Monthly Archives: August 2012

Letter of a Canadian businessman to his dual U.S./Canada citizen son on the occasion of his high school graduation

“Good citizenship” and “Your citizenship”

The Isaac Brock Society recently featured a discussion  about how and when to advise young people about the potential problems of U.S. citizenship and whether they should consider renouncing U.S. citizenship. As parents, teachers, mentors and friends we should pass on to our young people the benefits of our (in varying degrees) knowledge, wisdom and experience. We do this because we want to equip them with the skills they need to make the best life decisions that they can.

The books:  “Letters of  A Businessman to His Son” and “Letters of A Businessman to His Daughter“, by G. Kingsley Ward, are wonderful examples of  this principle.  They are chock full of practical advice and thoughts on –  the only business that really matters – “The Business of Life”.

I have been inspired by Mr. Ward. Here is the letter (with many factual modifications to protect the young person in question) that I wrote  on  the occasion of  that young person’s  High School graduation. Continue reading


U.S. persons in Canada must pay capital gains tax on sale of principal residence – makes upward mobility difficult

Payable by U.S. persons on the sale of a principal residence

“The principal residence exemption provides Canadian taxpayers with a generous tax break, possibly one we take for granted. In other countries the gain on the sale of a residence is not always completely free of tax. In the United States, for example, only the first $250,000 is exempted. For Canadian tax purposes, there is no monetary limit on the size of the capital gain that can be excluded from your income.”

So says: HR Block Canada in Tax Talk

It may come as a surprise to U.S. persons (Green Card holders, citizens or those who spend too much in the U.S.) that capital gains from the sale of a principal residence are taxable. The general principle is described here. The principle is that one gets a $250,000 exemption from capital gains tax. But, as always make sure that you read the rules carefully.

This is one more example of how citizenship-based taxation harms U.S. persons who live outside the U.S. For example, in Canada, the sale of a principal residence is a “tax free capital gain”. Not so in the U.S. What does this mean practically? A lot. Continue reading

Grover Norquist and Dan Mitchell argue for territorial taxation – “IRS Discount” associated with U.S. entities or persons

Introduction – Territorial vs. Worldwide Taxation or Global Taxation – It’s becoming topical!

July 15, 2012 – the Financial Times ran a front page article called “China eases taxes for foreign companies” The article included the following:

China will cut taxes on the profits that foreign companies take out of the country by up to 50 per cent after rules on withholding taxes were relaxed to encourage more overseas investment.

The move will also apply to dividends paid by Chinese listed companies to foreign shareholders through the Qualified Foreign Institutional Investor scheme . In both cases, the lower tax rates will apply only to companies and shareholders based in countries, such as the UK, that have double taxation agreements with China.

The changes could save companies billions of dollars worth of tax payments, which might initially lead them to repatriate more profits, but ultimately should provide incentives for more investments, according to experts at KPMG. US companies, however, cannot benefit as they are taxed on a global basis by US authorities. Continue reading

Addition of Ryan to Republican ticket should be good for U.S. citizens abroad

American exceptionalism is the idea that the United States is different from other countries in that it has a specific world mission to spread liberty and democracy. In this view, America’s exceptionalism stems from its emergence from a revolution, becoming “the first new nation,”[1] and developing a uniquely American ideology, based on liberty, egalitarianism, individualism and populism. This observation can be traced to Alexis de Tocqueville, the first writer to describe the United States as “exceptional” in 1831 and 1840.[2] Historian Gordon Wood has argued, “Our beliefs in liberty, equality, constitutionalism, and the well-being of ordinary people came out of the Revolutionary era. So too did our idea that we Americans are a special people with a special destiny to lead the world toward liberty and democracy.”[3]

The specific term “American exceptionalism” was first used in Russian 1929 by Soviet leader Joseph Stalin chastising members of the Lovestone-led faction of the American Communist Party for their heretical belief that America was independent of the Marxist laws of history “thanks to its natural resources, industrial capacity, and absence of rigid class distinctions.” American Communists then started using the English translation in factional fights.[4][5]

Although the term does not necessarily imply superiority, many neoconservative and American conservative writers have promoted its use in that sense.[1][6] To them, the United States is like the biblical “shining city on a hill,” and exempt from historical forces that have affected other countries.[7]

Note the focus on spreading liberty and democracy. If democracy implies a duty on the part of politicians to listen to voters, then it is clear that the “spreading liberty and democracy” does NOT include spreading it to U.S. citizens abroad. On the issue of “liberty”, U.S. citizens abroad are “Form Slaves” who live in constant fear of committing “Form Crime“. On the issue of democracy well: Continue reading

“One thing I don’t mention in the video is that a flat tax is “territorial,” meaning that only income earned in the United States is taxed. This common-sense rule is the good-fences-make-good-neighbors approach. If income is earned by an American in, say, Canada, then the Canadian government gets to decide how it’s taxed. And if income is earned by a Canadian in America, then the U.S. government gets a slice.”

International Liberty

In previous posts, I put together tutorials on the Laffer Curve, tax competition, and the economics of government spending.

Today, we’re going to look at the issue of tax reform. The focus will be the flat tax, but this analysis applies equally to national sales tax systems such as the Fair Tax.

There are three equally important features of tax reform.

  1. A low tax rate – This is the best-known feature of tax reform. A low tax rate is designed to minimize the penalty of work, entrepreneurship, and productive behavior.
  2. No double taxation of saving and investment – All major tax reform plans, such as the flat tax and national sales tax, get rid of the tax bias against income that is saved and invested. The capital gains tax, double tax on dividends, and death tax are all abolished. Shifting to a system that taxes economic…

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Great post – immigrants are often overlooked in this area.

Desi Ways


Tax regulations is one of the most confused and complex topic when you are in US on non-immigrant visa (H1/F1/L1, etc.) or you are permanent resident (Greencard holder) or US Citizen.

I found this nice information in form of slides on by  Sanket Shah of NSGlobal. It is really nice information and worth going through once to brush up your knowledge on tax basics and implications. It explains several scenarios with simple examples that’s easy to understand. It has touched almost every basic points including Gift / Estate tax, FBAR / OVDI, FACTA(8938), etc.

Link to Slideshow

Also check this slideshow: Do you Know

Hope this helps.

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