This quote comes from David Ricardo’s book, On the Principles of Political Economy and Taxation (Chapter 8 On Taxes):
Taxes are a portion of the produce of the land and labour of a country, placed at the disposal of the government; and are always ultimately paid, either from the capital, or from the revenue of the country.
From this passage we can see that any steps that one country may take in order to impose its tax regime on its citizens who reside in and earn their wealth in another country is not a tax that is being levied on its citizens but is in fact a tax that is being levied on the economic productivity of their country of residence.
In other words what the “Savings” clause says about the U.S. is that it does not understand economics or taxation at all.
Some of Ricardo’s theories are outdated, but this one is still applicable to our modern world. There are other things that the US does not understand. The president urges Americans and American companies to increase exports. He has in fact set a goal of doubling them in 5 years. But as “incentive” to go and sell exports it subjects its citizens to double taxation when the relocate abroad to sell exports. And he has recently announced his new tax plan for Corporations which would subject their foreign earnings to immediate US taxation, rather than taxing them only when they are repatriated.
By the way it might be well to check and see how well his export initiative announced 3 years ago is really doing. He announced a few weeks ago on TV that it “is ahead of schedule.” How does this statement compare with the facts? When first announced the US trade deficit was running at $1.5 billion per day. At the end of 2011 it was running at $2.0 billion per day. Now that really is progress, woldn’t you agree?
In April, 1961, Lucian C. Warren wrote in the New York Times:
i apologize for being a day late in marking the 99th anniversary of that infamous day in tax history. Am I forgiven because 2012 is a leap year?
In his article, Mr. Warren republished Mark Twain’s The Mysterious Visitor. In doing so, Mr. Lucian suggested:
I wonder what Mark Twain would say about IRS 72,000 page Tax Code. To keep it simple, Mark would likely say exactly what he said in 1902:
Check out what both Mr. Warren and Mr. Twain wrote: http://www.twainquotes.com/19610409.html
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The taxation of Americans abroad is not TAXES, in Ricardo’s definition.
It is TRIBUTE. That’s when a foreign nation goes to war, and accepts payment in lieu of killing all the men in the country and selling the women and children into slavery. Except that many Americans abroad just simply pay into the system without thinking about the ramifications of what extra-territorial taxation really means.
As I have said before, if the United States wants tribute, then they are going to have to do it the old fashion way and take over our countries. I will not volunteer my bank accounts to them, and I will encourage all others to follow my example.
“The way to crush the bourgeoisie is to grind them between the millstones of taxation and inflation.”
– Vladimir Ilyich Lenin
“The power to tax is the power to destroy.”
– John Marshall
“Taxation without representation is tyranny.”
– James Otis
There is no worse tyranny than to force a man to pay for what he does not want merely because you think it would be good for him.
~ Robert A. Heinlein
“If, from the more wretched parts of the old world, we look at those which are in an advanced stage of improvement, we still find the greedy hand of government thrusting itself into every corner and crevice of industry, and grasping the spoil of the multitude.
Invention is continually exercised, to furnish new pretenses for revenues and taxation. It watches prosperity as its prey and permits none to escape without tribute.”
– Thomas Paine
“To compel a man to furnish funds for the propagation of ideas he disbelieves and abhors is sinful and tyrannical.”
– Thomas Jefferson
I think that the definition of what “taxes” are depends heavily on the situation or country at hand. Some thoughts:
USA (if resident): Taxes fund in large part military industrial complex and are squandered on many politicians’ pet projects. Public services and roads seem to be very poor in comparison with other industrialised countries. No healthcare and little welfare funded, and you wonder where it all goes.
USA (if overseas): Government-regulated theft to fund above pet projects and military machine. Added benfit of taxing without real representation so as to maximise the financial gain and minimise the political pain (sorry about the cheesy rhyme – couldn’t resist!).
Eritrea: Literally like “protection money” for the mafia, since if you don’t pay there are stories about the government there harming family members. Truly despicable.
Most Industrialised countries: Taxes fund public services, healthcare programmes, quality education, pension plans, senior care, and so on. Nobody really likes paying taxes, but you understand and benefit from the services that you receive.
Zimbabwe, old Libya, North Korea etc: “Taxes” fund some public services, but most of it is siphoned off or misappropriated by heavily corrupt politicians who use them to live a life of opulence.
Just my lunchtime thoughts!
All,
Archbishop of New York Timothy Dolan has just been made a Cardinal by the Pope. I don’t know him, but according to the press he is a very impressive person who is already being rumored to be a top candidate for Pope when that time comes. Can you imagine, as a US citizen, he woulld not only be subject US taation of his salary as Pope but also on all the “in kind” benefits he receives, such as the fair rental value of his living qurters in the Vatican, the Swiss Guard that provides him with protection, and the fair market value of transportation, and on and on.
And of course he will be requred to submit FBAR reports not only on any personal bank accounts he might open abroad, but also on all the bank and financiual accounts throughout the entire world over which he has signature authority as the Pope, even though he has no personal financial interest in these accounts. That would sure keep the IRS busy digesting all of this information.
@Roger Conklin
This is a really interesting question that you have raised here! I once asked my cousin (who is a Jesuit that works in Rome) what happens when a pope gets elected in terms of citizenship status. Apparently most of the top people in the Vatican are all citizens of Vatican City and carry actual “Vatican City” passports as such. I haven’t been able to figure out if Pope Benedict is still a German citizen or not since by acquiring Vatican citizenship he should have automatically lost his German one. I imagine that the German government would have probably been willing to make an exception in his case though.
Now if a US citizen were to be elected Pope that would seem to be breaking into murky territory, since I think that the US actually enforces losing citizenship if you take a really high-level government position overseas. Take for example the current president of Estonia and the former president of Lithuania, Valdus Adamkus, both US citizens before being elected (though they may have renounced as well of course to be electable!).
I imagine though that if the Cardinal were elected he would have to quietly fill in a relinquishment of citizenship form, because I don’t see how the Vatican could function otherwise.
On the other hand, I don’t think that the IRS would come anywhere near an American Pope to demand he submit his FBARs and penalties…That would generate such a monumental, global backlash and damage to the US’s image overseas and at home (isnt something like a third of the US Catholic?) that they would have to be insane to really try that!
@ Roger: By becoming a foreign head of state, Dolan would likely be assumed to have relinquished his US citizenship. In any case, all he would have to do is simply send a letter to State informing them that he has relinquished it.
@Don Pomodoro, The solution for this dilemma would be for a US citizen Pope would be to renounce US citizenship before a US consular or Embassy official outside the US. He ould do that immediately on arriving in Rome since there presumably is no waiting period for a foreign citizen who is elected pope to become a Vatican citizen. But becoming a foreign citizen does not, in itself, result in loss of US citizenship. There has to be a clear intention to lose US citizenship in any act that might cause it to be lost.
I recall several months back when Haiti was preparing for new elections, one of the announced candidates for presidident was a long-term Haitian green card hoder who had lived int the US for several years. But in the end he did run for president so the possible tax crisis did not happen.
@Don – do I detect a hint of sarcasm in your last paragraph? I nearly posted a serious response, then thought again.
@all,
I had forgotten that by Act of Congress, Winston Churchill was actually made an honorary citizen of the United States. Here’s the link that records this;
http://www.winstonchurchill.org/learn/biography/redux/churchill-honored-with-us-citizenship.
I wonder if this was really necessary, since being born abroad to a US citizen mother he was already a US citizen. In those days dual citizenship was almost never considered siince citizenship was considered generally to be an “eith/or” status. Since this ceremony took place the year after the enactment of The Tax Act of 1962 which imposed US taxation on non-resident US citizens, I wonder if Skr Winston was ever presented with a tax bill by the IRS. If he was, but never paid it, I wonder of the IRS pressed a claim on his estate for unpaid US tax obligations and estate taxes. As far as I am aware there is nothing in US tax law that exoneratres honorary US citizens from being subject to US taxation.
@All, is there an exception in US law that permits a US citizen, who become the head of a foreign state to simply send a letter to the State Department saying “by-bye” or does he also have to formally renounce his US citizenship before a US consular or diplomatic officer like everybody else abroad, and pay what ever Exit Tax he owes?
http://isaacbrocksociety.com/2012/01/31/appreciated-conversation-with-honourable-mike-sullivan-ndp-fellow-us-person-in-canada-reasonable-cause-certificates-of-loss-of-nationality-etc/
In the thread above, I did send correspondence to Canadian government representatives, both federal and provincial, who were identified as having been born in Canada. I only heard back from two MP’s, one Mike Sullivan, who said:
I would like to ask permission to share the information you’ve provided me on http://isaacbrocksociety.com/, where a growing number of Canadians and US persons around the world are discussing this important issue? Your response to me is relevant.
[response] As for my personal situation, I came to Canada with my family as a very young boy and so my Canadian-born children are not, as you call them, ‘accidental’ Americans. I would have had to live in the US for 10 years, at least 5 of which after I turned 14, for that to happen.
Further, (You can use my info, with 2 caveats. One, I’m not exactly sure of the rules. I was told 10 years, 5 of which after age 14, but now am told 5 years, 2 of which after age 14, is what I had to live in the US for my kids to be accidental Americans. I left when I was 5, and did not return to live.)
I am very pleased that your children do not fall into the category of “Accidental American”. My adult children, born in Canada to US parents, are considered US citizens as many others in Canada, some of them not even aware of the status the US has given them. When they find out what their responsibilities are as such, it’s truly a life-changing moment.
[response] With respect to your question concerning MP’s born in the U.S., I note that there is currently no general prohibition on U.S. citizens’ running for an elected office in a foreign government. However, it would appear that “ accepting, serving in, or performing duties in a foreign government is a potentially expatriating act if the person is a national of that country or takes an oath of allegiance in connection with the position.” As a Canadian Citizen and a Canadian Federal Government Member of Parliament, I most assuredly took an oath of office and am proud of it.
Further, (As for the ‘certificate’ I have never had one, nor was I offered one. Apparently the law changed in 1967, meaning merely voting in a foreign election ceased to be a loss of nationality event after that date. And apparently if I want to lose my US citizenship, I must actively go to a consulate and do so.)
As you should be proud of it! Do you, though, have that important piece of paper to accompany your Canadian passport – your personal Certificate of Loss of Nationality? You likely have special status to cross the border without question, but many of us who came to Canada in the 1960’s and 1970’s and were warned that we would be relinquishing our US citizenship when we took our Oath of Canadian Citizenship did not know of and did not receive that important piece of paper. We were not informed by the US when they changed their laws that we were actually again US citizens. We were not given a choice to opt in or opt out. We assumed and lived our lives as only Canadians – working, raising our families, paying our Canadian taxes, generally trying our best to be good citizens, living in the country of our choice.
I appreciate that you are giving of your valuable time. Could you give your further response to the above? There are many taking note of the NDP position on this important subject.
@Roger
From: http://www.richw.org/dualcit/faq.html#losing
If I am a dual US/other citizen, is there any way I can lose my US citizenship?
Although current US law forbids the government from taking your citizenship from you against your will, it does permit you to give it up voluntarily. This has placed the US State Department in the complex position of determining whether someone who claims to be a US citizen has, in fact, given up that citizenship by his voluntary statements or actions.
In the early days of court-mandated acceptance of dual citizenship, State Department officials (hostile as most of them were to the whole idea of dual citizenship) tended to play hardball with people who claimed dual status, looking for almost any excuse to revoke US citizenship, and frequently ruling that a person had voluntarily forsaken his US ties despite steadfast protestations or even convincing evidence to the contrary.
On 16 April 1990, though, the State Department adopted a new set of guidelines for handling dual citizenship cases which are much more streamlined and liberal than before.
The State Department now says that it will assume that a US citizen intends to retain (not give up) his US citizenship if he:
is naturalized in a foreign country;
takes a routine oath of allegiance to a foreign country; or
accepts foreign government employment that is of a “non-policy-level” nature.
Apparently, a “routine oath of allegiance” to another country is no longer taken as firm evidence of intent to give up US citizenship, even if said oath includes a renunciation of US citizenship. This represents a dramatic reversal of previous US policy; it used to be that any such statement was taken rigidly at face value (as in the Supreme Court’s 1980 Terrazas decision).
This presumption that someone intends to keep US citizenship does not apply to a person who:
takes a “policy-level” position in a foreign country;
is convicted of treason against the US; or
engages in “conduct which is so inconsistent with retention of U.S. citizenship that it compels a conclusion that [he] intended to relinquish U.S. citizenship.”
The State Department says that cases of these kinds will be examined carefully to determine the person’s intent. They also say that cases falling under the last criterion mentioned above (conduct wholly inconsistent with intent to keep US citizenship) are presumed to be “very rare.”
@Roger
My other response was from MP Diane Ablonczy’s constituency office:
“Dear “calgary411”
Thank you for your recent e-mail to the Hon. Diane Ablonczy, regarding your questions and concerns with the U.S.Tax and “FBAR” filing requirements for U.S. Citizens in Canada.
Ms. Ablonczy is aware of the situation. However Ms. Ablonczy renounced her US Citizenship when she became a Canadian Citizen.
As it turns out, that’s shown to be true — now that Mr. Ladybug’s 1980 letter has come to light:
“Diane Ablonczy (maiden name Broadway) was born in 1949 in Peoria, Illinois, United States, as the oldest of six children. A year later the family moved to Three Hills, Alberta, and Ablonczy grew up in a variety of places in rural Alberta. In 1967 she graduated from High School in Lac La Biche. In 1973 she received her Education degree from the University of Calgary and subsequently taught English, creative writing and other subjects.”
“Our new Constitution is now established, and has an appearance that promises permanency; but in this world nothing can be said to be certain, except death and taxes.”
– Benjamin Franklin