Tax, Society & Culture: Fixing Global Tax Disorder: Multilateralism vs. U…. http://t.co/3w6BtBwHLA – interesting thoughts of @TaxPolBlog
— U.S. Citizen Abroad (@USCitizenAbroad) October 15, 2014
Very interesting read includes:
According to Allison Christians of McGill University Faculty of Law, the problems addressed by the conference’s panel on international taxation are not much different from those faced by four academics more than 90 years ago when asked by the League of Nations to study the question of how to share the world’s income tax base. Christians said the crucial issue now is the failure to tax income as opposed to double taxation, which worried policymakers then.
“If you gave international tax a grade over 90 years, it would be an F,” Christians said.
“We will not take fairness seriously on the international stage.”
Christians said that powerful countries too often end up calling the shots, much to the detriment of a fair and orderly international tax system. “When we turn to power, we sacrifice both efficiency and equity . . . and administrability as well,” she said.
Christians was especially critical of the U.S. for using the Foreign Account Tax Compliance Act to expose underpayment of U.S. personal income taxes while cautioning that the OECD’s base erosion and profit-shifting initiative could negatively affect U.S. multinationals.
“FATCA leverages U.S. control over the global financial system, thereby forcing the populations and governments of poorer countries to direct precious tax administration and regulatory compliance resources toward the enforcement of the U.S. tax system over their own,” Christians said. “Yet the U.S. has not used this same leverage to respond to base erosion. U.S. lawmakers have not seen as great a good in stopping tax avoidance by U.S.-based corporations as they have in stopping tax evasion by U.S. individuals.”
Speaking of Allison Christians, read her thoughts on Mr. FBAR:
A. Christians: It's Time to Fix FBAR http://t.co/ofYHxWb2oI – Excellent article by @TaxPolBlog demonstrating the absurdity of Mr. #FBAR
— U.S. Citizen Abroad (@USCitizenAbroad) October 14, 2014
You can download the paper here.
Some persuasive arguments:
The Foreign Bank Account Report, or FBAR, is part of a regime designed to stop
terrorists, money-launderers, and tax evaders. Unfortunately, its increasingly
draconian requirements and consequences now apply to millions of innocent
bystanders who are collateral damage in the ongoing battle against financial
crime. Their inclusion in the FBAR regime is a massive waste of both government
and taxpayer resources, effectively criminalizing activities that are wholly
unconnected to financial crime, and perversely discouraging compliance. All of this
is unnecessary because as the administrator of FBAR, Treasury can immediately fix
the problems.
Fixing FBAR
It wasn’t always this way for FBAR. When it was first adopted, Treasury’s instinct
was to integrate foreign account reporting with the annual federal tax filing regime.
The IRS created form 4683, and included a line in the 1040 very clearly instructing
taxpayers to fill out this new form if they had any foreign accounts. Indeed, form
4683 instructed the taxpayer to avoid redundant reporting of information the
taxpayer provided elsewhere in her return. In the intervening years, FBAR has
transformed from this integrated system – targeted to a narrow and specific
population, involving a clearly understandable and easy route to compliance – to a
regime that is the polar opposite in every respect. This transformation has
massively diluted Treasury’s ability to identify criminal activity, and now many
individuals are being punished for paperwork crimes where there is no grounds for
suspicion of any actual criminal activity. There must be a better way.
But Treasury could very clearly effect the necessary reforms immediately
under the express terms of its statutory authority to implement FBAR. The law
plainly conveys Congress’ intent that this regime avoid undue burdens on people
that are unlikely to be engaged in financial crimes, and provide that Treasury can
exempt groups of persons, categories of accounts, and even countries, from FBAR’s
reach.
U.S. persons living permanently in other countries may disagree with the U.S. policy
of taxing citizens on a global basis. A harsh regime that involves extensive and
duplicative financial reporting with a criminal stigma attached is a recipe for
deepening resentment. If the United States takes the sensible route in adopting
residence-based taxation, the extreme cost of FBAR filing, measured in dollars and
time spent as well as an increasingly fragile taxpayer morale, will disappear along
with millions of unnecessary annual returns showing no tax owing. This will free up
scarce administrative resources, allowing the IRS to turn its focus where it belongs;
on those who are determined to cheat and evade the system to the detriment of
everyone. Until then, it is in the interest of all taxpayers, the IRS, and the income tax
as a whole that FBAR compliance be a normal rather than criminal experience, and
that it be no more difficult or draconian than is absolutely necessary.
Quotes and added emphases with permission of author.
I cannot imagine the rich countries of the world would do the right thing and allow the shifts necessary for the lower income nations to become real partners in world markets, etc. No matter how one looks at it, the general pattern is to take what is possible, protect only the interests of the multinational companies operating in foreign nations. And then proclaim how much they give in international aid etc, which always amounts to a band aid solution. I have never read enough to really understand what OECD is trying to achieve; tax competitiveness seems to be their buzz word but unsure what it really means.
The FBAR article is fantastic. I would only add that it also extends to non-Americans with US spouses (spouses and children), It was my understanding that one of the changes involved in 8938 was to allow the IRS to directly initiate proceedings against a taxpayer with foreign accoiunt issues (as opposed to going through a very lengthy process via DoJ, etc). Am going to tweet this link to appropriate politicians on both sides of the border, Such a reasonable explanation of the problem. How could anyone fail to get this?
Thanks, Allison Christians. If only the common sense that you present as a stop-gap measure on the the US’s way, eventually, to standard of the world – residence-based taxation – could make its way to the proper legislators, senators and the executive of the US. Hopefully, litigation on the US front and the Canadian front will wake up the lame powers that be. Like you point out, fixing FBAR would go such a long way in freeing up money to go after the real criminals. Or, we can all continue to go down the one-way alley with no clear exit from the absurdity.
I was attending this conference myself and was in the room when she was giving her presentation. I will share some of my thoughts on it later this evening. Unfortionately, the reporter(who was sitting right behind me didn’t mention my questions to the speakers in the article).
By and large I am concerned about global economic problems, however there are so many very bad people in the world who believe that God ordained them to be the enforcer of his will, that sane civilized people don’t have a chance. That same group would pay no taxes unless the ”conversion by the sword” was so successful that all others became their persuasion.
Your statement that Our Gestapho is interested in enforcement is incorrect. They are interested in tormenting those already in compliance. They know by statistics alone that a segment of the population has taxable income, but they never file a tax return , therefore never paid taxes and are unidentified by the tormentors.
The IRS in 5 times the size of any other U.S. government bureau or dept. yet they are the most inefficient, because they simply have no way of knowing who is not filing. It is the old story—you don’t know what it is that you don’t know exists. In their case they know they exist but tormenting the compliers comes easier than hunting down the non filers.They will co-operate with Immigration identifying accidental Americans, but can see known criminals drive around in $150,000 cars and never look to see if they filed a tax return.Individual agents don’t have the authority and supervisors want to show a lot of audits so they get their performance bonuses.
Our Congress, commonly known as The D.C. Pukes, knows all the forgoing, but won’t change to the National Sales Tax, know by its proponents as the FairTax, which would solve all the expat tax questions, taxes illegal aliens who have to spend to live, taxes the pimp and his employees and all the service people who work for cash and either never file a tax return or understate their gross income.
Our congress, aka The D.C. Pukes, have tacked tax extenders onto the Marxist Income Tax, to benefit one group or another. Since tax reform in 1986 they have amended the tax code 8,000 times, more than 4 a day for each day they have been in session, with what they call Tax Extenders, which alway come up to expire in every congressional election year.
If the lobbyists for the group who benefits from the extender, comes by with a ”Campaign contribution” (read contribution as ”bribe”) then that individual or industry gets their extender voted in for two more years. No contribution, no exender.
How else can a politician with a 9% approval rating get re elected? The encumbent overpowers any competitor with so much spending, the challenger is buried, from the start.
The FairTax proponents have a movie out now in DVD, that was shown in 900 theaters with packed houses, on 10/14/2014, called UNFAIR. It outlines how badly our employees “aka The D.C.Pukes” treat us, their employers, you’d think it was the other way around or that we enjoy being abused, and you must be right because we continue to tolerate the abuse and keep sending the same old bunch back term after term.
@WiltonTidwell
I don’t understand this statement:
“Your statement that Our Gestapho is interested in enforcement is incorrect. ” Where is this?
It sure would be interesting to see some analysis of the psychology of all this nonsense. At the most fundamental level it seems to be about parental ownership and punishment of the naughty child. Leave Murica = disobedient child and you will therefore be punished. All the onlookers think “They sure have a weird way of punishing their kid, but hey, it’s not my place to say”. It then evolves to a battle of wills.. you will do as I say or else! No, I’m not! Yes you will, you will move back home now or you’ll be sorry! I HATE YOU!!!
Bad parenting (controlling) is never effective — be it with a child, a pet (like my rescue dog, Lucy), or dealing with those who have left the US homeland.
Good analogy, pukeknoz. Similar to the bad (abusive / controlling) marriage analogy from which many of us have said “Enough abuse — I’m out of here.”
Take a look at the non-Swiss banker individuals and their penalties. It’s mind-boggling that the Treasury would not immediately put a stop to this. As Allison points out, wasting all this time with us prevents them from accurately identifying criminal activity. This is criminal in itself.
http://www.bloomberg.com/news/2011-03-30/offshore-tax-crimes-scorecard-bankers-clients-at-ubs-correct-.html
Knowing the history of all this nonsense may help. In the early 1900’s everyone, especially the poor and the intelectuals were reading this obscure idea by a guy named Karl Marx and his supposed ”friend” Adolph Engels. They were from the upper economical class, but looked down upon because they were partners. This made them want to destroy the middle class. They wrote extensively and created something they called the Communist Manifesto. Everyone would be equal thru redistribution of the asset of the middle class. Every one of their detractors would become equally poor.
They had many new followers, in this country and everywhere he was read. The Russians were the first to try the new outline for equality. We had a bunch of them here who were financed by the Special Projects dept administered from the Lubanka Prison just outside the Krimlin. They sent thousands of ”sleepers” here to marry westerners, educate the spouses and the children into Marxist ways. Many of our government workers and many elected officials are descendants of these sleepers. It is estimated that we have over 3 million descendants and some of our own, just too stupid to see the error of Socialism, who are the students and devotes of Socialism. Our President’s grandparents were avowed communists as well as was his mentor Frank Marshall Davis. He said so in his book.
Destruction of the middle class and over taxation of anyone who wouldn’t believe in Socialism enought to run away, if they resented having their wealth taken away for distribution to those who didn’t earn it. Company owners and all things capitalist are equal in the eyes of the senators, representatives and government workers. Their motto,”give it to us and we’ll decide where it can be of the most use”. It is the equal of a Farmers neighbors getting into his seed shed and eating the seed corn in the middle of winter. Comes spring, no seeds to plant and now nobody has any corn.
Much of this nonsense comes from a fourth unconstitutional branch of government. The IRS takes the 80,000 page tax code and formulates tax laws and rules for us. They never allow a case to move thru the courts all the way to the supreme court. If they loose in any court they simply stop and never appeal the case in order to not create case law. We never had this problem when any change in party caused mass firings of the government workers. Democrats got control of all government jobs when their party won The Executive and Legislative Branches and they passed the civil service law. Since 95% of all government workers have voted Democrat, which today is a collective of all the socialist parties. They want Big Tax and Spend government and they want punishment for the ”run-aways”
Any time a government body does irrational things that hurt their own citizens it is proper to refer to them in derragatory terms. Nazi, Waffen SS, KGB, Gestapho and so on. We both know the IRS is who we are talking about, but Jack Booted Brown Shirts may be the one who visits you or me for even saying things about them. I wouldn’t bother taking the chance if I wasn’t old and sick. It would probably be a favor to me and my family if they held me in Fort Levinworth. that is why I can speak my mind so freely!
@Wilton Tidwell
Lol, glad to see you have a sense of humour
Allison Christians rocks. We are blessed to have someone with her knowledge and communication skills on our side.
Don’t forget that the new doublespeak in the OECD world is “dual non-taxation agreements”. They aren’t worried about any problems their citizens might face, they are worried about getting their minimum cut.
@pukekonz
Lol! That was brilliant. Cheered me up to no end. Uncle Sam as the dysfunctional, guilt-tripping parent from hell who can never be satisfied and wonders why his children don’t like him. Yupp, that’s about right.
I was a bit down after seeing that Hargreaves and Lansdown here in the U.K. has put some new anti-US person language into their latest mailing (which is mess: the language conflates U.S. citizen with U.S. person and doesn’t match up with other statements in the terms and conditions).
There were politicians back a hundred years ago who saw leaving as an act of betrayal. The main source of all this is Teddy Roosevelt, who said some hilariously awful things about Americans living abroad. Although he wasn’t a Marxist, he felt that government had the right to take the wealth of citizens who weren”t spending their money for the good of the country. Obama is really into this Lincoln/Teddy Roosevelt tradition of egalitarian nationalism.