An opportunity to raise the parallels between the Eritrean
situation and that of “American Persons” in Canada.
There is no comments section up yet, but reporter is
Niamh Scallan whose email is probably
nScallan@thestar.com
sbell@nationalpost.com
An opportunity to raise the parallels between the Eritrean
situation and that of “American Persons” in Canada.
There is no comments section up yet, but reporter is
Niamh Scallan whose email is probably
nScallan@thestar.com
sbell@nationalpost.com
try this one…
nScallan@thestar.ca
You can now post comments at the Star story…
<a http://www.thestar.com/news/canada/politics/article/1231226–eritrean-government-using-consulate-in-toronto-to-impose-tax-to-bankroll-military-un-charges
I like these excerpts; “
……“The Eritrean authorities continue to rely heavily on
extraterritorial taxation among Eritrean diaspora communities to
generate hard currency.
The Monitoring Group has confirmed that the collection of such taxes
routinely involves threats, harassment and intimidation,” it said.”….. http://news.nationalpost.com/2012/07/23/baird-troubled-by-reports-eritrea-using-toronto-consulate-to-extort-citizens/
The US parallel which should be reported in Canadian and other media could read:
“The
EritreanUS authorities continue to rely heavily onextraterritorial taxation among
EritreanAmerican diaspora communities togenerate hard currency (and revenue to offset the growing domestic debtload).
The Monitoring Grouphas confirmed that the collection of such taxesroutinely involves threats, harassment and intimidation,” ….”
“refusal to pay the tax often results in
denial of service orthreatsagainst, or harassment (of those deemed to be US individuals), (inability to visit) family members still residing in (the US)
Eritrea,orpossible arrest of the individual should they travel to
Eritreapaying the taxes alleged to be owing,””
If extraterritorial taxation and levies on Eritreans in Canada is extortion, and may be criminal, then why isn’t US extraterritorial taxation and the FBAR and FATCA penalty regimes the same? Canada did not say that it was only the method (threats, extortion) of extracting the tax, and the end use of the tax revenues (war, terrorism) that was abhorrent. Did Canada state that if Eritrea stopped using it for ends that we disapproved of, and the method of enforcement changed, that then the levy assessed inside Canada would be considered okay? No, the extraterritorial aspect – being assessed, imposed and enforced inside Canada, was also salient to the objection.
Put another way, if the Eritrean government promised to use the revenues only for domestic objectives and there was no implied or other reprisal against the families of those abroad, would that still be okay?
The US uses taxes and penalties it gleans from those ‘abroad’ for whatever it wishes – whether that be the many armed conflicts it engages in, unsanctioned assasinations, drone attacks that kill non-combatants, prisons, and many other applications that have never been officially sanctioned by Canada or the UN.
It is not a condition of the reciprocal tax treaties with other countries that the US must justify in any way, the use of the funds collected from duals and other deemed ‘taxable’ persons – or the method of extraction and enforcement. There is no provision specified in the reciprocal tax treaties that makes the assessment and collection of penalties dependent on assuring no reprisals against family. In fact, if we held a ‘foreign’ account with a US resident person, or even just named them beneficiaries, they would be equally liable for any penalties assessed for errors or omissions in reporting – whether they knew about it or not. You can name someone a beneficiary on an account, or in a will (or designate them with a Power of Attorney?) without their permission or knowledge.
With zero US tax owed, and complete tax compliance where we live and earn, we are nevertheless threatened with the imposition of life-altering fines (FBARs, etc.), criminal charges, confiscation of 30% of legal account balances (under FATCA) and libeled publicly and repeatedly by US politicians, and Treasury and IRS spokespeople through official statements to the media. We have – 6 million of us abroad – including our children – been declared criminals, tax evaders and money launderers before the fact, without zero robust evidence or due process. The ‘new’ compliance process won’t change that presumption of guilt – though US citizens are supposed to be deemed innocent until proven guilty. Many of us have been forced to spend thousands or tens of thousands to comply – with zero or de minimis US tax owed (on earnings and assets like sales of principal residences – not taxable at home) – and after already paying our home country taxes in full. We have no affordable or accessible or effective recourse. The US has demonstrated absolutely no honour in its dealings with the ‘citizens’ it claims as property. It provides zero services or benefits. It ignores or supercedes tax treaties retroactively and unilaterally at will.
Why doesn’t this constitute criminal and extortionate behaviour deserving of official sanction and statements by the UN, Canada and other sovereign governments?
Just because something is declared legal by a government, doesn’t mean it isn’t confiscatory and extortionate. If Eritrea doesn’t have the right to levy any extra-territorial tax on Eritreans abroad, then what makes it okay for the US? The Eritreans are asking for 2% – whereas the US, writes and enforces discriminatory laws taxing the sale of our primary residences, and other ordinary financial life events abroad – which are not taxable in our home countries (ex. saving for our children’s schooling with RESPs), and sometimes the equivalent is not even taxable within the US – which makes the size of the levy far exceed that imposed by the Eritreans. What is the ‘exit tax’ but a way of extorting as much as possible – even from those merely born to a US citizen parent overseas – in lieu of any future estate assets? Why should someone who has never ever lived, worked, or set foot in the US as an adult pay an ‘exit tax’ in order to exercise their human right to choose citizenship and home country?
In what other country does owing zero domestic tax, while the holding of entirely legal post-tax registered assets located in one’s country of dual citizenship and actual permanent residence, results in the levying of confiscatory and draconian penalties that can bankrupt an entire family and result in a tax and penalty debt for life?
I want to see Baird and co. issue a similar diplomatic and public statement about those Canadians who face extortionate and confiscatory threats and actions from the US – through FATCA.
The aggressive structure and application of US extraterritorial taxation imposes not only the probability of unreasonable tax burdens against those on whom it uses threats and force to compel compliance, but a uses a confiscatory and extortionate penalty regime with which it extorts non-tax revenues by assessing them on legal and already post-tax or tax-free assets outside its borders – despite the absence of any actual US tax liability and in the complete absence of any US origin of earnings or assets.
FATCA is designed for the eventual reporting of all transactions, credits and debits (over 10,000. ?) in our accounts, not just balances or interest earned. That final level of reporting will no doubt come with the same types of draconian and confiscatory penalties we have already seen. In this way, the US is gearing up for the imposition and collection of extra revenues, not only through assessed tax on any ‘income’ earned anywhere in the world, but through even more ramped up penalties on post-tax and tax-exempted assets and debits – by making reporting more and more elaborate – and by default, taxing the mere existence of savings and also transactions – whether debits, or credits. An extraterritorial reporting penalty based on legal and transparent post-tax or non-taxable debit and credit transactions inside accounts earned and held inside another country goes so far beyond anything that could ever possibly be considered just or ethical that it enters an entirely new realm of imaginary rationale for taxation.
There is absolutely no way for the US to credibly justify the reporting of every transaction in our accounts. Ordinary life requires banking. Ordinary life requires regular banking transactions. Requiring the monitoring and reporting of all the banking transactions of > 6 million deemed ‘US persons’ abroad is just insane – and cannot be credibly rationalized away by the other countries where we are citizens and permanent residents.
Since our emancipation rests on meeting whatever punitive and ever-changing criteria the US imposes – whether that be 5 years of retroactive or future ‘compliance’, or whatever punitive and draconian measures they decide to whimsically enact in coming years, we are effectively held captive against our will – unable to exercise international human rights to security of the person, and to choose our citizenship. Even if we renounce successfully, our children are still bound.
How far will the US go? How about 10 years past compliance? How about a new lower networth threshold for any ‘covered expatriate’ that exceeds 25,000. , or 50,000.? We are deprived of the rights and financial incentives that fellow citizens in the US and in our country of residence (and other citizenship) can benefit from through government tax policies designed to reward those who try to save and insure the financial security of our households, send our children to school, and plan for disability and the end of life. We are second class citizens in this respect – in both countries, and we are effectively prevented from being freed to save and prosper unless we pay dearly for the privilege of extracting ourselves from the grip of the US. If no country opposes the US, there are effectively no limits to what it can and will do.
How can other countries stand by while the US imposes this not only on adults, but on innocent children who continue to inherit whatever burden the US decides to enact on them in the future? How extreme will the measures have to get – like FATCA – before there will be meaningful opposition? The US debt will only get higher. The pressures for revenue will only increase. The representation of those outside the US will never be significant. At what point will US extraterritorial taxation inside sovereign countries be considered a global embarrassment too egregious to ignore?
@ badger
Oh my, I have to say that is another excellent comment. It may be too long to post at The Star but please send it to Baird (bairdj@parl.gc.ca) and the reporters mentioned above. Don’t let we “the choir” be the only ones to read this.
Thank you @Em, I am just so irate that I tend to rant here. But I should channel it into being productive too – and send it on.
*This was also discussed on “As It Happens” on CBC Radio One around 7p.m. (EST) tonight. While I was listening my husband and I kept commenting..”How is this different from what the US is doing and why isn’t what the US is doing also being discussed?
@badger
Great comments! A very complete summary of just how much expat Americans and Eritreans have in common. The only reason I can think of for why there’s this double standard, psychological blind spot or whatever it is about U.S. tax policy is that the delusion of American Exceptionalism is still too much ingrained not only in the American psyche but also in that of other countries like Canada. I truly believe that our own government, despite its earlier protestations (and now, virtual silence) is preparing to sell us out to the greater realpolitik of our indigenous banking system’s “need” to maintain unfettered access to the American market. Even if we constitute nearly one-thirtieth of Canada’s population, that will still be far too little to trump the influence of the only powerbrokers who have ever mattered in Canadian history.
And to top it off, the potential revenue to be collected (even with the massive FBAR and FATCA fines— if the fined persons even had the money to pay them) would not solve the debt problem in the US.
Today’s Swiss daily, Tages-Anzeiger, carries an article describing how the difference between the favorable tax rates, given to attract US expats to Switzerland, ends up being paid to the US.
http://www.tagesanzeiger.ch/schweiz/standard/Die-USA-profitieren-von-Schweizer-Steuergeschenken-an-Manager/story/20363075
*I sent the following Email to Mr. Bell with respect to this article:
“Dear Mr. Bell
A great job on the article about the repressive extraterritorial tax
policies of Eritrea. Thank you for speaking up!
I look forward with great anticipation on your writing a similar article
condemning the extraterritorial tax polices of the United States which, just
like Eritrea, subjects its diaspora (including some one million who live in
Canada, many of which have dual US-Canadian citizenship, to the same kind of
extraterritorial taxation.
Eritrea and the United States are the only two countries on the face of the
earth that do this. But in many respects US taxation is much worse. It applies
not only to all persons born in the US (including those born to a Canadian
parent temporarily in the US when the child was born) but to the children born
in Canada, and elsewhere in the world outside of the US, to a parent, either
father or mother, who is a US citizen. And the tax rates are the same as if the
person still lived in the US. Any US citizen with gross income of US$9,500 or
more is required to file a US tax return, even if foreign tax credits leave them
with a tax obligation of zero. And if during the year they had deposits in
Canadian bank accounts that equaled US$10,000, they must file FBAR reports with
the US Treasury Department. The penalties for failure to file FBAR reports start
at US$10,000 for each year such reports were not filed.
And with the 2010 FATCA legislation the US obligates every bank, credit
union, insurance companies and financial institution in Canada to provide
detailed reports to its Internal Revenue Service (IRS) on all accounts held by
“US persons.” This includes Canadian citizens who once lived and worked in the
US with green cards which they never formally canceled when they left the US to
return to Canada.
Effective January 14, 2014 Canadian banks which have failed to provide this
information to the IRS on all of their US person account holders will be subject
to a 30% withholding tax on money transfers from the US on any kinds of income
which are considered as taxable in accordance with US tax laws. Kind regards, Roger Conklin”
@Roger
I think you might have forgotten to mention the “Snow Birds” that also might get caught in the FATCA trap if they become a “US person” due to the amount of time they spend in the US.
*My good friend Patric sent an email to Mr. Bell, the author of this article, and resecived the following reply which our bloggers may find if interest. Here it is:
Please
tell your friends at whatever organization you all belong to that I have
absolutely no interest in US tax collection, so you can can stop sending emails
making the ridiculous comparison with Eritrea.
Stewart Bell
Senior
Reporter
National Post
1450 Don Mills Road
Toronto, Ontario
CANADA
M3B 3R5
Tel (416) 383-2509
Fax (416) 383-2305
e-mail: sbell@nationalpost.com
visit us at http://www.nationalpost.com
http://www.Stewartbell.net
*To be only “slightly” fair to Stewart Bell according to this biography tax “issues” are not really his is expertise. In fact Bell mainly covers Africa never mind even Canadian domestic politics. His email however, was that of a complete jerk. Barbara Schechter who I have emailed several times and gotten back responses is the main reporter at the National Post who normally covers tax issues.
Wow. Nice response.
*Send an email to Barbara Shecter
http://business.financialpost.com/author/bshecter/
bshecter@nationalpost.com
Re; “making the ridiculous comparison with Eritrea” in that e-mail response. Might it have hit a nerve? Someone who rejects the idea right away because it’s too uncomfortable to examine any more closely? Why not write an article demonstrating just exactly why it is ‘ridiculous’ to make the comparison? Even if he concluded it with a reiteration and confirmation of his pre-existing belief, it would be a very interesting article to read. So many articles pose a provocative question, and then knock it down, but even then, at least it raises the issue of citizenship-based taxation – that many readers would never have thought about, or didn’t even know existed – since they experience only residence based.
Maybe someone else would write it. At the very least, the title could be provocative, and get readers to look at it. Ex. “Eritrea and America milk citizens abroad?”, or, “Eritreans and Americans abroad find common ground: citizenship-based extortion?”, etc.
Similar to the excellent ‘what-if ?’ article by Arrow about Obama and the possibility of being subject to dual US and Kenyan taxation.
Arrow; would you be interested in writing an article like this?
@Badger: excellent rant. However I have a problem with the general flavor. Take this sentence for example:
You could replace “doesn’t mean it isn’t confiscatory and extortionate.” with “doesn’t mean it is fair” and you would be falling right into their trap.
What constitutes “confiscatory” and what constitutes “fair”? Are US expats really paying their “fair share”? Is an unconstitutional and unratified tax that was passed on the promise that it would never be bigger than a few percent on the ultra rich “fair” and “un-confiscatory”?
Many readers of this blog seem to operate on the assumption that the US Federal government is somehow legitimate and follows the constitution. Well it doesn’t, and I for one consider myself lucky that due to its HEROES/HIRE/FATCA actions I was made aware of the true nature of the beast that you seem to be continuing to legitimize. By venting your rage on only this one small aspect of US government overreach, the one that happens to affect you personally, you ignore the real and far bigger problem.