A reader posted a comment with this article:
Dr. Saud Al-Ammari is Managing Partner, Saudi Arabia & Gulf Region, Blake, Cassels & Graydon LLP, Al Khobar, Kingdom of Saudi Arabia. He has experience in a wide variety of corporate and commercial matters inside and outside the Kingdom. He served for ten years as special counsel and later general attorney for Saudi Aramco. Dr. Saud participated as legal counsel and a member of the team negotiating the Kingom’s accession to the World Trade Organization and served as chairman of OPEC’s legal defense team.
Here is a salient point:
The unintended consequences of taxing expatriate Americans by the US Government is that fewer of them seek employment overseas, and even fewer are hired by global firms. With fewer proponents of American goods and services who can influence buying decisions, there are fewer exports made by domestic companies, and in turn, fewer jobs in America. Ultimately, the US Treasury collects less overall revenue and America has a less competitive economy.
Thus Dr. Al Ammari agrees 100% with Roger Conklin.
@all…
Just to let you know, Roger and I got a couple comments posted there which just came out of moderation. Mine was short, and Roger’s was his usual well written facts and figures approach to “the way it is”.
Might there be one or two other Brockers that could lend some support there along the subject lines of what the post was about?
Let me see, 1962 to 2012 of Citizenship taxation. That is fifty years or 16.2 MCUs Minnow Complaint Units = 3 years. That is the time it takes for the IRS bureaucracy to even slightly amend the OVDI to something that might mitigate for “some” minnows.
Dr. Al Ammari’s piece hits the nail right on the head.
It should be sent to the WSJ as an Op-Ed.
@Roger, I don’t think it’s totally correct to say that the US started citizenship-based taxation in 1962. Before 1962, the US did not tax foreign earned income, but didn’t it tax investment income of Americans abroad? Didn’t Americans abroad have to file income tax returns every year to claim the exclusion? And didn’t they have to file the FBAR every year since 1970, for accounts with a combined value of more than $10,000? Today, I see that almost all problems with citizenship-based taxation are related to investments, including the complex reporting requirements, not really to earned income.
I read on renunciation guide that apparently the US instituted citizenship-based taxation as early as right after the US civil war, so to ‘catch the wealthy fleeing to London and not paying their fair share’ sort of thing. Check out these quotes from the website:
“If a man draws his income from our public debt, or from property here, and resides in Paris, skulking away from contributing his personal support to the Government in this day of its extremity, he ought to pay a higher income tax.”
– Senator Jacob Collamer (Rep., Vt.), 1862
“[The point of citizenship-based taxation is so that] if an American citizen went abroad and carried the protection of his country, of his citizenship with him, he did not escape its burdens… There are a great many people, I am sorry to say, who go abroad for that very purpose, and some of them went abroad during the late [Civil W]ar. They lived in luxury, at the same time at less cost, in a foreign capital; they had none of the voluntary obligations which rest upon citizens, of charity, or contributions, or supporting churches, or anything of that sort, and they escaped taxation.”
– Senator George Hoar (Rep., Mass.) , 1894
http://renunciationguide.com/Lawmaker-Quotes-About-Expatriates.html
*@shadowraider, It is indeed correct there were some short spurts in time when the US did tax, or attenmpt to tax, its citizens abroad. Here is the link to the history of US taxation posted on the ACA website. It was prepared by Andy Sundberg who founded ACA.
http://www.aca.ch/joomla/index.php?option=com_content&task=view&id=288&Itemid=132.
But it really became serious and permanent in 1962. With a $35,000 foreign earned income exclusion (equivalent to about $260,000 in 2011 US dollars when adjusted by the consumer price index) it only affecteted the very wealth. That was typically more than the president of a medium-size corporation made in those days.
But it was the Tax Reform Act of 1976 that drastically lowered the FEIE to $15,000, introduced stacking and restricted the application of foreign tax credits that really affected the middle class for the very first time. It has gotten progressively worse since.That is when Americans abroad started returning home by the tens of thousands and the US trade balance shifted from positive to negative ever since, as a direct result of destroying the very work force living abroad that had assured a trade surplus for the US almost every year for some 100 years. That was the beginning of the end. Since then the US cumulative trade deficit has grown to over $8.6 trillion and is increasing by some $2 billion average every day
I hope this helps to clear this up..
$35,000 in 1962=$260,000 today. Just goes to show how mean spirited congress is toward the expat. Is this not the definition of persecution?
*@bubblebustin, Here’s the exact calculation comparing $35,000 in 1962 to what it is worth in buying power in 2012:
$
in1913191419151916191719181919192019211922192319241925192619271928192919301931193219331934193519361937193819391940194119421943194419451946194719481949195019511952195319541955195619571958195919601961196219631964196519661967196819691970197119721973197419751976197719781979198019811982198319841985198619871988198919901991199219931994199519961997199819992000200120022003200420052006200720082009201020112012
Has the same buying power as:
$266,341.89
in 1913191419151916191719181919192019211922192319241925192619271928192919301931193219331934193519361937193819391940194119421943194419451946194719481949195019511952195319541955195619571958195919601961196219631964196519661967196819691970197119721973197419751976197719781979198019811982198319841985198619871988198919901991199219931994199519961997199819992000200120022003200420052006200720082009201020112012
What is equally if not more important, is how the US dollar has depreciated with resptect to the foreign currencies in which most US citizens living abroad are paid.
This will take some more checking and it varies depending on the currency and the country, but generally speaking (with some exceptions) the US dollar has also depreciated substantially with respect to other “hard” currencies.
For example in June 1962 the Swiss Franc was worth US$0.65. Today it is worth $US1.03. So you can see that adds another important variable to how severely the citizenship-based taxation policy of the US literally destroys the ability of US citizens to survive living in many countries, thus forces them to relocate to the US (where many of them have never lived or perhaps even visited in their whole lives) or renounce their US citizenship. It is truly a total disregard for fundamental human rights.
*The formatting was lost in the prior post, but from the CPI calculator on-line $35,000 in 1962 had the buying power of $266,341.89 in 2012. That is as far as its purchasing power in the US is conerned.
*News: It looks like a transportation bill is being formally passed today in the form merged between Senate and House–MAP-21. This is the one that is funded by revoking the passports of anyone owing more than $50,000 to the IRS. The judge and prosecutor is the IRS, and the bill allowed the sharing of IRS information to the customs and passport officials.
Question: Obamacare: is it true that everyone must give Barry his fair share, and purchase an approved domestic health plan—otherwise they will be charged anyways?
Heard on the street: My Indian friends told me that they have their own citizenship-based taxation being implemented next year. Looks like Barry is truly a world leader in all the worst ways.
@mark twain
re Obamacare. I dropped an email to ACA yesterday after hearing the “good” news as they were instrumental in seeking an exclusion for US persons abroad. Their response:
“If you are a bona-fide resident overseas you are excluded from participating in Obamacare in the United States.”
However, there are still tax implications, as renouncecitizenship explains:
http://isaacbrocksociety.ca/2012/06/28/yet-another-reason-to-renounce-u-s-citizenship-obamacare-tax-on-unearned-income/
If this is indeed part of the Transportation Bill, then allow me to predict that even more US citizens living abroad will be renouncing their citizenship and ridding themselves of this potential involuntary ball-and-chain that could prevent them from traveling.
You don’t have to be guilty, just alleged to be guilty, in order to have your passport snatched out of your hands. Just another stone being removed from the solid foundation of Universal Human Rights.
‘Where there is a will, there is a relative,” as one of my old bosses used to express it when I was but a teenager.
@Roger, doesn’t it say in the bill that this does not apply to people who owe federal taxes.
They mention that the non-renewal of the passport applies to people who have some weird federal debt (other than taxes), that does not seem very common. Did I misread or misunderstood the text?
@Roger, thanks for the explanation and the link. I didn’t realize that the exclusion amount meant so much at that time. But it still seems to me that even before 1962, the foreign income exclusion was only on earned income, so all salary and paid benefits were excluded, but interest, dividends, pensions and rents were not, and the forms were still required every year. Maybe at that time the FEIE was enough to prevent double taxation for most Americans abroad, but I think that making the FEIE unlimited today would not solve the problem. I see most people here complaining about the complexity of the forms, cost of tax preparation, penalties, and US taxation of investments that have exemptions or lower taxes in their countries.
*@Christophe, I am not sure exactly what the language is and we will probably have wait and see what is finally approved before we know for sure.
But it is my impression that (1) the $50,000 was for monies owed to the IRS which could be for taxes or penalties or a combination of the two and (2) that it calls for the cancellation of otherwise valid passports, not the non-renewal of passports that have expired. The language I saw indicated that if the person was outside of the US when his passport was canceled, he would be issued a temporary passport valid only for return travel TO THE US, but not valid for any other purpose.
We should know when the smoke clears in a few days.
@Mark Twain…
I posted this on the Surface transportation threads earlier, but if you did not see, here it is again…
The matters we are concerned about apparently are removed!
YES, indeed! Now available online in black and white:
http://www.rules.house.gov/Media/file/PDF_112_2/PDF/HR4348crJESih.pdf
pp.56-57 The Reid Amendment (passport denial/revocation/limitation): “The conference agreement does not include the Senate amendment provision.”
pp. 73-76 The Levin Amendment on action against certain FFIs (including blocking electronic transfers): “The conference agreement does not include the Senate amendment provision.”
Brings tears to the eyes. OK, now that conferees have agreed to the conference report — what next? Must admit I don’t know nuances of procedure. Both houses still have to agree/not oppose before it goes to the President for signature?
*@Just Me: thanks for this important clarification. Yes, the identical bill must be approved by both the House and the Senate before it can be sent to the Preident for his signature. That signature is what transforms a bill into law.
Updated information: Both Houses adopt the Conference Report; the bill is then passed; there is some paper work done (the bill is “enrolled”); it is sent to the President for signature; at which point it becomes law. Signature could be rushed to tomorrow I suppose.
@Mark Twain, India has simply reduced the number of days of presence required to be considered a resident for tax purposes. Before, a person was considered an Indian resident if present in India for more than 182 days in a year, now a person is also considered a resident if present for more than 365 days during the previous four years combined. So in average, a reduction from six months to three months per year. Indian residents are taxed on worldwide income, while non-residents are only taxed on income from India, like most countries do. Although Indian citizens abroad are the ones mostly affected by this change, it has nothing to do with citizenship.
http://www.morisonmenon.com/has_direct-tax_code_short-changed-the_NRI%20.php
http://ritusays.wordpress.com/2011/01/12/government-issues-clarification-on-dtc-direct-tax-code-clause-for-nris-non-resident-indians/
http://www.tax-news.com/news/New_Indian_Tax_Code_Set_For_2013____55871.html
For those following this…
CF&P Applauds Exclusion of Anti-Tax Haven Legislation From Surface Transportation Bill
@Just Me, comment “awaiting moderation.” 😉
Thought you might be interested in see how Roger Conklin constantly trolls the internet looking for stories that he can comment on and make a tie between Citizenship taxation and export job creation. In this article:
The U.S. and Europe: Time to spur growth through tradeBy Myron Brilliant, senior vice president for international affairs, U.S. Chamber of Commerce.
In response to this article Roger drew Myron’s attention to the article by Dr. Saud Al-Ammar, Managing Partner, Saudi Reigon for Blake, Cassels and Graydon, LLP
I also gave him a “like” and added a comment in support of his…
Just looking for opportunities to tell the story where ever we can.
Pingback: The Isaac Brock Society | Roger Conklin passes away – Tireless advocate for #Americansabroad and a decent human being