The deadline has now passed to submit comments to the Ways and Means Committee on Tax Reform. Comments are posted here. There were (and hopefully continue to be) a large number of letters from U.S. citizens abroad. Who knows what will happen? I am hopeful that Shadow Raider’s optimism will “carry the day”. For those who missed his comment:
Shadow Raider says
@Just Me, You can keep your hopes up. The reporters who wrote that article on The Hill probably contacted both chairmen of the international tax reform working group, Devin Nunes and Earl Blumenauer, and I suspect that the Republican aide who responded is the same Devin Nunes’s assistant whom I met last year. Yes, he defends citizenship-based taxation, but he is the only aide that I met who does. His opinion is not representative of what Congress thinks about the subject, so I think we can safely ignore his comments. All other aides that I met were supportive or at least open to changing the tax system to one based on residence.
Speaking of congressional aides, most of them are young, as you noticed (20-40 years old), highly educated, motivated and friendly. Also, most of them have traveled abroad, and they live in or around DC, which has a substantial international presence. Perhaps because of these characteristics, they are open-minded about the rest of the world and are interested in new ideas. A 150-year old policy that restricts international mobility is not something that they support. I think citizenship-based taxation is not going to survive much longer.
Also, Earl Blumenauer responded himself to the article on The Hill, and his response seems positive. I think I finally found the point that makes Congress care about the subject: thecompetitiveness of Americans for jobs abroad. When Bill Alexander proposed expanding the FEIE to all kinds of foreign income in 1992, he titled his bill “Overseas American EconomicCompetition Enhancement Act”. When Jim DeMint and Gregory Meeks proposed making the FEIE unlimited in 2007, they titled their bill “Working American Competitiveness Act”. Earlier this year, Dave Camp wrote that tax reform is needed to make US workers more competitiveinternationally. Now Earl Blumenauer mentioned something similar. The Senate Finance Committee scheduled a meeting on “international competitiveness” for next month, and I don’t think they are just talking about corporations. So congressmen don’t care much about logic, simplicity or fairness in the tax code, banking problems, exports or additional tax revenue, but they don’t want Americans to be undesired for jobs outside of the US simply due to their citizenship. In the past, this problem could be mostly solved with the FEIE, but today, with FATCA and the enforcement of FBAR penalties, even excluding all foreign income wouldn’t be enough. For Americans and foreigners to be considered equally for jobs abroad, Americans abroad can’t have tax or financial reporting requirements to the US either.
The Joint Committee on Taxation should say something about the subject in its report on May 6, and the Senate Finance Committee should also say something after its meeting on May 23. I think we’re in for a pleasant surprise.
Here are some comments that really captured the life of “U.S. citizenship abroad”.
Somebody trying to live an “every day life” in Canada
I suspect that #americansabroad in Canada can relate to this waysandmeans.house.gov/uploadedfiles/… – Accurate portrayal of the burdens of US citizenship
— U.S. Citizen Abroad (@USCitizenAbroad) April 17, 2013
This is an excellent submission from a U.S. citizen in Canada who is nowhere near retirement and is faced with the prospect of trying to live and build a life. What is particularly interesting in this one is that she suggests that many U.S. citizens abroad are afraid to write because they are not compliant.
And from a person at a similar stage of life in Switzerland
Excellent description of how “US citizenship abroad” is a punishment and why #americansabroad must renounce waysandmeans.house.gov/uploadedfiles/…
— U.S. Citizen Abroad (@USCitizenAbroad) April 17, 2013
The complete community of U.S. citizens abroad owes a great debt to those who are writing to the Ways and Means Committee.
Not all letters have been posted! (at least yet)
For those who have not been following this discussion, comments on this blog reveal that at least three people have written letters that have not been posted. Hopefully they will show up. But I am beginning to wonder (some were clearly written before some that have been posted). Perhaps those who wrote and find that your letters were NOT posted should post them here.
In any case, many helpful letters have been posted.
…………….Not all letters have been posted! (at least yet)……………..
I have send them 3 letters between 3/1 and 4/1 that have not been posted as of today
@Mike
Well then there are AT LEAST 4 that are indicated from this blog.
How long were your letters?
Pingback: Excellent submissions to the ways and means committee | U.S. Persons Abroad - Members of a Unique Tax, Form and Penalty Club
short and sweet !
I am slowly reaching the conclusion that they are doing some censoring. Without getting too specific, what are the topics you addressed – did any of them include a discussion of OVDI, OVDP, FBAR penalties in general, etc?
None of the published submissions mentioned OVDI, OVDP, FBAR or any kind of compliance penalties. I find it hard to believe that these could not have been a topic of submissions. I wonder if the Ways and Means Commmittee is trying to hide the injustices of these programs from the general public.
@ USCitizenAbroad ….you can bet your $4 million swiss mansion that they were censoring and hiding injustices from the general public .
In the first letter I tried to be diplomatic which is very hard for me 🙂 and addressed a very common topic ……..We have been personally affected by this situation with extreme compliance costs for CPA`s that are at least 5X higher what a “Homelander“ would pay and our XXXX tax return is 14 pages long whereas our US return > 100 pages , that is embarrassing ……
The next letter addressed ………..Please explain to me the huge and unfair differences regarding rights and privileges of americans in the US vs. americans abroad according to the US federal law ….. I guess that was maybe a bit too direct , but I wrote it the way it is – I did not even need to make anything up to make my point and the last letter addressed the following………….one other thing I respectfully would like to bring to your attention are the often mentioned by US politicians so called benefits and advantages for US expats living and working abroad by keeping their US passport . Please keep in mind that our opinion is not the minority , our frustration and anger has been building up over years…………….
@USCitizenAbroad, I mentioned OVDI, FBAR and the penalties in detail, including the sections of US code where they are located, and links to the IRS’s OVDI FAQ and the Taxpayer Advocate’s reports. In the end I listed abolishing the FBAR or its penalties as my top suggestion, above residential taxation. My submission was posted in March (Pinto).
@ShadowRaider
I saw that submission – it was a fantastic submission! Thanks for that. When reading it (correct me if I am wrong) I didn’t think there was anything in it that suggested that you personally had been hit with any of these compliance issues or penalties. I think it might have been different if a submission has included that aspect. But, yes, thanks for refreshing my memory. Yours did at least mention them.
Great work!
I don’t see mine posted, but I used the ACA letter template and did not add in too many new details. I’ve only recently returned to Canada, so my nightmare is just beginning…
USCitizenAbroad
I wouldn’t assume censorship, and if anyone has theirs missing, I would call. I plan them today as mine isn’t showing up. The author of RBT doesn’t have hers showing yet, and she knows a lot of the aides doing this uploading, so there is probably some disorganization going on, would be my bet. There is no way they have time to read and vet each one, before uploading them.
BTW, just checking, I see that the CF&P submission is not showing up yet…. Now, if they are censoring, which I am not convinced yet, they are censoring a bigger gun than you and I. 🙂
http://freedomandprosperity.org/2013/press-releases/cfp-to-congress-tax-reform-must-include-fatca-repeal/
Again, the number to call, if you don’t see yours there is… (202) 225-3625
I just called….
The aide who answered the phone on the first call, was very polite and helpful.
He said that over the course of the last few days, they got over 1000 submissions, and they are working to have them all up by the end of the week. If you don’t see yours by then, then he said please call again. He was very understanding of the desire for folks to see what they submitted posted, and said he “absolutely understood that, and they would definitely be posted.”
So, that is the latest…
I sent one in the last hours, and it is up now.
I just read the submission from Jackie Bugnion. Her statement reads like the Declaration of Independence and actually brought tears to my eyes. Thomas Jefferson and Benjamin Franklin could not have written it better.
http://waysandmeans.house.gov/uploadedfiles/bugnion_wg_comments.pdf
“A revolution among long-term overseas residents is now underway. Five years ago, Americans abroad never talked about renunciation of citizenship. Today, it is a common topic in the press and among the community abroad. For more and more individuals, renunciation is the only solution to an intolerable situation created by the U.S. imposing its laws beyond its borders. The United States is literally destroying the community of Americans abroad, which plays an essential role in representing U.S. interests and goodwill overseas.”
Thank you Jackie!
Another outstanding submission by an academic named Heitor Pinto, with foot notes, charts, maps etc. A truly great piece of research.
http://waysandmeans.house.gov/uploadedfiles/pinto_wg_submission.pdf
“Americans who live abroad do not receive any benefit from the US government, other than the few benefits for which they pay directly, such as a US passport and other consular services. In fact, the Bureau of Consular Affairs is profitable, earning slightly more revenue from fees than its cost of operation.”
“US citizens obviously cannot benefit from the protection or infrastructure provided by the US government when they are physically abroad. US Social Security benefits are only available to those who contributed to it, and reduced for those who already receive similar benefits from another country. Medicare and Medicaid do not pay for health care outside the US. Even in the rare cases of US assistance in evacuating US citizens from a troubled country, they are normally sent a bill afterwards to pay for the cost of the evacuation.”
“Therefore, there is no theoretical basis to tax nonresident citizens in the same way that those who reside in the US are taxed.”
@Patrick Henry,
That great submission is our very strong advocate, Shadow Raider: http://isaacbrocksociety.ca/2013/04/17/excellent-submission-to-the-ways-and-means-committee/comment-page-1/#comment-282689. Thanks, thanks, thanks to all Shadow Raider has done. Fantastic submission!
Bernard Schneider made two submissions including his paper, “The End of Taxation Without End: A New Tax Regime for U.S. Expatriates.”
http://waysandmeans.house.gov/uploadedfiles/schneider_wg_comment_1.pdf
http://waysandmeans.house.gov/uploadedfiles/schneider_wg_comment_2.pdf
If he is not already a member of ACA, he needs to be.
Now for the downer from Dan Mitchell. In spite of our submissions to @WaysandMeansGOP
There’s Not Much Hope for Tax Reform http://bit.ly/YvQyRW
@Patrick Henry
The Schneider paper (which is the one of the best, if not the best paper I have seen on this topic) was referred in the ACA proposal for RBT. It is obvious that his thinking has had made an enormous contribution on this issue.
Below is from W. John Sabin of the Middle East Council of American Chambers of Commerce. He writes from a perspective similar to Roger’s. Great stuff!
http://waysandmeans.house.gov/uploadedfiles/riley_wg_comments.pdf
“The employment of each American overseas directly reduces the ranks of unemployed Americans through what is termed an “absent worker” effect. For every American who is gainfully employed overseas, there is one less person seeking work in the U.S. For example, if one leaves an overseas position and take a job back home, they are taking a job in the U.S. from someone else.
However, it is much broader than just U.S. citizens working for U.S. companies overseas. Many U.S. citizens work for non-U.S. companies overseas. Ultimately, it comes down to basic economic theory of supply and demand: reduce cost, consumption increases. Reducing the cost of a U.S. citizen to an employer (a U.S. or non-U.S. owned company), creates the opportunity for more demand of U.S. citizens abroad which has a direct effect on that overseas U.S. citizen being able to influence purchasing of American products.
This ‘absent worker’ and his (or her) family also has a substantially reduced demand on government services and benefits such as public education, infrastructure construction and maintenance, police services, medical and unemployment benefits, etc. Additionally, the recycling of the earnings of Americans working abroad provides a further boost to the U.S. economy through purchases of goods, services, and investments in the U.S.”
@Just Me
After all of these submissions there is NO possible way that Congress can plead ignorance to the “prison of citizenship-based taxation” – a prison built – one legislative brick at a time.
Therefore, a Congressional failure to correct this situation would invite the inference that the United States would be attempting to:
1. Identify through FATCA; and
2. Destroy through “citizenship-based taxation”
one specific group of U.S. citizens – U.S. citizens abroad.
Since U.S. citizens abroad have NO political representation (the right to vote doesn’t matter if there is nobody to vote for), this “tax reform” discussion is the only chance to get the law changed.
The submissions are now being posted without a date. I’ve been reading through the latest ones and it breaks my heart to come across things like this (Sue Latham in Australia) …
“My husband has had two different malignancies, one of which “recurs relentlessly”; and I have had one. We have survived them thus far. But I question our survival financially, emotionally, and physically if we continue to be subject not merely to double taxation but also the increasingly strident threats by the IRS.”
So I guess I just want to say to Nunes and Blumenauer (few lines of a Pink Floyd song) …
Hello?
Is there anybody in there?
Just nod if you can hear me.
Is there anyone at home?
@USCitAbroad:
You are correct, this “tax reform” discussion is the last chance for ex-pats. If reform doesn’t work, choosing between renunciation or repatriation will be forced upon every ex-pat who wants to live a normal life.
As USX says, “Sauve qui peut” (save himself who can) will be the order of the day
I sure take exception to the gentleman from the Middle East’s observation that other nations are going gangbusters in the export market because they are eliminating the taxation of their citizens living and working abroad. They have never taxed their citizens abroad. It is the US that has taken action to discourage exports by taxing its citizens living and working abroad precisely so they wiil stay home.
All our trade competitor nations practice residence based taxation. By no stretch of the imagination can this be described as a subsidy, any more than you could describe California’s not taxing persons born in that state when they relocate to Florida, When they move to Florida they pay Florida taxes only. This is by no stretch of the imagination a subsidy awarded to ex-Californians when to relocate to another state.
Likewise when an American relocates abroad he pays taxes to his new country of residence. He pays taxes to the government where he lives for the government services he receives from that country. The US stands alone in the world in continuing to tax its citizens who relocate abroad for services it no longer provides.
I found out last month that I have 2 predatory gubbermints following me. I was looking at jobs in the middle east, and inquired with the Swedish tax office as to how that might effect me. Although this was just one person behind a desk with an opinion, she explained to me that I would have to have a discussion with the tax office upon my exit. THey would review the country I was moving to, and make a decision (based upon their intl tax agreements or lack thereof) as to whether I would be able to keep the privilege of paying Swedish taxes if I were to move to an uncontrolled system such as Kuwait. I checked and saw that countries such as UAE indeed had agreements, but it certainly did not assure me that a middle east job search effort was going to produce a situation where I would ONLY have to pay taxes to USA.