US Persons, FATCA and FATCA IGAs

As the US Treasury continues its attempts to bully various countries into  signing FATCA IGAs, the focus  continues to be on the details of an agreement. Theses details include a consideration of:

– what the FATCA partner country is required to do

– what  the US is required to do

– whether  the US can be trusted.

Let’s disregard what any agreement will  require  the US to do. Let’s forget about whether the US can be trusted  to abide  by the agreement. Let’s  even forget about what the agreement specifically requires  of the FATCA partner country. The details of  the agreement are  irrelevant. What is relevant is the effect of any FATCA agreement with the US.

What matters is that the effect of any agreement of this  type will be to turn the fiscal sovereignty of the partner country over to the US. There are a number of reason why, but the most important reason is/are as follows.

1. Fact: Through “US person-based taxation” the US steals money from the treasury of other countries. Money that has been earned, taxed and created in other countries, which is part of the tax base of those other countries is turned over to the US. This is outright theft. What the US is saying is: because  one of your resident/citizens was born in the US, we are defining your resident to be a “US person”. Since it is a “US person” the US has a claim on part of the economy of your country. In this way the US is in a continual  state of war with other countries.  The “weapon of choice” is “US person-based taxation”.

Recent examples of the US stealing from the economies of other countries  include:

– the taxation of Canadian mutual  funds (deeming them to be  PFICs)
– the FBAR Fundraiser
– the OVDI terror campaign

“US person-based taxation” is immoral.

As Don Whitely has opined: what if every country “country-person-based taxation”?

2. Fact: FATCA is an attempt by the US to force other countries to help  it  enforce  the immorality of “US person-based taxation” (citizens, green card  holders  and those who spend too much time in the US). Note that it is the US who defines  who is a US person.

3. Prediction: Once a FATCA IGA is signed, the US will gradually expand the definition of “US person” to include more and more kinds of people.

Examples:  Anybody who  ever  attended  school in the US or anybody who has even watched  NFL football (or anything else as stupid or arbitrary).  This will  turn more  and more  residents  of  the “FATCA partner” into “US persons” and into US weapons inside that country. It will result in a bigger  and bigger share of the economy of  the “FATCA Partner country” being turned  over as a “forced  tribute”  to the US.

4. Fact: As more  and more  people  are deemed  to be “US persons”, more and more people will be  forced to disclose their lawful, post-tax assets, to the US. (Or as former IRS lawyer Steven J.  Mospick” would  put it: “register their assets with the IRS”).

Prediction: Once those assets are registered they will be subject to confiscation and will eventually be confiscated.

Conclusion:  Under no  circumstances  should any country enter  into a FATCA IGA with the US.

I have no doubt that some readers  of the post will view this is somewhat “alarmist”. You are wrong. Although, I am sounding an alarm, it is not alarmist.

I remind you of  the following:

A. The FBAR rules were  enacted in 1970. Who would have imagined that they would be used to  steal  the assets of US citizens abroad?
B. The PFIC rules were  enacted in 1986. It was  not until  2010 that the IRS got the idea of applying them to Canadian mutual  funds.
C. The application of the Shulman voluntary disclosure  programs continue to be  an immoral attack  on US citizens abroad – would you have ever  imagined that the US would  do  this to its  own citizens?

My point is a simple  one. Under no circumstances should  any country enter  into  an agreement with the US that allows the  US to define who is a US person for tax purposes. Under NO circumstances should Canada enter into a FATCA IGA with the US. Not now! Not ever! History demonstrates  that the US simply cannot be trusted.

Sooner or later the world  will have to resist FATCA. It is less expensive to resist now. Peaceful resistance to FATCA will result in a new world financial order.