Liberty and justice for all United States persons abroad

The Isaac Brock Society

Posted on by Posted in Issues regarding US persons abroad 105 Comments

This is a rather disappointing article from an author who has written on this issue before. Why disappointing? The general tone seems to equate Americans Abroad with tax evaders and terrorists (whatever those are). That said, it’s one more article reporting the increasing numbers renouncing U.S. citizenship.

For example:

The U.S. launched the tax crackdown after the terrorist attacks of Sept. 11, 2001, and ratcheted up its efforts after 2009, amid evidence that UBS AG UBSN.VX 0.00% and other foreign institutions helped U.S. taxpayers hide assets.

Some taxpayers have applied for IRS limited-amnesty programs, in which they pay stiff penalties for past noncompliance but avoid prosecution.

Tax lawyers say the crackdown has ensnared smaller violators who weren’t intentionally evading U.S. taxes.

In addition, a law enacted in 2010, the Foreign Account Tax Compliance Act, or Fatca, requires foreign financial institutions to certify they aren’t hiding U.S. taxpayer assets, which lawyers say is leading some to reject U.S. customers.

Taxpayer penalties for failing to report assets can be severe, including up to 50% of an account balance for each year.

Although there is some suggestion that renunciations are caused by the time, expense and fear of compliance burdens, these suggestions are “too little and too late” in the article (at least that’s my interpretation). Therefore, I would suggest getting over to the comment section and offer them an “IBS Educational Seminar” on the impossibility of U.S. citizenship abroad.

Interestingly there was one rather good comment from some guy named Roger Conklin (amazing how much he seems to know). He argues, rather convincingly that a move to RBT/Territorial taxation would be good for the U.S. economy.

The US is one of the two nations of the world that belong to that very exclusive club of countries that subjects its citizens to citizenship-based taxation. The only other member nation is Eritrea, a” thriving” democracy in Africa. These two nations, in addiction to subjecting all of their residents to taxation on their world-wide income, also subject their citizens to homeland taxation if they live and work abroad, as if they never left home. Both US and Eritrean citizens living abroad are simultaneously subject to the tax laws of both their country of citizenship as well as the country where they reside. Both exert their “right” to assess and collect taxes from their citizens residing within the sovereign borders of every other nation. All other nations tax the world-wide income only of their residents, regardless of citizenship.
The UN Security Council condemned Eritrea by Resolution 2023 (2011) in December 2011 on the basis that its citizenship-based taxation violates the UN Universal Human Rights Declaration by depriving its citizens of the right to freely leave and return to any country, including their to own. They can leave, but they must continue to pay Eritrean tax no matter where they go. Heaven help them if they return home for a visit not being current in their tax obligations. Susan Rice, then US Ambassador to the UN, led the charge in securing this condemnation, thus asserting the right US to be the only nation permitted to violate the territorial taxation sovereignty of other nations with impunity.

FATCA obligates all foreign banks, at their own expense, to violate the privacy laws of their countries by providing fully-detailed annual reports to the IRS on all of their accounts with any US-person ownership, including jointly owned by their foreign spouses and relatives, in English with foreign currency values converted to equivalent dollars. Prominent US citizens living abroad, having been born in the US, include the King of Thailand, the mayor of London, one dual-citizen Canadian provincial premier and 6 members of the Canadian parliament as well as the 2 adult children of recently-deposed Egyptian president Morsi, as well as all children born abroad to one US parent who speak no-English, have never been in the US or held a US passport who likely do not even know they hold US citizenship. All are subject to US taxation and FATCA. There are 16 IRS instructions for US citizens abroad with 7,332 pages, plus 667 pages of tax forms. The FATCA instruction for foreign banks has 544 pages. The middle-class US citizen abroad can expect to pay the equivalent of one month’s wages for competent professional assistance in filing his US tax return, even though foreign tax credits in very high tax countries may totally offset his US tax obligation. Citizenship based taxation is not a revenue generator for the US Treasury, but a punishment for Americans residing outside of the US.

It has become virtually impossible for the US citizen to survive living abroad, leaving them with the choice of citizenship renunciation, or abandoning their foreign spouse and family, shutting down their small business, resigning their job and relocating to the US to join the ranks of the unemployed. How this can possibly be in the best interests of the US defies explanation. No other nation punishes its citizens by criminalizing their living and working in another country.

Roger, it’s not “virtually impossible”. It’s actually impossible.

On a brighter note, the authors clearly believe that Canada is a country that is foreign to the U.S. This appears to contradict recent assumptions by the NSA which consider Canada part of the Homeland. The author’s note that compliance costs may be a factor in at least on Canadian renouncing U.S. citizenship.

The cost of complying with various rules and regulations can be steep even for people with small tax bills.

Carol Tapanila, who moved to Canada more than 40 years ago and is now retired, renounced her citizenship in November and appeared on the current list. She says her U.S. taxes amounted to about $250 last year and she didn’t take the step to avoid paying them.

Legal and accounting fees and other costs of making sure she was in compliance in recent years have added up to nearly $40,000, says Ms. Tapanila. “It is nothing but stress.”

And finally, we have the usual comments from our “friends” the cross-border professionals. Of particular interest is:

The U.S. is rare in that all income earned by citizens and permanent residents, even those living abroad, can be subject to U.S. tax, according to Bryan Skarlatos, a New York lawyer. The U.S. also confers citizenship on people who are born on American soil.

Note: the link was added by me and is NOT part of the article.

And an interesting acknowledgement from a former IRS prosecutor (could this be somebody worth reaching out to?):

The web of rules is “overly burdensome,” said Jeffrey Neiman, a former federal prosecutor who led the 2009 UBS case, which resulted in the bank’s agreeing to a $780 million settlement. He now is a lawyer in private practice in Fort Lauderdale, Fla. “You basically find yourself in this continuous nightmare.”

Note: the link was added by me and is NOT part of the article.

Your mission, if you choose to accept it, is to continue to educate these Homelanders, journalists, and U.S. based tax professionals!

 

 

 

 

 

 

 

 

105 thoughts on “Laura Saunders @WSJ writes on increasing number of #americansabroad renouncing citizenship”

  1. Turning it off, and then washing your hands of it, is a good way of preserving your own sanity when surrounded with insanity.

  2. I’d hesitate to judge any country by the quality of the comments on newspaper articles. The comment sections in UK newspapers are also bad but I don’t think they are representative of what people think.

    It’s unfortunate that political discussion has been devalued by journalists, talk radio and politicians themselves. It’s very hard to have a rational political discussion these days. Try to talk politics even with friends and acquaintances and the discussion often degenerates into quick bite attack slogans. It’s easier to talk about sex and religion! Discussion on IBS and other small blogs seems to be a rare exception to this.

  3. My skin must be getting thicker, because negative comments, and rebuffs to my comments don’t bother me as much as they did when I first started responding to blogs and articles, in defense of ‘US persons’ living outside USA.

    As frustrating as it can be, I’m sure it is worth it to continue to use the articles that come out to try and educate the masses. For the most part, once they get it, most of them (anti-socials excluded) agree with us.

    Bad things happen when good people remain quiet. Don’t give up mosquitoes! The internet is our friend. Words are our weapons. Together we create a big swarm, and if we keep it up, soon FATCA and CBT will be bled dry.

  4. @WhiteKat

    I have since learned that there is no point in trying to have any meaningful intellectual debate with the anti-intellectuals, statist robots, and other such populist morons that attack us with their envy specialist rhetoric.

    If they really ‘hate us for our freedoms’ as they would like to say, then our best weapon is to go Galt on them.

  5. @WhiteKat, thanks for your encouraging comment! Their words do bother me sometimes because giving up my U.S. citizenship has been a gut wrenching decision and I don’t feel I’ve had ANY choice in the matter. Truth is I don’t really want to do it and wouldn’t do it except that there’s no way on earth I can keep it AND live normally here or protect my spouse and kid from future penalty grabs and reporting. I want to be able to leave my son something without the U.S. reaching over and stealing what I mean to rightfully go to him precious little though it might be!! He comes first and so does my spouse and really I am more Canadian now than American. Still, no one should be literally forced to give up their birthright. It’s being stolen so when people don’t get that and say some of the things they say I just feel disgusted. If it were happening to THEM they’d get it and that’s a shame they have to be so myopic.

    I’ve given up trying to change their minds but, I’d like them to know what this is really all about. As far as changing minds go, I try really hard with Canadian pols, and others because when they see what this is they are appalled by it. I hold out a lot of hope that Canada and other countries will fight back!

  6. @AtticusinCanada

    You don’t need to carry a US passport, or to be politically associated with such a narcissistic government, in order to pursue, and achieve happiness, as well as the ideals of liberty and freedom.

    America the ideal, is not a piece of land that is supposedly anointed by God Himself. It is what you carry in your heart, and what you know to be true and self evident. As long as you have that, you will always be an American, and nobody can take that away from you.

  8. @mjh49783,

    I hear you, but how do you distinguish the ‘anti-intellectuals, statist robots, and other such populist morons’ from those who are not? People are malleable.

  10. @AtticusinCanada

    You are a true warrior, fighting a good cause. Your well articulated messages are not wasted.

  12. @WhiteKat

    “I hear you, but how do you distinguish the ‘anti-intellectuals, statist robots, and other such populist morons’ from those who are not? People are malleable.”

    You know, that’s a very good question, and I’ll be happy to explain.

    First off, the anti-intellectual one as a rule, don’t want to learn anything. Some of them even see intelligence as a threat to them. Some people also fear being proven wrong. I’m not sure why. I doubt I’m even right half the time myself. ;^)

    Statist robots are the ones that are locked in their ideology of ‘everything for the state’ or ‘the state can never do wrong’. Unfortunately for them, their programming is usually burned into their ROM chips. But unfortunately for us, these guys will be the first to claim that ‘they were just following orders’ if their ideology has been responsible for crimes against humanity, and they’re checkmated by the overwhelming might of their enemies. (yes, I was thinking Nazi Germany here, but there are many other examples, I’m sure)

    As for the populist morons? Well, some of them like to whip up the masses by speaking of vague boogeymen and other such nonsense as the source of a nation’s problems. Some of them even get jobs programming those ‘statist robots’ to do their dirty work for them, but yet these guys do have one thing in common with anti-intellectuals in that they’re not too bright. They do have better charisma for bullshit, though. (Now, how many bastards like this have we had in positions of power throughout history, alive or dead?)

    Now, what do all of these types of people have in common? They have no capacity to accept another point of view that differs from their own, or that is in conflict with their beliefs. That, and in their mind, they are always right, whether they are right or wrong.

    One unfortunate thing that I have learned is that not all people are malleable, and that those ‘hard headed people’ are really not worth having a debate with unless they get verbally offensive at others (or directly at me) for expressing their views. Only then will I jump in and give these people a piece of my mind. Otherwise, I would rather just stay out of it, and go to where the conversation is more interesting.

    And of course, I certainly have my opinions on things. Some of them stronger than others. To be honest though, it is my worry that over time, I might end up as immalleable as some of the people I end up arguing with. Another reason for me to stick with more interesting conversations. That way, I won’t become bitter, or at least that’s the plan. ;^)

  13. @WhiteKat, thank you, you are so encouraging and that is worth so much right now to everyone here!

    @mjh, you were off to listen to music and while I was obsessed with this I almost forgot the beginning of the end for Breaking Bad. One of my close family members works on that show. Last year I got my dad on the set for the last show of the season making his 72 birthday a real treat! My relative who works on that set is Canadian. Did you all know MANY of the primary crew are Canadian? They are and they do a stellar job. So, there are other things we can and need to focus on too..lol. Thanks for the invite to listen to music. I’ll take you up next time because getting away from this and not forgetting the fun things is important too! To think I almost missed Br Ba and dissed my relative all because this is the main focus for me these days. It’s not worth it for every day to be about this! Thanks to all for this website.

  14. @ mjh49783
    Odd that you should be discussing what might be simply described as “cognitive dissonance”. Today I’ve been reading a biography of Leo Emil Wanta written by Marilyn MacGruder Barnewall (“Wanta! Black Swan, White Hat”) and I found an excerpt which supports your observations.

    “Sometimes people hold a core belief that is very strong,” Frantz Fanon said in his 1952 book Black Skin, White Masks (originally published in French as Peau Noire, Masques Blancs). “When they are presented with evidence that works against that belief, the new evidence cannot be accepted. It would create a feeling that is extremely uncomfortable, called cognitive dissonance. And because it is so important to protect the core belief, they will rationalize, ignore and even deny anything that doesn’t fit with the core belief.”

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  18. @AtticusinCanada,

    I am glad I was encouraging. It is so easy to get down about this whole bad mess.

    Speaking of bad, I also watched ‘Breaking Bad’ last night with my 3 daughters. We almost forgot it was premiering last night, but at dinner I asked the kids when the first episode of the new season was coming and we discovered just in time that it was last night. I did not realize there were so many Canadians in the show. Poor Hank. Sometimes FATCA stresses me enough that I feel close to an anxiety attack.

  19. I’ve read literally hundreds of homelander’s comments and I am coming to the realization that many confuse citizenship with residency. I think many believe that you lose your US citizenship when you move to another country and that if you somehow retain your US citizenship after moving you are gaming the system. The reality that an American retains US citizenship while living abroad creates ‘cognitive dissonance’ in the minds of who we term ‘homelanders’, when their core belief is that only people living on US soil should enjoy the benefits of US citizenship.

  20. This looks to be a video companion to the WSJ piece produced out of Hong Kong. Thankfully, the lawyer interviewed was clear that for the vast majority of people on the list, tax is not a driver. He even cited the discrepancy between the “official” statistics and the FBI numbers (though that part didn’t carry the same impact as Eric’s posts on the subject) and the large numbers of former Americans in Canada. Perhaps he is a reader.

    http://live.wsj.com/video/divorce-from-uncle-sam-is-harder-for-us-citizens-2013-08-12/6899F7BE-7C6C-4C88-A0E8-E8BDDD88E9F1.html#!6899F7BE-7C6C-4C88-A0E8-E8BDDD88E9F1

  24. @Em

    Yes, I have felt a strong sense of cognitive dissonance vis-a-vis the United States for many years myself. But once I’ve separated the ideal from the state, it became much easier for me to disconnect from the state emotionally, and it will be much easier for me to get my own renunciation done as well.

    Also, it’s important to know that even the founding fathers didn’t meet the ideals themselves. (some of them had slaves as we all know) That to me suggests that the state was likely flawed from the beginning. It doesn’t mean that the ideal itself was bad. And who’s to say that the desire for freedom is even an exclusively American ideal to begin with? The Magna Carta and the writ of Habeas Corpus certainly didn’t originate in the USA.

    All of that indoctrination that they gave us in school is really hard to shake off, once we can see through the lies. Some of us can only get rid of it a piece at a time because it really is that hard! It has taken me about 12 years to even get to this point, from where I used to buy into the bullshit without question, hook, line, and sinker. Then, there are those that just can’t handle the truth, like that fellow I was arguing with. It is likely that he was boiling mad at me when I told him that he only fought for the freedom of the state, instead of for the freedom of the people. Who dares question a soldier, right? Well, I did. After all, if he really fought for the freedom of the people, then as a person, I should be free to ask questions. But apparently, since he apparently fought for the freedom of the state, I wasn’t ‘allowed’ to ask those questions as that would equate to questioning the state itself. Yet I did it anyway.

    But to be honest, I would hate to think that anti-Americanism ends up being my new core belief, and I know that I can certainly do better. Hatred is unhealthy anyway, and I want to be happy.

  25. @bubblebustin

    You know, if only it was so simple to lose US citizenship upon moving out of the US, I wouldn’t have to worry about making appointments to the US consulate, having to fly and/or rent a car to get to the place, (likely twice) having to drop $450 in USD for the renunciation fee, having the CLN in hand so that I can wave it at the banks here like a holy cross to the FATCA vampires, chanting, ‘The power of my CLN compels you! Oh, and can I set up a new TFSA account, please? Thank you! ;^)’

    Even with my own family, I have experienced that cognitive dissonance at first where they thought I would lose US citizenship upon living abroad, or at least ask questions like that at a minimum. Now that they have had more time to digest my choice to live abroad, some of them wish they could do that themselves if not for life constraints, such as leaving careers, loved ones, etc….

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