As reported by Brian Knowlton in the NYTs and Badger pointed out here a Presidential Commission is being Sought on U.S. Expatriates. The Bill number HR 6263 with details can be found at here .
American Citizens Abroad (ACA) is encouraging members and supporters to contact their representatives and ask them to support this bill. This is a positive step forward for Americans living and working overseas. A Presidential Commission would be invaluable in our efforts.
ACA Press Release follows:
WASHINGTON, DC – Reps. Carolyn Maloney (D-NY), Mike Honda (D-CA), and Charles Rangel (D-NY) have introduced legislation to create a Federal commission to study the impact of government policies upon the millions of Americans living overseas.
“Americans living and working overseas constitute a kind of unsung constituency,” Maloney said. “They pay taxes and vote, but U.S. policies and laws can have unintended and sometimes irrational consequences on their lives– because no entity in Washington is paying attention. These hardworking citizens are our country’s informal ambassadors around the globe and help strengthen the U.S. economy and promote American influence. Their concerns about how their government interacts with them deserve to be heard– and paid attention to– here in Washington.”
“As a member of the Congressional Americans Abroad Caucus, I am proud to fully support the Commission on Americans Living Abroad Act, authored by my friend and Caucus Co-Chair Carolyn Maloney,’ Honda said. “Millions of U.S. citizens who are living and working abroad have voiced their concerns regarding the harmful impacts of federal policies– often unintentional– on their lives. These Americans abroad promote U.S. influence around the globe and help our economy thrive, yet our federal policies often disenfranchise them from becoming citizen ambassadors or even returning to the U.S. It is time we acquire a thorough, comprehensive understanding of the federal policy impacts on these Americans, which this bill would provide.”
“This commission would give Congress an opportunity to look under the hood of this issue and see what’s working, what isn’t, and what can work better,” Rep. Rangel said. “It’s our elected responsibility to ensure American citizens here and abroad are equally protected by their nation’s laws and Executive actions.”
Full text of the bill is viewable here:
BACKGROUND ON THE LEGISLATION
Rep. Maloney is co-founder and Chair of the Americans Abroad Caucus in the House. Find out more at hereThis legislation creates a 15-member bipartisan Executive Commission to study the impact of U.S. laws and Executive actions on the overseas Americans community. The study would then be used to make recommendations for actions Congress and the Executive Branch could take to improve collaboration and communication of policies impacting this community. The intent of the review is to ensure awareness, coordination, and integration of the activities of the federal government relating to Americans abroad. Specific areas of federal policy the Commission is charged with looking into are tax and banking policy (including FATCA, Banking Secrecy Act, USA PATRIOT Act), immigration, voting, access to federal benefits (Medicare, Social Security), and student loans. There is an initial study due one year after enactment, and then one year following that report an update of what actions the federal government has taken based on recommendations from the initial report.
I just received this comment privately, and am passing it on.
“Caroline Maloney is really going out on a limb with her bill to create a presidential commission for US expats. I really think she needs some political cover here and I think it would be a good idea for us to write to her and thank her for her initiative even if we aren’t her constituents.
Her contact info is here. She has a special form for comments from people outside her district.”
You can visit the new ACA web site here.
@Shadow Raider,
I am back at Isaac Brock since my earlier comments here and see that recalcitrant, badger and roger have stepped up to the plate to more eloquently answer your question on the harm any person with a mental incapacity has in keeping a US citizenship since his Parent / Guardian / Trustee is not given the right to renounce such citizenship on that person’s behalf — even though they make daily decisions, some life and death, for that same person. If we determine that it is in the best interest of our family member, we should have that right. Otherwise, it is blatant discrimination.
Also, these persons can earn income; my son works and gets an honorarium of $115/month. He also does a bit of volunteer work. He is a contributing member of Canadian society as best he can be and is an accepted member of his community. He also receives Alberta (Canada) Assured Income for Severely Handicapped (AISH). He has a Canadian Tax-Free Savings Account. Also, I am the Holder of an Registered Disability Savings Plan for him (he is the beneficiary and will be able to draw upon this, using it as a retirement fund, when he turns 60). As such, I am taxable each year in the US for the contributions that the Government of Canada has made to his RDSP (CANADIAN MONEY) and I pay extra to have a cross-border tax accountant prepare expensive additional forms for those “foreign trust” accounts. These are not foreign to us — they are in our country, Canada.
This is what I sent to the US Taxpayer Advocate, but I am told that they cannot help. Neither can the Canadian Civil Liberties Association. As well, none of my government representatives have directed me to anyone who can help. The US IRS certainly has been of no help — their only answer is to engage a US tax lawyer, which I have done. Thankfully, I have some retirement savings to do so. I have this matter in the hands of my US tax lawyer and Washington, DC Immigration/Nationality lawyer. I will be able to renounce. I want that for my son. I want that for any other like my son — my family is not the only one so affected. There have to be many, many and most don’t know how this will affect them / they really have their hands full with day-to-day issues over and above the norm. It some day might be your family or any other family that searches out information on this site. We all should pay attention.
The US has signed, but not seen fit to ratify the UN Convention on Disabled Persons.
This is from the ‘Americans with Disability Act’ which doesn’t address a lot of the discrimination for RDSPs, etc. for Canadians with developmental disabilities (and the like).
But I did glean the following portion, which talks about discrimination ‘economically’. (My comments are in CAPS.)
The Congress finds that:
(1) physical or mental disabilities in no way diminish a person’s right to fully participate in all aspects of society, yet many people with physical or mental disabilities have been precluded from doing so because of discrimination; others who have a record of a disability or are regarded as having a disability also have been subjected to discrimination;
(2) historically, society has tended to isolate and segregate individuals with disabilities, and, despite some improvements, such forms of discrimination against individuals with disabilities continue to be a serious and pervasive social problem;
(3) discrimination against individuals with disabilities persists in such critical areas as employment, housing, public accommodations, education, transportation, communication, recreation, institutionalization, health services, voting, and access to public services;
THESE INDIVIDUALS HAVE EMPLOYMENT, HOUSING, PUBLIC ACCOMMODATION, EDUCATION, TRANSPORTATION, COMMUNICATION, RECREATION, HEALTH SERVICES!!!!!, VOTING, ACCESS TO PUBLIC SERVICES IN CANADA — THAT IT WOULD BE DIFFICULT TO PROVIDE FOR THEM IN THE US (WITHOUT THEIR FAMILIES WHO ARE ALSO LIVING IN CANADA).
(4) unlike individuals who have experienced discrimination on the basis of race, color, sex, national origin, religion, or age, individuals who have experienced discrimination on the basis of disability have often had no legal recourse to redress such discrimination;
(5) individuals with disabilities continually encounter various forms of discrimination, including outright intentional exclusion, the discriminatory effects of architectural, transportation, and communication barriers, overprotective rules and policies, failure to make modifications to existing facilities and practices, exclusionary qualification standards and criteria, segregation, and relegation to lesser services, programs, activities, benefits, jobs, or other opportunities;
(6) census data, national polls, and other studies have documented that people with disabilities, as a group, occupy an inferior status in our society, and are severely disadvantaged socially, vocationally, economically, and educationally;
THESE INDIVIDUALS ARE DISCRIMINATED AGAINST ECONOMICALLY; I.E. THEIR CANADIAN BENEFITS ARE DIMINISHED IF THEIR PARENTS / GUARDIANS / TRUSTEES ARE NOT ALLOWED TO MAKE A DECISION FOR THEIR BEST INTERESTS TO RENOUNCE THEIR US CITIZENSHIP, WHICH THEN BECOMES A SEVERE ECONOMIC HARDSHIP FOR THEM LIVING IN CANADA OR ANOTHER COUNTRY. IF THEY HAVE IN THEIR NAME A CANADIAN REGISTERED DISABILITY SAVINGS ACCOUNT OR A TAX-FREE SAVINGS ACCOUNT, IT DOES NOT GIVE THEM THE SAME VALUE FOR THOSE LEGAL TAX-SAVINGS PLANS AS A CANADIAN WITH A DEVELOPMENTAL OR OTHER DISABILITY COMPARED TO THE SAME CANADIAN WITHOUT AN ADDITIONAL US CITIZENSHIP AND ITS RESPONSIBILITIES.
(7) the Nation’s proper goals regarding individuals with disabilities are to assure equality of opportunity, full participation, independent living, and economic self-sufficiency for such individuals; and
THESE INDIVIDUALS CANNOT HAVE ECONOMIC SELF-SUFFICIENCY — IT IS INCOMPATIBLE WITH AN EXTRANEOUS (TO THEIR CANADIAN OR OTHER COUNTRY CITIZENSHIP) US CITIZENSHIP.
(8) the continuing existence of unfair and unnecessary discrimination and prejudice denies people with disabilities the opportunity to compete on an equal basis and to pursue those opportunities for which our free society is justifiably famous, and costs the United States billions of dollars in unnecessary expenses resulting from dependency and nonproductivity.
THIS IS, FURTHER, UNFAIR AND UNNECESSARY DISCRIMINATION BY NOT LETTING THE PARENTS / GUARDIANS / TRUSTEES OF DEVELOPMENTALLY OR OTHERWISE DISABLED CANADIANS RENOUNCE US CITIZENSHIP ON THEIR BEHALF, WHICH DENIES THESE INDIVIDUALS THE OPPORTUNITY TO COMPETE ON AN EQUAL BASIS (IN THE COUNTRY WHERE THEY RESIDE AND HOLD CITIZENSHIP), THEREBY CREATING MORE DEPENDENCY AND MORE RESULTING EXPENSES. THE COST OF ADMINISTRATION OF THEIR EXTRANEOUS US CITIZENSHIP IN CANADA (OR ANY OTHER COUNTRY) CREATES LITTLE, OR IN MOST CASES $0.00, FOR THE US. IT DOES GIVE MONEY TO CROSS-BORDER ACCOUNTANTS AND US TAX LAWYERS IN CANADA (OR ANY OTHER COUNTRY) — NOTHING FOR ANY SERVICES IN THE US.
WHAT ARE THE OPPORTUNITIES FOR THESE INDIVIDUALS FOR WHICH THE US IS JUSTIFIABLY FAMOUS THAT IS BETTER THAN WHAT CANADA, IN THIS CASE, PROVIDES?
@recalcitrant,
Many thanks for your excellent explanation of the problems for mentally incapacitated US persons outside of Canada — and the injustice of those who look after their needs not being able to renounce on their behalf to remove themselves from the insanity.
*@Calgary411, It is information like you have provided in these posts that needs to be presented in a very forceful manner at the hearings which these US congressmen are trying to have held. These are clear and convincing comments and evidence on the unjust treatment of US citizens, by our own government, who live and work or retired outside of the United States.
It would really be great if you were personally able to travel to Washington and testify at this hearing if and when it is scheduled.
Thanks for your confidence in me, Roger. In fact, thank you so much for your continued help on this site. Your words to us have been invaluable and your long fight for US persons residing in other countries so respected by all of us.
@recalcitrantexpat
May I send your post in its entirety to my MP, John Weston, in support of my Pre-2013 Budget Submission to the Gov of Canada Finance Committee?
@bubblebustin- I am humbled by your request and very happy to lend this material to the cause.
Let me express my gratitude to you for taking an interest in the cause of the disabled.
@bubblebustin,
Absolutely, recalcitrant’s words should be further spread. What an excellent re-use of those words than in support of your submission, recalcitrant’s succinct explanation of the subject.
Thank you recalcitrant and calgary. My husband and I are very moved by this. From what I have read here, employment insurance benefits are also IRS taxable? On the backs of the less fortunate is a disgrace. I wonder what the average American living in the US would think about this.
*bubblebustin, has anyone done some research on this or written about it? This issue kind of touches me, since I left the US due to being unemployed and Cali unemployment benefits tripled after I left. I still have that tiny unemployment check that was never cashed.
@swisspinoy, my apologies to whoever posted it for not remembering who they are, but they mentioned that they were talking to a US person who said that their EI benefits were IRS taxable. That’s a question for a cross border accountant to answer. Sorry to hear about your experience.
@Roger, You are correct, and I apologize for my mistake. Of course the foreign social security contributions are taxable income (if not exempt by a tax treaty). However, <a href=”http://www.irs.gov/businesses/small/international/article/0,,id=97060,00.html”>according to the IRS</a>, there are some cases where they can be considered income tax and used for the foreign tax credit:
Income Tax
A foreign levy is an income tax only if it meets both of the following tests:
1. It is a tax; that is, you have to pay it and you get no specific economic benefit (discussed below) from paying it
2. The predominant character of the tax is that of an income tax in the U.S. sense
Pension, Unemployment, and Disability Fund Payments
A foreign tax imposed on an individual to pay for retirement, old-age, death, survivor, unemployment, illness, or disability benefits, or for similar purposes, is not payment for a specific economic benefit if the amount of the tax does not depend on the age, life expectancy, or similar characteristics of that individual.
No deduction or credit is allowed, however, for social security taxes paid or accrued to a foreign country with which the United States has a social security agreement.
From what I understood, you pay tax to the US on foreign social security either when you receive the salary and pay the contribution, or when you receive the benefits, but not at both times. Depending on the social security system of the country, there are three ways that they are taxed by the US:
1. The social security contributions are taxable income, but also considered income tax, and the social security benefits are fully taxable;
2. The social security contributions are taxable income, but considered
pension cost, and the social security benefits are only taxable when they are more than the pension cost;
3. Under a tax treaty, the social security contributions are not taxable income, but the benefits may be depending on the treaty.
I admit that the rules for determining the pension cost are very complicated and I don’t understand the details. I’m not very sure but I think that the above is correct.
*@Shadow Raider, The complexities you describe are one of the reasons why US citizens living and working abroad must pay thousands of dollars for professional tax expertise and then they live in hope that the IRS will agree that their tax returns and supporting IRS forms have been filed correctly.
One of our posters from Brazil, Mark Pine Tree, who is self employed pays, if I am remembering correcly, some 33% of his net income in social security taxes cumulatively to both Brazil and the US. And because of his age what he pays to the IRS no longer has any effect in increasing his US retirement benefits. His payments help fund Social Security. Period. There is no Social Security totalization agreement, nor is there a tax treaty between the US and Brazil.
That is why he has a letter in his hand, signed by a IRS – Treasury Deparment official in Washington which suggests he consider renouncing his US citizenship.
It is a dead end street from which there is no other exit. Can you imagine that a US government official is actually recommending to a dual US citizen that he should renounce his US citizenship? It is evidence like this that should be presented at this forthcoming hearing, if it actually is ever held, on how the US grossly mistreats its citizens who live and work abroad.
I know of no other country that recommends its citizens renounce their citizenship in order to survive living and working in another country. It sure does not sound like being guaranteed the Universal Basic Human right that every individual should be able to enjoy of leaving and returning to any country, including his own.
It was Eleanor Roosevelt back in 1948 that chaired the UN commission that drafted that Declaration of Universal Human Rights to which every nation which at that time was a member of the US ratified. We’ve come a “long way” since that noble document was developed.
@Roger “… We’ve come a “long way” since that noble document was developed.”
You’re right, but I think we might have missed a left turn in Albuquerque 🙂
During an SF (Swiss TV) broadcast on the 4th of July, Donald Beyer, US Ambassador to Switzerland and Liechtenstein, stated it was “practical” to renounce citizenship for US citizens with a loose connection to the homeland and who didn’t plan to live there. The interview starts at 1:30 (dubbed over in German):
http://www.videoportal.sf.tv/video?id=39053d8b-917c-4fb5-bd69-89d490bf836e
*@innocente, the fact is that it also practical for persons who still have a close connection with the US to renounce their citizenship althoght they may never plan to live there.
In Mark Pine Tree’s specific situation he immigrated to the US and became a US citizen. His children and grand children were born and live in the US and renouncing US citizenship, he rightly fears, could make it very difficult or perhaps even impossible to visit them.
Brazilians must obtain a visa in their Brazilan passport in order to visit the US and as we are all aware, persons who renounce their US citienship are demonstrating what some US consular officials in particular and the general US population and our political leaders in Washington in general consider a lack of loyalty which perhaps does not deserve to be awarded later by the issuance of a tourist visa. I can understand his concerns. And of course the fact that renunciation is irrevocable demonstrates what a serious action doing so really is.
We are well aware that the Reed Amendment to the 1996 Immigration Act allows the Secretary of theTreasury to blacklist any person who renounces US citizenship for tax reasons and forbid that they ever enter into the US for any purpose for the rest of their lives.
Although this law has never been invoked, as far as I know, we cannot forget that FBAR was on the books for nearly 50 years, likewise rarely enforced. It was never even revealed in the instructions for taxpayers that FBAR even existed. I never heard of it and was living abroad when it was enacted in 1970.
But then one fine day Congress decided that the IRS should be responsible for enforcing FBAR and since that day it has been enforcing it with a vengeance against US citzens living abroad – many of which were not even aware that they held US citizenship. More that a few have had their entire life savings wiped out paying penalties assessed by the IRS of such magnitude that they were destroyed financially.
So while the good Ambassador’s remarks may well have been in order, the fact remains that the only real reason for a person living abroad to renounce US citizenship is a direct result of the burdens imposed on them by the unique-to-the-US citizenship based taxation laws. And the consequences can be most dire.
@Shadow Raider
… and Canada’s Registered Disability Savings Plan and its Tax-Free Savings Plan, that mostly are entered into to save for retirement, but are not restricted to that, are foreign trusts taxable in the US. (So, similarly, in for other countries than Canada)
From Canada’s Finance Minister’s letter to me:
*Let me add that the fact the persons who renounce their US citizenship are required by law to have their names published on a “name and shame” list adds additional evidence to the disdain which such persons are subjected. This is a law enacted by the United States Congress and signed by no less person than the President himself.
*Roger, that’s so childish of the US government. If I end up relinquishing to save my mortgage, then the kids in Washington can publish my name on every rock on the face of the earth, for all that I’ll care. Heck, I’d even write a book about it and maybe earn millions!
@swisspinoy, and consider dedicating it to your friends at the Isaac Brock Society 🙂
@Roger, I have heard that immigrants who return their green cards can get a visitor visa very easily, because the consular officers understand that returning a green card is proof that the person really has no intention of remaining in the US longer than the visit. They also allow the person to return the green card and get the visitor visa at the same time. Could it be also easy for former US citizens to get a visitor visa?
@all, Thank you for explaining the problems, I wasn’t aware of all these details. The US taxation system of citizens abroad makes no sense, and that is why I’m writing a bill to change it. I don’t know if it will go anywhere, but if it’s any consolation, in my bill you would all be able to remain US citizens and not pay or report anything to the US (unless you have some income from US sources, then you would pay tax to the US only on it). For nonresidents, no income tax on foreign income, no social security tax, no exit tax, no IRS forms, no FBAR, no FATCA, no estate tax, no Reed amendment, no renunciation, no nothing. After I finish writing the bill, I’ll try to post a link here, maybe it will make you will feel better reading it even if it’s not real (yet).
@Roger, I’m still hopeful that my bill can get somewhere, even if it’s only partly implemented. If I remember correctly, you have testified in Congress. What was your experience? Did the Congressmen show any empathy for Americans abroad? Did you give up trying to contact them?
*Shadow Raider, When I testified before the House Ways and Means Committee in February 1978 Congressman Waggoner made a statement (I still have a copy of the complete transcript of that hearing) in which he said the US Congress owed me an apology for its thoughtless actions with the Tax Reform Act of 1976, which made my feel vinicated at the time. And Congressman Frenzel concurred with Waggoner’s words.
But subsequent action in the various legislative act that have followed, rather than rectifying the situation have only made it worse until it has reached the disastrous state it is in today. Subsequently Congressman Alexander introduced legislation to, as I recall, replace citzenship taxation with territorial taxation, as the GAO had recommended in studies in 1978 and 1981, but it never got to first base. In fact his action in favor of “tax evaders overseas” cost him re-election because his oponent really beat him up on this issue.
Soon all is forgotten. There are so many more pressing problems that the good intentions rarely are turned into actions.
Certainly territorial is the only solution. ACA has recommended this and produced a document that could well serve as a model for legislation that would do this. It would treat the taxability of US source income for US citizen’s living abroad the same way it treats US source income for non-US citizens who live abroad. In effect would level the playing.
Dan Mitchell of Cato Institute has made what to me seems like a very sound proposal for all countries. That is all income should be taxed by the government where it is earned. Period. That would bring an end to hiding funds abroad to excape detection “back home.” No ,more need for FATCA or no reciprocity or no foreign tax credits. Each nation would in effect have to compete tax-wise for capital. That would be a great leveler.
@Roger, Thank you for your explanation. So it seems that Congressmen understand and they are just lazy to do the work. That’s why I’m writing the bill myself, maybe they will introduce it if it’s already done, and maybe they will approve it if the complaints and renunciations keep rising.
By the way, I found out that Bill Alexander proposed three bills regarding Americans abroad: one to exclude all foreign income of nonresidents from US taxation (but they would still be required to file tax forms), one to create a nonvoting delegate in the House for overseas citizens, and one to give US citizenship to children of US citizens born abroad in more cases. He introduced these bills in 1991 and again in 1992 (1 2 3).
Bill Alexander looks like one of those rare politicians that are truly interested in making things right and not just trying to get votes (I doubt that his rural Arkansas district had any significant number of overseas voters). Nice guy. It’s a shame that he wasn’t reelected.
I agree with a territorial system. It surely makes things much more simple, and according to my research, 34 countries and territories indeed have this system. It creates the possibility of avoiding taxes by investing in countries with no or low income tax, but very few people invest internationally anyway, and I don’t think that is necessarily a bad idea as it would also create tax competition, as you mentioned. Residential tax systems are like protectionism. But I doubt that countries would let go of it, at least not in the current economic scenario.
*@Shadow Raider, Thank you for chasing down the bills that Bill Alexander introduced. He is a Democrat and I think you are right that there were few Americans from his district actually living abroad. But he was staking out a position which was good for the entire nation and not the selfish interests of high rollers in his own district. I believe he currently has a law practice in Washington. His bill to establish representation for overseas Americans was also a step in the right direction. But none of these were vote getters when he was up for reelection. So all went down the drain.
You are right about Mitchell’s territorial tax proposal. The one thing the OECD countries do not want is tax competition. They want uniformly high taxes for all and would fight his proposal tooth and nail.
With respect to the ACA proposal I believe that the method recomended for treating the US source income of overseas Americans would actually generate more revenue for the Treasury Department than the current citizenship based US tax system.
*ShadowRaider
Could you post the Bill numbers of Alexander’s proposed legislation? I am trying to look them up?
@Shadowrider, Can you post a different way to find those documents please? The links to the search results say “links to search results expire after 30 min.”
@all I found the Simpson-Bowles commission PDF. http://www.fiscalcommission.gov/sites/fiscalcommission.gov/files/documents/TheMomentofTruth12_1_2010.pdf On p.29 it says: “The current individual income tax system is hopelessly confusing and complicated.” And also: “A territorial tax system should be adopted to help put the U.S. system in line with other countries, leveling the playing field.” However, the later quote seems to be in the context of corporate taxes. Though obviously (obvious to all of us at least) it’s even more true for individuals.