"Bush doesn't look so bad now!" — Mattson http://t.co/kwHnUwDmo9
— U.S. Citizen Abroad (@USCitizenAbroad) May 31, 2015
“Christine Stebbins Dahl: don’t hold your breath waiting for a civil war to break out and end taxation of US citizens and residents. Cook v Tait is based on traditional notions of sovereignty, not on an assessment of the value conferred by citizenship. The Court specifically rejected the argument that expats received no benefits from the US and so shouldn’t have to pay taxes. Sovereignty remains a core principle, if not the core principle, of international law.”
As you know, FATCA is for the purpose of enforcing U.S.
place of birth citizenship-based taxation.
Joe Arvy, ADCS lawyer includes in his factum:
“Given the existing bilateral and multilateral tax information exchange and enforcement regimes between Canada and the United States, it is clear that in “enhancing” this regime, Canada would not be helping a foreign sovereign catch tax evaders. Instead Canada would be helping a foreign sovereign enforce jurisdictional claims over Canadian residents (as the FATCA required information must be collected, used and disclosed to the IRS without any evidence of evasion by these residents). This contradicts Canadian and international tax practice, and it introduces a systemic lack of reciprocity into the international tax regime. It seems clear that Canada has agreed to…
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This post concludes with:
“In conclusion …
For it’s worth, I believe that U.S. citizenship taxation is IN EFFECT a threat to Canada’s sovereignty and the sovereignty of every country where U.S. citizens (as defined by and only by the U.S.) reside.
For the record this does NOT mean that the Alliance For The Defence of Canadian Sovereignty is planning to initiate a lawsuit against U.S. citizenship taxation.”
Prologue: Prime Minister Pierre Trudeau speaking to the Washington, DC Press Club – 1969
The Elephant Today: FATCA, FBAR and U.S. Citizenship Taxation – How “even-tempered” is the beast?
I have been watching with interest a recent discussion at the Isaac Brock Society about U.S. citizenship taxation. Much of the discussion was focused on whether the Alliance For The Defence of Canadian Sovereignty should initiate a lawsuit against U.S. citizenship taxation. (This post is NOT to comment on that specific question.) Interestingly, much of the discussion centered around the question of whether, U.S. citizenship impacts on Canada’s Sovereignty. Some commenters believe it DOES impact on Canada’s sovereignty. Others believe U.S. citizenship taxation does NOT impact on Canada’s Sovereignty. I use the word “impact” to…
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“It is obvious to me that I have to renounce my citizenship. I don’t want to but I have to. Living under these laws is neither living as a Canadian nor as an American but as a mutated hybrid with two heads, four left feet, a humped back, and no heart. My livelihood and my family’s livelihood takes precedence over any benefits I may derive from the thing. I am American whether I like it or not, and I do want to help make it a better place. But I don’t need my citizenship to do that. My pen knows no boundaries.”
This post covers the taxation of Americans abroad and why it is forcing me to renounce my citizenship. There are other reasons I am renouncing (relinquishing) — I have lived in Canada for 45 years — but they are not as front and center as the IRS. I have been battling Americans over citizen-based taxation, mostly political Facebook groups and authors and commentators of news articles on citizen-based taxation and FATCA. I try to argue that taxing us Americans living abroad is wrong. The Democrats Abroad group – a bunch of gutless bureaucrats afraid to buck the party line – shrugs me off, vocal citizens claim I should pay for the services I receive, and retired military service personnel basically call me unpatriotic. You probably already want to leave this page because I sound like an anarchist or a communist, a revolutionary who wants to live in the woods with his…
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Introduction And Purpose:
This post is to “tie together” three comments/posts that discuss the problem of “political powerlessness” in the political process. This poses obvious problems in the area of “citizenship taxation”. It is important to note that what some refer to as “expatriate tax legislation” seems to always appear as a “revenue offset provision”. In other words, “Let’s put the cost on those whose votes don’t matter”. This point was made in one of the recent submissions to the Senate Finance Committee.
What should be the basis for the right to vote?
That said, maybe “Americans abroad” are lucky to be able to vote at all. There is NOTHING about citizenship per se (as the Canada experience suggests), that guarantees a “right to vote” for those who live abroad. In fact a recent comment from Lucy Stensland Laederich includes:
Both AARO and FAWCO have progress to their credit in terms of citizenship and election reforms – in each case, we followed the legislative path and worked with allies. It is true we do not have a history of “rocking the boat” but we do have one of sometimes major successes: when we inundated Washington with tea bags in the mid-Seventies (a campaign that started in AARO), we got the vote for overseas Americans!
The 1970s “Tea Bag” campaign is interesting. It should also give hope to those who think that change in Washington is impossible.
I strongly recommend reading the “AARO Account of how achieved in an increased capacity to vote“. It includes:
But opposition by the Justice Department continued, still led by Antonin Scalia, who had persuaded the Attorney General to oppose the President’s signature. The representative of the bipartisan committee, Gene Marans, decided to go over the head of the Justice Department. He asked Sen. Barry Goldwater to call the legal counsel of President Gerald Ford.
Senator Goldwater’s message to the White House was: “Listen you ___ fools! There are more Republicans in Paris than there are in Detroit! And Ford doesn’t want to be the first President to veto a voting rights bill since the Reconstruction.”
The bill was signed by the President on January 2, 1976. Direct political life had begun for Americans living overseas.
Note that Antonin Scalia was appointed to the Supreme Court of the United States. He continues to serve on the court today. Note that he wrote a dissenting decision in the May 18, 2015 U.S. Supreme Court decision described below. In other words, Justice Scalia appears to have opposed the rights of Americans abroad to vote, BUT upheld the right to Maryland to impose taxes on the “politically powerlessness”.
Part 1 – Discrete and Insular Minorities In The Political Process – Do Americans Abroad Have REAL Political Representation?
This post references the following two posts on the CitizenshipSolutions.ca site.
The post referenced in the above tweet discusses the evolution of U.S. tax law since 1924.
The post referenced in the above tweet discusses the evolution of U.S. citizenship law since 1924.
The discussion at Citizenship Solutions begins with:
As Charles Adams argued in his classic book, “For Good and Evil: The Impact of Taxes On The Course Of Civilization“, as go the taxing practices of a nation, so goes the nation. Given that taxes are a certainty, tax laws are a certainty, and those laws speak volumes about the “state of the nation” and the “values of the nation”. Tax laws evolve on an almost daily basis. The changes in tax laws reflect changes in societal values.
(See the videos of Mr. Adams which are referenced in the above tweet.)
In 1924, the Supreme Court of the United States, per Justice McKenna ruled in Cook v. Tait that U.S. “citizenship taxation” was constitutional. Since that time Cook v. Tait has been cited to justify the constitutionality, although not necessarily the propriety, of “citizenship taxation”. Note that “citizenship taxation” contains both the words “citizenship” and “taxation”. As a result, Justice McKenna’s decision along with the relevant statutes, may tell us a great deal about what “taxation” and “citizenship” meant in 1924.
What follows are links to posts at the Isaac Brock Society discussion the Kirsch Schneider debate held in Toronto on May 2, 2014. The posts (which are rich with comments) include:
The comments are fantastic! Great insight!
I was glad to see that Bernard Schneider’s paper was referred to at one of the Facebook groups frequented by Americans Abroad. Dr. Schneider’s was summarized as follows:
This paper was specifically mentioned by the SFC about two years ago after they received a round of submissions on tax reform (just like the current round). The SFC also mentioned an interest in Canada’s model of Residency Based Taxation.
In his paper, Schneider introduces the Cook vs. Tait (benefits justification) which is the current legal basis for CBT on page 4.
On page 6 Schneider identifies 5 types of expats (short-term, long-term, accidental, citizens by descent and unaware citizens by descent).
On page 52 Schneider begins an in depth discussion (for several pages) about the lack of “benefits” expats receive from the USG. He tears the Cook vs Tait “benefits” argument to pieces where he concludes with, “Thus only short-term expatriates and U.S. government employees and military personnel can be said to have, as a group, the nexus to the United States that justifies including them in the U.S. tax net.”
On page 73 Schneider writes, “In most cases, renunciation is driven not by a desire to escape taxation unjustly, but by the unjust imposition of taxation. U.S. taxation of long-term expatriates and accidental, nominal, and unaware citizens is unjustified; they should not have to renounce their U.S. citizenship in order to escape U.S. tax and reporting burdens….. More fundamentally, the use of citizenship as a jurisdictional basis for taxation of nonresidents is unsound because it distorts and devalues citizenship. Worldwide taxation of, and the ever-increasing compliance burden on, nonresident U.S. citizens constitute a real and increasing citizenship penalty. As the cost of U.S. citizenship rises, and the perceived benefits decrease, many are likely to see the U.S. passport as a passport of inconvenience.”
Schneider’s paper is long, but well worth the read. It provides the tools for overturning Cook vs Tait.