@CBCAllInADay interviews law Professor Michael Kirsch about his reasons for supporting taxation of #Americansabroad http://t.co/FcVL4QJIXa
— U.S. Citizen Abroad (@USCitizenAbroad) August 16, 2014
Notre Dame law professor Michael Kirsch defended citizenship-based taxation at the May 2, 2014 ACA Conference on citizenship-based taxation.
Here is a very recent interview with him. Listen carefully to his rationale.
@Anne Frank, ” I have no intention of submitting myself to the US jurisdiction to PROVE I don’t have it (I gave it up decades ago without any doubt whatsoever), but will have all the paperwork needed to prove to a Canadian court should I ever have to.”
This is a motivating comment. This all goes back to a CLN is NOT required for one to lose US Citizenship under the relinquishment criteria of 8 USC, other than renouncing.
Post FATCA we have FI’s asking; “Are you a US Citizen?” You would rightfully and honestly answer NO to that question.
The FI may request copies of maybe a passport. If there was indica, you would answer NO again.
They would then ask for a CLN and if that was the sole standard it would indeed be ultra vires.
So then you go to your file and provide a reasonable explanation as to the fact you relinqusihed and did not get a CLN as there was no reason to get one.
No here is where the fun gets and yes it could be “fun.”
What if said FI then states the reasonable explanation was not “reasonable.”
Thats when you state as fact that they will be taken into Canadian Court and as you state it will be a Canadian Court who will determine if you provided a “reasonable explanation” whilst in Canada to a Canadian FI that you are not a US Citizen.
Is someone has committed an 8 US Code relinquishment and has a document file to show it, along with the Code Section, will a FI accept it or risk going into a Canadian Court on the issue.
George: I understand your point but I don’t think that punishing Canadians who have moved to the United States just because “US Persons” are being punished in Canada is a very good idea. The people who get hurt are the US-resident Canadians. The US government probably wouldn’t even notice if Canada adopted that policy. The Canadian government was just as oblivious to US expatriate tax policy as were the rest of us before FATCA was dropped on it.
No. Hurting more people is not the answer. The US adoption of RBT is *the* answer and it has to happen.
@George, thanks for your kind comments. My philosophies are derived from experience more than the writings of philosophers. I’ve been party to a few legal matters over the years, and when I’ve been unfortunate to lose, I’ve always examined the specifics of how the other side came to prevail. In each case I remember thinking “I wish I had engaged their lawyer so that he could have exposed the weakness in my case”. In fact, if there were a law that litigating parties had to swap lawyers half way through, there might be a lot less litigation.
Of course in practice, this is hard to achieve. When you engage an attorney, you frame your problem from your own perspective, and they pick up that ball and run with it; it is only the other side’s attorney who thinks deep and hard about creative ways to undermine your claim. The situation is different with Kirsch: he is likely keenly aware of the sections of the tax code and treaties which are vulnerable. If you don’t believe me, I encourage you to read his paper hyperlinked in my previous post. What’s more telling to me, is that both in his most recent paper, and in the radio interview, he chooses to acknowledge our plight without providing any definitive solutions. Most absolutists would make some spurious claims that the new streamlined procedures have satisfactorily addressed our concerns, or choose not to address our situation at all if it undermined their narrative. Kirsch, by contrast, appears to have left that door open.
Kirsch is the second legal expert that I’ve identified in this narrow category. The other is Stephen Shay:
http://www.law.harvard.edu/faculty/directory/10794/Shay
He’s a Harvard law professor who worked for the Treasury as far back as 1982 as an International Tax Counsel and more recently as Deputy Assistant Secretary for International Tax Affairs. As best as I can make out, he drafted the current 877A expatriation legislation way back in 1995, where it languished before being enacted, without modification, in 2008.
http://www.gpo.gov/fdsys/pkg/BILLS-104s1357pcs/pdf/BILLS-104s1357pcs.pdf
http://www.c-span.org/video/?64205-1/tax-policy-former-citizens
http://www.c-span.org/video/?66084-1/tax-treatment-expatriates
The 877A provisions are on page 1676 of the first link. Stephen Shay begins talking at 2:29:18 of the second link. The two videos, collectively 5 hours, shed valuable light on congressional intent pertaining to our situation. Issues pertaining particularly to our situation can be found in minutes 50-53 in the first video and at 0:01:50; 0:23:27; 0:32:50; and 1:28:30 of the second video. The fact that these videos are 20 years old should not make them obsolete on account of the fact that the legislation being debated was not altered in the interim. Perhaps another keen Brocker could search to see if there has been any further debate on the matter which might be pertinent.
Like Kirsch, Shay would appear to be antagonistic to our cause; but as an academic, I believe he could be motivated to consider provisions that would eliminate some of collateral damage caused by present policy, particularly legislation that he was party to drafting or promoting. Notably on his disclosures page, he is no longer working in any government capacity and until very recently he advised a think tank on how ” territorial income tax systems address certain issues and whether or the extent to which their approaches are relevant to the United States”. He also provides “occasional legal services as a special tax counsel to Ropes & Gray on client matters as mutually agreed on a matter-by-matter basis”, meaning his skills are available to the private sector.
Kirsch and/or Shay (there may be others) might present us with an opportunity. Constitutional challenges are extremely expensive, while lobbying efforts by the likes of ACA and James Jatras appear to be making slow progress, if any at all. Members of congress are not available for consultation, and seem indifferent to our situation. Shay, by contrast, is available for consultation through the law firm Ropes & Gray, and law professors should be interested in cases where the laws and/or policies which they have championed are shown to have unintended discriminatory consequences.
If we can present a few sympathetic cases (such as Calgary411’s unconscionable circumstances) combined with the specter of a global outcry as tens of thousands of accidental citizens are exposed via FATCA, this combination of rights abuses combined with considerable potential damage to the US’s global reputation, primarily among its allies where foreign citizens reside, then we might convince Kirsch or Shay to promote some preemptive measures. Perhaps Kirsch could draft one of his 80 page papers dedicated to our cause, or Shay could draft some proposed regulations which would seek to protect the rights of those long term foreign citizens who genuinely have lost their US connections, while eliminating the likelihood of any whales slipping through the net. Such regulations could be of the ‘grandfather’ type, meaning that it would apply only to individuals presently identified as such and would preclude others from engaging in tax planning to benefit therefrom.
Ultimately this would be an indirect form of lobbying, with no guarantee of success, but I wager that Kirsch and Shay would be able to bend the ear of Congress more readily than ACA or Jatras.
Shay was one of the lead people behind FATCA. I highly doubt he looks that favorably towards us. Ropes & Gray is a HUGE HUGE law firm that I have some personal experience dealing albeit not with Shay. Their advice costs $$$$.
Tim
I will add another name though and that is Hugh Ault who I have personally met and is strongly in favor of residency based taxation. Hugh is a US citizen that lived in France for many years. As Hugh put it in my discussion with moving between countries for tax purposes should be just like moving between Massachusetts and New Hampshire(I believe Hugh now lives in New Hampshire)
http://taxprof.typepad.com/taxprof_blog/2012/09/conference-today-.html
He recently co-wrote a paper with the aforementioned Stephen Shay too.
http://taxprof.typepad.com/taxprof_blog/2014/07/ault-schoen-shay-.html
The only caveat with Hugh Ault is despite the fact he is American he is not considered by his colleagues to be in the upper echelon of tax practitioners in the US. Much of his work was in Europe.
Kirsch can blah, blah, blah as much as he wants, but it will only encourage people to continue renouncing and further isolate the US.
@Tim, thanks for that insight. You are probably correct, and I have no reason for believing that Shay has any sympathy for our cause; unlike Kirsch who has taken the time to address us on two occasions.
Shay and Kirsch are only two, there are undoubtedly others, similarly situated, who might be willing to assist us. It’s extremely common for tax professionals to work in a governmental capacity and then return to the private sector where they advise clients on the regulations or enforcement efforts in which they were previously involved. If we could identify such a person who still has the ear of Treasury or Congress, that would be somebody we should consult. Such a person might charge $$$$ for their advice, but a constitutional challenge costs exponentially more.
1. When you go on a long vacation, you may pay someone to feed your pets, water your plants etc. while you are away. Similarly, when you leave the USA, you should pay to make sure it’s still in good shape when you get back.
My wife has no intention of going back to that miserable backwater of a country that insists on taxing its own citizens and then providing no tangible services) and I’m not talking about Eritrea. Her home is in Canada with me and her children. So why should she pay to keep the “lights on”. All her pets and plants came with her or were here when she arrived over 14 years ago.
2. The USA may have paid to educate you and provide you with opportunities to enrich yourself. If you leave, you still have a debt to repay.
She was so far behind the rest of the education curve in Canada that Canada had to pay to bring her up to university level education. So that argument doesn’t hold any water and any post-secondary education that she received, she received out of Canadian taxpayer pockets. So tough luck. Keep holding out your hand, it’ll remain EMPTY.
3. Some people will claim residence in a tax haven but spend most of their time in the US and other countries where people actually want to live. CBT frustrates these freeloaders.
We are taxed higher than your highest tax rate so why should we have to double-tax pay for people in your country who don’t wish to contribute “their fair share” in a country that they reside in. And why should expats have to foot the bill for the rest of you who don’t want to work?
4. The US military maintains a Pax Americana that you benefit from even though you do not live in the USA. You should pay for this.
We have a military, it’s called the Canadian Armed Forces. And the last time the United States went to war against Canada, they promptly got their butts handed to them by the British Army who was in control of Canada at the time as Canada was a colony. Don’t f* with us. We are the beaver; we may not look tough, but we’ll gnaw your leg off and maybe sever an artery at the same time.
I’ve heard that American homelanders like to use the Canadian flag abroad so that they can get better service. This is known as “flag-jacking”. Maybe we should use a retaliatory taxation as a remedy against FATCA. “let’s say 30% tax” for displaying a flag that isn’t the country of your passport. Since Americans like to pretend they’re Canadians abroad, maybe we should tax them on “assumed Canadian Citizenship” after all they are getting a benefit of being labelled as a Canadian so that they don’t get taken as a hostage or come to any harm while abroad. It would be more a logical choice for taxation than #FATCA which has absolutely no benefit whatsoever except to those in the continental United States (all territories excepting Canada and Mexico – your mileage may vary).
Mark Mazur, Asst Treasury Secretary, Tax Policy (and Robert Stack’s supervisor) wrote this in his doctoral dissertation in the Acknowledgements section: “thanks to the taxpayers in general, and particularly those in New Jersey and Michigan, for subsidizing my education.”
Mark Mazur, who works in Washington DC, probably lives in DC or in a surrounding state such as Maryland or Virginia. It is unlikely that he is paying taxes to New Jersey and Michigan, but he is most likely paying taxes where he lives.
American emigrants would like to be able to do the same. We would like to thank the US for the education and other services, but we now pay taxes where we live, just like you, Mr Mazur.
3. Some people will claim residence in a tax haven but spend most of their time in the US and other countries where people actually want to live. CBT frustrates these freeloaders.
Oh…and one more thing: The number of your “freeloaders” on welfare tends to outnumber the entire population of Canada. Last number was 108 million on welfare. That’s a lot of freeloaders. Maybe you might consider cleaning up your country first before looking to those not living in your country to foot the bill.
who funds James Jatras?
anon, Last I heard, he had a job and gave services for monies paid out to him.
If the US continues to insist on CBT, it only seems fair that it stop taxing residents who are not citizens. After all, only citizens get the “benefits” of being citizens.
(I can’t for the life of me figure out what those “benefits” could possible be. But I’m probably stupid. Those homelanders seem to know.)
“……..In my view a lot of mischief takes place in the subtle–maybe you missed it–transition from the use of the word “citizen” to the use of the word “taxpayer.” This is a transition all too many scholars make without even noticing it, yet it masks a world of ideology and assumption that frame and define how we think about tax today.”………
“….We don’t have to work too hard to think of a few examples where defining the taxpayer is an exercise in claiming authority, which fundamentally depends on power. FATCA is an obvious one.”……
……
“.With FATCA, the US is using its sheer economic clout to get the whole world involved in chasing what it deems to be “US persons” for their tax tribute, without any discussion about whether the state’s unilateral conferring of citizenship constitutes consent to (permanent and worldwide) taxation. Indeed, it continues to erect ever-higher barriers to shedding that status, without a single policy discussion at any level of government about the merits of this action…”..
Allison Christians http://taxpol.blogspot.ca/2014/09/the-power-to-tax.html
Friday, September 5, 2014
‘The power to tax ‘
Too bad the ACA didn’t have Allison Christians debating Kirsch. Maybe next year?
and this guy – Professor Michael Kirsch is based in the US.
The right to live and work in the US important for people who don’t live in the US?
Kind of like asking a beneficiary of slavery how he might feel about slavery, isn’t it?
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