In studying historical tax rebellions, I have observed that governments have frequently been ready to commit mass murder in order to maintain their tax hegemony over a people. South Korea committed mass murder against the poor tax revolters on Jeju Island, who rose up in rebellion in 1948; Californians rode out to suppress the Indian tax revolters in 1851; Britain waged war against American colonists who unilaterally declared a permanent tax holiday from King George; the Romans razed the Temple at Jerusalem and crucified the anti-tax zealots in the Jewish War of succession in AD 66-70. Even George Washington, the beloved president who cut down the cherry tree but could not lie about it, personally led the troops against the Western Pennsylvanian tax protestors in the Whiskey Rebellion. No nation which wants to be taken seriously can ever allow a tax revolt. That’s why Irwin Schiff, father of investor Peter Schiff, rots in a Federal prison.
There are lessons to be learned from these examples. The revolts in question in every case took place because the protestors felt that the taxes were unfair. If the tax really is unfair, then protestors will revolt in large numbers, forcing the taxing authority to act. So I’ve decided to point out some aspects of fair taxes which people are willing to pay, compared to unfair taxes that leads to tax revolts.
Fair taxes seem to me to have the following characteristics:
- A fair tax is not onerous and well within the ability of the citizen to pay.
- A fair tax is part of democratic process in which the citizen has a right to vote for a local person who represents the taxpayer’s area in a legislative assembly. Representation in the legislative assembly is also proportional to population.
- A fair tax is proportional, i.e., charges all citizens proportionally to their means and not disproportionally.
- The proceeds of a fair tax must benefit the community of which the taxpayer is a part.
- Penalties for failing to pay a fair tax are proportional to the crime and the damage to the government which claims a right to collect taxes.
The following are characteristics of unfair taxes which will lead to revolt:
- An unfair tax is taken without local representation in a legislative assembly that makes tax law.
- An unfair tax is disproportional and onerous.
- An unfair tax does not benefit the community of the taxpayer but rather, it benefits the needs of others.
- An unfair tax is a weapon to destroy the taxpayer’s community or to make sure that that community never rises in prominence or wealth.
- An unfair tax comes with stiff penalties for disobedience–penalties which include destitution, detention, and death.
- An unfair tax results in the alleged protector becoming the chief enemy and persecutor of the taxpayer.
As any casual observer can see, the United States taxation of its expats fits the description of unfair taxes that I here provide. (1) It is done without local representation; (2) it is disproportional and onerous, not taking into account the taxpayer’s other tax burdens–e.g., Canadians already pay about 50% of their income in Federal, Provincial and Munipal taxes–including taxes for which there is no foreign tax credit (GST/HST); (3) it is done for the benefit of homelanders not for the communities of the expats; (4) it unfairly taxes the expat’s home countries tax bases to the weakening of those countries for the benefit of the profligacy of the United States; (5) the penalties for failure to comply with US extra-territorial taxation may result in the detention and destitution of the taxpayer–it often leads the taxpayers to renunciation of citizenship, and can even result in exile [Reed Amendment] or death, if the taxpayer commits suicide or resists arrest; (6) The United States has made itself the chief enemy and persecutor of expats.
Historians seldom look back favorably upon regimes that institute unfair taxation. History is now in the making. Will the United States continue down this path of demagoguery and despotism? Will it commit total annihilation of its own expat community through a form of Expat Cleansing which forces all Americans abroad either to renounce their citizenship or return to the homeland? I think so. I see no real signs that this situation will change but only that it will get worse. I hope that I am wrong.
Let me say one thing here in my own defense: The Isaac Brock Society is not a whack-job website, and Petros is neither an extremist nor a terrorist. Rather, I am a scholar with an interest in history, justice and fairness. A part of me died on February 28, 2011, the day I relinquished my US citizenship. That is the part of me that loves the United States. The United States’ crime of forcing expats to comply or to renounce their citizenship, in my opinion as a scholar, will go down in history as signalling a catastrophic end of the final vestiges of good will that the United States enjoyed in the world. Historians will remember this generation of leaders in the United States under a very dim light, and the Isaac Brock Society will be a primary source for their understanding of this period.
*Many look outside the US for analogies for FATCA legislation, there is one US precedent we can use to describe the plight of expats
slavery was legal in the US and subsidized through increased representation in congress, slaveowners rights were strongly enforced with the Fugitive Slave Acts of 1793 and 1850
FATCA legislation has the same intent, to track down and return US persons to tax servitude.
http://www.nationalcenter.org/FugitiveSlaveAct.html
@Patricia, Please note that Recalcitrant and I did make the comparison between slavery in the US and the current problems we are facing in this post:
Both our forefathers were slaves: When is a comparison correct and when isn’t it
I woke up early and I was bored, so I went to yahoo news. (I never leave that place happy.) The US media is doing their spin-thing again:
http://news.yahoo.com/u-army-battling-racists-within-own-ranks-050115179.html?_esi=1
The part that caught my attention was this:
“The standard hateful message has not been replaced, just packaged
differently with issues like freedom of speech, anti-gun control themes,
tax reform and oppression,” the presentation says, noting that
recruitment may be difficult to detect, occurring quietly “in bars and
break areas” on bases.
My objection to the article:
1- They admitted that gang infiltration of the US military is a much greater threat, so why didn’t that get the headline?
2- They make this a black/white issue, as always. And that whites are the only ones capable of racism which is pure baloney.
3- They spun the “freedom of speech” and “tax reform” issues in there. What? Is the great beast getting paranoid? It’s almost as if they are trying to make tax reform a taboo issue where people avoid mention of it. The psychology behind this propoganda is amazing, and will most likely BE very effective. Again, bad for people who keep US Citizensip.
Right on Patricia! that’s why I can’t wait for the day that I have a CLN in hand.
Given the way US agencies are arming themselves to the teeth and the current fashion in the US for drone strikes, one might wonder if issuing the ultimatum “Give me liberty or give me death” and leaving the choice of which up to the US government could be unwise in this day and age!
My reading of history finds it unusual to punish expats for living and working abroad. I can’t think of any empire level power that has ever (1) taxed citizens abroad; (2) taxed the foreign profits wealth such that it has largely dissuaded companies from repatriating their gains abroad. Of course my knowledge of history is very very far from exhaustive–and so I am curious if other readers can think of empires that have done this very thing.
In the absence of precise knowledge, my hunch is that Roman citizens living outside of Italy were largely exempt from taxes. I will be looking into this. Roman citizenship was a something that people wanted and for which they were willing to pay large sums. Please note this first century text regarding Roman citizenship (Acts 22.25-28):
The tribune paid dearly for his Roman citizenship because it was an asset not a liability. He did not pay $450 to shed it. The United States has lost its empire status almost before it attained it. Perhaps Gulf War II will be seen as the pinnacle of American hegemony, but with these stupid tax policies, one would think that they don’t really want to stay on top, that they really have a death wish. Funny thing is that many empires last much longer. It looks like the United States power will really last from the end of WWII and will be lost, I think, during the next presidency.
Item zero on this list is missing. A fair tax is paid voluntarily, and never under compulsion by the State. If this root item were present all of the others would be acceptable to a free man.
With the missing first item in place, whether or not the tax is within the ability of the citizen to pay becomes moot. If he is not able to pay, then he refuses consent, keeps his money, and the matter is ended.
The democratic process is irrelevant to a truly fair tax that is based on voluntary consent and not compulsion. What your neighbours think you should be paying is not relevant to wether or not a tax is collected on an ethical basis.
Taxing people in proportion to what their means are is absurd on its face. All people should pay an equal amount for their quotal share in the country, and the ‘rich’ should not pay more simply because they have more or earn more. If this were not the case, then the number of votes the rich are allocated should be proportional to the amount that they contribute; they contribute more, therefore they should have more votes in any election.
Once again, if the money collected in taxes is misused, it is the right of every man to simply abstain from paying for the services on offer. This market pressure would ensure that taxes are spent correctly and in line with the wishes of the taxpayer.
The last item is the most problematic. The government does not have rights, only men have rights, and they certainly cannot claim to have a right to tax individuals. There can be no penalties for failing to pay a tax that you do not agree to pay; the government cannot make up ethical standards out of thin air, or by proclamation, claim they have rights that they do not have, or that they can take money from men that men would rather not contribute.
Before you can understand any of the matters swirling around this subject, you must understand what man is, what the proper role of government is and what the true nature of taxation is. Without having all of these elements in their proper juxtaposition, it is impossible to come to the correct conclusions about tax, and why the State has no right to steal money from you.
If you concede that “failing to pay a fair tax… (is a)… crime”, then you have already lost the argument and are wasting your time here trying to tinker at the edges of this matter. Believing that the State owns you and your property and your money is un-American, and this is the central idea that needs to be challenged every time it is encountered while discussing this subject.
@all- if the U.S. empire is lost I believe that history will conclude that 9/11 proved to be the event that triggered the collaspe. It has been the U.S. response to that event which triggered two unfunded wars, the establishment of a permanent military on the home turf in the form of, Homeland Security and restrictions on the Constitutional rights of its citizens.
The irony of all this is that it took only a few men who came from a culture and religion without any democratic roots to take down the most powerful nation in the world, as it spent itself into insolvency trying to fight back. America learned nothing from the experiences of the British and the Russians, who both blew up their empires by fighting in the hills of Afghanistan.
@James Bellington, thanks very much for your comment. For me it is gratifying to see that we have attracted the attention of Mises.org author.
While I personally agree with what you say, despite its idealism in a world that vacillates between tyranny and despotism, I am writing in context in which there are significant disagreements between participants about the very issues of taxaton–we have for example on the Canadian side, readers and writers who are Tory, Liberal, and NDP, and even those who are essentially libertarian. Thus, if I did not take the stance you are suggesting, it is not out of disagreement, but out of trying to find common ground between the different political views that are part of the constituency of this website.
There are so few Canadians would agree with your position that I must start where it makes sense; thus, I have stressed that US taxation of expats is done from the outside by a foreign power which tries to extort money from their various expat communities to be spent on homelanders and not benefiting in any way the local communities of those abroad, such as Canada or France. In that sense, I hope that I will find those who agree with me to rise up and fight through peaceful means this extraterritorial abomination that the United States is committing against its expats.
Also I should add that I didn’t say that governments have the right to tax; I said only that governments claim the right to tax.
@James Bellington- if a country is going to raise its money through an income tax system then it makes absoulte sense that that tax should be levied on a proportional basis. Those people who hold more of the “stock” in the national corporation should be obligated to take proportionately more of their holdings of the nation’s stock and use it to fund the nation’s expenses because as the largest stockholders they derieve the greates benefit from the national corporation.
My personal preferences for a tolerable tax system would be one that is not based on an income tax since it makes no sense at all to discourage work, because discouraging work also discourages wealth accumulation. I would also have no payroll taxes because taxes on labour put it at a cost disadvantage to the favorable tax treatment that is given to labour saving devices and technology.
My preference is for governments to raise their monies through a national sales tax and charging fees for their services that at the least reflect the real costs involved in providing those services.
I realize that many will say that it is contradictory for me to prefer a “regressive” national sales tax to a “progressive” income tax but the reason I prefer it is because I believe that it is a system of taxation that is the easiest to administer. The 73,000 pages of the U.S. tax code are an abomination and is filled with provisions that under mine the progressive intent of the income tax system. So I think that it would just be best to get rid of the whole charade.
The regressive nature of a national sales tax can be countered by granting sales tax rebates to those whose incomes do not exceed a certain multiple of the national poverty level.
The idea that votes should be allocated according to wealth is of course patently absurd. When it comes to private enterprise it is completely sensible to allow the holders to vote according to the number of their shares but the nature of private enterprise is not the same as that of government.
Government is concerned about the administration of public justice whereas private enterprise is concerned primarily with the adminstration of justice. The individual’s vote is actually the primary ingredient in the nation’s system of justice and in a court of law it is important that justice be applied equally to all citizens without any reference to race, creed, or wealth.
Dear Brockers, not sure where to post this to get attention but please have a look
http://www.npr.org/blogs/money/2012/07/27/157421340/how-to-set-up-an-offshore-company
Radio show where the journalists investigated tax havens all over the world, and the ONLY country where they could set up an offshore company with absolutely no ID or any due diligence on the owners identity was (drum roll)…. the USA Delaware, Nevada, Wyoming, etc.
ALL other countries (Belize, Jersey, Caymen Islands, etc) required notarized copies of passports, recommendation letters from banks and lawyers, etc.
I believe we should contact these journalists they seemed authentically fascinated by this theme. At the same time to my knowledge they have never spoken about any of the FATCA or FBAR related problems.
Anyone who has a facebook or twitter account they don’t mind using for discussing this topic please contact the journalists on http://www.facebook.com/planetmoney
@Petros
Excellent post – well done!
@Recalcitrant
Good insight into the catalyst that caused many of the problems. The catalyst set into motion of chain of events which caused the U.S. under the leadership of Bush and Obama to destroy itself. Ten years later we have a situation where the U.S. has few friends, is making more enemies every day (example drone attacks) and must therefore spend more and more to attempt to defend itself.
The U.S. government and Homelanders fail to understand that (if there is a war), it is a war to capture “public opinion”. I.e. the U.S. must market what used to be its core values (freedom and democracy). The problem is that after a decade of Bush and Obama, the U.S. has abandoned those very core values. The U.S. is no longer free and is a democracy in name only. Since the country has no capacity for honest introspection and analysis it will implode. I believe that we are witnessing the last days of the United States.
So, many of the problems of the Expat Community are the result of citizenship-based taxation. There is no reason for it. And with it, the U.S. has even made enemies of its own citizens.
It is quite obvious that the U.S. needs to invest in “getting along with the rest of the world” rather than fighting with it. I will close with this quote from Kris Kristofferson:
“The heart is what matters most of all. The act of compassion of
being able to put yourself in somebody else’s shoes and to avoid any
kind of harm to any other human being would be the best thing that could
happen in the world. That is what is hopeful about Obama. I have a
feeling that the United States could be a leader in improving things in
the world, rather than being what we are right now, the biggest problem
in the world.
Kris Kristofferon – Wisdom – page 113 – Likely written prior to November of 2008″
Agreed – the U.S. is the biggest problem in the world today.
@James Bellington
‘Item zero on this list is missing. A fair tax is paid voluntarily, and never under compulsion by the State. If this root item were present all of the others would be acceptable to a free man.’
Agreed. I’m no expert on these matters, in fact I’m not much of a real expert on anything. I am an individual who is compelled to do the right thing, and for the first time in her life felt persecution in the process of trying to doing so. I voluntarily pay US tax, even though I live in Canada and my government states it will not collect tax and penalties from Canadian citizens on behalf of the US. I do this for fear of reprisals by the US government. Unlike US citizens living within the US, some US citizens living abroad have reason to fear banishment and retribution from the US and because of this face very different issues that result from non-compliance and renunciation.
@James Bellington: wonderful comment, I was working on something similar in my head but you put it much better than I could.
@Petros: the Canadian liberals have gone to play in their sandbox. They never wanted a serious discussion about taxes, they like the Canadian welfare state as it is and are perfectly willing to sacrifice their own freedom as well as everyone else’s in order to have the mommy state protect them from reality.
@recalcitrantexpat:
“I realize that many will say that it is contradictory for me to prefer a
“regressive” national sales tax to a “progressive” income tax”
A sales tax is not regressive, it is flat. The amount taxed is directly proportional to the amount spent and rich people spend proportionately more.
@bubblebustin:
“I voluntarily pay US tax”…”I do this for fear of reprisals by the US government”
If you voluntarily do something then it cannot be out of fear. This is the kind of contradiction that liberals always face, they end up having to twist themselves around like a pretzel in order to remain progressively PC (I am not calling you a liberal, I am pointing out how careful we have to be when we use their words like “fair”, “extreme”, and “voluntary”).
@ConfederateH- Rich people may spend more in absolute terms but overall they spend a smaller percentage of their total income than do those who have lesser incomes. Especially those who live at or slightly above the national poverty level.
@Confederate, perhaps some are at the sandbox; but I doubt seriously that even one of them can muster an argument against this post. But I would be happy to see it. But just simply calling someone that you disagree with a terrorist, racist or nut-job is really not very helpful.
The fact is we still have a fair number of readers and participants who consider themselves either liberal, progressive or new democrat. Those who remain however are perhaps more willing to accept a more belligerent approach. There are fighters on all ends of the political spectrum.
Petros – “participants who consider themselves” to be x or y or z
Labels are so useless. Not thinking is so easy. Logo-wearing is so faux. Whining about hurt eyes and ears is so cocoon. Staying open is so fun.
@confederationH
I see the contradiction.
@recalcitrantexpat
“Rich people may spend more in absolute terms but overall they spend a
smaller percentage of their total income than do those who have lesser
incomes.”
I knew you would come back with that. First of all, all these statistics are based on statistics provided by progressive organizations with an agenda. Instead of warmists they are taxists. So you cannot merely quote “science” from their liberal organs.
If a rich person doesn’t consume then he is saving. The purpose of having a consumption tax is to promote saving. So you would declare that rich people saving is not as “progressive” or as “virtuous” as poor people saving. Well you have fallen right into their class warfare trap. But what about negative income taxes or welfare or a government salary. If a welfare mother (or far rarer welfare father) or SS-Welfare recipient pays a 7% consumption tax on money stolen from the productive class, is she really being cheated by “regressive” taxes? The same applies to an illegal immigrant- section-8-housing-food-stamp recipient who pays that 7% consumption tax.
If a rich person isn’t spending, he’s saving. Which means investing and creating jobs. I am an investor. So my wealth is deeply invested in creating jobs and wealth in Canada, and hopefully, I will get nice tidy profits for all the jobs and tax revenue that I’m creating for the Canadian government. Nice deal for the government though–when I win the government wins; when I lose, I lose alone.
@ConfederateH- I have not fallen into a Marxist trap. A flat tax is truly regressive. Take the contributions that one makes to the government administered pension plan. The rate of contribution is the same for everyone without regard to the individual’s amount of take home pay. The thing is though that the obligation to contribute ceases when your income reaches a certain, arbitrarily determined level. This hardly seems fair since the pay being received has not changed in any way, but there it is. Your flat tax.
The poor people who are being referred to aren’t just those who are on welfare. The majority of poor people are actually the working poor who receive little to no government assistance. I do believe that it is unethical to saddle them with a taxation burden that their incomes cannot bear.
One of the reasons that I support a consumption tax is because it does promote saving and investing. I also support the repeal of the income tax because it not only encourages work but also encourages savings and investing. I am not a supporter of inheritance taxes or wealth taxes because it takes pools of accumulated capital to fund business investing. Yet I can also see little point in the government taxing a welfare payment since it would run counter to the goal of the payment which is to be a source of income for those who can’t work.
But I do believe that it is economically just that those who hold more of the shares that are issued by the government be responsible for footing a greater percentage of its costs since they have the greater vested interest in seeing that those shares are protected. When governments collaspe the poor people actually find their lives littel changed from what they were before.
Finding a pure system of taxation is not possible. Our goal should be to find one that is not as corrupt as the one that we have now. And the present U.S. tax sysem is the most corrupt one on the planet ranking right along side with those of the world’s tin pot dictatorships.
@Petros,
“I can’t think of any empire level power that has ever (1) taxed citizens abroad;”
The Soviet Union used to tax its citizens regardless of residence, until it was dissolved in 1991.
@shadow, Thanks for that answer. Well, that works with what I’m saying. The Soviet Union collapsed in on itself in 1991. They didn’t even last a century.
Regarding taxation and government finances, I can’t think of a better country than Estonia. It has a flat tax of 21% on individual income, no tax on corporate income (instead, dividends are taxed when paid to individuals), and VAT of 20%. Its public debt is 6% of GDP, the fifth lowest among all countries surveyed by the IMF. The country adopted the euro last year. It currently has a GDP growth of 7.5% per year, even with a decreasing population. Unemployment is 11.7% but decreasing. Estonians can vote through the internet.
@recalcitrantexpat:
“I have not fallen into a Marxist trap. A flat tax is truly regressive.
Take the contributions that one makes to the government administered
pension plan.”
You contradict yourself right from the start. Then you use an example of a pension to back up your case? Come on! and “regressive” is one of their divisiveness dog whistles.
My son’s ex-girlfriend lives on the old family farm that is leased out. This farm is beautifully situated with a fantastic view of lake Zürich. Most of the land is designated farmland, but the community has already tried to take part of it away from the family to make a freeway onramp. The family are multimillionaires on paper, but her mom works in a travel agency and she is a nurse. She drives a 20 year old car and rents out rooms in the house that she shares with her grandmother. They are land rich and income poor. Or take the guy who for a few years in his life strikes it rich only to be scalped of the majority of his once in a life time earnings, is that really “progressive”??? Or take the rich guy who can go anywhere on the planet to live and hire the best lawyers to protect his income from confiscatory taxes.
By going along with the “regressive” labeling you are being their tool. The progressives believe in “progressive” taxes and use “progressive” propaganda to make people think that things like citizenship based taxation is “progressive” and “fair” and “voluntary”. But the truth is there can never be fairness and the government, with the ever present threat of force behind it, is the last group that I want deciding what is “fair”.
But also you seem to so cavalierly ignore issues of private property. Should that Swiss family be forced to sell their land to feed the welfare state? Should Petros have to sacrifice not only his life savings but also his future income to feed this beast. This is what happens once you support the language of a government that tries to force “fairness” on us.
“The poor people who are being referred to aren’t just those who are on
welfare. The majority of poor people are actually the working poor who
receive little to no government assistance. I do believe that it is
unethical to saddle them with a taxation burden that their incomes
cannot bear.”
So who decides the meaning of “poor”, “receive little government assistance” and “taxes their income cannot bear”. I would submit that progressives have constantly upped the threshold for “poor” to the extent that poor people eat out often, drive cars, have color flat screen TV’s, airconditioning, free education, free healthcare and more. This is what happens when you let an elite group of universities on the east coast control the vocabulary. What is worse though is that these elites have been so brainwashed that they believe their own lies that somehow they represent the core values of “American Exceptionalism” and are therefor justified in having the government that they control and run decide the amount of money that they will steal (even from people living in other countries) in the name for “fairness” for the “poor”. Regressive my ass.
*It does not matter whether the tax rates are high or low, fairness requires that ratepayers receive value for money.
Without taxes there are no social investments, infrastructure, schools, police and fire protection, public health services (distinct from medicare).
If the population votes for and is willing to pay the taxes required to support universal health care, basic science reasearch, social assistance, skills retraining and other services from the government: then the Canadian taxes ,although higher then US taxes, can be considered as fair.
Another quality of fairness, everyone is viewed as contributing to the effort, consumption taxes assure that the everyone pays into the system. (for non-Canadians, Canada and Québec have means-tested rebate programs for GST and PST to offset the burden on low income households.. The amount of the rebate is based on income tax returns)
Canada is not perfect, but we seem to be more satisfied with our services and levels of taxation then Americans