Shadow Raider makes some thoughtful and thought-provoking comments on my post and the ensuing conversation:
I’d like to make some constructive criticism for all sides:
1. Many commenters on this website seem to assume that US residents are patriotic “homelanders” who support CBT. I live in the US and I can tell you that this is not true. The vast majority of Americans don’t even know that CBT exists. When I inform them, I get various responses: some say that the US should not tax foreign income or demand information on foreign assets because it’s none of their business; many sympathize with the problems of Americans abroad (complex paperwork, fear of penalties, financial restrictions); some try to justify CBT with consular services or the right of return, but when I reply that these things are not funded by taxes (or don’t actually cost anything, in the case of the right of return), they concede; only a few invoke patriotism, but as a joke.
2. Many here also seem to believe that “homelanders” see Americans abroad as “tax cheats”. I don’t know where you got this idea. I’ve only seen this as a brief mention by a US politician from the 19th century, and I don’t think anyone else believes that. I’ve certainly never heard anyone say that here. US residents correctly assume that people move abroad for various reasons. Many of them have family or friends who lived or are living abroad.
3. Condemning US patriotism while praising Canada is inconsistent and alienates those who are not from Canada. CBT applies equally to all countries outside the US, and the Canadian government has done the same as the rest of the world regarding FATCA, it’s not a special case. I’ve also seen some commenters focus too much on issues in specific countries such as the various 4-letter Canadian accounts or Australian superannuation. People outside these countries have absolutely no idea what these things are. The problem is CBT in principle, not the details of how it affects specific investments.
4. Some people, like Republicans Overseas, are focusing way too much on FATCA. Blocking or repealing FATCA is very unlikely, and even in that case it would not solve the myriad other problems caused by CBT.
5. Expatriate lobbying groups seem to be ridiculously afraid that the US government will not pay attention to their demands if it looks like they don’t love the US. Seriously? Michael Kirsch cleverly pointed out the inconsistency of identifying yourself as part of US society while requesting to be taxed as someone from outside that society. It would make much more sense if they just stated the truth: they are actually more attached to the countries where they live, but want to keep US citizenship simply for the peace of mind that they could return to the US one day. Maybe the CBT debate should be centered on whether the right of return constitutes membership in the society or merely the eligibility for membership.
@ShadowRaider
Shulman. Levin. Grasseley. Obama. Geithner. Schumer. Reed. And all the obnoxious homelanders who constantly tell us “don’t let the door hit you on the way out” on online forums, comments on articles, etc.
I’ll add to Tricia Moon’s remarks directly above:
I have lots of ex-hippie ultra-progressive friends, many from New England and wetting their panties over Bernie Sanders. Most have never spent significant time outside US borders. When I have had discussions on forums or Facebook about CBT and FATCA, and criticizing Bernie Sanders for being one of the House sponsors of the HIRE Act containing FATCA, the most common response I get is “Tax the cheaters!” That’s all: “Tax the cheaters!” Meaning, in the context of our discussions, those who “cheat” by hiding their ill-gotten gains abroad. Which by extension means anyone with money abroad. Which by extension means any American who lives outside the Homeland. Often they’ll add disclaimers to me like “Present company excepted,” or “Sorry if it also affects you.” But the gist of their remarks is that all US persons abroad are cheaters except maybe me because I am (or was 20 years ago) their friend.
They all also strongly support CBT, and are resentful that I get a $99,000 foreign earned income deduction. “And you’re complaining? Wish I could deduct 99K from my taxes!” I explain that I pay taxes in the country where I live, and some even question why: “But you’re not a citizen there. Why do you pay taxes?”
Hoo boy. And anyone dares to think that Homelanders aren’t misinformed, unthinking, and bigoted?
@Tricia Perhaps not viewed as cheaters until they complain about the compliance and taxes.
This is a very important discussion to try and understand the mindset to better able to undermine.
@Barbara
“Tax the cheaters!” That’s all: “Tax the cheaters!”
Indeed. To me, it reflects the mentality of an angry mob shouting: “Burn the witch. Burn the witch!!!”
Well, for what it’s worth, I consider myself a patriotic American who believes that the US has done many amazing things and is/has been a leader in the world (e.g. technology, media, and charitable giving), but I detest the US government for treating US citizens living outside the jurisdiction of the USA as property and taxing us under CBT while giving us nothing in return. I do not hate the USA, but I do not agree with the US government’s tax policy or the clear Jihad that the Obama Administration has launched against otherwise law abiding ‘US Persons’ living abroad. There are many policies of the USG that I have objected to over the years, but that does not mean I hate the US.
@Tricia
I think we all need to keep in mind that there are a fair few people on the internet who trash talk just to be inflammatory and hurtful. I do worry sometimes that too much energy is spent unwittingly feeding trolls.
@Barbara
The confusion about taxation and citizenship is very widespread. The idea that paying taxes is a duty of citizenship rather than of residence is something I see popping up in books over and over again, even in books by people who aren’t American. One problem is that people don’t make distinctions between citizenship and residence. Another problem is that people think of citizenship as being about more than just legal citizenship.
There are some situations in which Americans might not pay taxes abroad on the same basis as tax residents (non-doms in Britain, for example, including rather controversially some who are British citizens).
@ShadowRaider
I really liked your point at the end about whether legal citizenship of people living abroad is about membership of the society or the right to return. I think, though, that it is also crucially about identity, since people who have extremely little chance of returning still seem upset at having to renounce.
Publius: I also liked Shadow Raider’s final point.
I am a case in point. I was a small child when my family left the United States. My mother knew her 14th Amendment (better than the U.S. government as it turned out) and I was taught that because of my birth there I would always be considered a U.S. citizen (as a courtesy!) and would always be welcome in the United States. I was also taught to honour my heritage which is American right back to the “second boat” in 1621, and I have done so.
But as much as I will always remain American to the very core of my DNA and will always believe that I am owed my human right to return (now denied in all practical application) I am a Canadian citizen and have lived outside the United States for well over half a century. Moreover in that *entire time* I have not even *been* in the United States for longer than 30 consecutive days at any one time. It is ridiculous for me to be considered part of American society.
Yet I sat in a room in Toronto last May listening to Michael Kirsch telling me that people fitting my description *were* part of American society and, as such, should be ready and willing to step up and help support their fellow citizens in the United States through taxation. Well, if charity is what they’re really after I’ll do that voluntarily … through the United Way or something. I will not be *forced* to fork over a significant portion of my life’s savings to pay for nothing … and nothing is precisely what I would get in return.
Shadow Raider is right. This question needs to be addressed. US citizens living permanently abroad should be recognized as “associate citizens”, people who are not active members of the society but who retain the absolute right to return to the country at any time. If they elect to remain permanently they would *then* take up their responsibilities of full membership in the society. This is their right, and rights are free.
CBT is this issue. Nothing wrong with government wanting to know and tax foreign earnings and foreign accounts for residents in the US. It is what most other countries do: you reside; you pay tax locally on local earnings AND on foreign income (usually with a tax credit for foreign taxes paid). The issue is not FATCA, or FBAR, or whatever, if it were RBT system- the reporting requirements may be a little heavy handed – but when tied to CBT they are a disaster. Sadly the US persons residing outside the US are just collateral damage – something the US seems to generate in most of her endeavours.
Barbara
My objection to many Vermont hippies is that they prey at altar of the Canadian health care system but yet actually despise the Canadian system of residency based taxation. The response I receive from Vermont hippies is they don’t have to “accept” Canadian policies 100% lock stock and barrel to like Canadian healthcare.
I was once asked by a Canadian Brocker at a Brock event in Toronto if Vermont politicians were likely to be more sympathetic to the plight of people affected by FATCA in Canada due to the proximity of Vermont to Canada. I literally fell on the floor laughing. Absolutely not. With one exception as move further to the right on the political spectrum in New England(Yes their are conservatives in Vermont) you do run into people who probably more pro Canada than lets say in the deep South. Much of the trade between New England in Canada is energy(of which Vermont/New England has almost no indigineous supply). Most of the gasoline sold in the New England comes from Canada for example. Vermont hippies though really don’t like Gasoline whether or not it is Canadian Gasoline.
I guess from a Canadian perspective the easiest way to understand is whether or not you think Hydro Quebec and the Irving brothers are “good” for Canada or “bad” for Canada. Most Vermont hippies for very little love for HQ or the Irving brothers.
https://en.wikipedia.org/wiki/Irving_Oil_Refinery
When I put Homelander plus Patriotism together do you know what sum I get?
98% of the homeland sending 2% to fight their needless wars and when they come back giving them a 5% discount at K-Mart and being sure to say “Thank you for your service.” Thats Homelander Patriotism.
@George: You forgot flag lapel pins. Remember the 2008 presidential campaign when some trailer trash woman stood up and questioned then-candidate Obama how he could possibly claim to love America, when he didn’t have a flag pin on his lapel? Since then you never see him without one. Metal doo-dads:that is Homelander patriotism.
To show my patriotism, I have a lapel pin I bought in a drug store outside Washington DC that says “USA kicks butt”. I love to show off that patriotic pin to Homelanders. Know why? Turn it over and it says, “Made in England”. Not USA. Not China. England!
@Barbara, I sometimes wear a Canadian Flag lapel pin to show my patriotism…..and I do not live in Canada…only recently learned because of law change Canada claims me as her own…..
On July 4th, wear an American flag pin UPSIDE DOWN. Should be a real conversation starter.
Somewhere I have a US / Canada flag pin that I got from some corporate event. I will try to find it. Thanks for the excellent suggestion to start a conversation about what is going on, bubblebustin.
@Muzzlednomore
Kirsch seems to be using theories that come from Ronald Dworkin. In order for these to apply, we would need to be treated as equals. I am not sure how the American public feel about us, but the politicians definitely do not treat us as equals. I get prompt responses from my British MP, whereas my members of Congress just seem to block out my concerns.
I dunno. If I turn my Canadian pin over, it says “Made in China”. Hmmmm?
@Shadow Raider
I originally posted this on another thread but as I just found that this topic has its own thread now, that I would repost it here with some additions.
“You’re right that some “homelanders” accuse people who are complaining about FATCA or renouncing US citizenship of tax evasion, but that’s different. What I’m trying to say is that there is no preconceived notion against Americans abroad in the minds of the US population. They don’t think that moving abroad is unpatriotic.”
That I believe. I grew up, served in the navy and went to college in the States. When planning any of my trips to Japan I got nothing but support from family and friends. When I returned to Japan this time I never expected to marry, buy a home and start a family here.
However, once overseas even the slightest criticism of any U.S. policy is met with negative feedback of various intensity from homelanders. “Gone native, I see.” “Boy, you really have turned Japanese, haven’t you?”, “I think someone has been eating too much rice,”, “You have spent too much time over there”, “Why do you hate your own country so much?”. Then add taxes to the conversation, who hoo how the name calling escalates. And these experiences began well over twenty years ago.
There is, I’m sure, some theory to explain it, some psychological phenomenon, but there seems to be a natural human response that one is not a true member of a group unless they share a common misery. Everyone in the States hates doing their taxes and there seems to be a certain amount of jealousy towards anyone who escapes this obligation, a belief that those who do not have to suffer this yearly headache are not true members of Club USA. This has been expressed directly to me by at least one homelander, “See, you have to too!”, and indirectly by many. And this was even before FATCA.
“There are only two certainties in life, death and taxes.” In the homelanders mind, the U.S. Expat is escaping the second of these. The fact that we pay taxes in the countries of our residence is of no matter to them, it is outside the homelander and thus the American experience. Again, this was before FATCA.
You would be surprised at the large number of homelanders, even from within my own family, who are enraged that my wife, Japanese and living in Japan, does not pay US income taxes. Why should she, in their view? She works for an “American” company in Japan. And this too came before FATCA.
“Michael Kirsch cleverly pointed out the inconsistency of identifying yourself as part of US society while requesting to be taxed as someone from outside that society. It would make much more sense if they just stated the truth: they are actually more attached to the countries where they live, but want to keep US citizenship simply for the peace of mind that they could return to the US one day.”
Michael Kirsch is not as clever as he thinks by half! Taxation is not based upon membership. If it were, then “dues” would be the correct term. Nor are taxes based upon the right of return as others have suggested. Taxes are based upon the services the resident receives from the taxing government. I do not chafe at paying taxes to Japan as it is Japanese roads I drive upon, Japanese schools that educate my children, Japanese fire fighters that protect my home from fire, Japanese police that protect my family from criminals, Japanese ambulances which will transport me to a Japanese hospital in case of injury or illness. As the US provides none of these to me, what is their justification for demanding money from me for these services?
How does he justify taxing those who DO NOT identify as part of American society, those born in the States to nonUSC parents or those born outside the US to one or more USC parents. To that criminally inclined individual who seeks to steal from my Japanese wife and child, I would say that it is he who is inconsistent!
Further, although I am an American, proud us navy veteran American, it is laughable to assume I am a part of US society. The amount of time I spend in the presence of another USC each week can not be measured in hours, the minutes being far too few. I socialize with those around me who, I assume to be a surprise to Mr. Kirsch, are mainly Japanese. Society means the group we socialize with. “Citizenship” does not share the definition of “society”, Mr. Kirsch…perhaps another surprise for the clever fellow?