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!”
@bubblebustin
No but I checked to see whether it had CBT a good 10 years before I ventured there for the first time as an adult.
Dash,
Is financial rape and economic murder not evil?
@Dash1729
So between the time you left and the 10 years prior to returning, you were completely unaware of whether it taxed based on residency or citizenship? Did you research that country’s tax laws prior to exiting the country the first time?
@FromTheWilderness
“Is financial rape and economic murder not evil?”
Yes, but CBT by itself cannot possibly be described as financial rape or economic murder. Rape and murder are things you have no control over. No one can be forced into CBT against their wishes: all they need to do is renounce.
Dash1729,
We get it; you are a ‘smart’ person. You did the research you needed to do; you win.
We lose; we were not ‘smart’ persons, all of us who decided to follow our hearts, our job opportunities, our dreams to live in different country — a country of our choice, to say nothing of the consequences for the “Accidental Americans” we brought into this world.
The price to pay is pretty darn high for not knowing about US citizenship-based taxation. For something so important and with so many adverse results for families, the US did a piss-poor job of educating us. Just saying; my opinion and I’ll likely not change it.
dash,
What representation do expats have in US congress? Each state has two senators and several congressmen elected to represent the residents of their states. Which senators and congressmen are elected by expats to represent the interests of non-resident expats?
Let me rephrase “Why didn’t you research that country’s tax laws prior to exiting the country the first time?”
The US, then, for my son and others like him, IS a financial rapist and an economic murderer.
@bubblebustin
“So between the time you left and the 10 years prior to returning, you were completely unaware of whether it taxed based on residency or citizenship?”
That’s quite correct, bubblebustin. I ignored that country’s laws until the first time I considered visiting there as an adult. Had the rules proved to be onerous I would have had to make a decision: comply or choose not to visit. If I lived in Canada and had no intention of ever visiting the USA again, I would ignore US law too–I would not even consider complying with any of this CBT/FBAR/FATCA nonsense. If I were discriminated against based on “US person” status I would pursue my remedies through the Canadian, not the US, system.
If I want to visit a country, I research the laws. If I don’t want to visit, I ignore their laws.
“Did you research that country’s tax laws prior to exiting the country the first time?”
No. I was three weeks old at the time. But when I reached adulthood I didn’t leave it up to my parents to research this, either.
@bubblebustin
“Why didn’t you research that country’s tax laws prior to exiting the country the first time?”
Because I was three weeks old at the time.
dash,
You make renouncing sound like such a casual decision to make. It is not, particularly for people who had at one time naively believed in the goodness of the so-called “land of the free” only to later learn that slavery is still legal, at least for expats anyway, not to mention all the hoops one has jump through just to get their certificate of loss of nationality (CLN).
Virtually every expat I know who renounced or relinquished US citizenship hated/resented the fact that they were forced to do it but were very proud that they did so when they completed the process.
@calgary411
“The US, then, for my son and others like him, IS a financial rapist and an economic murderer.”
Not unless they actually enforce CBT against your son and you haven’t presented any evidence whatsoever that they intend to do so.
I understand your fears for your son as a mother but your fears for what might happen in the future do not justify the language that you are using to describe the US in the present–at least with regard to your son.
@calgary411
“We get it; you are a ‘smart’ person. You did the research you needed to do; you win.”
No you don’t get it at all. I’m not trying to “win”. I want you people to win and I’m trying to offer constructive criticism.
If you focus on CBT I think you’re going to lose no matter how “right” you may think you are. It’s not going to be a winning argument with the majority of Canadians with no US ties whom you will have to convince.
But if you focus on FBAR/FATCA I think you have an extremely compelling argument that will resonate with Canadians as a clear violation of Canadian sovereignty.
You obviously DON’T think I’m a smart person because if you really thought I was smart, you would listen more carefully to the advice I’m trying to offer. I’m not here to debate. I’m here to offer what I hope will be constructive criticism.
@ Dash1729
If you think calgary411’s words were harsh it’s a good thing you can’t read my thoughts. We get it. You have been perfectly imprinted with American exceptionalism and you are an old hand at acquiring citizenships so you keep yourself well informed of tax issues all over the world. For me that greencard (didn’t have to earn it, married it) turned out to be the biggest mistake of my life … and there have been many. Turns out USCIS didn’t like it either because they obviously threw it in the trash when I tried to return the damn thing. (I’ll admit it was a really bad photo. I submitted a nicer one with my application but USCIS insisted on taking their own.)
@Em
“You have been perfectly imprinted with American exceptionalism and you are an old hand at acquiring citizenships so you keep yourself well informed of tax issues all over the world.”
I have criticized the US government many, many times in this thread so I don’t see how I can possibly be accused of being “imprinted with American exceptionalism”. There are many, many things wrong with the USA and I have no hesitation about saying so. Having said that, the USA has provided me with a life and a career for over a quarter century–something neither Canada nor my birth country offered me–so I am proud to have become a US citizen.
I, for my part, “get” that people on here are very angry. Some of that anger is justified. Some of it is not. If you can direct that anger in a focused, intelligent way you will accomplish a lot. If it remains unfocused anger then you will just spend the rest of your lives being angry and bitter. Life is too short for that. This will be my last post on here, at least for today.
Dash1729,
There is the threat; there should be no threat. Just how would I present any evidence that the US intend to do so or do not intend to do so? Magical thinking? Prayer? I have asked — the US has not given me a clear answer. Canada has not given me any answer. Many such families as mine with US citizen children who may have a ‘mental incapacity’ do not know that their children even have US citizenship or that the US does not give the right for that to be renounced. They have more important use of their time and in most cases not sufficient financial resources. They know nothing of this threat — perhaps that is a blessing.
Mine is the conclusion to your statement, “No one can be forced into CBT against their wishes: all they need to do is renounce” until I see clear US definition otherwise. The professional advice I paid for was clear. My and other families will have to see what the “foreign” financial institutions ask in their quest to flush out US Persons from their client bases. Who will fall under the radar? Who will be spared? Why would my bank spare my son and risk their FATCA certification that they harbour no US Persons? Look at Switzerland. What is fair — for everyone? There is no level playing ground at all. It’s the luck of the draw; a crap shoot — unless the US is clear. I’ve seen the punitive results on the “grandma’s that former US Ambassador to Canada said the US was not after — he seemed clear; he was false and uncommunicative to US Persons in Canada. This site is littered with the bodies of those who have gone into programs meant for criminals. In the name of US citizenship-based taxation, this is valuable time we could be better living our lives.
There should be clarity. Perhaps we will one day get it from Canada in the answer to the question: Do ALL Canadians have the same rights? (Or, in other words, will we all be protected from what the US is attempting with its extra-territorial citizenship-based taxation combined with FATCA coming into Canada and all other countries of the world?)
The US and its citizenship-based taxation combined with FATCA is US might against the rest of the world’s sovereign nations and the people who live there, as well as promised threat to their treasuries. If this is just about the US attempt to apprehend tax evaders, use residential-based taxation as the US is where the real tax evaders reside and ship their untaxed monies offshore. Most else will be more US collateral damage.
So everything’s hunky-dory with Dash in the USA. Glad that U.S. citizenship worked out so well for him. I wish now that I hadn’t been so stupid. I wish that long ago at that immigration interrogation the USCIS agent had given me a pamphlet or something to give me a heads up at what I was actually heading into. (He just wanted to make sure we were really, really married.) If he had, I would probably have headed back home for a long rethink.
@Em
He probably just doesn’t like how Lynne’s fabulous piece make his precious look bad.
@all my Brocker friends.
I am so glad to be here with you . This post has been a very good lesson in FATCA .
Just why is Dash1729 here on this blog? He is so happy to be an American, good for him….I am happy to be just a Canadian. My country Canada is the greatest country in the world….and the other Brockers here from UK, Australia, France, Switzerland, NZ. and other locations feel that way about their countries. It seems Dash has become the ‘exceptional ” American like my brother who thinks no other country in the world is as great as America. I disagree with my own brother.
FATCA is evil.
@Northernstar
It is good to be exposed to Dash’s views on these topics. He provides valuable perspectives on who those NOT affected by this issue perceive it.
A few responses to some of his responses:
@Dash
Dash the reality is that those who are covered Expats will be raped financially. They can’t renounce without giving a significant chunk of their savings and assets.
You are oblivious to the fear factor. They don’t have to actually enforce CBT. They can and do destroy lives through threats and intimidation. That’s what is going on in Switzerland right now.
The CBT argument is NOT aimed at the Government of Canada. It is aimed at the U.S. The arguments that are offered to oppose FATCA in Canada are based on CBT only to show how it affects Canada as a whole. Since FATCA is the enforcement mechanism, these arguments are raised against FATCA too.
(referring to the changes in tax laws).
Whether one keeps up with tax changes or NOT is irrelevant to the fairness and morality of the law in question. It is possible to see the unfairness in the PFIC rules. but not own any PFICs.
Again, unless I have completely missed it, the case being made to the Canadian government is the FATCA issue and the effect on Canada as a whole. The case for the repeal of CBT is being made to the only government that can repeal it – the U.S. government.
We have all made mistakes. That’s the price of attempting anything. I applaud and encourage taking control and responsibility one’s life.
Dash;
…”Brockers–like other American expats–are entitled to representation in the US but don’t seem to place any value on this right.”
Not true. Over half of the US States do not allow for voter registration and absentee voting from abroad from those who are deemed US Citizens, but who have never actually lived in the US. Other states allow it as long as a parent had resided in the state. To vote, those US Citizens would actually have had to establish that they had some period of US residency (as defined by each state in question). So, no matter what value we might personally place on the ‘right’ to vote in the US for expats, it doesn’t actually exist equally or universally for those who have not ever resided there. And that is unlikely to change.
And for those who can successfully register and vote from abroad, our vote is so diluted that arguably it is merely a symbolic ‘right’.
I don’t think it is valid to argue that we actually have ‘representation’ either. Our Congresspersons and Senators do not even allow for us to register concerns if we have out of country postal codes – a deliberate choice in their website designs. We are not taken seriously because we do not live in the US. We are not considered an important constituency. The move to strike and fund a Presidential Commission to even look into our concerns is unable to get enough US political support to be enacted (despite Obama and the Democrats calling those abroad an important group of concern whose voice they vowed to listen to back in 2008). For a long while, that bill didn’t even have co-sponsors http://americansabroad.org/issues/representation/being-heard-washington/ . This is not the workings of a true democracy in so far as we are subjected to life altering laws that we have no say in. And we are to accept that they can apply retroactively and without recourse or consultation?
IF US taxation is extraterritorial, global and not restricted by actual US residency, then why should the US voter registration and actual voting be restricted by US residency – and subject to the whims of individual states? And why do we not even have actual representation as a constituency? Taxation of those abroad is an obligation imposed and enforced at the federal level, so why does the federal government allow individual states to restrict equivalent access to registering and voting from abroad?
All US Citizens are deemed equally eligible and obliged to be US taxpayers – despite the substantial numbers who have never set foot in the US or ever resided there. Yet we are not equally able to vote.
Hence, it is truly taxation without representation.
And the burden of taxation and reporting and penalties forced on those living outside the US is actually greater and more complex than what is demanded of US residents.
The US citizens who left and naturalized elsewhere decades ago were informed of the consequent automatic loss of their US status by the US government formally and firmly. They then made important life choices based on what the US government said. Some chose NOT to naturalize when they moved to live elsewhere, based on the US government pronouncements, and some accepted that state of affairs, and accepted that their US status was to be stripped from them. How can it be logical then that they must be responsible for monitoring ALL possible changes in US laws for their lifetime – when they do NOT live in the US, and when the US told them very firmly that they were no longer US citizens?
Can it really be a valid claim that the entire responsibility belongs to the individual, and none on the State?
If we cannot rely on the word of the State, then we can never plan, and we cannot ever be certain of what the law is. If we cannot rely on the word of the State, than we cannot respect it or trust it. It becomes unpredictable, capricious and perverse. Particularly when it comes to extraterritorial taxation and citizenship – and decisions that the IRS and Treasury make which have a retroactive and life altering negative effect.
We cannot respect a State which acts in capricious and harmful ways towards those it declares to be citizens. We are not vassals. We are not serfs. We are not property.
The US has not shown itself to be reasonable or just or ethical in its dealings with us. What then is the ‘value’ we should demonstrate for our citizenship relationship with it? What value the symbolic vote? What value the ‘right’ to enter and live and work in a State which we have no use for?
And what makes the US so exceptional that it should be excused these wrongs – which it would not accept if other countries tried to impose the same on US residents?
At this time, there are 146 comments to this post. I have not read all of them, so apologies if I am repeating something already said.
Excellent article, but inaccurate in one respect.
An individual born outside the US to a US citizen inherits US citizenship ONLY if the parent meets a US residency requirement. It is fairly complex, but it comes down to this: US citizenship cannot be indefinitely handed down from generation to generation without parents having some kind of residency in the US. My source for this is the Wikipedia article on “birthright citizenship in the United States”.
This would mean for Kerry that he is a French citizen if and only if his mother actually lived there for some number of years before his birth, not just be born there.
dash,
Try walking in the shoes of an American emigrant for a while and you’ll see very quickly whether our anger is justifiable or not.
If the Canadian government or the government of your country of birth introduces CBT, you will be angry for sure, unless of course you have already renounced both of those citizenships.
All,
I would like to extend my apologies. It seems a lot of this discussion has me having a public temper tantrum with someone who feels so differently about the concept of US citizenship-based taxation than I do. Dash1729 is a transplanted homelander with the same positive feelings for what the US that has given to him as I feel the country of my choice has given to me. The last thing I want is for anyone here to think I’m here only because of what is happening to my family. I seek only justice that all like my son and our family have the same opportunity they should have, as in
I feel like we have our ‘finger in the dike’ trying to hold this flood back to so many in so many countries outside the US. In anything here, my concern is for all of us.
This is the time of year for goodwill to men in whatever ways we celebrate. I have much I am so grateful for and I’ll now concentrate on that as I wish you all a wonderful holiday with your families and friends, with peace and hopefully some positive resolution in the new year.
I turn it over to someone who communicates so well on behalf of us all in her letter to Canada’s Finance Minister (who himself needs our thoughts for his better health).
http://isaacbrocksociety.ca/2013/12/17/mr-finance-minister-please-dont-be-an-irs-grinch-a-fatca-christmas-letter-to-jim-flaherty-2/
@Calgary411,
Apology not accepted. You have every reason to be upset, and every reason to express yourself and explain why. The CBT, and FATCA threat, must be fought with words. Like all soldiers, you need to practice your skills, and Brock is an excellent venue to hone your debating talents. Although the subject matter is complex, it is at heart a true, just fight, and so, if the soldiers are strong enough they will win the battle, eventually.
There have been other visitors to Brock, besides Dash1729, some quite obnoxious (think Lesperance) who have given us other precious opportunities to gather our thoughts and words together and present valid, just, and reasoned arguments against CBT (and its enforcer, FATCA), Newcomers reading here for the first time, get a crash course in the whole CBT/FATCA menace whenever one of these visitors comes along, and an army of Brockers comes to the defense of abused ‘US persons’ everywhere. Think of this as a good opportunity for yourself, and the rest of us, to educate newcomers, and to improve our ability to fight this war with our words. You ‘done good’!!!