At the heart of the citizenship-based taxation debate, is the issue of “what is a citizen” – isaacbrocksociety.ca/2013/02/05/yet…
— U.S. Citizen Abroad (@USCitizenAbroad) February 5, 2013
Or to put it another way:
Is a citizen the property of the government or is the citizen a member in a voluntary member of a community?
The 14th amendment of the U.S. constitution was enacted for the purpose of ensuring that former slaves had equal citizenship, the U.S. Should that same 14th amendment be interpreted to create permanent slavery?
“All persons born or naturalized in the United States, and subject to the jurisdiction thereof, are citizens of the United States and of the State wherein they reside. No State shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States; nor shall any State deprive any person of life, liberty, or property, without due process of law; nor deny to any person within its jurisdiction the equal protection of the laws.”
Note this interesting comment by Badger:
For a very illuminating discussion of the ‘chilling’ effect of conditioning and coupling expatriation from US citizenship with satisfying the IRS, and the concomitant barriers the US has designed to deny all access to the fundamental right to expatriate, as well as a dissection of US government behaviour and arguments on this issue, see:
‘The Constitutionality of the Taxation Consequences For Renouncing US Citizenship’
byWilliam Thomas Worster
1020 Florida Tax Review [Vol.9:11
“……….This method of taxation goes to heart of what it means to be a citizen. Is a citizen simply an individual receiving benefits from the legitimate monopolizer of violence or is the citizen a member of a common endeavor to create and sustain a government among equals? If the people are the former, existing in a separated and adversarial relationship with the government, then perhaps the government should be empowered to tax all who it can reach for its own enrichment. If, on the other hand, the citizens are engaged in a collective relationship, with the government merely acting as their representative and agent, then when a citizen elects to leave the community and no longer
receive the rights of the community, then the individual should not have lingering obligations upon leaving the state” http://www.academia.edu/1228417/The_Constitutionality_of_the_Taxation_Consequences_for_Renouncing_US_Citizenship
My question is: What is citizenship? What does it mean? Who does it belong to? What responsibilities does it entail? What are its benefits?
I often wonder if the U.S. government may one day argue that renunciants continue to be U.S. persons, at least for tax purposes. ‘Citizens’ of a sort but without the advantages of citizenship. Hopefully not… Of course they already remain so if they haven’t officially logged out with a 8854.
You raise an interesting and important question. The US taxes Green Card Holders who reside outside the U.S. which most people would find to be incredible. They may well claim the right to tax anybody for any reason. But, as I have and continue to argue:
This is currently a human rights issue. It is only a matter of time until it is recognized as a human rights issue.
Question: What does citizenship mean? Your thoughts?
@USC, I’m not even certain how to exactly define what comprises a citizen which is all the more why I could easily see the U.S. changing laws (even retroactively) to remove any incentives to renounce for tax reasons. There are already different sorts of de facto citizenship in effect just as you point out with green card holders living permanently abroad who haven’t officially turned their cards in.
I’d guess that the eventual outcome with be reform but not before we see lots of persecution first. I’d guess that it will start getting really bad from about 2016 or 2017 because it will take time to go through the mountains of data they’ll start receiving from April 2015.
In the meantime, dual nationals like myself will have to continue paying thousands annually to stay compliant unless we expatriate.
I wouldn’t put it past the U.S. to restore U.S. personhood to renunciants much as they did to relinquishers after the laws changed in 1990 to allow for dual nationality. I wouldn’t put it past Congress to try to punish expatriates by passing laws to continue imposing lifelong taxation on worldwide income. After all, the Ex-Patriot act was going to pass laws retroactively on renunciants, imposing a 30% capital gains tax on all U.S. sourced gains. They could expand it to worldwide gains.
In such a situation, it would be safest as a renunciant to close any accounts that would currently be reportable under FATCA and reopen new accounts under one’s new nationality so that the IRS wouldn’t be able to retrace their assets so easily. Also, obviously not have any assets or property in the U.S.; and if very paranoid, no longer visit the States
Prof. Allison Christians writes about the coming OECD meeting http://taxpol.blogspot.ca/2013/01/oecd-public-briefing-on-trace-and-fatca.html , which has denied the ACA American Citizens Abroad attendance (much less actual participation and input). At this meeting, FATCA will be discussed, an IRS representatives will be presenting http://www.oecd.org/tax/exchangeofinformation/invitationtooecd-biacpublicbriefingsessionontraceandfatca.htm .
But, NGOs, or real people are not allowed to attend. Organizations that might represent or speak for real people – who will be subjected to FATCA, may not attend. Only the taxers and the enforcers.
Ms. Christian writes …”when one NGO (American Citizens Abroad) tried to send a rep, she was rebuffed because ‘space is running out and “government and business have priority’.”….”Now, if I am wrong and there is an NGO or any other disinterested, non-business person who is going to be allowed to go to this “public meeting” at which what is going to be discussed by bureaucrats and business leaders is how governments will be monitoring and taxing human taxpayers who constitute the peoples represented by the member states, then please, please someone let me know.”… She also points out the irony of the OECD motto – prominently displayed on their website; “Better policies for better lives”. And their mission; “The mission of the Organisation for Economic Co-operation and Development (OECD) is to promote policies that will improve the economic and social well-being of people around the world.” and “We look, too, at issues that directly affect the lives of ordinary people, like how much they pay in taxes and social security, and how much leisure time they can take. We compare how different countries’ school systems are readying their young people for modern life, and how different countries’ pension systems will look after their citizens in old age.
Drawing on facts and real-life experience, we recommend policies designed to make the lives of ordinary people better. We work with business, through the Business and Industry Advisory Committee to the OECD, and with labour, through the Trade Union Advisory Committee. We have active contacts as well with other civil society organisations. The common thread of our work is a shared commitment to market economies backed by democratic institutions and focused on the wellbeing of all citizens. Along the way, we also set out to make life harder for the terrorists, tax dodgers, crooked businessmen and others whose actions undermine a fair and open society”. But, the FATCA session is open only to; ” all interested financial institutions, practitioners and press”.
Where is the representation of ALL citizens, and how exactly is our ‘wellbeing’ being ensured then if an NGO like ACA, that represents the interests of those subjected to US extraterritorial taxation without representation is not welcome to attend? Certainly, it is blatantly disingenuous for the OECD to make any representation that citizen wellbeing is being represented by presenters like these; “Ms. Danielle Rolfes (International Tax Counsel, US Department of Treasury), Mr. Brett York (Attorney-Advisor, Office of the International Tax Counsel, US Department of Treasury) and Ms. Quyen Huynh (Senior Counsel, Office of the Associate Chief Counsel (International), Internal Revenue Service)”.
The focus of this is; “the highlights of the final FATCA regulations that were issued on 17 January and explain how they interact with the intergovernmental agreements.
Officials from the US Treasury and FATCA partner countries will give an update on the progress made on the intergovernmental agreements.”
We know that the IGAs are suspect, that they trample on citizens wellbeing in terms of conflict with domestic privacy laws, human rights, and our constitutions and Canada’s Charter of Rights and freedoms. We know that the US is slyly offering a ‘faux’ reciprocity, and that it seeks to bind Canada and other countries to a made-in-the-US law which is to maximize benefits for the US, and deny any for those who are bound by FATCA.
My model of ‘citizenship’ is one which recognizes that the citizen has a ‘social contract’ with the state – and one which does not consider the citizen to be the lifelong property of the state. The US would take umbrage if we accused it of acting like a feudal lord; treating us as serfs, indentured servants, or slaves. But that is exactly how UScitizenship-based extraterritorial taxation plays out in it’s most extreme and egregious manifestations – ex. as applied to the assets and earnings of dual status children born and living lifelong outside the US; living abroad, creating assets broad – who by US law are to be assessed annually for the tribute the US asserts is its due – merely because of inheritance of a status conferred via parentage?
And it should not be unilaterally imposed by the state – skewed by those who have the monopoly on power. The ‘democratic’ model that the US pretends to worship – you know, from Lincoln’s Gettysburg address; ….”government of the people, by the people, for the people”… is not anywhere in evidence in the US relationship with those of us living outside its borders.
And now we have the OECD actively colluding in this, and excluding one of the only groups that have our true interests at heart – the ACA. No doubt Canada will have a representative there – to report on progress towards an IGA. Without having raised it for public debate here, or for discussion by our elected representatives in Parliament.
Have a look at the OECD page on ‘Members and Partners’
Of particular interest is the section on ‘civil society’:
‘Other key stakeholders’
“The OECD also co-operates with civil society on a number of levels. The OECD’s core relationship with civil society is through the Business and Industry (BIAC) and the Trade Union (TUAC) Advisory Committees to the OECD. These advisory bodies contribute to most areas of OECD work through policy dialogue and consultations. This co-operation has been complemented over the years by activities with other representatives of civil society, e.g. non-governmental organisation, think tanks, and academia.”
The CORE relationship is through “the Business and Industry (BIAC) and the Trade Union (TUAC) Advisory Committees to the OECD”.
Nowhere do I see anything that supports or recognizes NGO participation of a kind that would result in real input from anyone who is not representing business interests. The OECD page on ‘Civil Society’ is very vague http://www.oecd.org/about/membersandpartners/publicaffairs/relationswithcivilsociety.htm
Certainly I doubt that the issue of the relationship between the citizen and the taxing state gets much, if any play at the OECD.
If I am wrong, let me know.
Truly flabbergasting that ACA was asked not to come to the OECD meeting.