Many of you have reasonably given up on the political process in any country as a means to change bad laws — and many would also have difficulty in agreeing with all of the positions of some members of the U.S. Republican party.
—But today the Republican National Committee voted unanimously a resolution to support Residence-Based Taxation.
This is a good beginning.
We now have a major political party in the United States aiming to kill both FATCA and citizenship-based taxation. Will the other party support these good resolutions?
From the RO Facebook site:
Resolution Supporting “Residence Based Taxation”
WHEREAS, Residence-Based Taxation, (RBT), is a fair, equitable, and efficient taxation of American Citizens living overseas because it taxes their worldwide income only once in the country where they actually reside and receive government services;
WHEREAS, RBT would not only align U.S. law with the other industrialized countries, but also eliminate complex requirements and tax forms, such as the Foreign Account Tax Compliance Act (FATCA) and the Report of Foreign Bank and Financial Accounts (FBAR); and, it would significantly reduce IRS administrative expenses;
WHEREAS, The United States is the only industrialized country in the world that taxes foreign-source income of its citizens living overseas by Citizenship-Based Taxation (CBT), resulting in double taxation; all other industrialized countries only tax foreign-source income of their citizens residing in their home country (Residence-Based Taxation or RBT);
WHEREAS, The complexity of a U.S. tax return for an American living overseas and the significant additional penalties applicable to
Americans living overseas requires these U.S. Citizens to hire expensive tax preparers; the cost of this double-taxation along with the costs of preparation and compliance put American job seekers at a competitive disadvantage to other non-American workers, thus costing American jobs;WHEREAS, The higher cost to hire American workers resulting from CBT causes multinational corporations, even those headquartered in America, to hire fewer Americans, to have less of a connection to America and purchase fewer American goods and services, thus decreasing American exports;
WHEREAS, The Foreign Account Tax Compliance Act (FATCA), implemented as a result of CBT, has caused banks, both U.S. and foreign, to deny access to banking and other financial services to the 7.6 million Americans overseas, thus denying employment and investment opportunities and forcing them to choose between U.S. citizenship and their livelihood;
WHEREAS, The implementation of FATCA to enforce CBT promotes the abandonment of the U.S. Dollar as the global reserve currency and hurts the U.S. economy; and
WHEREAS, History reveals that replacing Citizenship-Based Taxation with Residence-Based Taxation will raise net Federal tax revenue because of increased economic growth, therefore be it
RESOLVED, The Republican National Committee urges Congress to repeal Citizenship-Based Taxation and its supporting legislation such as FATCA and FBAR;
RESOLVED, The Republican National Committee urges Congress to permit restoration of citizenship for those who were compelled to renounce their citizenship because of the crushing burdens of FATCA and FBAR; and
RESOLVED, The Republican National Committee urges Congress to align U.S. law with the laws of other industrialized countries of the world by limiting taxation to Residence Based Taxation on American Citizens living overseas which will encourage increased employment of Americans and increased export of American goods and services.
Chief Sponsor – Solomon Yue, Jr., Republican National Committeeman for Oregon (Vice Chairman and CEO of Republicans Overseas)
1st Co-Sponsor – Carolyn McLarty, Republican National Committeewoman for Oklahoma (Chairman of the RNC Resolution Committee and Member of Republicans Overseas Board of Governors)
2nd Co-Sponsor – Jeff Kent, Republican National Committeeman for Washington (Vice Chairman of the RNC and Member of Republicans Overseas Worldwide Advisory Committee)…..and others
See just posted Republicans Overseas RNC resolution to kill CBT.
@Stephen
So it will be voted on in August. Is my understanding correct?
The justification for CBT has always been that Americans abroad receive the protection of the United States. But a Federal Court has decided that the United States may assassinate an American abroad because, being outside of the borders of the US, a US citizen abroad does not enjoy the protection of the 5th Amendment. Therefore, US persons do not enjoy Constitutional protections outside the US and therefore there is no longer any justification for CBT.
I don’t think CBT has ever been about money or taxes. CBT in my view is about punishing anyone who leaves the USA. These people consider expats traitors and subhuman scum. How dare they. “Let’s eff these bastards up as much as possible, teach em to turn their back on Murca, we’ll show em.” -Sorry, can’t help myself. Their proposal will surely be meet with absolute contempt.. “who the hell do these scum think they are? next…” will be the general attitude if you ask me.
@Sam,
My understanding is that resolution will be proposed and voted on at the Chicago RNC meeting in August (August 5-9).
Petros raises a good point, which might possibly be used in litigation attacking CBT.
I’m pleased it’s being put forward to the RNC, however, with America’s changing demographics the Republican party itself has to change to be electable to capture both Houses if not the US Presidency. The Republican ‘product’ has to change to attract other than ‘old middle class white guys.’ They need to become attractive to the minorities as well or else they’ll never have the votes.
Why didn’t you simply say:
We, the overseas Americans urge the RNC to resolve the over seas American Taxpayer delima by supporting the FairTax, as introduced in the U.S. Congress every year since 1999, in HR25 and S122, a National Sales Tax collected from person who purchase new goods or services while in the territory of the United States and which would become the only tax the U.S. Federal Government can levy on citizen and non citizen alike while on U.S. territory only.
This would void FBAR and FATCA along with hundreds of other taxes the government tacks onto companies and individuals while pretending that they are paying taxes, but which they all incorporate into their cost of doing business and pass aong to the end consumer. The FairTax is a 23% sales tax which has been shown to be revenue neutral because it picks up taxes, as they spend, on the 50% who have taxable incomes but simply have never filed a tax return except to claim the ”earned income tax credit” which adds to their soendable income and is not taxed…..criminal and non criminals become equal under the law. Law abiding citizens get a break because the criminals pay taxes too.
The poor pays no taxes because they use the refund called a ”prebate” and have no witholding to their meager incomes. They tend to buy used cars and used houses which are un taxed.
K.I.S.S. (keep it simple stupid) No IRS, no tax forms, no audits, no criminal charges except against the merchants who fail to transmit the tax money to the state who sends it to the U.S. treasury, keeping a small amount for the expense of collection.
@Petros, given that argument, I also wonder if the US will take the view that its greencard holders and any former citizen they deem as still having US personhood for tax prposes will no longer have any constitutional protections. In other words, they could try to really punish people who’ve renounced because they could say ‘too bad, they’ve expatriated so we’re going to throw the book at them.’ So maybe the Constitution only protects homelanders…any resident alien or former citizen or even US citizen living abroad could be increasingly vulnerable to Voldemort’s whims…
“Voldemort`s whims”…….SNORT.
AINT THAT THE TRUTH.
The recent court decision ruling that Americans are not entitled to constitutional protections while outside the US puts an extra nail (more like railroad spike) in the coffin of Cook vs. Tait’s premise that having US citizenship is beneficial for Americans living outside the US.
US citizenship is now the single most dangerous citizenship in the world to hold as an expat.
This is THE first political approach to the problem. Remember, that in politics, either one side must bring something to the table or the other. On the facebook page, you can see a note inviting bipartisan support.
What we would like is for this issue to come to fruition and come to vote and pass.
Legislation in most countries is now decided to be passed or not passed based upon the measured interest. This is measurable in site hits, shares, media mentions, and search terms in each search engine. It is also measured in the quantity and tone of media articles. Formula One racing is the same—the teams are paid by exposure.
For whichever side takes this furthest, it is important to give it as much positive traffic as possible in as many forums as possible. And they won’t be too damaged by the tougher language used by some folks.
It is critical to build it up as a bipartisan effort and get this from resolution phase and over to bill phase.
Pass the word to make this legislation happen. For those that can vote, make your best to get your notes to your legislators and party reps.
“Legislation in most countries is now decided to be passed or not passed based upon the measured interest. This is measurable in site hits, shares, media mentions, and search terms in each search engine. It is also measured in the quantity and tone of media articles. Formula One racing is the same—the teams are paid by exposure.”
Wise words indeed!
I think that the media is finally (although slowly) waking up to the problems facing expats. We have to keep hammering the comments sections and writing to journalists and columnists.
I also think politicians DO care about what the press is saying.
And they also DO care about the number of renunciations. The increase in numbers really makes America look bad.
As cynical as I am about the political process, there has to the best of my knowledge NEVER been a better opportunity to get CBT repealed.
When it comes to war, you can always look for inspiration from Churchill:
“Never give in–never, never, never, never, in nothing great or small, large or petty, never give in except to convictions of honour and good sense. Never yield to force; never yield to the apparently overwhelming might of the enemy.”
I wonder what Churchill would have said about CBT, FBARs and FATCA if he were alive today?
Please correct me if I am wrong, but I am under the impression that he was a dual citizen of sort?
@Joe Blow, his mother was American, but I don’t think he was dual. At that time I don’t think nationality could be passed on unless the father was American, which he wasn’t of course. He was made an honorary citizen of the US in 1963.
“In 1963, US President John F. Kennedy, acting under authorisation granted by an Act of Congress, proclaimed him an Honorary Citizen of the United States,[235] but he was unable to attend the White House ceremony”
http://en.wikipedia.org/wiki/Winston_Churchill
This is all fine & good… but to me… I don’t think its going to happen…. I take this as more political grandstanding to get the expats’ vote.. as I am reading… some of the political shift was by expats’ votes… the deciding vote… so both sides will do what they can to get the votes… I have heard alot from the Republicans… I have seen no results… where is this lawsuit talked about… I thought they would at least get an injunction to stop July 1… nada… info could all be delivered today… they have it already… even if they stop the law… too little… too late… US has the info needed… I maybe wrong… since I know almost nothing about US politics… never cared… but now… I have become more & more aware of the political issues that pertain to me.. To me.. until its stop in its tracks… its more hot air they are blowing….
Way too little, way too late for the tens of thousands who have ditched their US citizenship recently. The problem will fix itself because there will be no Americans living outside of the US in a few more years.
I no longer have any confidence in the Washington political process to achieve anything useful. Congress lives in a bizarre, fantasy world that bears no resemblance to the real world the rest of us live in.
Holding US citizenship is no longer a good thing, regardless of fiddling with their tax system.
Hot air, no hot air. All politics is about getting voters who support a view.
The biggest danger with this proposal is that few people will react to it. If people do not react positively and effectively, then the politicians will believe that it isn’t wanted and isn’t needed. It won’t be political hot air, it will be cold air.
There has been no other such proposal in history.
For those that can vote and for those that can influence the vote, remember that this is the proposal looked for.
There has been a proposal in history akin. The one that made CBT effective as a result of the Civil War. A long time ago and time for change.
The political process in the US seems to me to be along the lines of ignore what Americans want in favour of the elite in Washington, both sides of the aisle. Illegal Immigration a most prominent case in point.
A huge majority of Americans want the border secured and illegals deported. As we see today the exact opposite is happening and it is for political expedience and furtherance of one political party: Democrat.
Republicans are too cowardly to oppose. Not one of them has a spine in the house and in the Senate, too few. With Harry Reid the obstructionist he is in the Senate, expect nothing to go anywhere beyond the House. I would expect this resolution to pass the house by a good majority. It will then die in the Senate, not even brought before the Senate for debate, for this is the way Reid has operated from day one.
They are taking their sweet time with this resolution and I, too, expected an injunction before July 1st., so do not know what is the hold up there nor their strategy at this point. Results matter. And the sooner the better. The time for talk is long over.
If “US persons do not enjoy Constitutional protections outside the US” it does make one wary about even going to the embassy to renounce.
@MarkM, I’ve concluded that all former citizens/green card holders may have to live with a degree of uncertainty forever. Congress may someday pass legislation in efforts to reclaim many of us as US tax persons once again..
This is a long process. It is a resolution to make kit a policy of the RNC Republican National Committee. Then, the REpublican legislators need to pick it up and make it a bill. To make it a reality requires that the DNC takes it on to get the 51% in Senate, and then the establishment needs to accept it in the Whitehouse. Obviously, that process would take til 2016 without a change of current mindset.
The lawsuit will be going on at the same time.
It will take a long time before becoming a bill, and they need to have assurance that it has a chance of going through — based upon what that other party thinks.
@Mark Twain, I fondly remember that episode on Schoolhouse Rock! 🙂