Cook v. Tait 17: Voices from the crowd – What U.S. citizenship-based taxation really is

This comment by Deckard1138 was made to: Dropping The Bomb at the Economist.

Please, let’s all cut the crap, shall we? Especially those apologists for CBT who treat it like some esoteric academic exercise, the same way supposedly learned men, who should have known better, once opined about eugenics. It’s really very simple: citizenship-based taxation is America’s Apartheid system. It is repugnant, immoral and indefensible. Since CBT is so clearly irredeemable, there is really nothing to talk about, unless your intellectual curiosity exists in a profoundly amoral vacuum. CBT discriminates against a particular group of people on the basis of their place of birth – a characteristic as immutable as the colour of their skin. It labels them, tracks them, intimidates them, criminalizes them and forces them into virtual prisons from which escape is nearly impossible. Worse, the architects of CBT are now co-opting the rest of the world to implement this discriminatory regime for them. It is astonishing and disheartening how quickly and easily this is unfolding. Far too many countries, cowed by the 30% withholding stick that the U.S. threatens to beat them with, like the FBAR and OVDP sticks they already beat their CBT victims with, simply refuse to challenge America on fundamental moral grounds and it is wrong. The U.S. does not deserve a free pass on CBT and FATCA any more than the old South African government deserved a free pass for its heinous apartheid policies. Yet several ostensibly modern and enlightened nations have rationalized their acquiescence to FATCA by publicly exclaiming that America has the inherent right to tax its citizens in whatever manner it chooses. Well, in a just world it does not, for CBT represents a clear denial of basic human rights and dignity. Yes, the global hypocrisy is staggering, especially from countries like Canada. Last year, our Conservative government expelled the consul-general for Eritrea for that regime’s tax extortion efforts against its expats in Canada. Just last week, the same government enthusiastically ushered-in America’s FATCA laws to override our country’s own Charter of rights and freedoms, discriminating on the basis of national origin, gutting federal banking privacy laws and setting the stage for a massive legal challenge which will be fought in our Supreme Court. Beneath all the technocratic language about forms, compliance, jurisdictions and enforcement, there is a fundamental truth: these American policies are morally unjust and the world must not condone them any longer. FATCA will be a global disaster unless it is stopped now. It is indeed time for the world to say no to the U.S. practice of citizenship-based taxation and to force it to adopt residency-based taxation like the rest of the world. If not, then the world better find a more deserving reserve currency in a hurry – the United States has abused its position of trust for far too long and it needs to be reminded that it is just one nation in a community of nations. The breathtaking audacity of FATCA is simply a bridge too far.

More from Deckard1138:

Wow, these academics sure seem to have a hard time getting to the point – only to miss it completely. 56 fucking pages to dance around, but never quite grasp the truth that citizenship-based taxation is fundamentally, morally wrong and indefensible – period. As many have convincingly argued before, CBT is no different than slavery, Jim Crow laws or apartheid. What exactly is there to talk about?

What really annoys me is the unstated presumption of people like Mason and Kirsch (who no doubt genuinely consider themselves our intellectual superiors) that it is somehow legitimate to lovingly, almost pornographically, explore CBT – in a world which so categorically rejects it – only because it is an American idea and policy and therefore somehow intrinsically worthy of debate. I counter that there is nothing to debate, and no need to kill innocent trees and waste energy on bits and pixels pathetically striving – and spectacularly failing – to turn lead into gold. The best I can say for Mason is that she greatly disappoints me, while Kirsch, as always, simply disgusts me. These people are no magical alchemists of inhumane tax policy and never will be. Rather, they will become the true footnotes of this sordid chapter of American history.

But what the hell do I know since I only have a lowly B.A.?

DualUSAbroad Jun 27th, 01:08 – explains why Americans abroad must renounce U.S. citizenship:

As an American expat (and now dual citizen) living abroad for 20 years, I have first hand, on the ground experience, to say without hesitation that (i) Citizenship based taxation and FATCA have been, and are, a disaster for US expats, and (ii) the US government is the biggest threat to US citizens living abroad today. No other country treats its overseas expats as poorly as the United States, and without any justification. We are treated like property, and under threat of fines and penalties applied extraterritorially, the US extracts taxes for money earned, invested and spent overseas by expats living overseas, with no connection whatsoever to the United States and without receiving ANY services for the tax dollars extracted from us. We already pay taxes in the countries where we live and work. Now, because of this grand idea called FATCA, we are branded as second class persons to the entire financial community worldwide. Citizenship based taxation and FATCA is a square peg forced by the US government into a round hole, and it is ruining the lives of US citizens overseas. If the US Treasury was a responsible entity (which it clearly has not been), it would go to Congress and the Administration and propose that citizenship based taxation be changed to the world standard of residence based taxation. Ironically, US companies already get the advantage of residence based taxation for money earned and retained outside the US, but US persons are taxed on worldwide income no matter where they reside on the planet. Whereas holding a US passport living overseas was a point of pride, today because of FATCA, the US passport has become toxic for US citizens living overseas. For the first time in my life, I am faced with the decision whether to renounce my US citizenship so I can have the same level of ‘normalcy’ in my life outside the US as any other world citizen. It is a horrible choice forced on me by my own government.

I will elaborate on my personal beliefs that residence based taxation is not good fiscal policy. At least here, I do have a bit more knowledge of the subject than on FATCA in general. I do understand that the rest of the world does it differently, but that doesn’t mean I think it is good policy. In general the U.S. should try to fit better in the world, and should only differ when there is good reason when we do it differently. Personally I do feel there is good reason, but I certainly respect those who see it otherwise, I don’t see a perfect solution. My reasoning is based on the fact that in the real world, taxes don’t directly pay for services, but rather most government services are amortized over many years, and many government things government provides are essentially insurance policies, not services. (E.g. if one has a fire at one’s house, one doesn’t pay the cost of the firemen. We all pay a much smaller amount per year. The system would not work if people could only pay their taxes in the years of high fire probability.) Despite the fact that you aren’t using any direct services, there is still significant benefit to being a citizen. E.g. if war breaks out, you can get on a plane and move back to the U.S. and be immediately protected by the U.S. military. The system wouldn’t work if we only paid for the military in war years. Another example is public education. The annual taxes we pay for a student in public school is a fraction of the annual cost of educating that student. But if a parent pays taxes their entire life, there are years they are paying school taxes when they have no student in school, so the costs are essentially amortized. If we allow people to only pay school taxes when they have children in school, the system breaks. Look, I get that these are simplistic examples, there are all kinds of details and exceptions. I’m sure you can point out differences with your specific situation. I am simply pointing out why philosophically and fiscally I favor some citizenship based taxation. Cheers. Thanks for all your replies. I do sincerely hope we can find a better solution for your situation. It is easy for me to philosophize when it doesn’t affect me directly. I do sympathize for your situation. You and others here have helped educate me, and I thank you all for that. I will certainly take your postings to heart, give them more thought, and shift my position on FATCA, even if it is not as much as you’d like. I’ve learned a lot. Thank you!

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