This is a response to the email from Professor Green.
Dear Professor Green:
U.S. citizens abroad – Democrats, Republicans and Independents – thank you for the “FBAR/FATCA Task Force” and we note with gratitude that:
Your FBAR/FATCA Task Force has been working steadily to seek relief for overseas Americans facing onerous tax reporting burdens.
Furthermore, your six proposals would be welcomed by U.S. citizens abroad – to be specific:
- 1. Define a foreign or offshore account as an account in a country other than one’s country of residence or the US, thereby recognizing the legitimate need for local banking services;
- 2. Raise the FATCA reporting threshold to $1 million to put the focus on taxpayers with wealth sizeable enough to justify the costly and complex investment structures normally used to conceal assessable earnings;
- 3. Index the reporting threshold to inflation so that it goes up every year just as the Section 911 income exclusion does;
- 4. Add a provision that excuses anyone who does not owe taxes (because of the Section 911 exclusion or any other exemption or a tax treaty) from the obligation to file form 8938, regardless of the threshold reporting;
- 5. Merge the FBAR reporting requirement with the developing FATCA legislation to eliminate duplication in filings; and
- 6. Offer amnesty to overseas Americans who are delinquent taxpayers, inviting them to pay what they may owe and restore their status as tax-compliant citizens. (See our opening remarks for our success in this area.)
That said, your proposals are merely an attempt to improve the conditions of the prison of citizenship-based taxation. You are essentially just accepting the ideas of citizenship-based taxation, FATCA, FBAR and the rest. Gotta be in prison anyway. Why not put the effort into getting along better with the guards!
I once heard the following story:
During the time period that Obama was looking for the “First Dog”, he was out jogging. He met a man with a litter of beautiful puppies. He asked the man the following question:
What kind of puppies are these? The man answered, they are democrats Mr. President.
A week later, Obama brought his wife back to look at the puppies.
Naturally she asked: what kind of puppies are these? The man answered, they are Republicans.
Obama said what? Last week you told me these puppies were Democrats.
The man answered. Well, I was telling you the truth.
Last week they were Democrats. But, this week their eyes have opened and they are Republicans.
Professor Green: I think you need to open your eyes too.
My read of your bulletin is that you are making two broad points:
1. The Obama Democrats really are friends of U.S. citizens abroad. Here are your reasons:
Compliance: “The Internal Revenue Service has made a significant concession to overseas voters who present little or no risk to tax avoidance.”
Professor Green: It’s clear you haven’t read the “concessions”. What the IRS is saying is that for those who have not filed tax returns, and are a “low compliance risk“, people will not face penalties. Furthermore, if you keep your eyes open as you read, you will see that owing less than $1500 tax is NOT a guarantee that one is “low compliance risk”. In addition, it is impossible that this could affect more than a small percentage of taxpayers. Let’s not forget the reign of terror coming from the Obama administration. Hundreds of innocent people terrorized into entering OVDI. Remember “The silence was deafening“. Remember Ambassador Jacobson’s statement: “we are not unreasonable …” (while 70 year old grandmothers were terrorized into OVDI). Remember the IRS letting the 2011 tax season pass without following up on their January 9, 2012 promise of procedures to come into compliance. The effect of not giving people timely directives for how to come into compliance is that they remain out of compliance. (Of course this does allow the IRS to levy more penalties.) Remember the failure to respond to the TAD from Nina Olsen with the respect to the infamous Q. 35 “bait and switch” in the 2009 OVDP? And what about the treatment of those overseas Americans who didn’t even know they were Americans. The IRS is graciously telling them that they must pay 5% of their assets to the IRS. This latest message from the IRS seems to me to be an attempt to get more people into the system. The problem is of course, as all long-term tax filers will know, is that (assuming no filing of FBAR), they are at great risk of penalties because they are in the system.
I could go on, but I won’t. So, Professor Green, it doesn’t look like there any significant concessions to me.
FATCA: “The good news is that the threshold for reporting under the FATCA regime (Form 8938) has been raised from $50,000 to $200,000 for individual-filing Americans living abroad (to $400,000 for Americans living abroad filing jointly).”
Professor Green: To say this is good news is to say only that the impact could be worse or that a smaller number of people will be affected by FATCA. You assume that FATCA is inherently good. But, that only its application to U.S. citizens abroad is bad. This is ridiculous. FATCA is an an attack on the sovereignty and freedom of all nations and all free people. I will say it another way: FATCA is inherently bad. FATCA is he beginning of the end of freedom and democracy the world over. People the world over, need to oppose FATCA, and not just how it applies to certain U.S. citizens abroad. Believe me, sooner or later it will apply to all. The time to take a stand is now. Somehow, the following poem by Martin Niemoeller comes to mind:
First they came for the Communists but I was not a Communist so I did not speak out. Then they came for the Socialists and the Trade Unionists but I was not one of them, so I did not speak out. Then they came for the Jews but I was not Jewish so I did not speak out. And when they came for me, there was no one left to speak out for me.
You should be opposing FATCA and not just the application of FATCA to certain groups!
But, you do make the point that:
The Government should be attacking tax cheats: You proudly state that: “In our discussions with political and bureaucratic officials we go to great lengths to express our support for the Government’s crack down on money launderers and tax cheats before explaining the adverse impacts and outlining our recommendations for making FATCA less harmful to overseas Americans.”
Professor Green: The Obama administration is defining U.S. citizens abroad as tax cheats. So, what you are really saying is: We express support for the IRS attacking U.S. citizens abroad, it’s just that it is harmful to U.S. citizens abroad to be attacked by the IRS.
Professor Green: U.S. citizens abroad are tax cheats only because the U.S. continues to terrorize its citizens with citizenship-based taxation (just like Eritrea). Citizenship-based taxation may be a violation of international law. There are some who believe that citizenship-based taxation is a crime against humanity. By using citizenship-based taxation, the U.S. has created a class of criminals that doesn’t exist in any other place except Eritrea. So, how about this for a novel idea:
Get rid of citizenship-based taxation. Lower the number of tax cheats. Lower crime.
Some comments on these points from readers from your email:
2. Americans abroad should get out and vote for Obama:
But, as we move forward toward November 6, please bear in mind that, as troubling as our tax issues are now, conditions would be much worse (taxes and way beyond) with a Romney presidency, a tea party House and a Senate without a filibuster-proof majority. Imagine a right wing activist Supreme Court for thirty years (despite the welcome news about the President’s historic health care initiative)!
Some comments on this point:
Professor Green: What is your objective here? Is it to promote the Obama administration or is to help U.S. citizens abroad? Unfortunately there is NO POSSIBILITY OF DOING BOTH. The Obama administration has declared war on U.S. citizens abroad. It has forever changed their lives as they knew them. Remember:
Let’s explore the consequences of both promoting Obama and of supporting U.S. citizens abroad.
1. If you are trying to support U.S. citizens abroad, then you should be telling the Obama administration that if they don’t change their policies NOW that you will be encouraging your group – Democrats Abroad to vote for Romney. The only thing the Obama administration will understand is a loss of votes. With respect, the notion that we should trust these people to make changes after the election, ranks as one of the stupidest things I have ever heard! They have had a long time to change their policies toward U.S. citizens abroad. Instead, it is getting worse and worse. By suggesting that people should vote for Obama, Professor Green you are encouraging and supporting the same policies that you claim to protest.
Since, you are busy urging that people vote for Obama, it is clear that you do NOT represent the interests of U.S. citizens abroad. Comment after comment has demonstrated how hostile the Obama administration has been to U.S. citizens abroad. Let me put it another way:
The Obama administration has forever changed the lives of U.S. citizens abroad! The IRS and Obama administration have stolen the lives of hard working Americans. I venture to say that many U.S. citizens abroad are not even the same people they were a year ago.
2. If you are trying to support Obama, I suggest that give us a reason to support Obama that is related to Obama. You are doing what all Democrats do – “Romney would be worse”. As a professor, grading a paper, you would expect somebody to explain their position. So, far I would give you a very low grade. I ask you to explain your position. In fact I ask you to explain two specific things:
Second, how about offering a reason to vote for Obama that has something to do with Obama? I know it’s hard. But, surely you can come up with some reason. Here is another thought that captures this sentiment:
Professor Green, I request that you provide answers to these two questions.
(Interestingly, a number of prominent democrats,including President Clinton believe that Romney is qualified to be president.)
Why no U.S. citizen “with his eyes open” should vote for Barack Obama
Obama is in charge of the executive branch of the U.S. government. He is in charge of First Tax Cheat Geithner, who is in charge of Shulman and the IRS. This attack on U.S. citizens abroad is NOT because of citizenship-based taxation (which is the result of an Act of Congress). It IS the result of the manner in which existing laws have been administered. The Obama administration is responsible for the administration of these laws and has used these laws to INTENTIONALLY attack U.S. citizens abroad.
I hate to sound like George Bush (You are either with the terrorists or you are with us). But, the reality is that the Obama administration has declared war (in a metaphorical sense) on U.S. citizens abroad. The only way to win this war is to defeat (in actuality) Barack Obama. Therefore, if you care about U.S. citizens abroad, I suggest that you encourage your members to vote for Romney. Romney has NOT declared war on U.S. citizens abroad.
On the other hand, if you and Democrats Abroad are just here to do Obama’s work in Canada (I thought this was Ambassador Jacobson’s job), then continue singing the “Let’s vote for Obama song”.
You need to decide what it is that you are trying to do. Are you a man of principle or are you a man of the Democratic Party?
Winston Churchill once said:
“Some people change their party for the sake of principle, and some people change their principles for the sake of party.”
P.S. As an aside, I note with amusement your comment that:
Many of us living outside of the U.S. will likely need to continue to seek professional help for filing the various tax forms required of us. We have heard some pretty horrendous stories about Americans being fleeced by unscrupulous tax preparers, so we urge that you use caution in finding professional financial help.
Professor Green: The truth is that the accounting and legal costs of coming into U.S. tax compliance are so high that few people can afford to pay them. Some cannot pay them at all. Some are dipping into their retirement funds to come into compliance, but cannot pay them on an ongoing basis. People are forced to renounce U.S. citizenship for this reason alone. Renunciations of U.S. citizenship are soaring under Obama.
Some Thoughts On the Costs of “Cross-Border Professionals“:
Coming into compliance costs: Talk to anybody who has attempted this. The principle is this: the more one has tried to save for retirement the more expensive the costs of coming into compliance. For most people the costs will be in the mid five figure range (and some in the six figure range). You might talk to some of the people in OVDI about this!
Compliance on a going forward basis: It’s a tax on life. Canadians who are not U.S. citizens can use their money to invest, go on vacations, join fitness clubs, etc. U.S. citizens have to use that money for accountants. Think I am kidding? I explored this in an earlier post explaining why U.S. citizenship has been priced out of the market.
Of course all of these problems could be solved if the U.S. would: