The following is excerpted from a post at RenounceUScitizenship.
To put it simply: FATCA is an attempt by the US government to conscript other countries into its abusive behavior. As a country that believes in the rights of individuals Canada should NOT acquiesce in the immorality and abusiveness of US citizenship-based taxation!
— U.S. Citizen Abroad (@USCitizenAbroad) November 30, 2012
Two Possible Responses To a FATCA IGA
Updated! From Todundsteur – his suggestion for a third solution (see comments):
— U.S. Citizen Abroad (@USCitizenAbroad) December 8, 2012
First Solution, Canada can (and should) just tell the US no. There will be no agreement. This would be preferable because it can be used to set an example to the world. It will cause some short term pain (it is in the interests of the Canadian banks to enforce FATCA). But there will be long term gain. Sooner or later the world must reject the US. To refuse to enter into an IGA is (“Gandhi like”) peaceful resistance to FATCA . The effect will be to nudge the world in the direction of a less US centric financial system. This will benefit all nations. Furthermore, later resistance to FATCA may NOT be able to happen under peaceful conditions.
Second Solution, Canada must protect itself by getting all US persons out of Canada. It is no longer possible for Canada to allow US persons to reside in its territory and be used as a weapon against the economy and fiscal sovereignty of Canada.
How does Canada get US persons out of the country?
Many of these so called “US persons” are Canadian citizens. The Canadian Charter of Rights gives Canadian citizens the right to stay in Canada. Therefore, they can’t be asked to leave. That said, all US citizens who are NOT Canadian citizens should be offered Canadian citizenship. If they decline, they should be asked to leave. Only Canadian citizens have a constitutional right to remain in Canada.
How then does one solve the problem of Canadian citizens who the US believes are US persons? How do they cease to be US persons? There are two ways to accomplish this.
1. Enter into an agreement with the US which would stipulate that for the purposes of FATCA, citizens of Canada who are also residents of Canada cannot be defined as US persons.
This makes a lot of sense. It is unlikely that FATCA was motivated by thoughts of “US Persons living abroad” and tax evasion. It is more likely that FATCA was motivated by the concerns of US residents using foreign banks to hide money from the IRS. If FATCA is NOT applied to “US persons abroad” then it would be used only to “root out” tax cheats who are US residents. Furthermore, this solution recognizes that Canadian citizens who are resident in Canada have a primary tax obligation to Canada.
This does not affect the obligations of US persons in Canada to file US tax returns. It does mean that for the purposes of FATCA enforcement that Canadian citizens resident in Canada are not included.
US citizens who are resident but not citizens of Canada must be asked to become a Canadian citizen or leave.
2. Negotiate an agreement for all Canadians who the US believes are US persons to renounce US personhood (US citizenship) without payment of the “Exit Tax“
The behavior of the IRS has become so abusive that it is likely to become a diplomatic issue.
To put it simply: The IRS must be kept out of Canada.
— Stop FATCA (@StopFATCA) November 23, 2012
Queen’s University law professor Arthur Cockfield has written about the upcoming Canada US tax war. If the IRS is hunting US persons, then Canada must arrange its affairs so that there are no US persons in Canada. In the same way that the banks are simply refusing to deal with US persons, the Government of Canada must minimize the number of US persons in Canada.
An easy way to achieve this is for the US to “free all US persons” – let them renounce US citizenship without paying the “Exit Tax”. An “Exit Tax” paid on gains accrued by Canadian citizens/residents on Canadian property is theft from the Canadian economy. (Historically Canada has played a major role in helping earlier US slaves from escaping the US. The “Freedom Crossing Monument” in Lewiston, New York is an interesting monument to this.)
Imagine: A special FATCA driven mass renunciation of US citizenship without an Exit Tax.
This is something that could be marketed to the rest of the world. There could be a “World Renunciation of US Citizenship Day”. What a wonderful thought!
This strikes me as the perfect solution. The US can continue to tax “US persons” who don’t reside in the US. It’s just that there won’t be any to tax.
What do you think of making January 20, 2013 “World Renunciation Day?”
Canada must NOT sign the model IGA with the US. As John F. Kennedy said:
There are risks and cost to a program of action. But they are far less than the risks and costs of comfortable inaction.
Canada must take action! Let the word go forth: