I am happy this morning to cross-post today’s ADCS-ADSC blog entry…
“Repealing “Citizenship Taxation”: The difficult we do today, the impossible takes a little longer”.
which starts out with:
The Alliance For The Defence of Canadian Sovereignty is prosecuting a lawsuit against the Government of Canada. The lawsuit is for the purpose of “striking down Canada’s FATCA IGA”. The Canada FATCA IGA lawsuit is providing citizenship leadership and FATCA education for the world.
The primary purpose of FATCA is to enforce U.S. “citizenship taxation”. In reality, U.S. “citizenship taxation” is taxation based on the immutable characteristic of “place of birth”.
Although “citizenship taxation” may have always been U.S. law it has NOT always been U.S. practice. In fact, the U.S. made no attempt to enforce “citizenship taxation” until sometime after the 2008 financial crisis. The reasons for the enforcement are not entirely clear, but the enforcement of “citizenship taxation” has been a “life altering” event for Americans abroad. For Americans abroad, “citizenship taxation” is NOT a theoretical concept. It is a reality that impacts on virtually every aspect of their lives. It directly affects their career opportunities, their retirement planning and (for those Americans with an “alien spouse”) their marriages. This has led to cries of anguish and pleas for change. It has led to a huge surge in the “relinquishments” of U.S. citizenship. On March 2, 2015 I participated in a session for U.S. citizens in London. A comment about the about the session and the recent enforcement of U.S. citizenship taxation included…
I would add that it was evident that some people at the meeting have suffered significant mental anguish, either now or in the past. These are good people, who had tried as US citizens to do the right thing, but who have been stymied by rules and complexities of the IRS code which, to paraphrase John, “no rational person would ever have suspected or guessed would remotely be true”.
I find the damage to mind and body to be one of the most heart-rending things about this whole mess. Someone wrote to me recently, “So I’m not alone in my panic!! Yeah, there’s been plenty of sleepless nights. Just can’t get it out of my head.” Many reading have had that experience.
I am waiting for the day that someone in government finally notices and apologies, perhaps admitting, “We tortured some folks.”
…
In the short term, the implementation of FATCA will exacerbate the “pain”. On the other hand, the “pain” may be the necessary impetus for change. In order for there to be “change”, there must be some discussion and analysis of the issue. In order for there to be analysis, there must be awareness of the problems of “citizenship taxation”. That’s the reality of what has been unleashed by FBAR, FATCA, PFIC, CFC and the whole “Alphabet Soup” list of provisions which have changed the lives of Americans abroad.
The good news is that awareness of “citizenship taxation” is growing. The awareness is “growing” largely because of the efforts of Americans abroad (including those who identify as Americans abroad and “accidentals” who simply do NOT regard themselves as Americans). The following groups (working independently) have been responsible for this awareness:
…
John Richardson also introduces a new voice in commentary by Professor Daniel Shaviro:
9. It is encouraging to see that “citizenship taxation” is being considered in law school classes. Two recent examples include:
A. The tax policy and law workshops at the Peter A. Allard School of Law – University of British Columbia. On Friday February 27, 2015, Professor Ruth Mason discussed her recent paper on “citizenship taxation”.
B. The Tax Policy and Public Finance Colloquium and Seminar run by Professors Daniel Shaviro and Alan Viard of NYU law school. On Tuesday March 3, 2015 Professor Ruth Mason was in attendance to discuss “citizenship taxation”.
Professor Daniel Shaviro commentary on the Ruth Mason presentation – March 4, 2015
Professor Shaviro’s perceptions of “citizenship taxation” (based largely on the Mason presentation) appear as a separate blog post here.
His post identifies (and categorizes) many of the “theoretical concerns” of “citizenship taxation”. He begins by saying:
Yesterday at the colloquium, Ruth Mason discussed her paper, Citizenship Taxation. I enjoyed reading it enough to conclude that I may want to write about this topic as well. (I generally agree with the paper, but it’s a rich topic and perhaps a fruitful area for me to deploy some of my interests and approaches.)
His post contains 10 interesting points. I would like to identify what I consider to be the most interesting and important two…
The John Richardson, ADCS-ADSC Co-Chair and Legal Counsel, ADCS-ADCS entry ends by saying:
U.S. “citizenship taxation” is a problem for:
1. The individuals affected by it.
2. The countries where U.S. citizens reside which are required to accept the capital outflows inflicted by “citizenship taxation”.
In 2009 few would have imagined that the problems of “citizenship taxation” would be given the attention that they are today.
As they say in the Marines:
“The difficult we do today. The impossible takes a bit longer.”
Keep up the great work! Keep the faith!
John Richardson
It seems to me all these discussions start with the assumption someone had “income” to be taxed in the first instance. My question is, is an IOU income or even money? President Nixon canceled the Bretton Woods agreement about 6 months after I came back from Vietnam. What was left of Constitutional Money in circulation in accordance with article 1 of the US Constitution quickly disappeared. Going forward I was forced to accept under legal tender laws IOU’s in the form of notes from the Federal Reserve bank. How can I be taxed on IOU’s. When am I going to receive my Constitutional money to extinguish the IOU’s I received from the Federal Reserve Bank? When I say income in line one,I mean, “the gain from capital or labor or both combined”, which is how the Supreme Court defined it.
The idea of Citizenship Taxation has been here on earth almost from the beginning of the idea of statehood. It was the election of a president who believes firmly in the Marxist idea of total equality for everyone but himself and his socialist friends. That is why he demonized the ”rich” and will do everything in his power to strip their assets from them. Taxation that you can see is just one of them. There are hundreds of taxes and fees not called taxed that are added into everything and passed on to the end consumer. So if we are to pay in the end all these hidden taxed, why not be up front about it and just add the taxes onto the end user, in the price they pay.
When I was in cost accounting we priced our products for sale according to costs. Direct labor, material cost, administrative and taxes. No matter what we did we could only control the first 3, but if you were big enough and smart enough you could hire a ”k” Street lobbyists and find ways to bribe congressmen and women and get a loop hole created just for yourself. Since Reagan got them to rewrite the tax code this has happened over 9,000 times and only the 9000 know they are exempt for some tax or another.
If we don’t kill this beast, drive a wooden stake thru its heart and bury it at low water mark by the seashore where the tide ebbs and flows every 24 hours.
Then to run government we need honesty so we pass the FairTax and under that bill everyone pays as they spend except the very working poor and they automatically get a 33% raise in pay. And Oh the expats can sop thinking about giving up their citizenship or go broke trying to comply.
So here is what I need. I need every expat to send Chairman Ryan a post card with one message==PASS THE FAIRTAX=====
I hope some will read and comment here on the today’s new article from “Tax Expatriation”: “Will Congress and the President Finally Act in 2015 to Repeal or Modify U.S. Citizenship Based Taxation?”
…in conjunction with this, to me, significant post by John Richardson, Co-Chair and Legal Counsel of ADCS-ADSC that I have cross-posted here from the ADCS-ADSC blog.
As pessimistic as anyone might feel about it, with all the focus on CBT, there has never been a better environment for CBT to be replaced by RBT.