The Committee for a Responsible Federal Budget (CRFB) is currently having a nice little chat about how it can best use the Foreign Earned Income Exclusion to double-tax non-US economies.
The Foreign Earned Income Exclusion, it says, “is designed to prevent a US taxpayer who moves to a high-cost country from paying more taxes than a similarly situated taxpayer in the US, since the standard deductions are not adjusted for a higher cost country.” Oddly, it makes no mention of compensating individuals who pay more taxes in other countries so that everyone pays the same.
Since they allow comments and might publish mine, I contributed my 2 cents, for what it is worth:
In 2001, during the dot-com crisis, I couldn’t find work in the US and thus moved to Switzerland to work instead of collecting unemployment checks or food stamps. I did not move because of taxes or to pay less or more in taxes, but rather to earn money to pay debt interest, to buy food, to buy clothing and to buy shelter. I migrated to acquire the basic essentials required for survival.
11 years later, local banks warned me that they were rejecting Americans due to US policy, preventing me from refinancing my mortgage. In America, this is known as national origin discrimination and national discrimination is a US federal crime. Nevertheless, the VA and HUD stated that they do not assist Americans living outside of US jurisdiction who become victims of US federal crimes caused by US policy and American politicians showed no interest or concern in American issues beyond US borders.
Both of these mentioned issues are unknown to both sides of the argument and yet both are the core subject. Foreign policy like this should be created or heavily influenced by Americans living abroad who understand the issues. Stateside Americans will never understand the issue well enough to make fair judgments since they lack the foreign exposure. The great lack of expat influence on US foreign policy is the reason why the US continues writing foreign policy with damaging impacts.
The idea of opposing national origin discrimination is to prevent the creation of 2nd class citizens by treating everyone equally. When living in a country, one generally attempts to integrate to be one with country so that one will be treated equally as anyone else. With this policy, one is focusing on treating individuals unequally, discriminating against them in their jurisdiction due to their national origin. This creates a huge conflict for expats who want to be viewed and equally treated as locals. Unfortunately, I lack the words in explaining this conflict properly. The best way for a stateside American to understand this is to move outside of US jurisdiction so that they can then learn to understand the practice of national origin discrimination through its implementation by US policy. It is fun to say that everyone should be taxed equally, but impracticable on a global scale since no jurisdiction is equal to US standards.
The idea of migration is generally to work instead of relying on government aid. Dual citizenship, commonly misunderstood by the US government, simplifies this process by making it easier for individuals to work where their skills are needed. I saved the US government money by moving to a low tax jurisdiction which needed my skills that America didn’t want. Yet, the US government wrongly views this as being a “cost” since it doesn’t understand the core issues of migration and citizenship. This “cost” view of citizenship conflicts with the popular “good riddance” opposition against dual citizenship which commonly argues that expats are not worthy Americans. The services that Americans abroad provide to America are invaluable and generally not recognized by the homeland.
Living outside of America, I do what any migrant to America does or should do, and that is to integrate, being a part of the nation who’s services one uses and who’s protection one needs. Being a part of one’s habitat nation means opposing 2nd citizen status, which requires opposing national origin discrimination, just as such is opposed by US federal laws. Integrating and respecting US federal laws thus requires one to oppose discrimination caused by US policy and such opposition, under existing conditions, obligates one to renounce US citizenship since one cannot be a 2nd class citizen in violation of federal US laws prohibiting such. A local of a jurisdiction must treated the same as any other local of that jurisdiction, regardless of national origin/citizenship.
Thus, I am no longer an American citizen today because I obeyed and respected US laws while complying with the interests of US policy makers who do not understand the true consequences of US policy outside of US jurisdiction. Several days ago, my son, with his near 500 years of American heritage, was born without US citizenship due to this confliction of US policies.
Something like this should never happen. No real American patriot would allow this if they understood the situation. America must make every effort to support and assist its citizens living abroad, especially when renunciations are irrevocable, when they have no representation, when they are discriminated against by US policy, when they are not treated the same as any other American, when it seeks to double-tax their earnings, prevents them from migrating with exit taxes, burdens them with filing complications and even threatens them with banishing.
Let’s face it, folks. US policy makers are just not qualified to discuss US foreign policy. This whole discussion is a joke. My advice to US politicians is for them to become expats so that they will gain a better understanding of this topic. Until then, abolish foreign policy and focus on local matters.
Otherwise, Swisspinoy, its nice that you can move on as others can. I’m envious of your sense of home.
Many of the rest of us can’t do it—for one reason that we don’t have a sense of home—our life overseas is just another workplace.
There are a small number of people that know it (renunciation) is an option now, who have a conscious choice, knowing the alternative. And there are 7 million others overseas and 10-50 million immigrants who will be hit with $5000 minimum fines. Those that are on record as having been aware are looking at that 300% fine possibility.
I can actually envision the U.S.A. forbidding global CBT if its own assets are on the line but keeping its own CBT to continue to acquire other countries’ assets. The U.S.A. has been doing “hypocritical”, like forever, and totally getting away with it. Nothing is likely to change that. One example is its condemnation of Eritrea’s relatively benign “diaspora tax” while spreading and strengthening its own malignant CBT everywhere in the world. Another example is its vocal condemnation of the legal nuclear program in Iran and its utter silence about Israel’s huge stockpile of illegal nuclear weapons, acquired with a wink-wink okey-dokey from the U.S.A. (Kennedy was the last, perhaps only, president to object to Israel going nuclear.) Another example is the U.S.A. condemning other countries who are spying upon and suppressing peaceful protest, while spying upon and suppressing peaceful protest on its own turf. The list goes on and on. For the U.S.A., it’s always you are a bad, bad goose for doing that but I am the perfect gander even though I am doing the exact same thing (or worse) or condoning the exact same actions by my “friends”. Obviously the U.S.A. does not go for the sauce-goose-gander concept when there’s someone offending its hypocritical (non)sensibilities. You are never going to get the U.S.A. gander and grander than all to admit to hypocrisy. Sorry, I’m feeling rantish again today, after another night with another nightmare.
ACA made a submission called “The Section 911 Mirage” which is quite good factually, but what is missing from the ACA submission is the human factor. Comments on how CBT and FEIE affect US Persons living outside the USA and their families would help balance the discussion and put a human face on it. Don’t know why my comment did not post.
Swisspinoy and others are doing an incredible service—-after having rid themselves of the problem, leading protest activities against the problem which they have already personally solved for themselves. Kudos.
@ Steve Klaus
What and where is “The Section 911 Mirage”. Was that something to do with the ACA’s submission to the Ways & Means committee or CRFB? So far the only comment I see at crfb.org is a very good one by anonymous.
Swisspinoy and many others who are no longer ‘US persons’ have not simply washed their hands of the rest of us still trapped in the net. In fact, they are the ones leading the way while most ‘US persons’ have yet to awaken to the nightmare that Swisspinoy has already lived through. In Canada, the ones with the loudest anti-FATCA voices are the ones who are no longer ‘US persons’. At both the Ottawa parliament hill protest, and the TO protest held recently, the majority of the protestors were ex-‘US persons’.
Yep. I’ve noticed.
The rest of the world considers it unfathomable and doesn’t believe that it is all already happening. A small portion are indeed aware but in full hiding mode.
And then there are blessed in bliss with the NPR version of the expatriate life.
Speaking as Canadian US chattel, if Canada throws us to the wolves, there will be more and more ‘US persons’ fighting the fight. You can see the group in the know, growing larger every week, with new people like Gwen and Mike for example, coming on board. Its unfortunate, that we have to be at the point where our government has legitimized our doom, and we are conversing with the nice lady at the bank, before we become aware of our plight.
If we are lucky, the NPR listeners will be the first to be reported.
Here is the ACA link: http://americansabroad.org/issues/taxation/foreign-earned-income-exclusion-feie/
At ACA: http://americansabroad.org/issues/taxation/foreign-earned-income-exclusion-feie/
I like the final conclusion of the ACA conclusions the best:
“Move toward residence based taxation within the framework of general tax reform and eliminate the FEIE and FHE when residence based taxation is implemented.”
RBT! RBT! RBT! How can we get that drilled into the American psyche?
The site approved all of the many great comments!
The crfb.org comments are awesome! Maybe they will be inspiration for a more careful examination of the dirty rotten core of U.S. tax policy — CBT. We need to excoriate CBT and advocate RBT, every chance we get.
RBT! RBT! Should we make our mascot a frog?
RiBiT! RiBiT! — I could go for that, as long as it’s a Brock red frog with determined froggy eyes, shooting holes in CBT and FATCA. 🙂