U.S. tax law could ensnare unsuspecting Canadians
American expats (CANADIANS who are now referred to by the Harper government as “Americans who happen to reside in Canada” / “US taxpayers in Canada”) are planning a charter challenge of an agreement that takes effect in July, requiring Canada’s tax department to forward information from banks about their clients’ U.S. connections to the U.S. Internal Revenue Service.
I cannot comment as I do not “do” Facebook. I will send my Letter to the Editor. It will go something like this:
Gwen, thank you for being interviewed and reporting Edmonton’s information session on the problem of US citizenship-based taxation law for Canadians who are deemed US Persons in Canada.
The intergovernmental agreement that Canada has negotiated and signed with the US to bring this foreign law into our formerly sovereign country has been hidden and is now in the process of approval of legislation to implement starting July 1, 2014. This is a result of US citizenship-based taxation law — the rest of the world, including Canada, taxes on residence — that taxes and account reporting is for the country in which a person lives, works, receives benefits. The US is searching for US Persons the world over — and it is not about taxes owed but rather about the horrendous penalties for not having known. Those deemed US Persons are being criminalized by the US coming into every country in the world. The tax evaders the US looks for reside, for the most part, in the US and send their untaxed money offshore. Canada is considered offshore and Canadians deemed US Persons are deemed to have foreign (offshore) accounts even though they are to us local Canadian accounts in our banks, credit unions and insurance companies. Spouses, children and business partners can be as affected as the deemed US Person. And, so can the many Canadian snowbirds if they snowbird outside the US rules and required yearly compliance forms.
This will set a precedent that the rights under the Canadian Charter of Rights and Freedoms be waived for a segment of Canadian society. They will be second-class Canadians to any other, no matter the first-class Canadian’s national origin or the national origin of their parents / grandparents. Who will then be the next country able to bring their law into Canada to search for Canadians of another national origin?
My hope is that this gets in front of every Canadian person who will decide such action is absurd and wrong and join us in the Canadian Charter Challenge to either stop or reverse implementation of the US FATCA IGA law in Canada. I hope that others will agree that implementation of the FATCA IGA could be buried in Bill C-31 omnibus bill without debating on its own merits and with the citizens of Canada is appalling.
Should Canada remain a SOVEREIGN nation with a Charter of Rights and Freedoms that mean the same for all Canadians?
John Richardson presented a similar information session in Calgary on Saturday. We thank him very much for coming to Alberta to foster more awareness and encourage those affected, rather than to react, to pause, determine whether or not they REALLY CAN BE DEEMED a US PERSON.
Do a lot of research and only then, work in whatever way you can best protect yourself and your Canadian family.
Since Jimmy carter started the ball roll in every politician in the U.S. has followed the idea that we were not an exceptional nation because of our personal and financial freedoms, we have gone downhill in every way. The per capita income has steadily fallen, the trade deficit has soared, the national debt has speed up to warp speed. This was the fault of the congress and the executive branch.
We have joined the thriving country of Eritrea in our taxation policies, the IRS has become the modern day BROWN SHIRTS, unemployment remains high among those wanting to work and millions have given up trying to work and over 25% of our population are ” thriving” on welfare programs, well not exactly thriving but they do have cars, flat screen TV’s, smart phones and computers.
We are heading to the place Argentina found when they elected their first socialist president. The most prosperous nation became 127th after 20 years of socialism and now we can eventually join them and the rest of the world is helping by allowing the Despised IRS into their books and furnishing information on their own citizens, to the same bunch who takes the 5th amendment against self incrimination before the “””watchdogs””” in our congress. maybe I should just leave the watch off watchdogs and call them what they are, ”traitorous dogs”.
I hate reading the statement that this “is not about taxes owed”,when the truth is that it is. This is about being unjustly taxed on earnings in another country. This is about being forced t live in poverty because of double taxation and investment restrictions that prevent wealth formation. This is about not being able to have a domestic bank account. This is about freedom of movement and a person’s right to work.
It is indeed about taxes.
You’ve got it much better than I did, recalcitrant.
Great LTTE, calgary411. Fingers crossed that it gets published. And thanks to you and all for making the Alberta sessions happen. John Richardson is so generous to give his time and heart to speak and write about this truly extraordinary and vexing situation people find themselves in.
Yes, absolutely, this is about tyranny by taxation.
Great letter, @calgary411! I also do not “do” Facebook and it’s unfortunate that so many sites are requiring this to comment.
Taxation without representation, without access to public goods/services, and the placement of restrictions on saving for retirement is just plain tyranny.
CBT is a modern form of slavery, so twisted that the victims are automatically blamed by society for the wrongdoing, when in reality, the only thing they are guilty of is trying to live their lives like everyone else.
War is Peace
Freedom is Slavery
Ignorance is Strength
2 + 2 = 5
How homelanders view expats:
The difficult thing to get across sometimes is that were aren’t just getting hit for 16% CGT on mutual funds and inheritance tax starting at $5.3 million, but something much worse. The rules are simply not suitable to a time when governments expect people to invest for their old age and children’s educations, when many people don’t have jobs for life and self-employment is more common. Part of the problem with Congress is that a bunch of 80 year olds (Rangel, the Levins) with guaranteed pensions (all of them) just don’t understand how things are now..
I bought three books on investing,thinking they would help me figure out how to put money into stocks (since we are allowed to do that and not much else is keeping up with inflation), but two of them just said that almost everyone should just put their money into some nice index funds. That is what I used to have. They forget that very few of us are MBAs..
This article was published in both the Edmonton Journal and the Calgary Herald. I hope you send your great letter to the editor to both, Calgary.
I did — to The Editor at the Calgary Herald and to the author at the Edmonton Journal (who acknowledged it).
Some of the comments on the Edmonton Journal article, along with various other commentary that has been posted on Isaac Brock over time, suggest that FATCA was only meant to go after US residents and expats are merely collateral damage.
I disagree with this assumption. If one reads through a few of the various tax treaties and also the text of the IGAs, it becomes very clear that expats are in fact being targeted.
Usage of tricky legal devices such as the “saving” clause which gets the parties to recognize that the US has the right to tax so-called “US persons” anywhere, anytime and anyhow it pleases along with the IGA term “US Resident for Tax Purposes” are clear indications that expats have been on the hit list since the beginning.
The term “US Resident for Tax Purposes” is an interesting one. Its a kind of self-admission that expats are NOT considered US Residents for any purpose.
That’s a great point, X. I never thought of that phrase as meaning that we aren’t considered US residents for any purpose other than taxation. It’s appalling on the surface, and even more so when you realize that we get virtually nothing for the honour.
Thanks for pointing this out, X and bubblebustin. Right before our eyes all the time.
My new twitter bio:
Canadian resident and citizen by choice, US resident for tax purposes only, according to the US government.
It gets even more absurd when a non-resident, non-US citizen is deemed to be a “US resident for tax purposes” by the USG and ONLY for tax purposes (i.e. holder of an expired green card living in his/her homeland outside the USA). At least the Canadian IGA guidelines give this situation a wink-wink and suggest identifying yourself as a non-US person at the bank.
Thanks for the link, BC_Doc.
ties in nicely with http://isaacbrocksociety.ca/2014/04/21/report-on-alberta-information-session-edmonton/
I agree with the 80 year olds comment. These guys think of the US in its heyday in the 1950s when 50% of world GDP was inside US borders. The US was the only functional economy left at that time as Japan and Europe were still recovering from WWII.
It’s apparent with FATCA they’re trying to build in backstops to prevent people from leaving the country in the event the US Dollar losing sole reserve currency status.
The America of the 1950s hasn’t existed for decades and the US has to sort out it’s debt problems. Yes countries can and do get out of debt, but not without pain. The upcoming pain is what the Levins of the world don’t want the US voters to know about until it’s too late.
I do agree that the root of the problem is CBT, although I see little chance of it being revisited domestically in the US. The US has hobbled itself more ways than can be counted with a tax system that is counterproductive and vastly over complex. Reagan attempted to simplify it 30 years ago, but did only half a job and it has been thoroughly undone since. If they can’t stop the self-mutilation that is their corporate tax system (the least competitive in the WORLD and damming up literally trillions of dollars in potential investments in the US overseas), don’t expect them to waste too much breath on a relative handful of expats from whom they are exacting a few random billions here and there. Fairness, reason, rationality – none of these have a place in US politics as far as fiscal policy is concerned at least. At any rate, from my perch, I see no chance of changing them and prefer to focus on the things I can influence.
With our court challenge, we MAY nudge the US closer to a re-examination of this area of law. The “one-two” punch of Canada potentially limiting FATCA to non-tax residents and then OECD “GATCA” doing the same, perhaps even adding a reading down of the Tax Treaty to the same effect (were a Charter ruling to come in our favour on FATCA and the IGA, the corrollary could well be a “reading down” of the Treaty provisions obliging Canada to help the iRS collect tax from Canadian resident US citizens, although I am not aware that the US has ever in fact attempted to rely on that Treaty provision). These body blows to the concept of CBT may lead them to re-examine. However, as I noted above, there is so much more wrong with the US tax system that it is hard to see how our little pleas will ever make it near the top of the pile.
I saw somewhere somebody draw a parallel to the US Revolution and I think it is pretty apt. What does it take for Canada to declare its independence from these guys? Two hundred and thirty-eight years ago, a rag tag band of a few million British subjects living in North America declared independence from a country that purported to tax them under its own domestic tax rules even though they lived abroad. The colonial power protested – hey, we ran up all this debt in part to defend you! The pleas fell on deaf ears and the rebels seceded. Barely a generation later – in 1812 – these same Americans declared war on Britain for attempting to impose its citizenship (military service in this case) on those of its subjects who had moved to the newly independent America and taken up residence. Fast forward – the US is now seeking to impose its taxation and military service on those of its “subjects” who move abroad just as Britain did two centuries earlier. That which was a casus belli to their forefathers is an exercise of their sovereign rights today. Plus ca change….
Perhaps it is time that Canada issued its own declaration of independence from a power that twice tried to invade it.
The article appears on the front page of the print edition of the Edmonton Journal.
That is ideal placement for follow-up letters to the editor.
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