“Numbering well over one million and representing the United States around the world in all aspects of commerce, these overseas Americans constitute an important national asset. Recently, however, U.S. law governing the rights and obligations of these citizens has fallen subject to increasing criticism – first, as to its fairness; and second, as to its wisdom, at a time when America’s international economic competitiveness, which depends heavily on effective business activity by U.S. citizens abroad, is under severe challenge. I therefore deemed it important that the policy implicit in this diverse body of law be subjected to a fresh and comprehensive examination.” – Senator George McGovern July 2, 1980 – From: U.S. Law Affecting Americans Living and Working Abroad
This post is an attempt to bring together a number of comments at the Isaac Brock Society. It is interesting to compare the Democratic Party of the Carter years to the Democratic Party of the Obama years. It appears to be “night” and “day”. It is important to note that President Carter does believe that the Obama administration is committing human rights abuses. It would be interesting to know what his opinion would be of the way in which the Obama democrats are treating U.S. citizens abroad.
The attack on U.S. citizens abroad by the Obama Democrats has been duly noted. It is interesting to note that another Democratic President – Jimmy Carter was friendly to U.S. citizens abroad. President Carter now runs the “Carter Center” in Georgia, which among other things, promotes human rights. In a June 2012 op-ed in the New York Times:
– expressed his commitment to the Universal Declaration of Human Rights
– noted that the U.S. was in breach of at least 10 of the 30 rights guaranteed
– expressed his opposition to the U.S. government targeting U.S. citizens for assasination
– confirmed his worry that:
Despite an arbitrary rule that any man killed by drones is declared an enemy terrorist, the death of nearby innocent women and children is accepted as inevitable. After more than 30 airstrikes on civilian homes this year in Afghanistan, President Hamid Karzai has demanded that such attacks end, but the practice continues in areas of Pakistan, Somalia and Yemen that are not in any war zone. We don’t know how many hundreds of innocent civilians have been killed in these attacks, each one approved by the highest authorities in Washington. This would have been unthinkable in previous times.
These policies clearly affect American foreign policy. Top intelligence and military officials, as well as rights defenders in targeted areas, affirm that the great escalation in drone attacks has turned aggrieved families toward terrorist organizations, aroused civilian populations against us and permitted repressive governments to cite such actions to justify their own despotic behavior.
At a time when popular revolutions are sweeping the globe, the United States should be strengthening, not weakening, basic rules of law and principles of justice enumerated in the Universal Declaration of Human Rights. But instead of making the world safer, America’s violation of international human rights abets our enemies and alienates our friends.
President Carter also opined that the United States can no longer speak with moral authority when it comes to human rights (a comment reinforced by Russian President Putin).
Jimmy Carter is no longer president. But he was President in 1979
President Carter 1979: Believed that Americans abroad were an asset to America
Roger Conklin, who is also a strong proponent of the need to have Americans abroad promoting American interests noted that:
On December 10, 1979 the President’s Export Council submitted its unanamous report to President Carter. This report contained the following statement:
“Americans working overseas are essential to a viable export program. An increase in the number of Americans assigned abroad can increase our exports, reduce the negative balance of payments, enhance our country’s image, and raise employment in the U.S.
Recognizing that it is in the best interest of our nation to encourage Americans to work overseas, the Task Force recommends the adoption of tax policies that are comparable to those of major competing industrial nations, none of which now tax citizens who meet overseas residency tests. We urge the development and enactment of new legislation to put Americans who work in the private sector overseas on the same tax footing as citizens of competing industrial nations.”
Unfortunately nothing concrete was done to implement this recognation and here we are 34 years later witha $750 billion trade deficit which translates into some 7.9 million destroyed American jobs producing for export, the human rights destroyed for persons with US citizenship living abroad who, because of FATCA cannot open or maintain bank accounts in the countries where the live, and record numbers renouncing their citizenship because they simply cannot survive unless they do so.
To top it off in these days of fiscal crisis for the US the citizenship-based tax policy enshrined in US law which is, in my opinion, the prime cause of this massive trade deficit and its resulting unemployment produces only about $6 billion for the US Treasury while the trade deficit destroys some $136 billion in tax revenues. How can this possibly make any sense to anybody in Washington?
In 1979, President Carter advocated for equality and fairness for Americans Abroad
Some Context: America and Americans Abroad in the late 1970s:
In 1978 Congress enacted a law calling for the Equitable Treatment By United States Of Its Citizens Living Abroad
EQUITABLE TREATMENT BY UNITED STATES OF ITS CITIZENS LIVING ABROAD
Pub. L. 95-426, title VI, Sec. 611, Oct. 7, 1978, 92 Stat. 989, as amended by Pub. L. 96-60, title IV, Sec. 407, Aug. 15, 1979, 93Stat. 405; Pub. L. 97-241, title V, Sec. 505(a)(2), (b)(1), Aug.24, 1982, 96 Stat. 299, provided that:
“The Congress finds that –
“(1) United States citizens living abroad should be provided fair and equitable treatment by the United States Government with regard to taxation, citizenship of progeny, veterans’ benefits, voting rights, Social Security benefits, and other obligations, rights, and benefits; and
“(2) United States statutes and regulations should be designed so as not to create competitive disadvantage for individual American citizens living abroad or working in international markets.”
In the 1983 case of Zahourek v. Arthur Young the requirements were said to be “advisory only”, the existence of this statute is fascinating. It says two things:
1. United States living abroad should be provided with “fair and equitable treatment” (“equitable” does NOT mean the same as identical). Remember that the true interests of equality may require differentiation in treatment: and
2. Law should not be designed so as to NOT create a competitive disadvantage for U.S. citizens abroad. This provision was clearly designed to operate prospectively. (Unbelievable what has happened since.) Think of FBAR, FATCA, the PFIC rules, etc, etc.
Apparently this law also required the president to write a report identifying problematic laws and regulations. It was in this context that President Carter prepared his report. President Carter completed the report as required. Then:
The enclosed report, prepared in compliance with Section 611 of Public Law 95-426 identifies six Federal statutory and regulatory provisions which discriminate against United States citizens living abroad. The Executive branch has evaluated those provisions and has concluded that changes are warranted in order to resolve certain inequities involving citizenship and veterans and social security benefits. The report also reviews twenty-eight other issues raised by some Americans. living abroad concerning their rights and obligations as U.S. citizens.
This report is the result of a painstaking and earnest review of the many legal provisions affecting our citizens residing abroad. The test for discrimination used was to compare the effect of those provisions on U.S. citizens residing abroad with U.S. citizens living in the United States.
I believe the report responds in a responsible manner to the concern about the situation of Americans residing abroad. I am aware that section 407 of H.R. 3363 just recently enacted, broadens the scope of the report to include the “competitive disadvantage” of Americans abroad compared to nationals of other major trading partners and extends the report’s transmittal date until January 20, 1980. Because this report was completed and awaiting my transmittal at the time section 407 was enacted, I believe it best to transmit it now to the Congress for its consideration. I have, moreover, requested the Secretary of the Treasury to prepare an additional report on the taxation of American citizens living abroad compared to the treatment by our major trading partners of their citizens living abroad and to identify any competitive disadvantages that may ensue.
The Administration will continue to work to resolve discriminatory provisions in regulations and in agency procedures affecting Americans living abroad; I am hopeful that inequities which are subject to legislative remedy will likewise be resolved.
What Did The Carter Report Say?
You can look at this report in entirety (which does not contain the more extensive supplementary report on taxation that is alluded to in the introduction, but not named – commissioned to look more specifically at details of taxation issues only), at the very end of this report, are very focussed and astute point-by-point rebuttals by ACA of the response or lack thereof from the government (addressed to the president specifically). There is a detailed section where the ACA specifically notes the discrimination against foreign non-resident spouses – and calls it ‘the marriage penalty’.
In the ACA comments, they describe the US government rationale, which seems to be that by deliberate design, those filing ‘separately from abroad’ are to be penalized by having a much lower reporting and tax threshold than those filing as ‘single persons’ –deliberatelypunishing those who do not choose to subject their non-US non-resident spouse’s ‘foreign’ income and assets to eternal US taxation – which the US would like to force on them from afar, within the borders of all other countries, even in the absence of any other US relationship other than having married someone deemed to be a ‘US taxable person’. The rationale is that this is because we are presumed to beavoiding paying tax to the US on the assets and earnings of the non-US non-residentspouse, which we are presumed to enjoy via our ‘share’ of ‘community property’. Which of course is generated and located in another country, and already taxed by that other jurisdiction – where the true owner of the assets is a citizen. This is a form of double taxation by proxy. The ACA wonderfully skewers this US claim that the IRS should be able to extend US taxation assessment and powers to non-US, non-residents ‘abroad’, merely because they married a US person. At issue also is that if we do not file ‘married jointly’, that is a decision that the non-US person has the right to decide on their own behalf – they have no obligation to the US – so why should they agree to take that burden on? Thus, the US uses the US taxable person spouse as a lever to get at the earnings and assets of non-US citizens, who do not live in the US, have no US taxable status, no US taxable income, no US citizenship, no US residency, enjoy no US services – based and rationalized only on some specious and fantastical claim that by mere association with a US taxable person through marriage, the US has the right to tax even foreign nationals outside its borders.
Worth reading through the entire text at that link. Looks like most issues still the same – which is depressing. Wonderful to see how powerfully and assertively the ACA came up with their detailed list of discriminations against US citizens living ‘abroad’ and how they dissected each non-response or irrational assertion by the US government as to why the discrimination was justified. Obviously a very dynamic organization right from the beginning. Fulltext of this report and associated material needs to be digested, and to obtain the more tax focused report (unnamed) that was also commissioned as an adjunct.
You will see Joseph R. Biden on the list of members making up the Committee on Foreign Relations who received the report.
This report – plus supplementary reports from the time, would make very sound basis for comparison – as a baseline to compare with the state of things now, and see whether the US has addressed the discrimination brought to their attention more than 30 years ago. There were some changes to citizenship laws – and interestingly one of the obstacles the US government identified to making retroactive changes to how citizenship was granted to children of US parentage born abroad, was a ‘ripple effect’ related to taxation (as well as Social Security, etc.).
Was not able to cut and paste excerpts (though didn’t try screen captures) to provide actual quotes here.
Not certain how this is useful, other than it establishes (which the ACA already knows) how entrenched the issues are, and how dedicated the US is to extorting tax revenue from us abroad – while providing no services and no representation. The ACA comments point this out repeatedly. They also note that at just at the time when more of those abroad could qualify to vote absentee, some states were using that as evidence for establishing US residence and subsequently imposing tax. As a result, fewer of those outside the US, who then could vote from abroad, chose not to – for fear of yet another layer of tax burden imposed on them from stateside. Sound familiar? Note the most recent outcry prior to the 2012 election; “The Pentagon office with responsibilities for assisting U.S. military
and civilian overseas voters is issuing a new ballot-request form that
requires civilian voters to make an all-or-none declaration either that
they plan to return to the United States or have no intent of ever doing
so. Expatriate groups say the choice is confusing and unfair, carries
potential tax ramifications and could depress voting in ways that might
affect close elections in November……..” fromhttp://www.nytimes.com/2012/05/10/us/change-to-ballot-request-form-angers-us-expats.html?_r=3&
And interestingly, the ACA identified many issues specific to IRS policy and priorities; which you will all find entirely familiar from the TAS Reports to Congress : including; the failure of the IRS and US to provide toll-free telephone assistance to those abroad, the failure of the IRS to provide and mail requisite forms (including the FBAR! – which is described as an example of a less common form), the failure to allow for sufficient time for IRS correspondence to reach those abroad and for them to respond, the issue of foreign postmark dates re ‘timeliness’, the problem of being required to provide information to the IRS before that information is available from foreign sources, the failure of the IRS to allow the payment of any outstanding US tax owed at a later date – to match the actual filing deadline from abroad, the failure of the IRS to dedicate sufficient resources to serve those abroad – while demanding compliance, the failure of the IRS to recognize that filings from abroad required more knowledgeable and dedicated IRS assistance – due to the complexity of the extraterritorial requirements, the failure of the IRS to allow common deductions given to those stateside – but denying the equivalent to those abroad, the lack of eligibility for US services (SS, Medicare, etc.) offered to other citizens – but denied those abroad despite taxing them, the failure of the IRS to consider those abroad important enough to dedicate assistance to – while insisting on more burdensome compliance, the IRS tax discrimination against non-US non-resident spouses and children, etc……..
This may not be new at all to ACA members, but to me, after reading the evidence from an actual primary source more than 30 years old completely supports my present conclusion that the US and IRS really has no intention of addressing any of this discrimination and injustice.
Clearly the United States is not and does not intend to take the advice of its own “advisory” law and the advice of a then President of the United States.
What is the effect of the conduct of the United States Government? I have argued for a long time that the way the U.S. treats its citizens abroad is a human rights violation. We know that President Carter is a supporter of the Universal Declaration of Human Rights. Would he believe that the Obama administration’s treatment of U.S. citizens abroad is a human rights violation?
Possible Violations of the Universal Declaration of Human Rights
A comprehensive analysis of possible U.S. violations of the Universal Declaration of Human Rights, in relation to U.S. citizens abroad, is at the Isaac Brock Society. Without attempting to duplicate this brilliant and comprehensive analysis, it would be interesting to note the clearest violations of the Universal Declaration in relation to U.S. citizens abroad. I am restricting this to violations that affect U.S. citizens abroad disproportionately.
I suggest the following violations. Below each I will include the reason described in the original post by Petros of the Isaac Brock Society. Feel free to add comments.
Everyone is entitled to all the rights and freedoms set forth in this Declaration, without distinction of any kind, such as race, colour, sex, language, religion, political or other opinion, national or social origin, property, birth or other status. Furthermore, no distinction shall be made on the basis of the political, jurisdictional or international status of the country or territory to which a person belongs, whether it be independent, trust, non-self-governing or under any other limitation of sovereignty.
Article 2 forbids the United States to discriminate against people whose wealth exceeds a certain arbitrary limit, marking them as targets for special and discriminatory punitive measures.
All are equal before the law and are entitled without any discrimination to equal protection of the law. All are entitled to equal protection against any discrimination in violation of this Declaration and against any incitement to such discrimination.
Taxing ex-citizens of the United States in a manner different then other non-resident aliens of the United States is not equal protection under the law. Banishment of former Americans, treating them with unequal treatment to other citizens of their new country of citizenship, is discriminatory and a clear violation of equal protection.
No one shall be subjected to arbitrary interference with his privacy, family, home or correspondence, nor to attacks upon his honour and reputation. Everyone has the right to the protection of the law against such interference or attacks.
The exit laws of the United States require that the renunciant handover private information to the IRS after they are no longer a citizen of the United States in order to prove that they should not be treated with the harsher and punitive measures of the Ex Patriot Act. This is a violation of the privacy of the individual, of his family (if married) and of his home, which is an asset which figures in the determination of whether the person is a covered or specified expatriate
- (1) Everyone has the right to freedom of movement and residence within the borders of each state.
- (2) Everyone has the right to leave any country, including his own, and to return to his country.
An expatriate who renounces citizenship nevertheless has a right to return under Article 13; this right of return does not obviously still include taking up residence or employment without obtaining the appropriate visa, but it is a right that must be extended to the expatriate to the same degree as to any other citizen of the expatriate’s new country. A Canadian citizen may stay, for example, for six months in the United States without a visa. To forbid a former citizen who is now a Canadian citizen the same length of stay in the United States is a violation of Article 13, which attempts to prevent tyrannical countries from permanently exiling people born in their land.
- (1) Everyone has the right to a nationality.
- (2) No one shall be arbitrarily deprived of his nationality nor denied the right to change his nationality.
Article 15 treats the right to expatriate as a fundamental right. The Ex Patriot Act seeks to prevent rich citizens from exercising this fundamental right.
- (1) Men and women of full age, without any limitation due to race, nationality or religion, have the right to marry and to found a family. They are entitled to equal rights as to marriage, during marriage and at its dissolution.
- (2) Marriage shall be entered into only with the free and full consent of the intending spouses.
- (3) The family is the natural and fundamental group unit of society and is entitled to protection by society and the State.
An American has the right to marry a non-American. Article 16 seeks to protect marriages from arbitrary and unfair treatment. Marriages of American expats are in danger because of extra-territorial taxation. The non-resident alien spouse of an American comes into the danger of excessive fines of the current FBAR regime, as well as unjust extra-territorial taxation. An American who renounces citizenship in order to protect their non-resident alien spouse has the right to do so, and Article 16 would protect that person and their spouse from abuse that may result from expatriation.
- (1) Everyone has the right to work, to free choice of employment, to just and favourable conditions of work and to protection against unemployment.
- (2) Everyone, without any discrimination, has the right to equal pay for equal work.
- (3) Everyone who works has the right to just and favourable remuneration ensuring for himself and his family an existence worthy of human dignity, and supplemented, if necessary, by other means of social protection.
- (4) Everyone has the right to form and to join trade unions for the protection of his interests.
Expats who move overseas to work have done no wrong and must not be punished by the United States.
United States extraterritorial taxation undermines just and favorable remuneration and jeopardizes the well being of the families of US expats. It is demeaning and humiliating to be treated in this manner by a government in a far away land. Rather than supplementing the well-being of expats, the United States seeks to leech off of them, taxing them while providing no useful services to them.
- (1) Everyone has the right to a standard of living adequate for the health and well-being of himself and of his family, including food, clothing, housing and medical care and necessary social services, and the right to security in the event of unemployment, sickness, disability, widowhood, old age or other lack of livelihood in circumstances beyond his control.
- (2) Motherhood and childhood are entitled to special care and assistance. All children, whether born in or out of wedlock, shall enjoy the same social protection.
US extraterritorial taxation takes no account of the higher cost of living in other countries, including sales taxes for which there is no equivalent in the United States. While a person may seem to make a lot of money in another country, the US has no right to tax them because it does not provide any of the services such as health care, education or other social services that the expat needs to survive in the country of residence.
What services to motherhood and childhood does the United States provide to expats? None. So the United States should not take from expats when it does nothing to help them.
- Everyone is entitled to a social and international order in which the rights and freedoms set forth in this Declaration can be fully realized
The Ex Patriot Act is clearly trying to prevent US citizens from exercising their freedoms and rights as provided in this Declaration and would thus be substantive violation of Article 28.
Where does one complain?
The mechanism for complaint is here. FATCA will make it absolutely impossible for U.S. citizens to live abroad. Perhaps the time has come to seek help from the international community – for their benefit and for ours!
What might have been
One wonders what would have happened if Jimmy Carter had been re-elected in 1980. President Carter may or may not see the treatment of Americans abroad as a human rights issue. That said, we know that he is a supporter of human rights in general. If Carter had been re-elected, U.S. citizens abroad might have been valued rather than treated as “tax cheats” to be milked for revenue . The current attitude of the Obama democrats is confirmed in the following comments of Timothy Geithner.
Note his reference to Americans abroad paying their “fair share of taxes”. For what?