God, grant me the serenity to accept the things I cannot change,
The courage to change the things I can,
And wisdom to know the difference.
As I watch the IGA spectacle unfold, I have the feeling that other countries don’t understand citizenship-based taxation. They don’t understand that by employing citizenship-based taxation, they are really asking other countries to identify lawful residents of their countries, and help the U.S. collect tax from them. This tax collected as at the expense of the country where those US citizens reside. All penalties paid under the OVDP and OVDI penalty programs erode the tax base of the country where the U.S. citizen abroad resides. Because no other country (except Eritrea) imposes citizenship-based taxation, reciprocity (even if the U.S. could be trusted, which it clearly can’t) would not mean that the US would report on citizens of other countries. At best, the US would report on residents of other countries that have bank accounts in the US. The point is a simple one:
A FATCA IGA does not require the US to erode its own tax base in any significant way.
Why is there this imbalance? The answer is simple. Only the US employs citizenship-based taxation. The US employs citizenship-based taxation as a weapon against not US citizens abroad, but against the countries where they reside.
Therefore, at the end of the day, if the US is going to get “FATCA Co-operation” from the rest of the world, it must stop citizenship-based taxation.
Interestingly this necessity seems to have been recognized in an academic paper – FATCA: Toward a Multilateral Automatic Information Reporting Regime by Joanna Heiberg. I highly recommend this article.
She writes in part:
Future generations will visit the #PFIC memorial in Washington – a monument to the destruction of #americansabroad isaacbrocksociety.ca/2013/04/17/exc…—
U.S. Citizen Abroad (@USCitizenAbroad) April 24, 2013
I have never met a Homelander who would believe the story referenced in this tweet.
Q. What do the U.S. and Eritra have in common?
A. They both terrorize their citizens abroad.
This post is a “follow up” to an earlier post called: “Why are we so cruel to U.S. citizens living abroad.” That post also referenced the above Twitter Exchange. That post included the following poll:
The preceding twitter exchange identified at least part of the reason for citizenship-based taxation as “Congressional ignorance”. The exchange also referenced the need to get the message to the Ways and Means Committee. With the help of the advocacy of American Citizens Abroad and others Congress received many submissions on the topic of citizenship based taxation. Thanks to AbusedExpat for taking the time to transcribe excerpts from the submissions in comments starting here.
As Patrick Henry notes the comment from Jackie Bugnion of ACA rated a 10 on the “emotion scale” and was a true “Declaration of Independence” for Americans Abroad. Patrick Henry comments that:
CBC ask u to pass "investigative tips" about those using #offshore trusts to email@example.com isaacbrocksociety.ca/2013/04/04/can… – What a world!—
U.S. Citizen Abroad (@USCitizenAbroad) April 04, 2013
The Prophetic George Orwell – Winston Smith – 1948
George Orwell’s “1984″ is a book that I reread every ten years. The more times I read the book, the more prophetic I see that it was.
Here are the final few paragraphs of George Orwell’s 1984
Of relevance is the following:
It should be self-evident, however, that such a result is absurd, and cannot have been intended.
Congress cannot possibly have meant to treat individuals who had long since relinquished their U.S. citizenship, and whose expatriations had always been respected for federal tax purposes, as if they had been citizens all along.
Undoubtedly, Code Sec. 877A was meant to apply solely to individuals that, on (or after) the date of enactment, were otherwise treated as citizens (or long-term residents) for federal tax purposes.
Any individual who took all steps required to successfully terminate citizenship for federal tax purposes, under the tax laws as in effect immediately prior to enactment of the 2008 Act, would not again need to relinquish U.S. citizenship and thus could not be within the intended scope of Code Sec 877A(g)(4).
“A Government of laws and not of men”
Growing up in the United States I remember hearing this phrase “time after time”. I don’t recall ever:
- thinking about it
- asking about
I just accepted it. Surely (like all great ideas) it must have been invented in the United States and it has been attributed to John Adams.
Will the 2013 Canadian Federal Budget include some references to Canadians who the IRS defines as U.S. persons? As we all know the US is currently trying to get Canada to surrender part of its sovereignty by signing a FATCA IGA.
In its prognostications on the 2013 Budget, Moodys Tax Advisors considers:
Nice list of articles about citizenship-based taxation by Victoria: …efranco-americanflophouse.blogspot.fr/p/the-diaspora… #FATCA #FBAR #americansabroad—
U.S. Citizen Abroad (@USCitizenAbroad) February 12, 2013