With the release of the 2012 Country Reports on Human Rights Practices yesterday, it seems the U.S. State Department has finally realised its hypocrisy in condemning Eritrea for imposing tax on the Eritrean diaspora to fund wars in Africa, while aiding the IRS to impose tax on the American diaspora so that the US can also fund wars in Africa, and the Middle East, and Central Asia, and …
Unfortunately, State’s response has not been to levy similar criticisms against the IRS or to stop cooperating with it, but instead to tone down their criticisms of Eritrea. While the 2010 and 2011 reports are virtually identical in the wording they use to condemn Eritrea’s diaspora tax, the 2012 report shows subtle shifts in language, providing classic examples of “framing techniques” that a writer can use to address roughly the same set of underlying facts while leading the reader to take sharply different attitudes towards those facts.
The actual text
2011 report |
2012 report |
|---|---|
| There were also reports of security forces arresting persons whose foreign family members did not pay their extraterritorial income tax of 2 percent of foreign earned income … | Other diaspora Eritreans whom the regime deemed insufficiently loyal—either through lack of tax payments or other support—asserted that their families in Eritrea were subjected to government harassment … |
| Increasingly, children of any age were denied exit visas either on the grounds that they were approaching the age of eligibility for national service or because their foreign-based parents had not paid the 2 percent income tax required of all citizens residing abroad. | Some parents avoided seeking exit permits for children approaching the age of eligibility for national service due to concern that they would be denied permission to travel, although other adolescents were granted exit permits. Diaspora members who visited the country reported being required to pay a 2-percent tax on foreign earned income before being given exit visas. |
| In general citizens had the right to return. However, citizens residing abroad had to show proof that they paid the 2 percent tax on foreign earned income to be eligible for some government services, including exit visas for future departures from the country. | In general citizens had the right to return. However, citizens residing abroad had to show proof that they paid the 2-percent tax on foreign earned income to be eligible for some government services, including passport renewals. |
Let’s be clear from the start: these changes in language do not reflect actual improvements in the human rights situation in Eritrea between 2011 and 2013. Human Rights Watch’s Eritrea chapter of its 2013 World Report is just as harsh in its criticisms of Eritrea as the 2012 World Report. Swedish newspapers in 2013 continue to refer to the Eritrean government’s treatment of its diaspora as “systematic oppression”. And the situation for Eritreans in Canada improved not due to any new-found respect for human rights on the part of the Eritrean government, but only because Ottawa stood up and told them to cut it out.
“Reports” vs. “assertions”
First and foremost, the “reports” of harassment in the 2011 text have been downgraded to mere “assertions” in the 2012 text. “Reports” makes it seem like a factual, well-verified phenomenon; indeed, this is why the State Department calls these texts “Human Rights Reports” rather than” Assertions About Human Rights”.
At risk of sounding like a 4th-grader trying to pad out a book report (there’s that word again!), let me quote the dictionary, which defines a “report” as “an account or statement describing in detail an event, situation, or the like, usually as the result of observation, inquiry, etc.” In contrast, “assertion” reduces the whole thing to a he-said she-said: maybe it’s true, or maybe those diaspora whiners are lying because they fled the country to avoid taxes and don’t want to pay their “fair share”.
Exit visas
Second, notice the change of agency in the inability to obtain exit visas: in the 2011 Report, parents of children are the victims of the bureaucracy which refuses to let them out; in the 2012 Report, it’s allegedly the parents themselves who are deciding not to apply for exit visas. And the non-payment of the tax itself is no longer reported as grounds for denial of an exit visa; instead, it’s reported as grounds for denial of passport renewal.
In other words, the 2012 Report is much less clear about the link between failure to pay the diaspora tax and the loss of freedom of movement. Mention of “exit visas” brings to mind the Soviet Union and other such unsavory regimes, whereas “passport renewals” sound like a bureaucratic function of fee-for-service on which restrictions might be “legitimately” placed for any number of reasons, the way the U.S. itself has proposed doing — even though passports are just as much an instrument of political control as exit visas, and the U.S. itself has used them as such.
The description of the tax itself
And finally, the “extraterritorial income tax” or the “tax on citizens residing abroad” is now described as a “tax on foreign earned income”, a phrase clearly taken from U.S. tax law without understanding its meaning (since “earned income” like wages is supposed to be contrasted with “unearned income” like bank interest or social assistance payments — but in fact the Eritrean diaspora tax applies to both categories of income).
Edit: as Shadow Raider points out in a comment, the Eritrean diaspora tax is far less broad than U.S. citizenship-based taxation, and only applies to certain categories of what U.S. tax law would classify as “unearned income”: specifically, it does not apply to items I mentioned like bank interest or social assistance payments. It does apply to rental payments.
It also applies to self-employment income, parts of which may be considered either “earned” or “unearned” in U.S. tax law — for example, the dividing line between what counts as “salary” and what counts as “distributions” from an LLC is a frequent topic of U.S. tax planning. I can claim no familiarity with how Eritrean tax law makes the distinction, though I imagine that arguing with an armed “diaspora tax auditor” about the dividing line will produce less-than-ideal results.
The former descriptions — just like “exit visa” — are well-recognisable to any reasonable reader as dictatorial anti-emigrant practises which have been abandoned by all liberalising countries, including the successors of the Soviet Union, the Philippines as it cast off the baggage of the Marcos era, Vietnam during doi moi, and most recently Burma. The latter is a bloodless, bureaucratic phrase which obfuscates rather than informs — it hides the fact that the tax is being imposed on people who do not live in the country which is imposing the tax.
What remains the same?
On the other hand, the complaints that “[t]he government considered persons of Eritrean descent to be citizens and did not recognize their possible citizenship in other nations” and that “[the government did not grant consular access to detained dual citizens” both remain intact from the 2011 report. However, for Eritreans actually in Eritrea, this is nothing more than a straightforward application of the Master Nationality Rule — unfortunate but entirely expected as a matter of international law, and similar to the practises of most countries. And of course, both the Eritrean and U.S. governments are equally guilty of ignoring the fact that members of their respective diasporas have “possible citizenship in other nations”. Apparently whoever decided to tone down the tax criticisms in this year’s report didn’t notice this other bit of ongoing hypocrisy.
Eric, that’s a masterful dissection. Orwell’s 1984 was entirely about the deliberate misuse of language as an instrument of control and repression. How crass and cynical that the U.S. Government would deliberately re-cast the words in this report to somehow justify its unjustifiable taxation of its own diaspora.
@Eric
Great post. Orwell’s 1984 is one of my favorite books. At the end there is a discussion of how language and thinking are related. You may recall the simplicity of “Newspeak” and the way it was used to shape, limit, and control thinking. Your research has uncovered a wonderful example – an example that would make Orwell proud.
Here is a slightly different take on this. This may NOT be an example of the U.S. realizing its hypocrisy. Rather it may be an example of the U.S. simply becoming aligned with the “Eritrea View of The World” (without any consideration of hypocrisy) and how to treat one’s citizens abroad.
You might find this to be of interest.
Sophia Tesfamariam, an anti-semitic, pro-Eritrean activist, in March 2013, was in Vancouver to shill for the current Eritrean regime. The U.S.-based Tesfamariam does fundraising and public appearances throughout the Eritrean diaspora, promoting the government of Eritrea. Presumably this would include defending the levy of a two per cent income tax on expatriate Eritreans as a donation to the Eritrean military.
See the following for examples of the issues and controversy:
http://asmarino.com/news/1661-bar-pro-eritrean-activist-from-canada-group-says
http://www.winnipegfreepress.com/local/firebrand-speaker-triggers-ban-bid-122381158.html
http://assenna.com/sophia-tesfamarima-should-be-prosecuted-for-wilful-incitement-of-hatred/
http://asmarino.com/eyewitness-account/586-eritrea-hires-sophia-tesfamariam-officially
She now lives in the Beltway as an “Eritrean-American analyst/writer with US Foundation for the Horn of Africa in Reston, VA” and is warmly received by the American government.
Here is a link to an article that includes pictures of her with Michelle Obama and Susan Rice that demonstrate the extent of her warm reception from the U.S. government. The title of the article is:
“Eritrean Queen Sophia Tesfamariam meets Michell obama and Susan Rice”
http://www.ethiopianreview.com/forum/viewtopic.php?f=2&t=50357
Could it be that the U.S. has more in common with Eritrea than just citizenship-based taxation?
You can keep up with her at the following Twitter handle -@stesfamariam
Imagine – direct connections to the Obama White House.
@Deckard
Sorry for the duplication we were writing our comments at the same time!
I guess that these changes in State’s report would mean that the U.S. government is cognizant of the criticisms that are being levelled at it with regards to U.S. persons and citizenship based taxation. Therefore the fact that the U.S. has consciously altered its wording is a good indication of “willfulness”, should any legal procedures subsequently be brought against the government on citizenship based taxation and its violation the human rights U.S. persons living abroad.
@Recalcitrant
You may be right. It’s hard to believe after the events of the last couple of years that they are unaware. If they don’t change to RBT then clearly their behavior is “willful”. At the end of the day they will pay the “willfulness” penalty (unless they are able to demonstrate “reasonable cause”).
Wonder if I could get your thoughts on the following:
Here is a quote from Bernard Schneider’s submission to the Ways and Means Committee:
http://waysandmeans.house.gov/uploadedfiles/schneider_wg_comment_1.pdf
“Generally, U.S. expatriates are treated like U.S. residents and taxed on their worldwide income. However, U.S. expatriates should be compared not to U.S. residents but to nonresident aliens. But for their citizenship or immigration status, U.S. persons abroad would be treated like nonresident aliens, i.e. generally taxed at a flat rate of thirty percent on U.S. source income that is not effectively connected with a U.S. trade or business and at the regular graduated rates on income that is effectively connected with a U.S. trade or business, including on gain from the sale of real property interests in the United States. In addition, net capital gains would not be taxable unless they are fixed or determinable annual periodic income. Needless to say, the foreign source income of nonresident aliens is not taxed by the United States. In most cases expatriates could engage in the same economic activities in the United States as nonresidents without paying the higher taxes for which residents are liable. The difference between the tax imposed on nonresidents and that imposed on expatriates constitutes part of the “citizenship penalty” paid by U.S. persons abroad.”
Note particularly the last sentence that reads:
“The difference between the tax imposed on nonresidents and that imposed on expatriates constitutes part of the “citizenship penalty” paid by U.S. persons abroad.”
I don’t think I have seen this expressed as clearly as in that sentence.
Now, here’s an aspect that needs more consideration. I would argue that this demonstrates a violation of the “equal protection clause in the 14th amendment”. The U.S. Supreme Court has ruled that “citizenship classifications” are “suspect classifications” and that they can be upheld only if the government can demonstrate a compelling state interest.
The government is clearly imposing a burden based on citizenship. Both US citizens abroad and non-resident aliens are non-resident.
The problem is largely: what should a non-resident U.S. be compared to?
– a non-resident alien (as Mr. Schneider suggests, neither group resides in the US or has the benefit of US services); or
– resident citizens (as Form Nation suggests, all US citizens are property of the state)
The answer depends on what one thinks a “citizen” is. Does the comparison to “resident citizens” depend on accepting the idea that the U.S. has a “property right” in its citizens
Assuming the correct comparison is the comparison to non-resident aliens:
Why should US citizens not be given the same treatment as non-resident aliens? Why has this not been argued/discussed before? I.e. citizenship-based taxation as a violation of the 14th amendment equal protection clause.
If you get a second, read this:
http://law.justia.com/constitution/us/amendment-14/88-alienage-and-nationality.html
I would like to get this issue thoroughly researched. Is the answer that non-residents (Americans abroad) don’t have the benefit of constitutional rights? I doubt it. Remember that the 14th amendment has been used to protect against the loss of citizenship.
The analysis on this thread is amazing. Thank you Eric, everyone.
Whether the change in tone about Eritrea is a result of pro-Eritrean government lobbying, or an attempt by the USG to lessen its culpability in any of its actions that would be viewed as similar to the Eritrean government’s, the result is to put more blame on the victim. It’s downright creepy that the shift is moving away from being a human rights issue.
I agree completely with the position that none resident U.S. persons should be treated just the same as foreigners who have investments in the U.S. I have always held to this position as being the only logical one because it is the one that is fair.
The U.S. taxes its none resident U.S. persons as if they are property by virtue of their U.S. ties. However U.S. citizenship cannot be bought and sold as if it is property. That the U.S. government has absolutely no financial interest in its none resident persons is clearly apparant. An analogy would be a stranger or even friend who wanted to buy insurance on the life of another indvidual while yet not having any financial connections to that individual where the purchaser would be adversely affected by the death or physical impairment of the insured individual. In such an instance the law does not allow for such a purchase.
I want to thank you for asking me about this. Unfortunately I have to go soon so I will take a more in depth look at the other material that you supplied. These are just my preliminary remarks.
And finally, the “extraterritorial income tax” or the “tax on citizens residing abroad” is now described as a “tax on foreign earned income”, a phrase clearly taken from U.S. tax law without understanding its meaning (since “earned income” like wages is supposed to be contrasted with “unearned income” like bank interest or social assistance payments — but in fact the Eritrean diaspora tax applies to both categories of income).
@Eric, The Eritrean diaspora tax only applies to employment, self-employment and rental income. Eritrea doesn’t tax investments like interest, dividends or capital gains at all, not even from its residents. See here (page 116) and here.
@Shadow Raider: thanks for pointing this out; I added a correction to the post to reflect this.
I read the justia article quickly and found only a discussion of how to treat “aliens” inside USA.
I couldn’t see anything that applied to our situation.
FATCA has begun to make the world aware of “extra-territorial taxation” (U.S. person based). The early discussions of FATCA focused on only the economic consequences – “The Berlin Wall”, “The Neutron Bomb of the Financial System”. Now that it is realized that FATCA has the effect of enforcing the immorality of citizenship-based taxation, FATCA has become a human rights issue. The combined effect of FATCA and citizenship-based taxation is the loss of human freedom. By taxing residents of other countries, the United States has created a new kind of slavery. This is NOT the use of the 14th amendment to create slavery. It is simply the United States defining a group of non-residents who live must live in a “fiscal prison” for life.
But, lets not forget that FATCA and citizenship-based taxation have forced U.S. persons to stay in the United States (a kind of “Berlin Wall”). “Homelanders” live in a “Medium Security Fiscal Prison”. But once a “Homelander” leaves the United States he incurs severe punishment and is moved into a “Maximum Security Fiscal Prison”.
It’s extremely important to realize that FATCA has both economic consequences and human rights consequences. I believe the time has come to make this an international human rights issue. As President Carter has noted the U.S. is in breach of many articles of the UN Declaration of Human Rights. The way that citizenship-based taxation is applied is one more.
http://renounceuscitizenship.wordpress.com/2013/01/25/president-carter-believes-in-human-rights-and-americansabroad/
Who would have thought that the United States of America would be the country primarily responsible for ATTEMPTING to make Orwell’s prophecy a reality – that is to move us toward an Orwellian world.
The old Louis Armstrong song “What a wonderful world” needs to be updated for the times.
“What an Orwellian World”
http://www.youtube.com/watch?v=eXld16r7-l4
The words of the song need an update for the “Orwellian World”
@Em?
“Lyrics:
I see trees of green, red roses too
I see them bloom for me and you
And I think to myself what a wonderful world.
I see skies of blue and clouds of white
The bright blessed day, the dark sacred night
And I think to myself what a wonderful world.
The colors of the rainbow so pretty in the sky
Are also on the faces of people going by
I see friends shaking hands saying how do you do
They’re really saying I love you.
I hear babies crying, I watch them grow
They’ll learn much more than I’ll never know
And I think to myself what a wonderful world
Yes I think to myself what a wonderful world.
Oh yeah!”
@USCitizenAbroad
It’s astonishing to see how so little has changed, in fact gotten much worse for USP’s abroad over the years. Citizenship based taxation has managed to remain America’s dirty little secret for a very long time, and an ‘out of sight out of mind’ problem for Congress.
So what’s changed, or about to, since then that would create the impetus to do anything about it?
The US government’s INACTION proves again and again that it is not a lack of recognition of our plight that’s the problem. It’s becoming more and more evident that the problem is our inability to accept the fact that not only does our own government not value its citizens abroad as assets, but they also have no appreciation of what it would mean to NOT have a thriving diaspora.
The current opportunity for change through comprehensive tax reform presents a ‘now or never’ situation for me, and frankly if nothing is done my attitude is that it’s THEIR LOSS. “Shame on me”, if I don’t.
I agree with you, Mark Twain. None of what is in that piece applies to the situation of non-resident U.S. persons. It all applies to how the U.S. Constitution applies or doesn’t apply to resident aliens.
@To all, I would like to think that if things turn really nasty and renunciations surge, the U.S. will finally realize the folly of their ways and reform the tax system to a residence-based system. I hope they will also give an official (and genuine!!!!) apology to U.S. citizens abroad and FORMER U.S. citizens, perhaps even offering them their citizenship back. They will have to use POSITIVE incentives rather than THREATS to win us back.
monalisa,
Offering us our citizenship back??????? I’ve got one in my family they can have back!!!
Winning us back????
An apology from the US, to me, would be like an apology from an abusive spouse in a never-ending cycle. Fool me once, shame on you. Fool me twice, shame on me.
@ USCitizenAbroad — This is pretty gloomy but it’s all I could come up with …
What an Orwellian World
I see FATCA threats, lost savings too
I see them loom for me and you
And I think to myself what an Orwellian world.
I see skies of grey, dark clouds in sight
The bleak fearful day, the long haunted night
And I think to myself what an Orwellian world.
The colours of our lives now so ashen in their hue
Are also on our faces when our taxes are due
I see friends betray friends for the IRS rules
They’re really nothing but sad fools.
I hear babies wail, their future’s dim
They’ll learn too soon this prison we’re in
And I think to myself what an Orwellian world
Yes I think to myself what an Orwellian world.
Oh woe!
You asked the right person, USCitizenAbroad. Good work, Em!! Very good lyrics. Gloomy is appropriate.
Excellent work, Em. I’ll never hear that song in the same way again…
Great work Em. So sad that it is so apt.
Sorry, did that too fast. Should be … I hear babies wailing, their future’s dim … too many syllables the way I wrote it. Can you fix it calgary411?
I fixed it, but would this work better — “I hear babies wail; their future’s dim” ?
Thanks calgary411. I was just going by the “I hear babies crying” that USCitizenAbroad wrote but I see other places where the lyrics say “cry” so you are right … go with “wail” not “wailing”. It works. Another fix I guess, sorry.
Not a problem — just want to make sure.
I love your way with words — makes me smile; makes me shed a tear; makes me proud to be associated with you all.
@Em could be our Poet Laureate!! That was quite impressive for something thrown together so quickly!
@Calgary, of course I’m only dreaming. Wouldn’t it be wonderful if things could change for the best but realized when I took my oath that I could never really go back to Kansas. I suppose I dream of an America that only exists somewhere over the rainbow – a more innocent place that probably only seemed real because it’s how I naively perceived it as an innocent child…
@monalisa,
Keep the good things of your past in your memory. Realistically, none of us can (and most don’t want to) ‘go home’. It is never the same for anyone. That would be even more so for any of us who have lived away from the continental USA for such long times. Our real homes are where we’ve made them. You, monalisa, have made such amazing strides. You’re going to be a much stronger person for all you’ve been through. You are going to be able to visit your family in the US and enjoy all the memories you share of earlier times. You’ll never lose your heritage. You have and are going to continue to move on from all this and enjoy the home and life you’ve made with your husband in the UK. You have truly become your own person — and that thrills me no end. I wish you so much happiness down the road you’re on. YOU, the stronger person you have become, have made that possible for yourself!!!