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
Why would the US even think about abolishing CBT? It makes them money!!!! Until it is worthless, they will never repeal it period. As long as they are getting away with this, as long as no country can overpower them, CBT is here to stay and you can bank on that!
Schoolhouse rock came when I was a teenager and when I was making fun of my little sisters for watching it. Fortunately I saw it while I was making fun of it.
@NativeCanadian
I think that they will end up repealing it once they realize that FATCA and CBT will end up costing them more money in the long run.
How much will it cost to enforce all of this nonsense, compared to how much they can collect from taxes and penalties? How much of a tax base will become permanently lost due to renunciations?
The country is broke. Really, the last thing they can afford is more hubris. Doesn’t mean they’ll necessarily do the right thing, though. All I can do is keep calm, and carry on.
The best strategy for getting CBT killed may be the same that got FATCA passed — slip it into a bill as a rider that everyone wants to pass.
I have asked them about that before. Still waiting for an answer.
I have also asked all Democratic candidates for Congress in my old district. Still waiting for an answer from any of them.
@Native: Actually, I don’t know if CBT does make money for the US. 82% of people who file owe nothing. Some people somehow get refunds even though they didn’t pay anything. In fact, some Canadians who filed to become compliant to renounce (who never lived in the US!) got some kind of stimulus payment of hundreds of $. Unfortunately, their accounting fees were more than that.
For those who owe nothing and even those who pay something, the costs of processing hundreds of pages of complex returns must cost more than people pay.
CBT has never been about money or taxes. From the time it began in the Civil War, it has clearly been about power, control and punishment. That is the real reason the American government is determined to hang on to it.
With FATCA, the US is moving beyond control of people to control of the world’s economy, financial institutions and countries. That is the real reason they are doing it.
I also posted this on the general FATCA thread. I see that the IRS is still pretending that they have statutory authority for the IGAs.
http://federaltaxcrimes.blogspot.ca/2014/07/irs-letter-to-congressman-defending-its.html
‘Wednesday, July 2, 2014
IRS Letter to Congressman Defending Its Implementation of FATCA (7/2/14)
June 23, 2014’
“June 23, 2014
The Honorable Bill Posey
U.S. House of Representatives
Washington, DC 20515
Dear Representative Posey:”……….
“..Your letter also asks about statutory authority to enter into and implement the IGAs. The United States relies, among other things, on the following authorities to enter into and implement the IGAs: 22 USC Section 2656; Internal Revenue Code Sections 1471, 1474(f), 6011, and 6103(k)(4) and Subtitle F, Chapter 61, Subchapter A, Part III, Subpart B (Information Concerning Transactions with Other Persons).
The Treasury Department and the IRS will continue to work closely with businesses and foreign governments to implement FATCA, including implementation by means of IGAs, in a manner that appropriately balances the compliance objectives of the statute with whatever burdens the statue imposes.
We appreciate your continued attention to this important effort to reduce tax evasion. If you have additional questions, please contact Sandra Salstrom, Office of Legislative Affairs, at (202) 622-1900.
Sincerely,
Alastair M. Fitzpayne
Assistant Secretary for Legislative
Affairs “
I really hope and pray the Republicans don’t blow it and get control of the Senate and keep control of the House. Given the poor performance of this Administration they have the election to lose. While Obama may veto a FATCA repeal/amendment the Congress can defund it.
Another possibility is to get modest Democrats on the side. This can be done with individual Senators or by getting any of their classic benefactors to push them. Not so easy.
The big problem is that Congress is just so dysfunctionally partisan and bipartisanship will be needed to sort this one out. The Democrats will undoubtedly want measures to keep large U.S.-earned fortunes from going offshore (which was why CBT was reintroduced in 1894 and 1913). Basically,the real villian in CBT is people like Lady Grantham off Downton Abbey: wealthy Americans who bought their way into the aristocracy before World War I. I can’t see it passing without some sort of exit tax provision and some measure to keep FATCA for enforcement of RBT.
@moaner
There are still protections outside of national security; however, it does seem like the world’s most expensive supplemental travel insurance policy. If the tax goes, then voting would probably also go, although relatively few U.S. citizens abroad vote.. As the years go by, I feel voting in U.S. elections is an intrusive duty rather than a privilege, even though I have reasons for following U.S. politics. People who are only overseas for a short time may feel differently.
@NativeCanadian @JoeBlow
FATCA made it into the legislation because it was a funding mechanism, although it probably won’t raise nearly as much as proposed. Any rider getting rid of CBT, would need to find another source of revenue to exploit.
I see this Republican effort as a very positive step in absolutely the right direction. Regardless of our individual political preferences I believe we should give it our full support. Regardless of our belief in whether or not it has a chance of succeeding or whether or not the Republicans have a chance of winning the 2016 election we should get behind this effort. We have found a powerful ally!
This does not mean we should give up on our other avenues. What it does mean is that we have added another edge to our sword. Unlike conventional warfare where battles on many fronts split up and weaken the forces, our position in our war will actually benefit from attacking our adversaries in many different ways. I salute the Republicans for taking up our cause!
@MuzzledNoMore
Hear hear!
@Publius
“FATCA made it into the legislation because it was a funding mechanism, although it probably won’t raise nearly as much as proposed. Any rider getting rid of CBT, would need to find another source of revenue to exploit.”
So expats will have to pay for getting rid of CBT? That means expats will have to make keeping CBT expensive for homelanders so they will want to get rid of it. Hmm, so what can we do to start costing them money?
@FromTheWilderness
“Hmm, so what can we do to start costing them money?”
Ironically, filing.
Nice to see a policy resolution that actually seems to get it (mostly). However, these folks have control of the House right now: nothing stopping them from passing the bill at their level. It may die a couple of times before a new electoral outcome provides a path towards signature (or not- I don’t see support for CBT being more than skin deep down there: most barely understand it), but it certainly would be more forceful if an actual voted-upon House Bill than a simple “some day” policy resolution. Personally, I’m not holding my breath that the US moves off of this self-destructive position until some more attractive prospect entices them to do so. Were our Court Challenge to gut FATCA in Canada (by restricting it to non-residents), the US would face a tough choice: demand the impossible of Canada or focus on what they really care about (domestic tax avoiders). That MIGHT get them to re-consider CBT as the prospect of the whole world following suit with Canada would also drive them crazy unless they made a virtue of necessity and abolished CBT on their own (which they can “discover” was harming so many little people) in order better to go after big fish domestic cheats.
Anne Frank:
They’ll have to get the RNC to agree to include this in the party platform first to have any hope of that, I imagine. Maybe after August?
I have to say this actually gives me the first stirrings of hope I’ve felt in a long time about all this, and I have never even voted Republican. At least someone in a position to do something is listening.
Now up to 20 members — Go Solomon Yue!
Twenty RNC members, including seven of the nine-member RNC Resolution Committee joined Solomon Yue, Vice Chairman and CEO of Republicans Overseas to propose the following RNC resolution in order to end double taxation and FATCA for 7.6 million overseas Americans.
Resolution Supporting “Residence Based Taxation”
If I am not mistaken, there is a Committeeman & Committeewoman in every state, meaning that now 20% of the RNC are SPONSORs.
Here are efforts on the other side of the aisle.
http://www.thedemocratabroad.org/may-fbarfatca-task-force-update/
Reps Overseas has invited both DNC and DA to participate in their resolutions. It will be important to get both sides of the aisle together.
Desombre of Reps Overseas tweeted this today
FATCA legal action website goes live next week. Stay tuned!
If RO and DA want to keep their constituents abroad they will need to act quickly. Now that the cat is out of the bag on CBT, FBAR, and FATCA the vast majority of long term expats will renounce/relinquish or go underground (most underground).
I predict that within two years time the American Diaspora will be wiped out. Literally extinct with the exception of people who are abroad only temprarliy and have strong ties to the Homeland along with retirees who are living off US source pensions (Social Security, 401ks etc).
Virtually all long term expats who have built lives abroad will be gone! I give it two years maximum.
I won’t guess as to the time line, but I agree with you that it’s inevitable, FromTheWilderness. Whether it’s greed, fear, stupidity, or all of the above, America is devouring itself starting with it’s own diaspora. These are interesting times, to say the least.
Democrats Abroad is very weak. They obviously still embrace CBT. The best they can come up with is to politely ask for a “same country” exclusion for FATCA reporting. That doesn’t do anything to much to help Americans living in the EU who live in one country and work in another thus bank in more than one location.
If DA has any degree of legitimacy with its “reason to be” which is support American Democrats abroad, they will step up to the plate and join RO in proposing a resolution to support “Residency Based Taxation.”
Republicans Overseas’s resolution in support of RBT is a demand for justice.
Democrats Abroad’s request for a FATCA same country exemption amounts to a plea for mercy.
Joe Blow:
I’m not sure they embrace CBT as much as don’t want to touch that rail. FATCA they clearly embrace, with modifications, and they have stated so and given their reasoning for that position. Fair enough, one can agree or disagree with their position.
When it comes to CBT, all they do is giggle and say, “My goodness, isn’t it amusing that the US and Eritrea have something in common? Oh well!” Such a studiedly empty-minded response tells me they don’t want to take a position either way — they know darn well their constituents are against CBT, but they also probably expect the DNC to try to use RBT vs. CBT as a wedge issue to distinguish themselves from the Republican party. (I mean, I expect this, anyway.) So they are stuck, and are hiding behind a facade of ignorance and hoping not to get pinned down.
All of which is pissing me off mightily. I have voted straight Democratic ticket my entire life, and never imagined I would ever vote Republican. But if the Republicans actually take a principled stand here while the Democrats keep their heads in the sand, I may actually have to start re-evaluating that stance. Never before thought I’d see the day when I would even be questioning which way to vote… Strange new world.