120 thoughts on “MUST READ paper defending FATCA and Citizenship based taxation”
Anyone have his email address or twitter account? Apparently he doesn’t understand that we are being triple taxed! 1. US taxes. 2. taxed in the country we reside and 3. if we need US services we yet pay again at the Embassy. Apparently he hasn’t read any of our lists of questions about FATCA either.
@Taxconfuzaled…
that would be a good idea to write him. I started from page 41…
I found myself not too happy .
“The taxation of citizens abroad can also be supported based on neutrality
concerns—in particular, the effect of tax rules on where a citizen chooses to live.
As I previously observed:
A citizenship-based tax regime minimizes the role of taxes in a
citizen’s residency decision. If a citizen is subject to U.S. tax
regardless of where he lives, his residency decision will be
governed primarily by … nontax factors …. In contrast, a tax
system that does not use citizenship as a basis to tax might
significantly impact a U.S. citizen’s choice of where to live.”
First, this argument presumes that the government has any business trying to influence where individuals choose to live, either in the direction of neutrality or not.
Second, if neutrality is a goal, then citizenship-based taxation as currently practiced discourages citizens from living abroad, because of all the problems we are so familiar with. Thus the goal of neutrality would argue against the present system.
My blood started boiling after this comment:
“A citizenship-based tax regime minimizes the role of taxes in a citizen’s residency decision. If a citizen is subject to U.S. tax regardless of where he lives, his residency decision will be governed primarily by … nontax factors …. In contrast, a tax system that does not use citizenship as a basis to tax might significantly impact a U.S. citizen’s choice of where to live.”
It’s going to take me awhile to finish the paper, with all the blood pressure breaks I’m going to have to take. While reading what I have so far, I kept thinking about what Tina Turner said about her reason for renouncing US citizenship – that she wished to “clarify the situation”. By living abroad and not renouncing we are apparently saying that we agree with every kind abuse heaped upon us at the whim of US lawmakers.
I suppose many homelanders will be happy with the renunciations. Once cleansed of the riffraff, there will only be ‘true Americans’ living abroad. In fact, the US should make even greater efforts than they have to make our lives miserable, so that only the staunchest remain US citizens – like wearing a hair shirt to prove your religious devotion.
I just read about 75% of the article and quit because this is getting bad or my health. There’s SO much not addressed….like the concepts of PFICs and “foreign trusts” just to begin. This actually very strongly reinforces my belief that renunciation is the way to go and just be rid of this navel gazing discussion.
I think these “intellectuals” in this whole discussion are in for a rude awakening when renunciations really start happening. I was at a social event this weekend, with 3 known-to-me Americans present. The first one said she renounced last summer (a high-5 moment I might add), the second has an appointment to renounce, and the wife of the third approached me in a very serious manner saying that I needed to talk to her husband as he needed info on how to renounce. What does this tell you……..?
Badger could take on Kirsch (others too) and I admire your resolve to read through his latest attempt to justify the unjustifiable, Bubblebustin, but he would never be persuaded to change his mind. Best to let this mad dog stay in his kennel chasing his tail and put our energy into something doable, like waking people up and pushing our Canadian politicians to do the right thing. If Americans in the homeland won’t fix CBT then Americans living outside the madness will eventually have to extricate themselves by whatever means they can. BTW, I downloaded the pdf and when I had to give it a file name I just put Kirsch Krap on it. I read a few passages but I doubt I’ll read the whole thing.
@Em
Good file name.
So, this guy is probably 24 years old? When I was 19, I wrote a paper about a World Justice system. At 24, I had an interview with the CIA.
The difference with this guy though, is that it will likely land him a job with a compliance firm, an OVDP defense lawyer, or the beast itself.
I was particularly amused by the bit where he argues that the US should not charge for evacuating its citizens from war zones because it undermines the argument for CBT.
Kirsch writes:
“More generally, the creation of a system where significant numbers of
U.S. citizens (or even somewhat smaller numbers of athletes, entertainers, or
other high-profile citizens) can voluntarily excuse themselves could further
undermine the cohesion of American society, creating the perception that some
citizens are exempt from a fundamental obligation of citizenship—the payment of
taxes—while others are not.”
Um, no: under residence-based taxation, the payment of taxes is not a fundamental obligation of citizenship, but rather a fundamental obligation of residency.
Basic logic error, there.
His arguments could have been written by the Stasi or any other regime that seeks to keep its citizens inside of a border.
@bubblebustin, yes they treat citizenship like a cultish religion rather than a birth right. CBT seeks to punish citizens for living abroad thus keeping them in or making them suffer should they leave.
@Johnson, almost everything undermines the argument for CBT which is why most nations don’t do things that way. Now that I know he’s only 24 it explains the simplicity, black/white thinking of his argument.
Under mitigation measures, he mentions that he is against punitive laws such as the Reed Amendment and the proposed Ex-PATRIOT Act. Ok, that’s nice.
Beyond that, what? He makes some vague suggestions to be “nicer” to Americans abroad, but doesn’t make much in the way of concrete policy suggestions. He references Dick Harvey’s paper (which I thought contained an excellent list of such possible measures to increase the relative fairness of CBT, if CBT has to persist), but Kirsch doesn’t seem to contribute much to that discussion himself.
@Atticus:
He’s not 24, he got his bachelor’s degree in 1985. Probably around 50.
The Treasury/IRS ‘myth creators’ will love him.
Kirsch is just another apologist for tyranny.
@Johnson, you wrote:
“I was particularly amused by the bit where he argues that the US should not charge for evacuating its citizens from war zones because it undermines the argument for CBT.”
Just as the Foreign Earned Income Exclusion undermines the argument for CBT.
The hero is the king of exploiting taxation without representation:
he worked in the U.S. Treasury Department’s Office of Tax Policy, where he served as the Associate International Tax Counsel. While at the Treasury Department, he was a member of numerous U.S. delegations to international tax treaty negotiations. http://law.nd.edu/directory/michael-kirsch/
I know that it is hopeless writing to advocates of crime living in America. Nevertheless, I wrote:
Dear Michael,
On October 28, 2013, you published a unique article titled: “Revisiting the Tax Treatment of Citizens Abroad: Reconciling Principle and Practice”. On page 38 of that article, you wrote:
“It is understandable that, as an initial reaction to FATCA and in the absence of further guidance regarding its implementation, some FFIs might have taken steps to try to avoid its reach—e.g., attempting to eliminate all U.S. citizen clients—rather than face the possibility of having to interact with the IRS and face potential sanctions under U.S. law” http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2346458
I don’t know if you are familiar with US law, but in America it is a federal crime to discriminate against an individual based on their national origin:
By stating that it is “understandable” that banks discriminate against Americans due to their national origin as a result of FATCA, you acknowledge that FATCA is indeed a US federal crime. Given that I was forced to renounce US citizens in response to US federal crimes, don’t you think that the US government should, at the very least, apologize for its obviously criminal behavior against its unrepresented diaspora?
Sincerely,
Former US citizen
@bubblebustin wrote
“Just as the Foreign Earned Income Exclusion undermines the argument for CBT.”
Advocates for CBT often parade the FEIE as a symbol of how generous the US is in treating its expats and how the rules don’t affect the little guy. Certainly without the FEIE, filing would become much harder for the vanilla moderate salary and bank interest type of USP I know quite a few USPs who simply update the numbers on their 1040, Schedule B and 2555 each year and submit. They don’t see it as a big deal.
So I would say the FEIE helps CBT advocates because removing it would antagonise and radicalise this currently complacent group of USPs. The US congress keeps trying to shoot itself in the foot by removing the FEIE. They’ve failed thus far but it seems only a matter of time before their aim improves.
I did a very quick overview of this paper – believe me, that’s all it’s worth.
Some observations:
1. I have never seen somebody write so much and say so little.
2. It is really more of a “book report” than an argument any specific kind of tax policy. He is just reiterating the positions of others.
3. His justification of citizenship-based taxation is based on the following assumptions:
A. The default presumption is that a citizen is the property of the state. He does recognize the right of expatriation (freedom from slavery) but he does feel that the slave owner should be compensated (exit tax).
B. There are two basic obligations of citizenship/servitude: paying taxes and serving in the military
We must consider the rest from the context of this statement:
“A citizenship-based tax regime minimizes the role of taxes in a citizen’s residency decision. If a citizen is subject to U.S. tax regardless of where he lives, his residency decision will be governed primarily by … nontax factors …. In contrast, a tax system that does not use citizenship as a basis to tax might significantly impact a U.S. citizen’s choice of where to live.”
Obviously, he doesn’t understand that people have to:
– pay taxes in their country of residence;
– that other countries have different methods of taxation which mean that the credits against foreign taxes are not available except in limited cases.
– he assumes also that U.S. citizenship would be the dominant citizenship no matter where the U.S. citizen lives. It’s as though, he thinks: Sure you can pay your foreign taxes after you have paid your U.S. taxes.
– he clearly has no sense of the “terror experienced by U.S. citizens abroad” from the fear of penalties, reporting requirements, etc.
– not a mention that I could see of the life restrictions associated with citizenship-based taxation
But, the good news is that he acknowledges that the “offshore jihad” disproportionately affects U.S. citizens abroad
The good news – yes there is good news – is that I get the impression that he is arguing for a less punitive exit tax.
But the bottom line is this:
The fact that this is a NEW paper which will be published in 2014 speaks volumes about the “Homelander Mindset” and its not pretty. From the homelander point of view the U.S. is the beginning, the middle and the end of awareness.
This paper is one of the best arguments I have seen for renouncing U.S. citizenship. It will also be read in future history and sociology classes as a demonstration of the breathtaking ignorance, arrogance and outright stupidity of Homelanders. The reason this history will be written is because ladies and gentlemen:
Those of you who are reading this post and comments are privileged to have a “ring side seat” to the fall of the American Empire.
Get the FATCA Memorial and the FBAR Museum built. They will be the surviving symbols of the American Empire.
@USCitizenAbroad:
I agree it is remarkably wordy for what little he has to say.
It is actually a pretty good summary of other peoples’ positions, but does not contribute much original thought of his own.
I was much more impressed with Dick Harvey’s paper. He actually seems to understand the problems faced by Americans abroad in trying to live normal lives (even if he helped create some of those problems himself), and makes concrete proposals for improvement.
SwissPinoy, wow, that was a short, but to the point message, that sums it up, I may write a short one instead of a long one, he is not really worth the time, but he obviously has no idea what he is talking about, and I think I might just tell him just that…
Kirsch doesn’t seem to have any commentary about all the high worth individuals renouncing their US citizenship other than about the exit tax and a small number of people has renounced.
Look Professor the reality is rich people are voting with their feet, recent examples include Michael Flatley ($300M net worth), Tina Turner, Eduardo Saverin, and I’m sure there are many others.
You lose a Michael Flatley ($300M) that’s like losing 3000 normal wealth citizens (assuming each has a paltry net worth of $100,000).
We ought to be looking at losing citizens from that point of view. So for example the month Eduardo Saverin renounced the true economic cost to the US was whatever the figure was that month plus 3400 ordinary souls.
But more importantly these people wield influence and decision making about investments. The US is hungry for inward investment but seems to be making it more difficult everyday to make the case .
Yes Professor we do live in a globalised world, but one that increasingly does not need the US for everything.
Another example how economic power is shifting away is a statistic I saw yesterday. By the year 2100 the population of the world will be 11 billion (up from 7 today). Nine billion of those people will live in Africa and Asia with only 2 billion in Europe and the Americas.
That’s got to have an impact. And even if they income doesn’t increase, having 9 billion have not’s on your grandchildren’s doorstep is not a great possibility. If they become successful the US will be a minnow in a large pond. Either way US’s position is on the wane.
Your paper does not reflect even the near future reality.
The very first sentence of the abstract:
“In an increasingly mobile world, the taxation of citizens living abroad has taken on increased importance.”
Anyone have his email address or twitter account? Apparently he doesn’t understand that we are being triple taxed! 1. US taxes. 2. taxed in the country we reside and 3. if we need US services we yet pay again at the Embassy. Apparently he hasn’t read any of our lists of questions about FATCA either.
@Taxconfuzaled…
that would be a good idea to write him. I started from page 41…
I found myself not too happy .
@ Taxconfuzaled
https://law.nd.edu/directory/michael-kirsch/
This would be the man I believe.
EMAIL: Michael.S.Kirsch.1@nd.edu
“The taxation of citizens abroad can also be supported based on neutrality
concerns—in particular, the effect of tax rules on where a citizen chooses to live.
As I previously observed:
A citizenship-based tax regime minimizes the role of taxes in a
citizen’s residency decision. If a citizen is subject to U.S. tax
regardless of where he lives, his residency decision will be
governed primarily by … nontax factors …. In contrast, a tax
system that does not use citizenship as a basis to tax might
significantly impact a U.S. citizen’s choice of where to live.”
First, this argument presumes that the government has any business trying to influence where individuals choose to live, either in the direction of neutrality or not.
Second, if neutrality is a goal, then citizenship-based taxation as currently practiced discourages citizens from living abroad, because of all the problems we are so familiar with. Thus the goal of neutrality would argue against the present system.
My blood started boiling after this comment:
“A citizenship-based tax regime minimizes the role of taxes in a citizen’s residency decision. If a citizen is subject to U.S. tax regardless of where he lives, his residency decision will be governed primarily by … nontax factors …. In contrast, a tax system that does not use citizenship as a basis to tax might significantly impact a U.S. citizen’s choice of where to live.”
It’s going to take me awhile to finish the paper, with all the blood pressure breaks I’m going to have to take. While reading what I have so far, I kept thinking about what Tina Turner said about her reason for renouncing US citizenship – that she wished to “clarify the situation”. By living abroad and not renouncing we are apparently saying that we agree with every kind abuse heaped upon us at the whim of US lawmakers.
I suppose many homelanders will be happy with the renunciations. Once cleansed of the riffraff, there will only be ‘true Americans’ living abroad. In fact, the US should make even greater efforts than they have to make our lives miserable, so that only the staunchest remain US citizens – like wearing a hair shirt to prove your religious devotion.
I just read about 75% of the article and quit because this is getting bad or my health. There’s SO much not addressed….like the concepts of PFICs and “foreign trusts” just to begin. This actually very strongly reinforces my belief that renunciation is the way to go and just be rid of this navel gazing discussion.
I think these “intellectuals” in this whole discussion are in for a rude awakening when renunciations really start happening. I was at a social event this weekend, with 3 known-to-me Americans present. The first one said she renounced last summer (a high-5 moment I might add), the second has an appointment to renounce, and the wife of the third approached me in a very serious manner saying that I needed to talk to her husband as he needed info on how to renounce. What does this tell you……..?
Badger could take on Kirsch (others too) and I admire your resolve to read through his latest attempt to justify the unjustifiable, Bubblebustin, but he would never be persuaded to change his mind. Best to let this mad dog stay in his kennel chasing his tail and put our energy into something doable, like waking people up and pushing our Canadian politicians to do the right thing. If Americans in the homeland won’t fix CBT then Americans living outside the madness will eventually have to extricate themselves by whatever means they can. BTW, I downloaded the pdf and when I had to give it a file name I just put Kirsch Krap on it. I read a few passages but I doubt I’ll read the whole thing.
@Em
Good file name.
So, this guy is probably 24 years old? When I was 19, I wrote a paper about a World Justice system. At 24, I had an interview with the CIA.
The difference with this guy though, is that it will likely land him a job with a compliance firm, an OVDP defense lawyer, or the beast itself.
I was particularly amused by the bit where he argues that the US should not charge for evacuating its citizens from war zones because it undermines the argument for CBT.
Kirsch writes:
“More generally, the creation of a system where significant numbers of
U.S. citizens (or even somewhat smaller numbers of athletes, entertainers, or
other high-profile citizens) can voluntarily excuse themselves could further
undermine the cohesion of American society, creating the perception that some
citizens are exempt from a fundamental obligation of citizenship—the payment of
taxes—while others are not.”
Um, no: under residence-based taxation, the payment of taxes is not a fundamental obligation of citizenship, but rather a fundamental obligation of residency.
Basic logic error, there.
His arguments could have been written by the Stasi or any other regime that seeks to keep its citizens inside of a border.
@bubblebustin, yes they treat citizenship like a cultish religion rather than a birth right. CBT seeks to punish citizens for living abroad thus keeping them in or making them suffer should they leave.
@Johnson, almost everything undermines the argument for CBT which is why most nations don’t do things that way. Now that I know he’s only 24 it explains the simplicity, black/white thinking of his argument.
Under mitigation measures, he mentions that he is against punitive laws such as the Reed Amendment and the proposed Ex-PATRIOT Act. Ok, that’s nice.
Beyond that, what? He makes some vague suggestions to be “nicer” to Americans abroad, but doesn’t make much in the way of concrete policy suggestions. He references Dick Harvey’s paper (which I thought contained an excellent list of such possible measures to increase the relative fairness of CBT, if CBT has to persist), but Kirsch doesn’t seem to contribute much to that discussion himself.
@Atticus:
He’s not 24, he got his bachelor’s degree in 1985. Probably around 50.
The Treasury/IRS ‘myth creators’ will love him.
Kirsch is just another apologist for tyranny.
@Johnson, you wrote:
“I was particularly amused by the bit where he argues that the US should not charge for evacuating its citizens from war zones because it undermines the argument for CBT.”
Just as the Foreign Earned Income Exclusion undermines the argument for CBT.
The hero is the king of exploiting taxation without representation:
I know that it is hopeless writing to advocates of crime living in America. Nevertheless, I wrote:
@bubblebustin wrote
“Just as the Foreign Earned Income Exclusion undermines the argument for CBT.”
Advocates for CBT often parade the FEIE as a symbol of how generous the US is in treating its expats and how the rules don’t affect the little guy. Certainly without the FEIE, filing would become much harder for the vanilla moderate salary and bank interest type of USP I know quite a few USPs who simply update the numbers on their 1040, Schedule B and 2555 each year and submit. They don’t see it as a big deal.
So I would say the FEIE helps CBT advocates because removing it would antagonise and radicalise this currently complacent group of USPs. The US congress keeps trying to shoot itself in the foot by removing the FEIE. They’ve failed thus far but it seems only a matter of time before their aim improves.
I did a very quick overview of this paper – believe me, that’s all it’s worth.
Some observations:
1. I have never seen somebody write so much and say so little.
2. It is really more of a “book report” than an argument any specific kind of tax policy. He is just reiterating the positions of others.
3. His justification of citizenship-based taxation is based on the following assumptions:
A. The default presumption is that a citizen is the property of the state. He does recognize the right of expatriation (freedom from slavery) but he does feel that the slave owner should be compensated (exit tax).
B. There are two basic obligations of citizenship/servitude: paying taxes and serving in the military
We must consider the rest from the context of this statement:
“A citizenship-based tax regime minimizes the role of taxes in a citizen’s residency decision. If a citizen is subject to U.S. tax regardless of where he lives, his residency decision will be governed primarily by … nontax factors …. In contrast, a tax system that does not use citizenship as a basis to tax might significantly impact a U.S. citizen’s choice of where to live.”
Obviously, he doesn’t understand that people have to:
– pay taxes in their country of residence;
– that other countries have different methods of taxation which mean that the credits against foreign taxes are not available except in limited cases.
– he assumes also that U.S. citizenship would be the dominant citizenship no matter where the U.S. citizen lives. It’s as though, he thinks: Sure you can pay your foreign taxes after you have paid your U.S. taxes.
– he clearly has no sense of the “terror experienced by U.S. citizens abroad” from the fear of penalties, reporting requirements, etc.
– not a mention that I could see of the life restrictions associated with citizenship-based taxation
But, the good news is that he acknowledges that the “offshore jihad” disproportionately affects U.S. citizens abroad
The good news – yes there is good news – is that I get the impression that he is arguing for a less punitive exit tax.
But the bottom line is this:
The fact that this is a NEW paper which will be published in 2014 speaks volumes about the “Homelander Mindset” and its not pretty. From the homelander point of view the U.S. is the beginning, the middle and the end of awareness.
This paper is one of the best arguments I have seen for renouncing U.S. citizenship. It will also be read in future history and sociology classes as a demonstration of the breathtaking ignorance, arrogance and outright stupidity of Homelanders. The reason this history will be written is because ladies and gentlemen:
Those of you who are reading this post and comments are privileged to have a “ring side seat” to the fall of the American Empire.
Get the FATCA Memorial and the FBAR Museum built. They will be the surviving symbols of the American Empire.
@USCitizenAbroad:
I agree it is remarkably wordy for what little he has to say.
It is actually a pretty good summary of other peoples’ positions, but does not contribute much original thought of his own.
I was much more impressed with Dick Harvey’s paper. He actually seems to understand the problems faced by Americans abroad in trying to live normal lives (even if he helped create some of those problems himself), and makes concrete proposals for improvement.
SwissPinoy, wow, that was a short, but to the point message, that sums it up, I may write a short one instead of a long one, he is not really worth the time, but he obviously has no idea what he is talking about, and I think I might just tell him just that…
Kirsch doesn’t seem to have any commentary about all the high worth individuals renouncing their US citizenship other than about the exit tax and a small number of people has renounced.
Look Professor the reality is rich people are voting with their feet, recent examples include Michael Flatley ($300M net worth), Tina Turner, Eduardo Saverin, and I’m sure there are many others.
You lose a Michael Flatley ($300M) that’s like losing 3000 normal wealth citizens (assuming each has a paltry net worth of $100,000).
We ought to be looking at losing citizens from that point of view. So for example the month Eduardo Saverin renounced the true economic cost to the US was whatever the figure was that month plus 3400 ordinary souls.
But more importantly these people wield influence and decision making about investments. The US is hungry for inward investment but seems to be making it more difficult everyday to make the case .
Yes Professor we do live in a globalised world, but one that increasingly does not need the US for everything.
Another example how economic power is shifting away is a statistic I saw yesterday. By the year 2100 the population of the world will be 11 billion (up from 7 today). Nine billion of those people will live in Africa and Asia with only 2 billion in Europe and the Americas.
That’s got to have an impact. And even if they income doesn’t increase, having 9 billion have not’s on your grandchildren’s doorstep is not a great possibility. If they become successful the US will be a minnow in a large pond. Either way US’s position is on the wane.
Your paper does not reflect even the near future reality.
The very first sentence of the abstract:
“In an increasingly mobile world, the taxation of citizens living abroad has taken on increased importance.”
Wow.