76 thoughts on “Is citizenship-based taxation a violation of international law?”

1. All relevant and cogently argued as usual. Although U.S. citizenship-based taxation is not violent enough (yet) to warrant a “crimes against humanity” label, I would venture that it is not far off with each law enacted that erodes the concept of innocent until proven guilty. At this moment it is an “annoyance against humanity.” In all seriousness, this issue has been causing me loss of sleep, angry outbursts, and a feeling of helplessness. The psychological trauma inflicted on U.S. citizens living abroad is, I would have to argue, quite severe. The question is: How does one practice Ghandi’s peaceful resistance whilst abroad and without representation?

2. @laurasecord- a very interesting question that you pose there. In light of another article that i read today you can now ask this question:
   how does one practise any kind of resistance without being branded a terrorist?”
   It seems that under the National Defense Authroization Act that even peaceful protestors are now being labelled as terrorists by the FBI. How chilling is that?
   I dare say that the U.S. government is taking a very dark view of expat opposition to overseas tax enforcement measures.

3. @recalcitrantexpat “I dare say that the U.S. government is taking a very dark view of expat opposition to overseas tax enforcement measures.”

   Are we in the 30’s in Germany? In some ways, I say, perhaps.

4. Leaving aside individuals, let’s consider this on the level of the banks in sovereign countries and FATCA. They are under no legal obligation to comply. I have always been of the opinion that the U.S. needs the rest of the world far more than the world needs the U.S. In fact, the world does not need the U.S.

   Kris Kristofferson once said that the U.S. is the biggest problem in the world, and it is.

   It would be interesting if the fast majority of the world’s banks simply declined to enter into agreements with the IRS. What would the world’s biggest debtor do then?

   On the level of individuals, well that is a harder question. But, the simple reality is that few people have the financial resources to comply with all the reporting and tax requirements. Therefore, many people may find themselves as inadvertent peaceful resistors. Do you have an extra $3000 to $5000 per year to pay to deal with these requirements? There may be no choice.

   http://renounceuscitizenship.wordpress.com/2012/01/17/u-s-citizenship-has-been-priced-out-of-the-market/

5. Well, it may be an interesting discussion to have amoungst ourselves, but as you know the US does not seem to recognize any International conventions that it chooses to ignore, and not ratify, like the World Court.

   Not sure they care that much about any Human rights international conventions that they didn’t impose unilaterally or think up first. It is one rule for Americans, generally speaking, and another rule for the rest of the world. It used to be that he that had the most gold made the rules, but I think it has been perverted to he who has the most debt and biggest military makes the rules.

6. @Just Me

   Actually, it really doesn’t matter what the U.S. thinks. That’s the whole point of international law. Furthermore, the U.S. is mattering less and less. That’s why it’s getting so loud and obnoxious.

   It’s a good idea to begin the discussion and research this. So, far none of this has been framed in terms of violations of international law and it’s time the discussion started.

   FATCA will result in countries seeking a center of financial gravity outside the U.S.

   The effects of what is going on today will not be felt for a few years down the road (at least), but they will be felt. At that point there will be no return.

   The U.S. cannot force the rest of the world to play with it in the sandbox.

7. This may be off point, but I feel like writing the following: The US was neutral before WWII. Yes, the US helped Europe free itself from fascism. The US wisely decided for the Marshall plan, which helped avoid the resurgence of a new dictator (Germany was emasculated by the treaty at the end of WW 1, and that helped Hitler and his henchmen come to power, in my simplistic view of things). But this does not ordain the US as dictator of Earth. Jesus said something like “those who lead must follow”.

   I remember one time I took a TGV to Paris and went to the restaurant wagon to have a few pints. There was a group of French WW 1 buffs there and we started talking over beers and sandwiches. One of them said: thank God you guys came when you did. You saved our behinds.

   The Frenchman thanked me because my grandparents helped his. But nobody elected the US dictator of the world. We, as Americans, need to be more open to the world. Otherwise, nobody will follow. We are a grand experiment in Democracy. But we are failing.

   Most Germans that I have met in the past few decades are disgusted about what Hitler and friends did. I am disgusted about what the Americans did to the Native American population. What will our great-great-great-grandchildren say about US behavior today?

   Americans are European, African, Asian, Native American, and many other things. We come from all over the planet. We should be more internationally-minded. Not insular as the case is with most homelanders and the US government. What a mess.

   We have a choice. We have the choice to be true to our pioneering American Democratic Values.

   If we follow the path of democratic pioneers, the world will be open to us. But the policy of Unca Sam today will only result in a worldwide revolt against America. Are we that stupid?

8. @renouce as to “3. Terrorizes U.S. citizens living abroad and dual citizens in the same way that Eritrea does.” Does anybody have the text of the UN resolution that condems Eritrea for extraterritorial taxation? Would not such a resolution have the force of international law? Could we cross-interpret the resolution to annul FATCA, FBAR, double-taxation?

9. Yes the USA has a lot to offer to the world but sometimes it makes terrible mistakes that make the world community angry. I thought that President Obama was going to change this. But with FATCA…it seems that he is not helping the image of the Country. I am still hoping that he will realize this. I stll see him as a good man! And he needs our votes.

10. @Jefferson

    You will find the link to it here:
    http://isaacbrocksociety.com/2012/01/30/only-the-u-s-may-tax-its-citizens-living-abroad-u-s-condemms-use-of-disapora-tax-for-other-countries/

    @Marketpinetree

    The Obama administration is responsible for the OVDI reign of terror. Geithner, “First Tax Cheat” (Treasury Secretary), could exempt U.S. citizens abroad from FBAR but has chosen not to. To put it another way: Barack Obama and his administration are responsible for the “reign of terror” directed at U.S. citizens abroad. There are other and more reasonable ways to deal with any issues of non-compliance on the part of U.S. citizens abroad. Renunciations of U.S. citizenship are soaring under Obama.

    He must be voted out – the sooner the better. I don’t believe the U.S. can survive four more years of Obama and his administration.

    Is he a “good man”? I don’t know. He is a bad president.

11. @Jefferson before the World Wars the US was not only neutral but non-interventionist and isolationist, which is what the mood and vibe of the country is seeming to slowly return to.

    If the majority of American’s want to disconnect and rebuild at home, would you tell them they are wrong? We get cheap junk from China, our oil from Canada, but besides that we have the resources and the ability to be self sufficient if we ever are required to be. I read on here about the big “reckoning” coming to the US, if that does indeed happen, don’t you think most American’s are going to favor completely disengaging with the rest of the World anyway and circling the wagon’s, will that be good for the world?

12. @Everyone

    This is actually a fairly complex issue. One clear thing is citizenship based in not allowed under the model OECD or UN tax treaties. Thus in the spirit of American Exceptionalism the US uses its own model treaty which allows for citizenship based taxation despite being a founding member of both the UN and OECD. The US interestingly enough does have the so called tie breaker provisions in its treaties so a US citizen domiciled in the US but whom spends are lot of time in Canada could “tie break” out the Canadian tax system going through the IRS Competant Authority Services Office. I guess is does the OECD model treaty in some sense form a kind of de jure international law.

13. @WhoaIt’sSteve and Everybody

    Let the Americans circle their wagons that they may relearn to do what they have forgotten to do best at home. Let them revive what they have lost and neglected through their hubris. America: Let us folks abroad be– parts of our hearts do love you, but you are a big pain and we’ve had enough. We are your sisters and brothers and we won’t abandon you, but your government, Unca Sam, must be just and right with us; you must mind your own business, let us mind our business, and we can meet somewhere in the middle and share our experiences.

    Instead of trying to wank us about through stuff like FATCA, FBAR, double taxation: let the US rebuild its “Yankee Ingenuity”! That is what the world appreciates. That is what was made of the “melting pot”. The US has always been quite good at building marketable products from the scientific and technical studies of people around the world. That doesn’t mean that the technical advances of the past centuries are “American”. They are international. And the products are never perfect: we are humans. We should all benefit from our collective knowledge without trying to bash or cheat each other. As a human race, made in the image of God, we should be able to solve our problems without preying upon each other through bizarre tax policies.

    People from all over the world must work together. If the US can’t take a step back and be “cool”, it will flounder and wither. The whole world could descend into a new sort of “Dark Ages” if Unca Sam doesn’t behave himself. Wake up folks!

    Sorry, I am ranting again, and my comments may be a bit off-point as to the present thread, but they are heartfelt and I am really upset. Tears came to my eyes yesterday when I thought about how truth is betrayed by the present system. God save the United States. God save the Human Race.

14. @whoait’ssteve- No one has missed the absence of the former Soviet Union from the world stage and I seriously doubt that thw world would suffer if a similar fate were to befall the U.S.
    I actually think that the world would benefit from a U.S. that had less of a presence on the world scene. A couple of months back I watched a Public Broadcasting System interview with, Zbigniew Brzezinski, in which he said that the U.S. cannot continue as a democratic state if it persist with its foolhardy attempt to police the world. In his opinion for the U.S. continue in this role it would have to to drive its economy into ruin and to destroy its political system.
    We need to question whether or not the U.S. may actually be precepitating the very problems that the world is looking to solve.
    It would be much better, and a stablizing element in his appeal considerations if your husband could produce other care.

15. @all- I don’t know where the last line in my last comment came from. I must have fallen asleep.(lol)

16. Democracy in its pure form, with checks and balances, does not require a dictator to survive. America can step down if it values its own founding principles.

17. In the recent past the United States determined that it harbored entities that were considered “too big to fail” and took “action.” Perhaps that set of risible gestures was its own wishful projection into the not-so-microcosm? Uncle Sam needs to start wearing a bulbous red clown nose.

18. I believe that citizenship-based taxation, if not clearly illegal under the UN Charter of Fundamental Rights, has very clearly been condemmed by the UN and US in the case of Eritrea. Since there is no exception written in international law to allow for the US to do this, I would argue that it is indeed illegal.

    However, since waiting for the UN to issue a binding resolution condemming US citizenship-based taxation will obviously never happen, so I would look closer to home. Take a look at some of the articles of the European Charter of Fundamental Rights which relate to data protection, handling of personal property and right to non-discrimination in the European Union. Note especially Article 21 which is supposed to ban discrimination based on place of birth. Some highlighted articles from the Charter below (Full text found here: http://www.europarl.europa.eu/charter/pdf/text_en.pdf)

    Article 7: Respect for private and family life
    Article 8: Protection of Personal Data (Everyone and their mother seem to be jumping over eachother to sell US citizens out on this issue in the EU currently…)
    Article 16: Freedom to Conduct a Business (Bit difficult when subjected to asinine IRS reporting requirements for your own business)
    Article 17: Right to Property (“No one may be deprived of his or her possessions, except in the public interest”)
    Article 20: Equality before the Law (If this is true then why can’t I, as an EU citizen open the same bank accounts as someone without a US birthplace?)
    Article 21: Non-Discrimination (This is the most relevant: “Any discrimination based on any ground such as sex, race, colour, ethnic or social origin, genetic
    features, language, religion or belief, political or any other opinion, membership of a national minority,property, birth, disability, age or sexual orientation shall be prohibited.”)
    Article 48: Presumption of Innocence and Right of Defence (IRS seems quick to condemn you as guilty with limited means of appeal if you can’t afford the lawyers to do so…)

    Where are all of the outraged dual EU-US citizens? FATCA, FBAR and citizenship-based taxation would be under intense scruitiny if brought before the European Court of Justice. I expect that somebody next year a European, unfortunate enough to be born in the US like me, will cry foul and generate massive negative publicity for the US and this will hopefully lead to a court case. I hope that Canada’s Charter offers similar legal avenues of resistance and I imagine that the same will happen before the SCOC as well hopefully!

19. Don, if someone challenged the US government on this, I’d love to see it, perhaps more than a major sporting event. I’m not going to hold my breath though. Most people on here at least seem rational, and it’s only $450 to be free of the problem.

    At least from my perspective, the US is really shooting itself in the foot if you look at all of the people living abroad who ARE renouncing citizenship. If you look at the money that we are contributing to other economies, it has to be a A LOT of money. If someone renounces, they cut the relationship with the US. There is no chance of those people going back to the US to add money to the US economy. For what? To catch a few resident US tax evaders!! IMHO, forcing hundreds of thousands of people to renounce (that’s what I’ll bet it gets to) to catch a few dozen people is just plain ridiculous.

    For me, I’m now starting to make money. I’m in the process of creating a home and I have a family. If it were just a “filing” issue, no big deal; I could just pay someone to do my taxes for me. But this FATCA deal is over-the-top in terms control. I was perfectly happy being a US citizen overseas until this FATCA came out and I started seeing how people were getting their bank accounts closed. I guess you can say that it was the tipping point for me.

20. @renouncecitizenship, Allow me to suggest that you revise point #2, which reads: “2. Steals from the wealth of individuals who just happen to have been born in the U.S.,” to include persons born abroad to a US-citizen parent as well. They are in exactly the same double taxation boat as well.

    You might also include a couple of additional points as well: (1) on the fact that citizenship-based taxation violates the national sovereignty of other countries by imposing taxation by a foreign country on persons who are bona-fide residents of those countries and by collecting tax revenues from within their sovereign borders. (2) In countries with foreign exchange controls it obligates bona-fide residents of those countries to illegally obtain a the currency of the taxing country and remove it from that country to pay taxes to the foreign country levying such taxes. In essence it requires that such persons decide which prison system they are most likely to surve in either violating the extraterritorial tax laws of the country imposing citizenship-based taxation or the foreign currency control laws of their country of residence by illegally obtaining on the black market currency of the taxing nation and, in violation of the money-laundrying laws of the nation of residence illegally remitting the foreign currency to the taxing authority of the country imposing the tax.

21. @Roger

    Thanks – post updated to include your thoughts!

22. @renounce

    Great post!

    It can also be argued that the “exit tax” is a barrier to freedom of movement and changing one’s nationality: UN Universal Declaration of Human Rights articles 13 and 15.

23. The “exit tax” keeps the most productive expats trapped into citizenship-based taxation.

24. @Joe Expat I’m not sure if taxation was one of the things the author’s and Mrs. Roosevelt were thinking about when they drafted the Human Rights Declaration, I think they were more concentrating on ethnic cleansing, and genocide. But if a court excepts that argument you should run with it.

25. @WhoaIt’sSteve:

    I have to read it again, but the recent UN Resolution which condemned ERITREA’S DIASPORA TAX probably refers to the UN Declaration of Human Rights somewhere within the text.

    However, there is one thing is for sure, taxation was certainly the main thing America’s founders were thinking about when they “RENOUNCED” their ties with Great Britain.

    CITIZENSHIP-BASED TAXATION (with no representation) was the primary “CASUS BELLI” of the AMERICAN REVOLUTION.

    So here we are again — 236 years later. Meet the new bankrupt empire, same as the old bankrupt empire.

    BTW: The Brits had all kinds of laws on the books for taxing the American colonists. It wasn’t until they started to enforce them that the rebellion began.