Both….
Lynne Swanson does it again. Another fine piece. This time at the U.K Tax News with a global audience.
She frames the story by asking the key question, “What If Other Countries Adopted American Citizenship and Tax Laws?
It is actually a frightening idea, however in this world of copy-cat taxation policies with OECD’s GATCA arising out of the U.S. unilateral global imposition of FATCA, and the U.K ‘Sons of FATCA‘, it is question that needs more attention. And, she got it!
As I understand it, the article was also published as a letter to the editor in Tax News International (subscription only), the most widely read tax publication anywhere, with the largest audience of compliance experts including Treasury and the IRS.
The questions she asks, is also a question posed by the late Andy Sundberg who penned a piece on January 6th that did NOT get as wide distribution as Lynne’s article did. It paints the picture of a dystopian nightmare for a person laboring under the demands from multiple countries all claiming their citizenship taxation rights. It was posted in February of 2012, the early days of IBS existence. What is the Systemic Risk of Citizenship taxation to the World’s Economy?
Later that year, there was Arrow’s excellent article written in June of 2012. The accidental Kenyan: What would happen if the African nation copied U.S. tax policy? by Don Whiteley. He focused on the impacts on Obama, and it got good play in Vancouver and Canada.
And now Blaze has completed the trilogy for even a wider audience, and answers the key “What if” in a manner that anyone should be able to understand, unless, apparently, you are a U.S. Congressman.
With this piece you are now armed with 3 good articles to send to family and friends that “Don’t get it!”
@All
There has been much discussion of the advantages/benefits of U.S. citizenship and/or dual citizenship. As I mentioned in a previous comment, I have long since concluded that U.S. citizenship is an extreme disadvantage in:
A. A global world; and
B. A World that the U.S. is becoming less significant.
Those who believe U.S. citizenship is an advantage should read the following article that appeared in the New York Times – today December 26, 2013:
http://www.nytimes.com/2013/12/27/world/asia/american-held-by-al-qaeda-in-pakistan.html?partner=rss&emc=rss&smid=tw-nytimesworld
This man was kidnapped and has been in captivity for one reason only – his U.S. citizenship. Note that the U.S. has made no attempt to help him. He is now pleading to Obama for help:
And meanwhile, back at the ranch:
Drone Strike in Pakistan Was First to Be Launched by @BarackObama Administration on Christmas Day http://fdl.me/1aar4ze from @firedoglake
@ USCitizenAbroad
Maybe we should all make a video about being held captive by US CBT and FATCA. We are, after all, restricted in varying degrees from living a normal life outside the USA (even when that country outside the USA is our homeland) and threatened with serious consequences for form crime. We are not just myths. We are captives too. BTW, US foreign aid and development companies are sometimes CIA fronts and one objective of CIA operatives in Pakistan is to seek out potential drone targets. I’m not saying this is the case with Mr. Weinstein but it could explain the USG’s reluctance to overtly come to this poor man’s aid. I wish Obama had done some captive releasing on Christmas Day, instead of drone bomb unleashing. It would have been more in keeping with the spirit of Christmas.
Dash’s premise that US citizenship is beneficial for Americans abroad hangs on the increasingly weak justification of being US citizenship being “beneficial” for expats, which was used in Cook vs. Tait.
Most contemporary scholars agree that Americans living abroad are subject to a “citizenship penalty” due to the outweighing of the obligations vs. benefits of holding US citizenship while living abroad on a permanent or long term basis.
One has to look no further than comparing the situation of Americans living abroad vs. Brits, Canadians, Germans etc who live abroad. No other expats in the world are subject to the mistreatment that Americans abroad get from the homeland government.
@Em
You say:
Remember that ALL tax compliant U.S. citizens abroad are U.S. government Trojan Horse soldiers in their country of residence.
@Joe Blow
Yes, absolutely agree that all attempts to justify CBT are some variant of the Cook v. Tait “Government by its very nature benefits its citizens argument.” That may be true for some citizenships. Here is a poll on this question for U.S. citizens abroad:
http://poll.fm/41xlj
@ USCitizenAbroad
Yes, the Trojan horse analogy is good. Another one might be that CBT is slant drilling into other countries’ assets. FATCA is a brand new bit and the USA is making other countries pay for it.
As a good introduction to CBT, I would recommend the Tom Cruise movie Oblivion:
http://www.youtube.com/watch?v=V_PBWtV1kRI
It’s about a hostile power sucking the resources out of the planet earth. Seriously, the movie is instructive. The parallels to CBT are fascinating!
http://en.wikipedia.org/wiki/Oblivion_%282013_film%29
@Em
“He was free and clear to make a killing in his chosen land, without Canadian encumbrances.”
I may have been “free and clear” to do so but for most of my time in the USA I did NOT “make a killing”. Granted for the last 3-4 years I’ve been fairly compensated–not wealthy but fairly compensated–but I’m definitely playing catchup now for decades where I was not making much money.
For most of my time in the USA, I was underpaid and overqualified–but being underpaid and overqualified for my job was still better than the alternative in Canada which was simply to be unemployed, period. I think I may have posted on here that I’ve never had trouble finding work in the USA and that is true–but the work has NOT always paid well. But poorly paid work is a helluva lot better than no work at all–which is the deal other countries offered me.
Now don’t get me wrong–my finances have improved a lot in the last few years. But my quarter century in the USA has by no means been one uninterrupted string of financial successes. Of course, I would attribute part of the relative success of the last few years to the fact that more doors are opening for me since I became a US citizen–but I “get” that most Brockers aren’t persuaded by that argument.
I’m afraid you are guilty here of the same stereotyping of expats that, in the US, has led to CBT: that all expats are somehow wealthy FAT CAts. That stereotype is apparently untrue in the case of Brockers in Canada and it is also certainly true in Canada that not all Canadian expats are wealthy.
Well, the application of CBT in the FBAR is a bit unhealthy, eh? Know any US persons getting Executive jobs in Canada or elsewhere?
http://samuelclemmons.wordpress.com/2013/12/24/help-wanted-executives-u-s-persons-need-not-apply/
Em @ Dash
I just said you were free and clear to make a killing. It matters not whether you did. (Although it is the American dream, isn’t it?) The point is you could do whatever you did without the hassle of filing taxes with the CRA. The key words there were “free and clear”. BTW, stereotyping had nothing to do with leading to CBT. It has its origins in the Civil War as a punitive measure to keep Americans from fleeing the country.
@Em, this is why I decided to go ahead an renounce during 2013 because I fear, like Phil Hodgkins, that even more punitive rules will be introduced in efforts to put people off.
@Dash, I’m not saying that US citizenship is worthless. I believe that you had more job opportunities after you became a US citizen, because I know that practically all jobs in the US government and with government contractors specifically require US citizenship. There are many other advantages of US citizenship, even if compared with a green card, such as being able to vote in the US, to leave the US for extended periods without risk to the right to return, and to sponsor more relatives to immigrate to the US. But the point is that all of these things are related to living or working in the US, so they are only meaningful for residents. When I wrote that there is no financial advantage of US citizenship, I meant for nonresident citizens.
If you argue that nonresident citizens should pay more US tax than nonresident foreigners, shouldn’t resident citizens then pay more US tax than resident foreigners too? Maybe, but I argue that they already do, because if the “citizenship advantage” results in more economic opportunities, it results in more income and therefore more tax. See your own example, you have a better job now, so you must be paying more tax too. Your argument would make some sense if taxes were imposed as a fixed amount per person, but since federal taxes are already proportional to income (income and payroll taxes), any advantage is already reflected in taxes automatically. And better yet, by taxing income, the advantage is taxed when it is used, and not taxed when it is not, precisely and proportionally in each individual case. Additionally taxing the citizenship itself is an unnecessary oversimplification that leads to unfairness in individual cases where the “citizenship advantage” doesn’t exist (which I suppose is the vast majority of people). In my opinion, the words “citizen” and “alien” should be erased in the entire tax code.
For 1/2 a century I have been a Canadian citizen with Canadian-born parents and Canadian-born grandparents who told me I was lucky to be the only family member with a US birthplace. I never thought much about it, never seriously considered moving to USA, and never thought of myself as anything but a true Canadian. My unique birthplace, was little more than an interesting topic of conversation, that garnered comments like, ‘Oh cool, lucky you’.
I am not ‘Canadian’ anymore.
I am an: American living abroad, American living in Canada, American with untaxed foreign accounts in Canada, American tax cheat, American traitor who has deserted USA, American expat who doesn’t pay her fair share….
At best, I am a second class citizen of Canada, UNWORTHY of: RESPs, RRSPs (without going through annual form hell), TFSA’s, Canadian mutual funds, investment income/unemployment earnings/pension earnings/disability income that are not double taxed, tax free capital gains from the sale of the family home in Canada….
Thanks CBT!
And thank you FATCA for letting me know I was all these things all these years – not lucky, but cursed!
And thank you Dash, for finding a few advantages of being American (what were those again?) to make me feel a little better about the US tattoo on my Canadian butt!
back at it after spending a relaxing xmas break at a world renouned ski area.
my wife and i spoke to 10 or 12 people who were either unaware of the looming fatca crisis and were directed to this website. these people’s reactions were mostly nope we did not know we needed to file our taxes and good luck in us now letting uncle sam know who we are (unless the canadian gov’t caves and signs the iga)
to
a couple of people saying that they knew of friends who applied (i.e. came out of the woodwork) in either the 08 or 11 fbar (?) and saying that it cost them tens of thousands of dollars (paid to their accountants )to find out they owed no taxes but were then hit with penalities. and them saying they really wished they had done nothing and waited to see what would happen.
all the people i talked to i strongly suggested they contant minister flareity and their m.p. and let them know just how bad fatca will be for them.
i hope that we have not yet begun to fight this thing and still cling to the slim hope that our powers that be see the folly in their ways and tell uncle sam to do his own dirty work
Just in case anyone wonders about Whitecat’s reference to a tattoo on her Canadian butt:
http://isaacbrocksociety.ca/2012/06/30/the-property-of-the-usa-tattoo/
@dash
just where do you get off on saying something to the effect that were it not for working in america i would be unempolyed
and
that since you became an american you have made more money than not being an american.
most if not all the people i know here in canada are making a comfortable living. none of us are monitarly rich but well off in other areas of our lives.
that is great that over the last couple of years you are now being fairly compensated for what you do. and you obviously love living in the us of a
however why the heck should i who through no fault of my own (i was never told or notified ever on the any of the many trips to the us of a that i have taken over the past 25 years) be penalized for not knowing what i was required to file taxes.
my wife and i were beginning to plan our retirement years and that included spending a couple of months each year in the southern states. that has all changed now. we in fact have made the decision to never cross the border ever again.
if america only wants us for our tax dollars or fines then they can come looking for us cause i will be doing as little as possible to let them know where or who i am and then other warm climate countries can benifit from our retirement years
dash you seem to think that america is the greatest country in the world….which at one time it may have been…however now as it lashes out its citizens who like me did not know they were required to file taxes its world standing further shrinks in our eyes and we want nothing to do with it.
i am glad you finally found fisical sucess you so desired but please do not support the forcing on a group of people who really wanted nothing (i never really gave my us citzenship much of a thought for 25 years) to do with america down our mouths
It’s worth -16% in Singapore.
See calculation.
http://samuelclemmons.wordpress.com/2013/12/25/us-persons-are-not-competitive-in-the-world-employement-market/
@Petros, re: the property of USA tattoo on my butt, your post was before my time here (I never read it until today). Thanks for pointing it out.
Now, if someone could help me figure out how to remove the ugly spot painlessly, I am all ears. I wonder if Dash has any suggestions.
Dash probably thinks my tattoo is pretty!
Dash is probably tattooing his own butt right now 🙄
Hmmm … we seem to be seeing a bit of Dash backlash here. I hope he understands it is welling up from a pool of pain. I actually think he does. And I actually admire his attempts to defend CBT. We’ve been able to formulate some good anti-CBT and anti-FATCA arguments here and we need to make sure they go out the Brock door and into the media whenever an opportunity arises. Better yet, we need to make those opportunities arise if we can.
@Em,
Dash backlash? Or CBT backlash?
How can you admire anyone who, after hearing countless arguments that show how harmful and unjust CBT is, is still attempting to defend it? Personally, I think Dash suffered some discrimination job-wise because he is not American, and has a bone to chew. Why else would he so stubbornly refuse to see the reality of the immorality of CBT in principle, as well as in practice – assuming he doesn’t make his living from the compliance industry?
You are right though, about taking advantage of the media opportunities that present themselves, and I have no doubt that media reads here, so Dash has – whether he intended to or not – done non-US residents, afflicted with the US curse, a favour.
A perspective from Russia Today on the Warren Weinstein plea to Obama – you know, a plea to help this poor U.S. citizen abroad who was kidnapped because he was a “U.S. citizen abroad”.
This should be read in conjunction with the Petros post discussing the U.S. response to the arrest of Raymond Allen Davis in Pakistan (the U.S. was trying to secure his release).
http://isaacbrocksociety.ca/2013/12/21/united-states-diplomacy-requires-a-generous-spritzing-of-poopourri/
According to Russia Today:
http://rt.com/news/weinstein-al-qaeda-video-obama-840/
Now in fairness, it must be acknowledged that in the Davis case, the U.S. was dealing with the government of Pakistan. In the Weinstein case the U.S. is dealing with Al-Qadea. But, it must be noted that the refusal to negotiate with Al-Qaeda is the reason the U.S. gives for refusing to secure Mr. Weinstein’s release. Is this a justifiable reason?
In other words, the U.S. is saying:
Well, we will negotiate to secure your release, if you are kidnapped by someone who we are willing to negotiate with. Is this reasonable?
Mr. Weinsten says:
Actually, Mr. Weinstein is far too kind to characterize his treatment as “abandonment”. Given that he went to Pakistan to assist the U.S. government, I think a better characterization of his treatment is “betrayal”. After years of defending the interests of America abroad he is now being betrayed. But, this is hardly a surprise. For Americans abroad – the Obama “change you can believe in” – is betrayal.
But, from the U.S. perspective, the circumstances of Mr. Weinstein present a far bigger issue:
What about the fact that Mr. Weinstein, has not filed his FBAR?
Actually, discrimination against Dash was a bad word choice re: my guess about Dash’s fixation on CBT.. Disadvantage would be more appropriate because there are advantages to being American in America.
The problem with CBT is that it extends outside of America. This is what Dash doesn’t get, but maybe he is starting to.
@Em
@Whitekat
Dash’s posts have been a great gift to those who oppose CBT. He expressed the views of those who do not see a problem with CBT. Also, let’s not forget that his arguments are not aimed at arguing that CBT should exist. Rather they are aimed at demonstrating that there is nothing wrong with CBT in principle. After about a week and about 280 comments, it appears that the arguments offered as justification of “CBT in principle” come down to one thing:
Somehow or other U.S. citizenship is a benefit and that therefore it’s okay to tax it.
This is similar to the rationale in the Cook v. Tait decision almost 100 years ago.
To me, it’s significant that Dash has never had to live with the problem of CBT. I strongly suspect that his views would be very different if he were a U.S. citizen living in Canada. We will never know.
Also, Dash completely agrees (go to the very first comment) that the current rules of CBT are not workable.
What I would find interesting would be to know Senator Ted Cruz’s views on CBT. We know how lucky he was that he was born in Canada and moved to the U.S. (rather than the other way around). Is it that the only people who can recognize the unfairness and injustice of CBT are those who have been directly victimized by it?
@USCitizenAbroad,
Yes, unfortunately, with exceptions of course. It depends on your ethical IQ. . I was born in Texas. Cruz was born in Canada I doubt he has a clue.