Financial Post: Diane Francis: Shaming Won’t Prevent Tax Avoidance
Does she take advantage of a Canadian Tax Free Savings Account (TFSA), have mutual funds, RRSPs? Are these profitable investments for her after her US tax compliance with 3520 and 3520A’s, 8621, 8891 form preparations? Does someone handle and pay for this compliance for Ms Francis?
And, why does she use the term “Tax Avoidance”? Does the CRA take their lead in terminology from Ms Francis?
But now the big nations — the United States and the European Union with its tax havens — are finally preparing to crack down on tax leakage as they struggle with debt and entitlement burdens and slow growth.
They have few choices: High profile tax evasion in Greece, Cyprus and Southern Europe has rattled the EU, as has Russia’s no-tax enticement of Gerard Depardieu to its jurisdiction. Finally, steps are being taken to remove secrecy in financial centers such as Luxembourg, Ireland, Austria and even the Switzerland.
The United States is also realizing that its tough system is being eroded by international tax gamesmanship. This week, the CEO Tim Cook of America’s Darling, Apple, was grilled by Congress on its clever tax avoidance schemes around the world and pilloried alongside Wall Street’s greedy and parasitic sector. Britain attacked Google’s and Amazon’s tax games, too.
But shame won’t do the job. Only an international tax regime, and rewriting of tax treaties that facilitate cheating, will.
To that end, the Organization of Economic Co-operation and Development (OECD) is preparing a template for international tax collection to eliminate loopholes and rein in evaders that will be presented this fall to the G20.
Further to my comment here, I suspect Francis would opt not to be US taxed and AVOID any further taxation by staying in the US fewer days than what would trigger US taxation under the substantial presence test. That would just be good tax planning, wouldn’t it?
…and what is the descriptive name for that good tax planning, bubblebustin?
@Calgary411 and @Bubblebustin,
Thanks for sending the clearly worded (!) letters to the Post—and hoping that many more (you do not have to be Canadians and you can ask that your name be withheld if you wish) will also take the time to send short letters on the Francis article (her second) BY SUNDAY NOON to:
You also make the good point that I had not appreciated when you say that Francis “can” “elect to keep paying US taxes.”
Should the Schneider proposal to House Ways and Means be passed, I and many others would make the election to remove themselves from the IRS system— but I know that since Ms. Francis would never deviate from her publicly stated position and will always elect to remain within the system and forever… embrace total IRS compliance.
@IRSCompliantForever and bubblebustin,
Let it be known to all that even if US Persons Abroad may someday have the opportunity (by way of a proposal to the House Ways and Means) to remove themselves from the IRS system, Diane Francis will never elect to give up the privilege of paying her fair share to the United States of America.
Commenters might also wish to email (today) a very short letter to the editor of the Toronto Star, a major widely read Canadian newspaper.
Today’s Sunday editorial “Update creaky privacy laws” aims to give the Canada Privacy Commissioner better legislation to ensure privacy for Canadians.
FATCA and preventing US from compelling my Canadian person-spouse from disclosing joint bank accounts are not cited as examples of privacy breaches that new legislation would help.
You will find quite interesting the point (I know we all agree on this) that US, unlike Canada has stronger privacy laws and, unlike Canada, is not so “cavalier” about privacy rights: “It would help if Canadians cared more [like the US, about privacy.]”
If you have an opinion, email short letter today to:
“Letters to the Editor
Send your contribution to Letters to the Editor
via email to firstname.lastname@example.org
Letters must include full name, address and all phone numbers of sender
(daytime, evening and cellphone). Street names and phone numbers will not be published. We reserve the right to edit letters, which typically run 50-150 words. Please note: We get many more letters than we have space to print. Due to the volume, we unfortunately cannot acknowledge every submission.”
Bernard Schneider proposal for tax reform suggests:
“Instead, the United States should enact a new tax regime for U.S. citizens and LPRs abroad:
A Code Section 877A type departure tax would apply to those who take up or abandon U.S. tax residency, defined using either the bona fide residence rules or the substantial presence rules in Code Section 7701(b)(3). Under this approach, the Service would consider an individual to have disposed of most of his or her property at its fair market value on the day he or she emigrated or immigrated and then re-acquired the property for the same amount immediately thereafter. U.S. government employees and military personnel overseas would continue to be treated as U.S. tax residents.
While nonresident, expatriates would be treated like nonresident aliens. They would cease to file returns on foreign source income, and their U.S. source income would be subject to withholding at source. Tax and financial reporting requirements, including those related to the FBAR and FATCA regimes, would not apply.”
“U.S. government employees and military personnel overseas would continue to be treated as U.S. tax residents”…perhaps we should create a new category for the Diane Francis’s of the world. Any suggestions?
A (too) short letter in response to columnist Diane Francis’ vision for US persons in Canada (and elsewhere) has just been published in the difficult to find online “letters” section of Canada’s Financial Post (part of the National Post)– but, more importantly, the letter also made it to this morning’s print version of the newspaper.
Francis’ column “(Why shaming won’t work with tax cheats” in: http://opinion.financialpost.com/2013/05/24/shaming-wont-prevent-tax-avoidance/)
-concluded with the statement: “And the last word goes to Seymour Schulich, Canada’s foremost philanthropist: “I think you owe allegiance to the place that gave you the opportunities. Americans [individuals] pay taxes no matter where the profit was made and that’s the way it should be.”
The letter in response:
“This is at least the second time that Diane Francis has enthusiastically supported, in the Post, U.S. taxation of all “U.S. persons” in Canada in order to crack down on tax cheats.
Her proposal of course includes those unfortunate dual citizen pensioners and middle class individuals living in Canada for many years who have no intention of ever returning to the U.S. and who are harmed by unreasonable and costly IRS compliance demands.
All I ask is that, in the next column on the subject, Ms. Francis include one sentence to provide balance acknowledging the above point–just one sentence please.”
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