120 thoughts on “MUST READ paper defending FATCA and Citizenship based taxation”
@Innocente, thats all great stuff!! It inspired me to do some looking too.
From the UK Census 2011
Population England/Wales 56,075,912
Born in USofA 177,185
US Passport Holders 126,330
Number who “Identify themselves” as US Citizens: 119,229
From I think the IRS;
2011 number of returns from the United Kingdom 31,599
____
What does that indicate?
1.) One third of US born individuals in England and Wales do not have a valid US Passport and do not present themselves as as being US. The super super majority of these would not have a CLN as its simply impossible by the historical record.
2.) A very large percentage of US Passport holders in England and Wales do not file with the IRS.
3.) A significant number of 50,855 US born individuals in England and Wales carry a British or other non-US passport as their sole passport.
4.) Tens of thousands of good people are going to have an OMG moment.
5.) Extrapolating from your SE England data, 144,943 US born individuals live somewhere other than the Southeast, with the southeast being the comparatively wealthy area.
There are a few destinations that deliberately try to lure rich people. I would have to admit that the UK with its non-dom fees has tax haven tendencies. The thing about these places, though, is that their tax systems are set up so that they aren’t tax havens for anyone who isn’t really wealthy. Some people from abroad pay non-dom fees of around $51,000 instead of the normal taxes. $51,000 is a bargain if you earn hugh amounts of money, but for a large portion of Americans in the UK that is more than they earn in a year. In Monaco, there are municipal fees that again make it only a haven for the wealthy.
Italy actually has a more sensible policy of following wealthy Italians who move to specific tax havens and leaving other people alone. I asked someone who has lived in Italy about this and he said that even though the Italian tax collectors are completely ineffective in collecting out of Sicily, the Guardia di Finanza .
@innocente,
Thanks for the hard work generating the stats and analysis that debunks one of Kirsch’s contentions and rationale for supporting US extraterritorial CBT. He and the CBT supporters should do some of that work themselves. If they are academics that wish to be taken seriously, they should have to generate work that cites genuine and robust facts and references for their statements. Instead, I have wondered how some of this actually get published, and then passes muster unless the US tax policy area is one in which CBT is accorded the same status as the Ten Commandments, and there is no need to subject them to actual objective and robust scrutiny. I note that it is pretty self interested for homelanders to tell those abroad what is justified and what is not. Easy for a homelander to prescribe what they never have to suffer under and live with.
Question: Just how many US citizens reside in the Netherlands?
Answer: Depends on the statistical database used.
Eurostat:
2013: 15,571 US citizens in the Netherlands
Statistics Netherlands:
2013: 35,357 with Origin: USA
of which:
First generation: 21,565
2nd generation: 13,792 (one or both parents w/ USA origin)
The 35,357 from the Dutch govt statistics are probable US citizens minus a few who have formally expatriated.
Correct Answer: The number of USCs in the Netherlands is likely nearly 35,357, or more than two times the Eurostat figures. With the assistance of the Dutch banks and their Fatca mandate, perhaps around an additional 6,000 more USCs, born in the US, can be outed who have not self-identified as USCs to Eurostat. It will be more difficult for the Dutch banks to smoke out the approx. 14,000 second-generation USCs because they were likely not born in the US.
@George
1.) One third of US born individuals in England and Wales do not have a valid US Passport and do not present themselves as as being US. The super super majority of these would not have a CLN as its simply impossible by the historical record.
** Agree **
2.) A very large percentage of US Passport holders in England and Wales do not file with the IRS.
** Yes, but consider that a family of USCs (husband, wife, minor children) might file only one US Federal tax return, i.e., the percentage of non-filing US passport holders who should be filing is likely lower than the gap might suggest. **
3.) A significant number of 50,855 US born individuals in England and Wales carry a British or other non-US passport as their sole passport.
** Agree (and there will be more in Scotland) **
4.) Tens of thousands of good people are going to have an OMG moment.
** Absolutely **
5.) Extrapolating from your SE England data, 144,943 US born individuals live somewhere other than the Southeast, with the southeast being the comparatively wealthy area.
** Which also means that USCs have contaminated practically every bank and branch in the UK. **
@ Innocente – I’ve been reading your various posts here – – very interesting findings!!!
I hope you have forwarded this extensive information to other allies like American Citizens Abroad & Jim Bopp to aid in their current efforts. And/or anyone in the US media to spread the word more broadly that we are not all wealthy “myths”!
@Innocente…..thinking more about England/Wales.
It is likely that 119,229 who “Identify themselves” as US Citizens make up most of the US Passport Holders 126,330.
That means that around 50,855 neither identify themselves as US or carry a US Passport even though they were born in the USA. It is likely that they carry a UK Passport.
There were 31,599 tax returns filed from the UK. For discussion, assume they all came from England/Wales.
It is unlikely that those tax returns represent any of the 50,855 who even though they were born in the US neither carry a US Passport nor identify themselves as a US person. These persons want nothing to do with America and are not “going back.”
HM Government signed an IGA with the USA where the sole practical method of “fixing your problem” is to renounce and get a CLN.
IF the US Embassy in London processed two renouncement per hour, every working hour of every working day, it would take TEN YEARS to process those fifty thousand British Citizens.
As a condition of signing that agreement, HM Govcernement should have required a simplified manner in which those fifty thousand affected persons who want nothing to do with the USA to escape its talons.
A clarity moment is at hand that CBT absolutely can not work when relinquishment must be proven instead of the old way of being not the intent.
@George: Thanks for the insightful comment on the needed through-put to process 50,000 renunciations in the UK. USCs in Switzerland seem to be on the renunciation frontline so a quick comment. In January it was reported in a magazine that the US Embassy in Berne had a one-year backup and that some were making trips to other US embassies in nearby countries to renounce (which the author did). A recent post on a message board here said that he had observed four renunciations in a two-hour wait at the Berne embassy – this might suggest around 10 renunciations a day there, or 2,000 per year, in that single embassy.
As you allude to, the renunciation through-put issues at the State Dept’s embassies may not have been thought out by Treasury and DOJ in designing the general CLN process. They may have to come up with a simplified process, perhaps web-based or by post, if the wave of renunciations turns into a tsunami.
@LM: Appreciate the bon mots. It has been challenging to find statistics on incomes of Americans in Europe possibly due to the fact that USCs are generally a smallish immigration group in most European countries, and therefore not studied by governments or academics. Americans also seem to be able to compete in the job marketplace which may reduce academic and political interest in them since they are less likely to be on social welfare than other immigrant groups.
@Innocente, “USCs in Switzerland seem to be on the renunciation frontline so a quick comment.”
You guys are definitely on the front line. While I think the practices which are occurring in CHF are likely not to be exported and practiced in other nations, I also think it is wise to consider what happens in CHF to be a warning of what might come elsewhere. Plan for the worst, pray for the best…..
You have done a great job in pointing out with the statistics that the reality of ex/former pats is not champaigne swilling on the Riviera or shopping at Harrods and having the valet park your Bentley.
As we put together by accident, the super duper majority of ex/former pats in the UK live in the North, the Midlands, the West. These areas are nice and have their own joy but that niceness and joy has nothing to do with excessive wealth.
In regards to the CLN process I think I have put some pieces together. The CLN process that we have in 2014 was designed for the reality that existed in 1974. It was designed for the occassional former/ex-pat that applied for a US Passport overseas who had committed an expatriating act. I assume in the old days that a CLN was issued without you asking for it and without you stepping foot in a consulate!! You applied for a passport and instead received a CLN. 🙂
The problem with all this goes back to the Supreme Court which gave teflon coating to US Citizenship. Had the Court not interferred we would not have a FATCA problem today. Unfortunately after the Court decision was reached, the US Congress did not revisit 8 US Code and come up with a fix.
Seriously, after the Court decision a reasonable amendment to 8 US Code could have included an amendment that while the presumption was retention of citizenship that you needed to file a Certficate of Retention of Nationality (CRN). This is similar to South Africa and I now belive Germany. They could have then added a proviso that if you did not timely file a CRN you could get a backdated CRN by showing that you had acted in a manner to retain your US Citizenship by voting, filing tax returns etc etc….
I keep wondering of there is a will in Congress where we could get them to throw us into that tar pit. 🙂
In spite of its high taxes, Germany continues to be a magnet for immigrants, including from the USA. Official statistics for the 1st half of 2014, released today, show that 13,808 people emigrated to Germany from the US. Excepting war-torn Syria, US emigration to Germany exceeds all other non-European countries:
Annualizing the total of all immigrants to Germany for the first six months of 2014 yields 1.333 million for full-year 2014. Even though Germany, with a population of 80 million, is far smaller than the US with its population of 315 million, it is attracting about the same number of immigrants. Germany may indeed be the new land of unlimited opportunities.
As is well known, USCs in Switzerland have been hit hard by Fatca and pre-Fatca, the US-Swiss Tax Programme, which have caused banking and employment problems to American citizens living here. An analysis of USCs on social welfare for the period 2011 to 2013, however, shows only an immaterial increase in the percentage of American citizens on welfare:
2011:
USCs on welfare: 224
USCs on welfare as a % of USCs: 1.2%
2012:
USCs on welfare: 252
USCs on welfare as a % of USCs: 1.3%
2013:
USCs on welfare: 268
USCs on welfare as a % of USCs: 1.3%
As a benchmark, citizens of selected other developed countries have similar percentages on welfare:
2013:
Canada: 0.9%
Netherlands: 1.4%
Sweden: 1.2%
UK: 0.9%
An update of this analysis might be useful when 2014 welfare figures by nationality become available.
Ausländische Sozialhilfebezüger/innen nach Herkunftsland
je-d-13.04.03.04.09.01.xls
UK Employment Statistics show that fewer US citizens are employed in the UK at year-end 2014 vs. 2012. Although I would hesitate to conclude that this trend is real, and not due to statistical sampling errors, we may be observing an actual decline in the number of USCs working in the UK. Another explanation is that USCs are going into hiding.
– The rate of employment of USCs remained fairly constant at about 72% during this two-year period.
By country of birth: USA
(in 1000s)
Oct-Dec 2012: 130
Oct-Dec 2013: 100
Jan-Mar 2014: 97
Apr-Jun 2014: 102
Jul-Sep 2014: 83
Oct-Dec 2014: 93
This is an update on my post above from July 29, 2014:
“Another interesting statistic regarding Belgium and the Netherlands is the number of cross-border employees who reside in one country and work in the other. Belgium has higher income tax rates than the Netherlands but lower employee social charges. Residents of Belgium who work in the Netherlands pay the Dutch social charges (where they work), which are higher than the Belgian, and pay Belgian income taxes (where they reside), which are higher than Dutch income taxes. Conversely, residents of the Netherlands who work in Belgium pay the lower Belgian social charges and the lower Dutch income taxes. Using Kirsch’s reasoning that people try to optimize their tax rates through migration, it would then be expected that more Dutch would work in Belgium (and continue to reside in the Netherlands) and fewer Belgians would work in the Netherlands (and continue to reside in Belgium). The statistics show the opposite:
Belgian residents working in the Netherlands: 13,256 (1995)
Dutch residents working in Belgium: 3,600 (1995)”
Update:
Eurostat tracks cross-border payments described as “Primary Income: Compensation of Employees”:
2012:
Netherlands cross-border wage payments to Belgians: Eur 1.441 billion
Belgian cross-border wage payments to Dutch: 220.0 million
While in 1995, 3.7 more Belgians worked in the Netherlands than Dutch worked in Belgium, the 2012 statistics suggest that 6.5 more Belgians work in the Netherlands than vice-versa, using wage payments as a proxy for number of employees.
Kirsch’s reasoning that people try to optimize their tax rates through migration continues to not hold for Belgians working in the Netherlands. In fact, over the past 17 years, Belgians increasingly work in the Netherlands, probably because there is work there, in spite of the fact that they take a beating on taxes.
Source: Eurostat table: Personal transfers and compensation of employees, bop_rem6
@Innocente, “Another explanation is that USCs are going into hiding.”
Hiding is the wrong term……
My own experience in that neck of the woods is people are identifying less as American.
Growing up in America I remember people claiming they were half Iris, quarter Canadian and quarter German, when in reality they were none of the above and solely 100% US Passport Grade AA.
Personally then, I thought it was insane…….
I think ex-pats worldwide are shaking that fraction mindset…….if you solely have a US Passport then you are American…….something you can not hide from legally or morally. But if you hold a French Passport and live in the EU you are first a French Citizen and then second a EU Citizen and who the hell cares what some other foreign country calls you.
Hmmm an EU Legal question….. What would an EU Court consider to be the nationality of an Irish/French Citizen resident in France? If an EU Court would disregard the Irishness they would conversely ignore the USness.
With respect to IGAs under EU law, I keep getting back to….
1. Asking place of birth is identical to asking religion and is therefor discriminatory.Maybe asking a YES/NO question…Where you born in the United States and/or are you a US Citizen?
2. Asking by way of example in Ireland, Are you an Irish Citizen or a legal Irish migrant is a valid question.
3. In regards to number 2, a followup question would be What is your nationality and immigration status?
4. I think it would be lawful to ask;
A.) Are you tax resident in the United States?
B.) List all countries where you are considered resident?
Eurostat recently published statistics called “Main citizenships of persons granted first residence permits”. With 171,800 new resident permits for 2013, it provides 7.3% of the immigrants from non-EU and non-EFTA countries and is number 3 after the Ukraine and India. It is the only developed country consistently listed by EU/ EFTA countries (which is also due to its size).
Prof. Kirsch might research whether EU/ EFTA have higher taxes than the US and ponder why Americans might wish to reside abroad if their tax burden increases:
To help Prof. Kirsch in his research, Eurostat statistics show that Americans emigrate to EU/ EFTA countries primarily for Education, Employment and Other Reasons:
@Innocente, homelanders like to selectively pick what taxes to compare in declaring another country a tax haven.
I have run into homelanders that consider the UK a tax haven because and by way of example how Boris J. did not have to pay capital gains tax on the sale of his home.
They neglect to mention that the UK does NOT allow deduction of mortgage interest that the US Tax Haven does allow!!
Previously I had been of the mindset that CBT could remain IF dominant nationality or the master nationality rule applied.
That position has now been changed because CBT does not flat out work in the 21st Century unless you look at both cost of living and total tax impact on where you live. CBT is franky absurd in the modern world as long as you are taxed somewhere.
It IS a human right that everyone is entitled to a nationality. It is also a human right that you are taxed once and in one country.
Statistics Netherlands released a report on residents of Germany and Belgium who cross into the Netherlands to work, approx. 40,000 from each country.
As noted above, Belgians who work in the Netherlands get the worst of both worlds: they must pay the comparatively high Dutch social charges, charged where they work, and the comparatively high Belgian income taxes, charged where they live. Even though they take a social charge and tax beating, this obviously does not stop Belgians from working in the Netherlands. According to the report, “Manufacturing is the main sector for workers commuting from Belgium.”
My related post from March 16, 2015 above suggests that 6.5 more Belgians work in the Netherlands than Dutch work in Belgium. Generally, the Netherlands has a stronger economy than Belgium.
I have not researched the situation of Germans working in the Netherlands to determine whether they are tax and/ or social charges advantaged, disadvantaged or have a neutral situation.
@Innocente: interesting. I looked it up following your comment, and the big notion in Europe is that of fiscal residence: you pay where you reside, i.e. residence-based taxation.
Note that some inter-country agreements (Luxembourg-Belgium?) do have a system where workers are taxed in country where they work, not where they live).
@Fred:
Thanks for feedback.
According to EU Parliament document from 1997:
“Belgium-Netherlands:
Taxation in the State of residence if employment and residence are in the frontier zone – exception: Dutch nationals resident in Belgium since 1970 are still taxed in the Netherlands (place of work)
Very high taxation in Belgium and heavy social contributions in the Netherlands (31.2%), the latest increase in which has recently been offset by a reduction in the rate of direct taxation (7.05%): Belgian frontier workers pay twice for social security.”
– Note the beneficial treatment of Dutch citizens residing in Belgium, i.e., they are treated as residing in the Netherlands.
“Netherlands-Germany
Direct taxation and social contributions in the State of the place of work.”
My point regarding residents of Belgium working in the Netherlands is that they have a very unfavorable tax and social charge situation vs. residents of Netherlands working in Belgium, but that significantly more Belgian residents work in the Netherlands than vice-versa in spite of that. This is likely because there are jobs in the Netherlands and the Belgians have not moved like the law professor Kirsch would seem to predict. People are “stickier” to where they live than the theoretician Kirsch seems to believe.
Re-post to place this comment with other statistics-oriented comments:
An ongoing myth is that Americans abroad are “fat cats”. Below are median taxable income statistics for the city of Zurich (2012) for the 12 largest nationalities. These statistics suggest that Americans in Zurich can compete but are not “fat cats”. As an example, the median taxable income for a French married couple is nearly 50% higher than for an American married couple in the city of Zurich:
@Innocente, thats all great stuff!! It inspired me to do some looking too.
From the UK Census 2011
Population England/Wales 56,075,912
Born in USofA 177,185
US Passport Holders 126,330
Number who “Identify themselves” as US Citizens: 119,229
From I think the IRS;
2011 number of returns from the United Kingdom 31,599
____
What does that indicate?
1.) One third of US born individuals in England and Wales do not have a valid US Passport and do not present themselves as as being US. The super super majority of these would not have a CLN as its simply impossible by the historical record.
2.) A very large percentage of US Passport holders in England and Wales do not file with the IRS.
3.) A significant number of 50,855 US born individuals in England and Wales carry a British or other non-US passport as their sole passport.
4.) Tens of thousands of good people are going to have an OMG moment.
5.) Extrapolating from your SE England data, 144,943 US born individuals live somewhere other than the Southeast, with the southeast being the comparatively wealthy area.
There are a few destinations that deliberately try to lure rich people. I would have to admit that the UK with its non-dom fees has tax haven tendencies. The thing about these places, though, is that their tax systems are set up so that they aren’t tax havens for anyone who isn’t really wealthy. Some people from abroad pay non-dom fees of around $51,000 instead of the normal taxes. $51,000 is a bargain if you earn hugh amounts of money, but for a large portion of Americans in the UK that is more than they earn in a year. In Monaco, there are municipal fees that again make it only a haven for the wealthy.
Italy actually has a more sensible policy of following wealthy Italians who move to specific tax havens and leaving other people alone. I asked someone who has lived in Italy about this and he said that even though the Italian tax collectors are completely ineffective in collecting out of Sicily, the Guardia di Finanza .
@innocente,
Thanks for the hard work generating the stats and analysis that debunks one of Kirsch’s contentions and rationale for supporting US extraterritorial CBT. He and the CBT supporters should do some of that work themselves. If they are academics that wish to be taken seriously, they should have to generate work that cites genuine and robust facts and references for their statements. Instead, I have wondered how some of this actually get published, and then passes muster unless the US tax policy area is one in which CBT is accorded the same status as the Ten Commandments, and there is no need to subject them to actual objective and robust scrutiny. I note that it is pretty self interested for homelanders to tell those abroad what is justified and what is not. Easy for a homelander to prescribe what they never have to suffer under and live with.
Question: Just how many US citizens reside in the Netherlands?
Answer: Depends on the statistical database used.
Eurostat:
2013: 15,571 US citizens in the Netherlands
Statistics Netherlands:
2013: 35,357 with Origin: USA
of which:
First generation: 21,565
2nd generation: 13,792 (one or both parents w/ USA origin)
http://statline.cbs.nl/StatWeb/publication/?DM=SLEN&PA=37325ENG&D1=a&D2=a&D3=0&D4=0&D5=241&D6=11-17&LA=EN&VW=T
The 35,357 from the Dutch govt statistics are probable US citizens minus a few who have formally expatriated.
Correct Answer: The number of USCs in the Netherlands is likely nearly 35,357, or more than two times the Eurostat figures. With the assistance of the Dutch banks and their Fatca mandate, perhaps around an additional 6,000 more USCs, born in the US, can be outed who have not self-identified as USCs to Eurostat. It will be more difficult for the Dutch banks to smoke out the approx. 14,000 second-generation USCs because they were likely not born in the US.
@George
1.) One third of US born individuals in England and Wales do not have a valid US Passport and do not present themselves as as being US. The super super majority of these would not have a CLN as its simply impossible by the historical record.
** Agree **
2.) A very large percentage of US Passport holders in England and Wales do not file with the IRS.
** Yes, but consider that a family of USCs (husband, wife, minor children) might file only one US Federal tax return, i.e., the percentage of non-filing US passport holders who should be filing is likely lower than the gap might suggest. **
3.) A significant number of 50,855 US born individuals in England and Wales carry a British or other non-US passport as their sole passport.
** Agree (and there will be more in Scotland) **
4.) Tens of thousands of good people are going to have an OMG moment.
** Absolutely **
5.) Extrapolating from your SE England data, 144,943 US born individuals live somewhere other than the Southeast, with the southeast being the comparatively wealthy area.
** Which also means that USCs have contaminated practically every bank and branch in the UK. **
@ Innocente – I’ve been reading your various posts here – – very interesting findings!!!
I hope you have forwarded this extensive information to other allies like American Citizens Abroad & Jim Bopp to aid in their current efforts. And/or anyone in the US media to spread the word more broadly that we are not all wealthy “myths”!
@Innocente…..thinking more about England/Wales.
It is likely that 119,229 who “Identify themselves” as US Citizens make up most of the US Passport Holders 126,330.
That means that around 50,855 neither identify themselves as US or carry a US Passport even though they were born in the USA. It is likely that they carry a UK Passport.
There were 31,599 tax returns filed from the UK. For discussion, assume they all came from England/Wales.
It is unlikely that those tax returns represent any of the 50,855 who even though they were born in the US neither carry a US Passport nor identify themselves as a US person. These persons want nothing to do with America and are not “going back.”
HM Government signed an IGA with the USA where the sole practical method of “fixing your problem” is to renounce and get a CLN.
IF the US Embassy in London processed two renouncement per hour, every working hour of every working day, it would take TEN YEARS to process those fifty thousand British Citizens.
As a condition of signing that agreement, HM Govcernement should have required a simplified manner in which those fifty thousand affected persons who want nothing to do with the USA to escape its talons.
A clarity moment is at hand that CBT absolutely can not work when relinquishment must be proven instead of the old way of being not the intent.
@George: Thanks for the insightful comment on the needed through-put to process 50,000 renunciations in the UK. USCs in Switzerland seem to be on the renunciation frontline so a quick comment. In January it was reported in a magazine that the US Embassy in Berne had a one-year backup and that some were making trips to other US embassies in nearby countries to renounce (which the author did). A recent post on a message board here said that he had observed four renunciations in a two-hour wait at the Berne embassy – this might suggest around 10 renunciations a day there, or 2,000 per year, in that single embassy.
As you allude to, the renunciation through-put issues at the State Dept’s embassies may not have been thought out by Treasury and DOJ in designing the general CLN process. They may have to come up with a simplified process, perhaps web-based or by post, if the wave of renunciations turns into a tsunami.
@LM: Appreciate the bon mots. It has been challenging to find statistics on incomes of Americans in Europe possibly due to the fact that USCs are generally a smallish immigration group in most European countries, and therefore not studied by governments or academics. Americans also seem to be able to compete in the job marketplace which may reduce academic and political interest in them since they are less likely to be on social welfare than other immigrant groups.
@Innocente, “USCs in Switzerland seem to be on the renunciation frontline so a quick comment.”
You guys are definitely on the front line. While I think the practices which are occurring in CHF are likely not to be exported and practiced in other nations, I also think it is wise to consider what happens in CHF to be a warning of what might come elsewhere. Plan for the worst, pray for the best…..
You have done a great job in pointing out with the statistics that the reality of ex/former pats is not champaigne swilling on the Riviera or shopping at Harrods and having the valet park your Bentley.
As we put together by accident, the super duper majority of ex/former pats in the UK live in the North, the Midlands, the West. These areas are nice and have their own joy but that niceness and joy has nothing to do with excessive wealth.
In regards to the CLN process I think I have put some pieces together. The CLN process that we have in 2014 was designed for the reality that existed in 1974. It was designed for the occassional former/ex-pat that applied for a US Passport overseas who had committed an expatriating act. I assume in the old days that a CLN was issued without you asking for it and without you stepping foot in a consulate!! You applied for a passport and instead received a CLN. 🙂
The problem with all this goes back to the Supreme Court which gave teflon coating to US Citizenship. Had the Court not interferred we would not have a FATCA problem today. Unfortunately after the Court decision was reached, the US Congress did not revisit 8 US Code and come up with a fix.
Seriously, after the Court decision a reasonable amendment to 8 US Code could have included an amendment that while the presumption was retention of citizenship that you needed to file a Certficate of Retention of Nationality (CRN). This is similar to South Africa and I now belive Germany. They could have then added a proviso that if you did not timely file a CRN you could get a backdated CRN by showing that you had acted in a manner to retain your US Citizenship by voting, filing tax returns etc etc….
I keep wondering of there is a will in Congress where we could get them to throw us into that tar pit. 🙂
In spite of its high taxes, Germany continues to be a magnet for immigrants, including from the USA. Official statistics for the 1st half of 2014, released today, show that 13,808 people emigrated to Germany from the US. Excepting war-torn Syria, US emigration to Germany exceeds all other non-European countries:
https://www.destatis.de/DE/PresseService/Presse/Pressemitteilungen/2015/02/PD15_057_12711.html;jsessionid=58D5A3D58C10656A4DCF5283F8F72973.cae1
Annualizing the total of all immigrants to Germany for the first six months of 2014 yields 1.333 million for full-year 2014. Even though Germany, with a population of 80 million, is far smaller than the US with its population of 315 million, it is attracting about the same number of immigrants. Germany may indeed be the new land of unlimited opportunities.
As is well known, USCs in Switzerland have been hit hard by Fatca and pre-Fatca, the US-Swiss Tax Programme, which have caused banking and employment problems to American citizens living here. An analysis of USCs on social welfare for the period 2011 to 2013, however, shows only an immaterial increase in the percentage of American citizens on welfare:
2011:
USCs on welfare: 224
USCs on welfare as a % of USCs: 1.2%
2012:
USCs on welfare: 252
USCs on welfare as a % of USCs: 1.3%
2013:
USCs on welfare: 268
USCs on welfare as a % of USCs: 1.3%
As a benchmark, citizens of selected other developed countries have similar percentages on welfare:
2013:
Canada: 0.9%
Netherlands: 1.4%
Sweden: 1.2%
UK: 0.9%
An update of this analysis might be useful when 2014 welfare figures by nationality become available.
Source:
Sozialhilfe – Detaillierte DatenTabellen und Datenwürfel
http://www.bfs.admin.ch/bfs/portal/de/index/themen/13/03/03/dos/04.html
Ausländische Sozialhilfebezüger/innen nach Herkunftsland
je-d-13.04.03.04.09.01.xls
UK Employment Statistics show that fewer US citizens are employed in the UK at year-end 2014 vs. 2012. Although I would hesitate to conclude that this trend is real, and not due to statistical sampling errors, we may be observing an actual decline in the number of USCs working in the UK. Another explanation is that USCs are going into hiding.
– The rate of employment of USCs remained fairly constant at about 72% during this two-year period.
By country of birth: USA
(in 1000s)
Oct-Dec 2012: 130
Oct-Dec 2013: 100
Jan-Mar 2014: 97
Apr-Jun 2014: 102
Jul-Sep 2014: 83
Oct-Dec 2014: 93
By nationality: USA
Oct-Dec 2012: 93
Oct-Dec 2013: 70
Jan-Mar 2014: 80
Apr-Jun 2014: 86
Jul-Sep 2014: 68
Oct-Dec 2014: 81
Source: Table “EMP06 Employment levels and rates by country of birth and nationality” at this link:
http://www.ons.gov.uk/ons/publications/re-reference-tables.html?newquery=*&newoffset=25&pageSize=25&edition=tcm%3A77-350752
This is an update on my post above from July 29, 2014:
“Another interesting statistic regarding Belgium and the Netherlands is the number of cross-border employees who reside in one country and work in the other. Belgium has higher income tax rates than the Netherlands but lower employee social charges. Residents of Belgium who work in the Netherlands pay the Dutch social charges (where they work), which are higher than the Belgian, and pay Belgian income taxes (where they reside), which are higher than Dutch income taxes. Conversely, residents of the Netherlands who work in Belgium pay the lower Belgian social charges and the lower Dutch income taxes. Using Kirsch’s reasoning that people try to optimize their tax rates through migration, it would then be expected that more Dutch would work in Belgium (and continue to reside in the Netherlands) and fewer Belgians would work in the Netherlands (and continue to reside in Belgium). The statistics show the opposite:
Belgian residents working in the Netherlands: 13,256 (1995)
Dutch residents working in Belgium: 3,600 (1995)”
Update:
Eurostat tracks cross-border payments described as “Primary Income: Compensation of Employees”:
2012:
Netherlands cross-border wage payments to Belgians: Eur 1.441 billion
Belgian cross-border wage payments to Dutch: 220.0 million
While in 1995, 3.7 more Belgians worked in the Netherlands than Dutch worked in Belgium, the 2012 statistics suggest that 6.5 more Belgians work in the Netherlands than vice-versa, using wage payments as a proxy for number of employees.
Kirsch’s reasoning that people try to optimize their tax rates through migration continues to not hold for Belgians working in the Netherlands. In fact, over the past 17 years, Belgians increasingly work in the Netherlands, probably because there is work there, in spite of the fact that they take a beating on taxes.
Source: Eurostat table: Personal transfers and compensation of employees, bop_rem6
@Innocente, “Another explanation is that USCs are going into hiding.”
Hiding is the wrong term……
My own experience in that neck of the woods is people are identifying less as American.
Growing up in America I remember people claiming they were half Iris, quarter Canadian and quarter German, when in reality they were none of the above and solely 100% US Passport Grade AA.
Personally then, I thought it was insane…….
I think ex-pats worldwide are shaking that fraction mindset…….if you solely have a US Passport then you are American…….something you can not hide from legally or morally. But if you hold a French Passport and live in the EU you are first a French Citizen and then second a EU Citizen and who the hell cares what some other foreign country calls you.
Hmmm an EU Legal question….. What would an EU Court consider to be the nationality of an Irish/French Citizen resident in France? If an EU Court would disregard the Irishness they would conversely ignore the USness.
With respect to IGAs under EU law, I keep getting back to….
1. Asking place of birth is identical to asking religion and is therefor discriminatory.Maybe asking a YES/NO question…Where you born in the United States and/or are you a US Citizen?
2. Asking by way of example in Ireland, Are you an Irish Citizen or a legal Irish migrant is a valid question.
3. In regards to number 2, a followup question would be What is your nationality and immigration status?
4. I think it would be lawful to ask;
A.) Are you tax resident in the United States?
B.) List all countries where you are considered resident?
Eurostat recently published statistics called “Main citizenships of persons granted first residence permits”. With 171,800 new resident permits for 2013, it provides 7.3% of the immigrants from non-EU and non-EFTA countries and is number 3 after the Ukraine and India. It is the only developed country consistently listed by EU/ EFTA countries (which is also due to its size).
Prof. Kirsch might research whether EU/ EFTA have higher taxes than the US and ponder why Americans might wish to reside abroad if their tax burden increases:
http://ec.europa.eu/eurostat/statistics-explained/index.php/File:Main_citizenships_of_persons_granted_first_residence_permits,_in_2013_V5.png
To help Prof. Kirsch in his research, Eurostat statistics show that Americans emigrate to EU/ EFTA countries primarily for Education, Employment and Other Reasons:
http://ec.europa.eu/eurostat/statistics-explained/index.php/File:Main_groups_of_citizenship_granted_a_first_residence_permit_in_the_EU-28_and_main_EU_Member_States_issuing_the_permit,_by_reason,_in_2013_V3.png
@Innocente, homelanders like to selectively pick what taxes to compare in declaring another country a tax haven.
I have run into homelanders that consider the UK a tax haven because and by way of example how Boris J. did not have to pay capital gains tax on the sale of his home.
They neglect to mention that the UK does NOT allow deduction of mortgage interest that the US Tax Haven does allow!!
Previously I had been of the mindset that CBT could remain IF dominant nationality or the master nationality rule applied.
That position has now been changed because CBT does not flat out work in the 21st Century unless you look at both cost of living and total tax impact on where you live. CBT is franky absurd in the modern world as long as you are taxed somewhere.
It IS a human right that everyone is entitled to a nationality. It is also a human right that you are taxed once and in one country.
Statistics Netherlands released a report on residents of Germany and Belgium who cross into the Netherlands to work, approx. 40,000 from each country.
As noted above, Belgians who work in the Netherlands get the worst of both worlds: they must pay the comparatively high Dutch social charges, charged where they work, and the comparatively high Belgian income taxes, charged where they live. Even though they take a social charge and tax beating, this obviously does not stop Belgians from working in the Netherlands. According to the report, “Manufacturing is the main sector for workers commuting from Belgium.”
My related post from March 16, 2015 above suggests that 6.5 more Belgians work in the Netherlands than Dutch work in Belgium. Generally, the Netherlands has a stronger economy than Belgium.
I have not researched the situation of Germans working in the Netherlands to determine whether they are tax and/ or social charges advantaged, disadvantaged or have a neutral situation.
http://www.cbs.nl/en-GB/menu/themas/arbeid-sociale-zekerheid/publicaties/artikelen/archief/2015/80-duizend-werknemers-uit-belgie-en-duitsland.htm
@Innocente: interesting. I looked it up following your comment, and the big notion in Europe is that of fiscal residence: you pay where you reside, i.e. residence-based taxation.
Note that some inter-country agreements (Luxembourg-Belgium?) do have a system where workers are taxed in country where they work, not where they live).
@Fred:
Thanks for feedback.
According to EU Parliament document from 1997:
“Belgium-Netherlands:
Taxation in the State of residence if employment and residence are in the frontier zone – exception: Dutch nationals resident in Belgium since 1970 are still taxed in the Netherlands (place of work)
Very high taxation in Belgium and heavy social contributions in the Netherlands (31.2%), the latest increase in which has recently been offset by a reduction in the rate of direct taxation (7.05%): Belgian frontier workers pay twice for social security.”
– Note the beneficial treatment of Dutch citizens residing in Belgium, i.e., they are treated as residing in the Netherlands.
“Netherlands-Germany
Direct taxation and social contributions in the State of the place of work.”
My point regarding residents of Belgium working in the Netherlands is that they have a very unfavorable tax and social charge situation vs. residents of Netherlands working in Belgium, but that significantly more Belgian residents work in the Netherlands than vice-versa in spite of that. This is likely because there are jobs in the Netherlands and the Belgians have not moved like the law professor Kirsch would seem to predict. People are “stickier” to where they live than the theoretician Kirsch seems to believe.
See Annex 3 for an overview of these cross-border agreements in the EU:
http://www.europarl.europa.eu/workingpapers/soci/w16/summary_en.htm#Annex1
Re-post to place this comment with other statistics-oriented comments:
An ongoing myth is that Americans abroad are “fat cats”. Below are median taxable income statistics for the city of Zurich (2012) for the 12 largest nationalities. These statistics suggest that Americans in Zurich can compete but are not “fat cats”. As an example, the median taxable income for a French married couple is nearly 50% higher than for an American married couple in the city of Zurich:
Married couple (CHF):
France: 119’100
UK: 104’400
Germany: 100’000
Switzerland: 80’000
Austria: 80’000
USA: 80’000
Spain: 70’500
India: 65’200
Portugal: 61’400
Italy: 60’100
ex-Yugo: 45’000
Turkey: 41’800
Single (CHF):
UK: 67’500
Germany: 60’000
France: 53’200
USA: 50’000
Austria: 44’350
Switzerland: 40’000
Spain: 39’300
Portugal: 36’700
India: 35’000
Italy: 33’900
Turkey: 22’000
ex-Yugo.: 20’000
http://blog.tagesanzeiger.ch/datenblog/index.php/7978/die-gymiquote-der-deutschen-ist-doppelt-so-hoch-wie-jene-der-schweizer