The American Citizens Abroad Global Foundation has launched its educational program with a forum/debate on the merits of Citizenship-based taxation vs. Residence-based taxation.
This is a full day event, sponsored and organized by the ACA (American Citizens Abroad), that will be held at the University of Toronto on May 2nd. Registration and Information
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‘This is the first public debate — worldwide — devoted to this important topic.’
Donation of US$50 prepaid with the reservation or C$60 cash only at the door.
Student discount – C$10 cash at the door with valid student ID
The speakers will include academic tax specialists Bernard Schneider and Michael Kirsh, who have different approaches to the taxation of US citizens abroad, with the program moderated by Toronto lawyer John Richardson.
Dr. Stephen Kish, who co-authored with Mr. Richardson a submission to the U.S. Senate Finance Committee (see below), will be the academic host.
Bernard Schneider:
The End of Taxation Without End: A New Tax Regime for U.S. Expatriates, Virginia Tax Review, Vol. 32, No. 1, 2012, http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2186076
Michael Kirsch:
Revisiting the Tax Treatment of Citizens Abroad: Reconciling Principle and Practice, October 23, 2013, Florida Tax Review, (Forthcoming), Notre Dame Legal Studies Paper No. 1457, http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2346458
Richardson/Kish:
John Richardson, Willard Yates, Stephen Kish, Request for Tax Rules Changes for U.S. Citizens Overseas: Submission to the Senate Finance Committee, January 2014, http://citizenshipsolutions.ca/wp-content/uploads/2014/01/RichardsonYatesKishJan232014SFCSubmission.pdf
Keynote Speakers
Prof. Michael S. Kirsch, Professor of Law, Notre Dame Law School
Dr. Bernard Schneider, Teaching Fellow, Centre for Commercial Law Studies, Queen Mary University of London School of Law
Phil D.W. Hodgen, International Tax Attorney, Hodgen Law Group PC, Pasadena, CA
David Kuenzi, Certified Financial Planner,® Founder, Thun Financial Advisors, Madison, WI
Charles W. Cullen III, Certified Financial Planner, ® RBC Dominion Securities, Inc., Halifax, NS
Neil Sinclair, Chapter Chair, Amcham Canada – Ontario Region
Closing comments: Jackie Bugnion, American Citizens Abroad, Inc., Director of Tax Team
Originally published on April 23, 2014
Wow! What a programme! I wish I could be there, and I hope it leads to good things for all of us.
Related comments on another thread:
http://isaacbrocksociety.ca/2014/04/21/ne-exeat-republica-the-next-irs-tactic-vs-expats-and-accidental-americans/comment-page-2/#comment-1508090
and
http://isaacbrocksociety.ca/2014/04/21/ne-exeat-republica-the-next-irs-tactic-vs-expats-and-accidental-americans/comment-page-3/#comment-1521623
and
http://isaacbrocksociety.ca/2014/04/21/ne-exeat-republica-the-next-irs-tactic-vs-expats-and-accidental-americans/comment-page-3/#comment-1526757
It would have been cool if the advance fee was payable in Euros (or C$) instead of USD. We could be amongst the first to tell the USA that their currency is not as important as they think it is. I’m hoping (well, we all know) we’ll see lots of such in the future.
Exciting event!
I never thought I would have a deep motivation or interest in attending an event centered on comparative systems of taxation. Or to have read the work of presenters on the topic. Until recently, I had never read a tax journal article in my life.
How life has changed!
Among the highlights I am hoping for, is to hear someone live, in front of an audience on Canadian sovereign soil, defend and debate one of the oft cited CBT justifications – from *’Cook vs. Tait’ http://www.law.cornell.edu/supremecourt/text/265/47 – to a group that will include those directly affected; some duals, Canadian citizen ex-USPs, Canadian citizens, and Canadian permanent residents – rather than the same argument restricted to the more usual audience of compliance and enforcement professionals, or US based tax and law academics and homelanders on US soil.
I am looking forward to hearing a USP standing inside Canada’s borders, describe in detail any actual ROBUST and INCONTROVERTIBLE evidence that supports the extraterritorial US claim as to the extensive ‘benefits’ reputedly received from the US during decades of living in Canada – and thereby to be extraterritorially taxed, penalized and controlled for a lifetime and beyond, merely because of a random accident of a US birthplace or parentage, and very limited or no US residency. No free lunch was received; during US residency, any US services would have been paid for in full via the US taxes levied on and paid by adult parents.
What can be presented that would ethically support the lifelong (and beyond) US extraterritorial taxation, penalization and ownership the US asserts over my life in Canada and my Canadian family’s savings – and that of any theoretically qualifying children (who would then also have been cursed with receiving such a generous unwelcome ‘benefit’ as punitive US taxation and penalization of their Canadian RESP as a ‘taxable foreign trust’)?
* from ‘Cook vs. Tait’:
265 U.S. 47 (44 S.Ct. 444, 68 L.Ed. 895)
COOK v. TAIT, Collector of Internal Revenue.
No. 220.
Argued: April 15, 1924.
Decided: May 5, 1924.
opinion, McKENNA
“…The taxing power of a state, it was decided, encountered at its borders the taxing power of other states and was limited by them. There was no such limitation, it was pointed out, upon the national power, and that the limitation upon the states affords, it was said, no ground for constructing a barrier around the United States, ‘shutting that government off from the exertion of powers which inherently belong to it by virtue of its sovereignty.'”
“…The contention was rejected that a citizen’s property without the limits of the United States derives no benefit from the United States. The contention, it was said, came from the confusion of thought in ‘mistaking the scope and extent of the sovereign power of the United States as a nation and its relations to its citizens and their relation to it.’ And that power in its scope and extent, it was decided, is based on the presumption that government by its very nature benefits the citizen and his property wherever found, and that opposition to it holds on to citizenship while it ‘belittles and destroys its advantages and blessings by denying the possession by government of an essential power required to make citizenship completely beneficial.’ In other words, the principle was declared that the government, by its very nature, benefits the citizen and his property wherever found, and therefore has the power to make the benefit complete. Or, to express it another way, the basis of the power to tax was not and cannot be made dependent upon the situs of the property in all cases, it being in or out of the United States, nor was not and cannot be made dependent upon the domicile of the citizen, that being in or out of the United States, but upon his relation as citizen to the United States and the relation of the latter to him as citizen. The consequence of the relations is that the native citizen who is taxed may have domicile, and the property from which his income is derived may have situs, in a foreign country and the tax be legal—the government having power to impose the tax……”
Those passages always struck me as supremely arrogant and entirely subjective. That merely asserting something without any burden of proof, stood as sufficient to justify an extraterritorial claim to the assets of generations abroad – no matter what the cost. How convenient. When I first read it, it made me want to bite that grasping extraterritorial hand – the one that didn’t feed me.
To go right to the heart of the beast, to CBT, is brilliant. All we ever seem to look at is its infamous FATCA fangs. I can hardly wait to watch Deckard1138’s video of the event. He wrote in a previous thread:
“Regarding the questions about this event being videotaped, the answer is YES. I plan to drive down from Ottawa to record the entire event with professional video and audio equipment, as I did for the FATCA Forum a year ago.
Assuming we have the same degree of audio support from U of T, we should expect sound quality similar to that of the FATCA Forum recordings (also see sidebar for the same link). To the best of my knowledge, there were no complaints about the audio for that event.
Following the CBT vs. RBT Forum, it will require a few days to edit and upload the presentations to YouTube for the wider audience. I fully anticipate a great deal of interest in this event and will make every effort to post the recordings as quickly as possible.”
Perhaps this is a bit off-topic, but I just learned today of a principle called Hanlon’s Razor (I’d heard of Occam’s Razor but not this razor): “Never attribute to malice that which is adequately explained by stupidity.” That can explain a lot in politics and bureaucracy. Notably CBT and FATCA.
For more related to this concept, see the following superb column by CBC’s chief Washington correspondent, Neil Macdonald:
http://www.cbc.ca/news/world/why-politicians-and-academics-don-t-just-say-what-they-mean-1.2618268
My informal variant of this Razor has always been, if I can’t understand what someone else is saying to me in English (which is my maternal language), my assumption is that it’s the speaker who doesn’t understand what he or she is saying, not me. Goes a long way in a lot of academic discourse and also in a lot of IRS bafflegab too.
badger,
So far away for me to get to this CBT vs RBT forum / debate.
If you get the chance, badger, can you or someone else bring up the subject of those who are ENTRAPPED into U.S. citizenship (like my son and others with a development disability, and even those with age-related dementia, who have some ‘mental incapacity’ so don’t ‘understand the concept of citizenship’ and cannot renounce themselves, also because they must not have the influence of any others. The parent, the guardian or the trustee for someone with a ‘mental incapacity’ also does not have the right to renounce of that person’s behalf — although they could register that same person for the U.S. Selective Service, for which there could be a $250,000 fine and jail time for not doing so). Perhaps also, the fact that some families experiencing this feel that U.S. CBT tax law (or any other country’s tax law) that could entrap someone into the enormous administrative and emotional expense of the responsibilities of an extraneous U.S. citizenship-based taxation year after year after year, is immoral and injust.
What would be the opinion of any Canadian taxpayer there, knowing that a portion of his/her Canadian taxpayer money that goes toward my son’s (and others like him) Canadian and provincial disability benefits and Canadian government contributions to Registered Disability Savings Plans (RDSP) was being passed along to the U.S. IRS. As the “Holder” of my son’s RDSP that is just what I paid U.S. taxes on when I owed nothing to Canada.
Just what would be my son’s (and others like him) fair share for the U.S.– born in Canada, raised in Canada, never registered with the U.S., never lived in the U.S., never had any benefit from the U.S. (only Canada). (Of course, yes, I forgot — he has been to the U.S. in the past to visit his grandpa and grandma, aunts and uncles and cousins, but no more will that be a luxury he will safely have.)
Stupidity is fixable and it has more than enough time to be fixed. I tilt towards the belief that we are actually dealing with malice now. But, then, I’m not as wise as Robert Hanlon or William of Ockham. Bafflegab — love that term. It says more than what the bafflegabbers say.
@Calgary411, Thinking again about your son. This is a solid example as to where a sovereign nation needs to state firmly that the Master Nationality Rule applies.
The USA by its actions affirms the Master Nationality Rule within its territority. There is nothing wrong with that.
But the problem is that apply it in action with CBT and so far supposed sovereign nations have rolled on their backs with belly exposed.
On another thread I proposed that Canada needs to amend its citizenship law and define Canadian Citizen. That definition would effectively render FATCA moot for ALL Canadian Citizens in Canada.
Conclusion? The Master Nationality Rule if applied in Canada would give your son the security he needs.
I am posting this again from an earlier thread with hopes some of the debate participants read IBS to get an “in the trenches” point of view from expats affected by CBT / FATCA / FBAR / EXIT TAX etc.
So here goes:
It will be interesting to see when the pro-CBT debater tries to argue that having US citizenship is beneficial for expats a la Cook vs. Tait.
I have an answer for him:
If US citizenship were so “beneficial” for expats, why are they paying money to get rid of it?
Expats have no representation in US congress and no access to US public goods and services. Expats don’t use US highways, roads, dams, bridges, schools, hospitals, fire rescue, police, courts, Medicare, Medicaid, Obama care, unemployment insurance, food stamps and so on. Only homelanders consume these things.
But what about all the embassies and consulates all over the world that provide services for Americans?
Any public services that expats use at embassies or consulates are paid for in the form of fees (very high ones at that). The last time I walked into an embassy I was surprised to see the fee schedule posted on the main wall like a fast food restaurant menu, but no specials. It was very comprehensive. Virtually every little service, no matter how routine requires payment.
http://jerusalem.usconsulate.gov/service/schedule-of-fees.html
The Cook vs. Tait “benefits” argument falls flat on its face. No cost / benefit analysis would support expats retaining US citizenship. The ones who do retain US citizenship either intend to live in the US in the future or do not want to lose a military pension or some other retirement plan. Most other expats who do not formally relinquish US citizenship by obtaining a CLN do so out of fear from the costs and penalties of coming into tax compliance. Instead, they go underground and live in the shadows like the illegal aliens inside America.
It is very difficult (if not impossible) to come into compliance when an expat’s entire life is considered to be a crime.
America’s immigration problem is widely acknowledged. But its emigration problem is far worse.
Thanks for your continued common sense, George!! Your thoughts on this are well taken by me for any discussions that may come up about my son. And, may others learn a bit from my experience — as my son and my family will NOT be the only so affected.
@Badger, “Exciting event!”
Lets step into the Wayback Machine with Mr. Peabody and Sherman and go back ten years.
George meets Badger in Downtown Toronto and asks, “Hey, what do you think about residency based taxation?”
Badger runs away and says “That guy is pretty weird.”
In April 2014 Badger now finds this “exciting.”
LOL
Also from a previous thread:
Citizenship based taxation (CBT) is America’s “PECULIAR INSTITUTION.” So was SLAVERY.
According to Wikipedia, http://en.wikipedia.org/wiki/Peculiar_institution:
“(Our) peculiar institution” was a euphemism for slavery and the economic ramifications of it in the American South. The meaning of “peculiar” in this expression is “one’s own”, that is, referring to something distinctive to or characteristic of a particular place or people. The proper use of the expression is always as a possessive, e.g., “our peculiar institution” or “the South’s peculiar institution”. It was in popular use during the first half of the 19th century, especially in legislative bodies, as the word slavery was deemed “improper,” and was actually banned in certain areas.
@Calgary411, a little repeat on my own history.
A certain former communist country considered me to be one of its nationals by descent. If I had filled out a passport application, I would have had a travel document toot sweet.
But because of my job, those “fellow countrymen” would have likely imprisoned me as a traitor.
The US Government told me, “Sleep well, do not worry, just do not travel there or to any of their neighbors.” That was the Master Nationality Rule in action.
So while I can appreciate (with respect to Canada), the comments of Flaherty and the Courts that they will apply the revenue rule, I think what we all really need is the Master Nationality Rule.
In the Country that is my home, I get pretty surly when someone calls me American. I correct them rather quickly. Though I do smile when I am called Canadian, S. African or Australian. 😉
…and may some savvy politicians of whatever country pick up on just that, George. You have given me a lot of good information for which I thank you so much.
Here’s another one:
The purpose of CBT was, and still is, to punish people for emigrating from America. Americans abroad don’t use US public goods and services. Americans abroad don’t have representation in congress. All those “horizontal equity” theories posited by so called academic experts in taxation policy don’t hold a drop of water when the simple question is asked, “what about horizontal benefits in return?” Oops, forgot about that.
CBT, FATCA, FBAR, Exit Tax, and the Reed Amendment violate human rights of expats on many fronts, to include the US Constitution, International Declaration of Human Rights, as well as the Constitutions and Charters of the countries where expats are living.
Anne Frank hit the nail on the head with the below comment which explains why so many expats have so much contempt for the US government and are renouncing/relinquishing citizenship or taking active measures to conceal their “US personhood.” Virtually no long-term US expat considers CBT as being fair. How’s that for the theory of “tax morale?”
“Any law which is manifestly unreasonable and routinely ignored is dangerous because, like an acid, it corrodes the legitimacy of ALL laws. Instead of a reflex of obedience, a reflex of contempt and resistance is fostered. CBT is well past that point.”
@ FromTheWilderness
Don’t forget the “marines to your rescue” fallacy. Even if they do you’ll pay for it.
http://www.overseas-exile.com/2013/03/us-expat-evacuations-not-what-people.html
@Badger, “Those passages always struck me as supremely arrogant and entirely subjective. ”
I am not defending “Cook v Tait.”
But I can say that maybe in 1924, it might have made logical sense.
We are looking at this through glasses shaded with FBAR, FATCA, ACA and many more alphabet soup.
Fast forward NINE decades, is the burden imposed on the bearing said US Citizenship “worth” the “benefit” that the US sovereign can provide? As I paused, I started giggling and have not had a single adult beverage. 🙂
A US passport is no more valuable than a Canadian, Australian, any EU Passport………
@EM, it is indeed a fallacy for most of the US emigrants.
There is part of me that says a sole US Citizen who has not taken the plunge and remains a permanent resident (aka “guest”) should remain fully obligated to the USA in all ways including CBT. If that person runs into a jam, there is only one they can call for help.
But for the rest of us? To use that phrase from Ghostbusters, “Who ya gonna call?”
If you are in a jam overseas, I think your first call will be to Canadian Embassy.
My first call would be to my countrys embassy but if they could not help, I would use my EU Citizen rights and call the nearest EU countries Embassy!!
I agree that CBT is at the heart of the matter. But it is also the hardest thing to talk homelanders out of and the have the majority of the vote. Its all about “other people`s money”. Thats what they want to pay off their debt with.
Thanks EM, I almost forgot about the “we’ll send the Marines to get you fallacy.” Another reason for overturning Cook vs. Tait:
From FAQ about US Embassy Evacuation Assistance:
http://yaounde.usembassy.gov/media/faqs_for_potential_evacuees.pdf
Who will pay to evacuate me and my family?
If commercial carriers are operating, the Embassy will recommend that you depart on your own and at your own expense. If you don’t have money to pay the fare, the Embassy can help you contact family and friends and assist in transferring money from them. In extreme circumstances, A DESTITUTE AMERICAN WISHING TO RETURN TO THE U.S. MAY QUALIFY FOR A REPATRIATION LOAN. THE CONDITIONS FOR MAKING SUCH LOANS ARE STRINGENT, AND YOUR PASSPORT WILL BE LIMITED UNTIL YOU REPAY THE LOAN.
IF COMMERCIAL CARRIERS ARE NOT OPERATING, AND THE US GOVERNMENT CHARTERS AIRCRAFT OR REQUESTS MILITARY ASSISTANCE, YOU WILL BE REQUIRED TO SIGN A PROMISSORY NOTE GUARANTEEING REPAYMENT. The government is required by law to seek repayment of expenses for the evacuation of Americans from overseas locations. The amount charged is generally the cost of a full fare economy ticket. If the actual cost per evacuee is less, you will be charged this lesser amount. The Embassy will not require, and will not be able to take, cash or credit at the time of evacuation. You will be billed later and your passport will not be limited.
@Polly
You wrote:
“Its all about “other people`s money”. Thats what they want to pay off their debt with.”
Here’s another version, fitting for the civil war era CBT precedent:
Its all about “cotton needs a pickin”. Thats what they want “expats to do for them.”
The Cook vs. Tait argument, that US citizenship for non-residents is “beneficial,” is no longer valid.
The recently invented legal term in IGA’s, “US Resident for Tax Purposes,” clearly implies that expats are not considered US Residents for anything else other than for taxation.
This is not a benefit, it is pure liability.
I look forward to watching the video of the Forum. Regarding keeping US citizenship – for me the issue is that my dual citizenship is in a country that is not under the Visa Waiver program, meaning that if I pay the exit tax, do the necessary and dump what for me overseas is a toxic passport, I will need to apply for a visa to visit my family and attended business meetings – and they just might out of spite reject my visa application….that is the only reason I have not (yet) renounced.
@ Steve Klaus
If Chuck Schumer gets his way with permanently banning covered expatriates, and he may eventually get it, a visa waiver passport will not be much good anyway.