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!
#FATCA is impossible to achieve unless foreign governments preemptively surrender their sovereignty. freedomandprosperity.org/2012/testimony… – Take note!
— 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):
Brilliant! How to use #FATCA IGA to bring FATCAT to ruin! isaacbrocksociety.ca/2012/12/08/two… – Immediate reciprocity!
— 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.
@yourvoiceatirs suggests that IRS #OVDI and #FBAR threats “terrorizes whole country of Canada” oicattorney.blogspot.ca/2012/11/taxpay…– No to #FATCA
— 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:
May I suggest a 3d and perhaps much more effective alternative?
When negotiating an IGA Canada should simply insist on complete and immediate reciprocity.
This will include the obligation of US financial institution to conduct searches of both their electronic and paper data bases for indicia of Canadian residence. (Because US know-your-customer rules tend to be much less stringent than those of other OECD countries, reliance on a US financial institution’s electronic data base would be pointless; hence the requirement of a full-paper search.)
The same requirement would apply to the detection of non financial institutions with at least 10% Canadian resident ownership. Again, because the US does not practice what it preaches with respect to identifying the beneficial owner of financial accounts or interests in corporations and other entities, the “full Monty” paper chase would be specifically required.
The US cannot and/or will not be able to impose the conditions on US financial institutions that would allow the IRS to agree on full reciprocity.
Thus, any country that simply says “FATCA? Sure. We’ll show you yours if you show us ours.”
will bring FATCAT to ruin.
Brilliant! Thanks have included this in the post.
The USG does not seem at all interested in making exceptions for its taxpayers abroad. What is the incentive for them to do so? To keep us from renouncing? Some consulates are making it easier! I believe that the US taxes us because they can, and continue to do so in the spirit of egalitarianism (one size fits all). Every USP should be made to wear one of those dog collars that sends out a shock when it crosses the border. Free with every SSN issued.
I like the idea of a heroic rejection of FATCA and letting the chips fall where they may.
This gave me the perfect link for the most recent Linkedin post I saw!
Don’t Stop Now: Capitalize on the FATCA Deadline Delay
Perfect for alternative suggestions for Stopping! 🙂
What we, who are U.S. citizens and are living in the United States, should do is pass the FairTax, which would negate FATCA and it would free us from the IRS as well as those living abroad. FairTax Bill HR25 repeals the 16th amendment that allowed the Marxist Income Tax (Marx described and recommended it in the second chapter of the Communist Manifesto),Repeals all Federal tax laws, disbands the IRS, and institutes a national sales tax of 23% on all new goods, is revenue neutral, takes away all the power to extort campaign contributions, makes criminals living here pay their share and helps everyone decide if they want to spend and be taxed or save and not be taxed along with 50 other benefits. About 100 million Americans are against it because they or one of their family or a friend makes a living from the Marxist system. The rest of us are for it. Write your congressmen and ask for passage.*
The US has much bigger interest in Canada than extracting penalties from dues-citizens, if this article is true: http://www.fool.com/investing/general/2012/12/08/could-alberta-supply-american-energy-demand-for.aspx.
If this is true and Canada is not catious, Canda may end up becoming a colony of the USA. If these projections are right, Canada can just tax the resources and substantially reduce taxes, which lead to substantial US taxes on dual-citizens. But I wish this is right and Canada would become tax free country like Gulf countries. I am sure 1 million renunciations would send a strong message to the USA, if this happens.
Here is a very good person to write to about FATCA IGA in negotiations.
I came across this very bold and frank statement by Ralph Goodale – anyone here in his riding? We should all write to him, as he was willing to stand up in Parliament for those the US wants to tax inside Canada. He was willing to question the Harper government on what they were planning to do (or not).
September 30th, 2011 / 11:55 a.m.
“Mr. Speaker, there
is concern across the country among many law-abiding Canadian citizens
and taxpayers about the long arm of the U.S. tax collection department.
Even the Canadian Bankers Association is upset. The Americans are trying
to enforce their laws beyond their borders and are threatening
Canadians to that effect.
So far, the government
has offered Canadians tea and sympathy. Will the government do something
a little more tangible? Will it set up an advocacy centre to actively
inform and assist Canadians who are unfairly being put upon by the
extraterritorial excursions of the U.S. IRS?”
See context to find out what was said next.
You can see the Harper government answer:
Minister of State (Finance)
certainly we are concerned with what is happening to many honest
taxpaying Canadians who were not expecting this to be imposed upon them.
The finance minister
has spoken to his U.S. counterpart, saying in no uncertain terms that
we do not want this unfair treatment to Canadian taxpayers who are
honest law-abiding citizens. We are encouraging the U.S. to be very fair
with our citizens.”
Note the weasel wording: …”We are encouraging the U.S. to be very fair
with our citizens.””…
Not exactly a firm or unequivocal stand.
Also Goodale has said:
‘Goodale Commentary – Fighting the “Long Arm” of the U.S. Tax-Man’
Posted on October 7, 2011
But the Americans go way too far when they start harassing Canadians,
even to the point of asking Canadian banks to seize assets like RRSPs
to compensate the US for the alleged tax liabilities of certain
MPs from all parties (including me) have raised this issue in Parliament. We all agree the US-IRS is extremely off-base!
The government says it has protested to Washington. But more needs to be done.
Our government must stand shoulder-to-shoulder with innocent citizens
and taxpayers – to inform and assist them in fending-off abusive
American tax enforcement proceedings.“….
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