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!”
@Dash1729,
CBT cannot possibly work fine. What are you smoking?
@Blaze,
Excellent article! Congratulations on getting it published.
Once again, you have articulately described just how NOT FINE citizenship based taxation is.
Keep up the great work! I hope you never stop! Those of us cursed with a US birthplace owe you big time!
dash1729,
Are you an American? If yes, can you please tell us what happened when Great Britain tried to enforce citizenship based taxation (CBT) on the American colonists (British expats) back in 1776?
@all,
If the OPTION to easily move to the USA (due to having a US birthplace) is such a wonderful, special thing that is WORTH something (debateable if you ask me, but that is the subject of another post), rather than trying to jerry rig CBT to work with the other 190+ countries in the world who do not have CBT, why not have a simple annual USA membership fee associated with the privilege. Hmmm….lets say 100 bucks a year. If you don’t pay the annual membership fee, you lose the awesome, special privilege of claiming US citizenship.
@Dash1729
Under the existing Canada-US tax treaty we had to pay tax on the sale of our home in Canada, a country where my husband has always lived and where I’d lived for over 40 years. Canadian savings plans like Americans living in the US have are taxable under the Canada-US treaty. Due to the treaty’s complexity, USP’s are forced to pay high priced accountants and lawyers to apply and interpret the treaty.
The treaty is not for every day people, makes Canadian-Americans 2nd class citizens in Canada, and you support it?
@ShadowRaider
There are a great many Americans who think that other Americans should not be able to just come and go as they please. They feel that somehow we have the ‘best of both worlds’ and advantages that they’re denied because they choose to stay close to their roots. They believe that those advantages should be made up for through tax, but what they don’t care about is the fact that we don’t take advantage of what those taxes pay for. It’s almost as though they’re saying “those services will be there for you while you’re gone, so you must maintain them for yourself and others with your tax dollars while you’re off somewhere doing something you should be doing here – and for the right to call yourself an American.”
@All, re: previous comment. I would rather put my 100 bucks in my kids’ RESPs.
Sorry Dash1729, but your comments really piss me off! How can you possibly think the way that you do?
I feel like knocking my head against the wall, because to me it is so obviously obvious how unfair CBT is, no matter how many hoops you jump through with endless treaties to try to make it fair somehow. The point is that it is not fair, so get rid of the damn thing, and stop trying to smooth it over with treaties. It is WRONG PERIOD!
@Dash1729
i want to get rid of my american citzenship….i have lived and worked in canada since 1989 and have not made a cent in america since arriving in canada
i can not afford to pay my potential fines due me because i did not know anything about the cbt laws
is that fair that yes i want to leave but no i can not leave because is the convlouted unfair laws
@ WhiteKat
You are so feisty and so right. When my husband asks me what to bring home for supper I say gruel because we’ll have to get used to eating it IF the Canadian government betrays us and forces FATCA compliance in the true north, not strong, not free. I want the “negotiating” to end. I want my country to tell that country what it can shove up its FATCA$$.
Frankly I am stunned that anyone following the stories people have shared here at Brock can think that CBT on it’s own is fine. Sounds like someone who has never had to file taxes to a foreign country.
There are sooooo many issues but for now I will try to restrain myself & only talk about fiing as related to CBT. Filing that the US expects with or without FATCA or FBARs
Now that the extra high start up costs of becoming compliant and turning my life upside is done, my annual tax filing is costing me around the $3,000 mark. That’s about a month of my take home pay from my full time job. Is this a reasonable cost for a US citizen living outside of the U.S. receiving no benefits? This is for someone who doesn’t actually owe US taxes.
I am so “lucky” that I do not owe taxes since we have that wonderful foreign earned income exclusion granted from the benevolent US government.
Since I have sold all my mutual funds they won’t be a problem to me anymore. My name has already been removed from all my husband’s financial accounts that used to be joint so I don’t have to report his financial accounts on my tax forms anymore. Isn’t that great? As long as I don’t invest, retire, sell anything, inherit or die, things should be peachy.
What a deal I am getting, how could I complain? So now to maintain my right to move back to the US all I have left to do is: pay annual fees to my accountant, give up vacation time from work so I can visit the accountant, spend leisure time preparing information, worry about filing errors, & oh yes let’s not forget my husband would need to cut me completely out of his Canadian business which is currently a partnership and all our personal assets as well to prevent any more of his information and hard earned Canadian dollars to go to a foreign government. Unless you think divorce is a better idea? It would be one or the other.
Sorry, I don’t think my right to move to the US is providing enough value for the price.
No wonder even Americans abroad who WANT to be Americans abroad are renouncing.
Incidentally I am a Canadian from birth – born to Canadian only parents in the US. Came back in the 60’s as a child and haven’t visited the US for about 30 years.
@Em,
Oh, quit your complaining. Haven’t you heard? Gruel is good for you, and the fact that it is cheap is just a bonus. Lucky you!
@northof49,
LOL, I had not read your comment before I posted mine to Em, but it sounds like we are on the same wavelength.
I think get the idea Dash1729 is trying to point out about catching the real cheats. To me, the ONLY cheat is if a US person LIVING IN THE US hides money in any other country, then that person is a cheat/tax evader. To take from those living in other countries where their wealth and life savings/retirement/education funds were earned is immoral to say the least. This is where the US government is going to lose any good or friendly status they had with other countries. Their “extortion” from people born there is a last ditch effort to steal any wealth from the rest of the world to support their own governments failures at home, and trust me on this, the world is watching and learning. CBT is simply an immoral control system and makes US people and their families robots of the US financially with nothing in return. A person would be, and this is crass, “totally stupid” not to renounce and dump the USA for good. My job as a future victim, is to trumpet the consequences to the Canadian economy and the people involved, which is everyone in Canada. I have a lot in store for the New Year. And yes, I was born in Hamilton Ontario Canada….. and I love my country.
@ WhiteKat
It’s a gruel, gruel world. 🙁
One of the first posts I ever read at Brock, shortly after my OMG moment (thank god IBS was there) was a post from Petros that still makes me shiver because the lamb is me(and many others):
http://isaacbrocksociety.ca/2012/11/14/the-wolf-and-the-lamb-revised-for-our-times/
We can probably buy gruel with food stamps – ooops, wait a minute – our tax dollars don’t entitle us for food stamps! I hope someone south of the 49th appreciates the ones I paid for!
@NativeCanadian,
Did Dash1729 talk about US citizens resident in US who are hiding money abroad? He did talk about the privilege of holding US citizenship (not by choice, but by law) as being worth something, and he equated that worth with CBT. Let’s not try to sugar coat CBT or those who try to defend it. Treasury does this already. Decide whose side you are on. There is no in between.
@WhiteKat I am clear that CBT in any form is despicable. If a country is losing money to it’s own tax cheats, they have a right to pursue those people, however,they MUST abide by the laws of the other country. This is obviously an abuse of power, some even call it an act of war.
…and the IGA’s are a negotiated surrender, NativeCanadian.
@bubble The IGA’s are for the banks and governments to surrender, yes you are right, Now here is where Switzerland went wrong, with some even asking if their government even knew what they were signing. Those IGA’s are just to “get this over with”. But Switzerland, as we are learning, is worse off than if they told the US to take a hike in the first place. Enter China….. wow! Canada needs to stand up to the world bully bigtime!
@NativeCanadian,
Sequel to War of 1812. There is NO doubt about that.
You were born in Hamilton. My 3 daughters were also. I’m glad you are on board.
The fight has only just begun.
@NativeCanadian,
Canada will not do squat, unless a whole bunch of us cry really loud…and even then, it is a long shot.
A long shot I am taking in honor of my Wife and daughter..
And all in the Country I love Canada
In all my ranting I forgot to thank Lynne for her splendid article. And thank you NativeCanada for your love of Canada. I love Canada too. Let’s hope those in charge know what they’re doing.