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
That letter from CUNA is full of half truths and omissions. They completely avoid mentioning that FATCA is intended to prevent resident Americans from hiding money offshore. I also don’t know how FATCA would prevent people from maintaining bank accounts in the US, when it is the Patriot Act (a Republican law) that prevents Americans abroad from opening accounts for the reasons they describe.
I understand that telling the truth doesn’t further their cause and it’s all politics now, but I don’t appreciate the possibility of Americans abroad being used as pawns – even if I might benefit from it. They could easily cast us aside too, if it suits them.
@Bubblebustin
“FATCA is intended to prevent resident Americans from hiding money offshore.”
I would not assume that the intended target of FATCA was only Americans residing inside the Homeland.
I believe FATCA was crafted with many objectives in mind, one of which was to round up expats and bring their money (to include a windfall in FBAR fines) back to the plantation.
Why all the emphasis on data mining for Place of Birth instead of Place of Residence? And why are the Democrats still pretending the problems experienced by Americans abroad are all myths while stubbornly defending the “peculiar institution” of CBT?
I am very happy to see the endorsement from CUNA. Right now, expats need all the friends they can get.
@Samuel Adams
I’m happy to see CUNA’s endorsement too. I just become suspicious of motive when I see misrepresentations being made about non-resident Americans – even if these misrepresentations are to our advantage, and worry that we are being used for some other gain – for instance in this case for the US to remain as the world’s premier tax haven. FATCA’s original aim to catch resident Americans with offshore accounts was conspicuously missing from letter, and instead the reader’s told that Americans abroad are the sole target of FATCA.
On the bright side, if the only way to repeal FATCA is to advocate for us, then I applaud their efforts – with a healthy dose of scepticism.
We’ve yet to see how data mining and reporting will generate much in the way of revenue now that the IRS is more open to accepting reasonable cause arguments for not filing FBARs. The IRS is actually considering people who’ve signed closing agreements in the previous amnesty programs to come back have their FBAR penalties refunded to them. I suspect once through the wringer though, most will want to avoid getting the IRS in their lives again.
@Bubblebustin, I agree. I certainly don’t want either the IRS or US back in my life again. If I was offered US citizenship I wouldn’t take it back. It’s not something I need or want.
That’s “previous”, not “precious” amnesty programs!
@Sam Adams; ““FATCA is intended to prevent resident Americans from hiding money offshore.” I would not assume that the intended target of FATCA was only Americans residing inside the Homeland. ”
When I read through the draft IGA documents, it was clear to me that they were written by a group of people not a single person. Further, the final approval looked like a group approval not a single person with a veto. That is my observation from my “previous life” enough said on that.
It is clear to me that one of the authors sought to “carve out” non-resident expats. This is shown with the local client base exemptions and the exemptions for retirement type accounts and an attempt to effectively exempt government issued savings bonds.
Yet, there was a single author who wanted to attack EX-PATRIOTS. This is clear from the language looking for “unambiguous US place of birth.” I would further guess that the early drafts simply said US place of birth and did not say unambiguous. I would further suspect that there is an implied guilty assumption for those young people who use a birth certificate to open a financial account and it shows a tainted parent. I have heard this has been a problem on my side of the shoreline.
Had we all been “organized” early in the process, I think it would have been easy politically to get a resident based reporting exemption which would have solved all our problems.
In the end, I do not have a problem with intergovernment reporting of resident taxpayers stashing money non-taxed overseas. Unless the overseas government taxes the interest and dividends first.
I agree with what you say about FATCA if it went only after resident Americans. Many of us have said that it may just be FATCA’s effects on non-resident Americans that will kill FATCA, or get us a same-country exemption. CUNA’s letter is an attempt at the former. If CUNA was strongly advocating for Americans abroad they’d mention the same country exemption – but then that wouldn’t get the USFI’s off the hook on reporting all of their non-resident account holders in a reciprocal agreement would it?
@Bubbles, I am also a supporter of the European Savings Directive that requires 35% withholding which you only recoup by reporting to your local tax authorities.
Taxes must be paid as a price for civilized society and the place to pay it is where you live.
BTW, I would have little quibble for CBT if the USG imposed it on a USC who lived in no/low tax jurisdictions.
“BTW, I would have little quibble for CBT if the USG imposed it on a USC who lived in no/low tax jurisdictions.”
@George, I respectfully disagree. There are no/low tax jurisdictions where basic infrastructure and/or public goods and services are extremely poor. So why should somebody living in such a country be forced to pay a rate of 35% or more for a level of infrastructure and services that is worth about 10% at most?
CBT assumes that everyone lives in wealthy G-20 type countries. That assumption is wrong. There are plenty of expats living in Banana Republics that have only 50% electricity and 50% water, lousy schools, corrupt courts, unsanitary hospitals, pot holes in every street, and unemployment rates exceeding 40%. Why should they be forced to pay 35-40% income tax for such poor infrastructure and services. Is that a fair price for living in such a such a “civilization?”
CBT is just plain tyranny no matter how you try to slice it. It was created as a punishment and it will always be a punishment.
RBT or bust!
@Joe B….. touche.
Cheers George. I live in such a country.
Obama’s legacy for expats — consistent setting of new records for the highest number of Americans forced to renounce US citizenship.
Great job Barack, may your winning streak continue.
7.6 million Americans overseas have x4 or more this number in family and friends stateside. I’ll be asking for people to vote Republican this time around even if they never have in their lives. The Democrats are supposed to be the party of compassion yet their treatment of overseas Americans is quite a contradiction.
@JC
That is where the Democrats grossly miscalculated. They thought they could get away with screwing 7 million expats and nobody would notice. But they completely forgot about the family members of expats still living in the homeland. I think your estimate of 4 family members per expat is actually very conservative.
The total number of Americans affected (directly or indirectly) by CBT, FBAR, FATCA, REED, EXIT etc. is easily over 30 million. That is not a small number.
I already renounced but will I certainly tell all of my family members to vote Republican. And they will do it for sure because they are very upset with the way I have been treated and awkwardly embarrassed that I was forced to give up citizenship of the “greatest country on the planet” (cough, cough).
All of us “myths” have family members in the States.
Take note DNC. You think Hillary has it in the bag for 2016, think again.
Michael DeSombre @MichaelDeSombre 8m
At R N C Resolution Committee meeting where the resolution in support of Residence Based Taxation will be proposed.
Exactly…Joe Blow and that’s not counting just extended family (grandparents, brothers, sisters). It’s counting cousins (first, second, third) – most of whom are absolutely pissed off that expats have to renounce to save themselves due to a government of “entitlement first”. My wife’s cousins can’t believe that the USA is doing this to her – causing her to think about becoming Canadian, first, foremost and ONLY Canadian.
“Republican Overseas Will Propose RNC Resolution in August 2014 to Kill Citizenship-Based Taxation”
Wow, very brave for them to come out like this and admit their treasonous and evading acts to the world, and then have the nerve to ask forgiveness! (if you are wondering how this will be viewed by homelanders, I think I summed it up nicely).
pukekonz
“…very brave for them to come out like this and admit their treasonous and evading acts to the world, and then have the nerve to ask forgiveness! (if you are wondering how this will be viewed by homelanders, I think I summed it up nicely).”
That is why the American people don’t get a pass for Uncle Sams abuse of expats. They are highly culpable themselves.
RNC Resolution Committee just passed the resolution in support of Residence Based Taxation #RBT. Will now be put to entire RNC.
American Society of Mexico Endorsed Resolution in support of Residence Based Tacation #RBT.
@Marktwain What does “RNC” stand for?
@Polly
RNC = Republican National Committee
@ Polly
Republican National Committee
Thx! It has become so common to use abbreviations for everything and sometimes that leaves me in the dark. LOL
I was told that the RNC will vote on the kill CBT resolution on Friday. When this passes, RNC and the Republican Overseas people have to educate and begin influencing Republicans in House and Senate. I think the pitch should be “CBT is bad for business and makes the U.S. less competitive”.
I attended the meeting at which Michael DeSombre of Republicans Overseas explained to the RNC Resolutions Committee the different harms that CBT cause middle class US people living abroad (e.g., accounts closed, double taxation, high costs of filing even when no tax is owed).
Then he explained why CBT is “bad for business.” One example he gave was that of a company overseas in which, originally, about half of the senior employees were American. Now, because of IRS tax rules only two of 25 senior people are American. Americans have become just too expensive for overseas companies to hire.