As the date for the summary trial for the Canadian FATCA IGA draws nearer, behind the scenes, various groups are contemplating other ways to attack USA’s extraterritorial overreach into the sovereignty of other countries, and its insistence that US persons abroad are Americans first and foremost, thus subject to US law. Republicans Overseas are expected to soon be announcing a legal challenge against FATCA from within the USA. Rumblings at the Isaac Brock Society, and at various forums representing Americans abroad, hint at a potential future legal challenge aimed directly at citizenship based taxation.
All these attempts at helping to save ‘US persons’ living outside USA from American laws, are laudable and worthy of support. However for the most part, no group has been talking about another obvious battle to be fought, which is the fight to help set people free from the chains of unwanted US citizenship. How many times have we heard from homeland Americans who don’t understand our pain, “If you don’t like it, why don’t you just renounce”? Unfortunately, relinquishing US citizenship is a mine field full of potential compliance nightmares (ex’s: PFICS, foreign trusts), possible penalties, and an outrageous renunciation fee (currently $2,350 USD), thus rendering it a near impossibility for many.
Yet to be free from US citizenship would mean freedom from FATCA, and freedom from citizenship based taxation(CBT), and ultimately freedom from ANY AND ALL US LAWS imposed by USA against those it considers ‘US persons’ NOW AND FOREVER MORE.
Of course not everyone wants to give up US citizenship, and for those who do not, their interest is naturally directed more towards the particular US laws that cause harm to Americans living outside USA – currently FATCA and CBT. Some think that FATCA would be fine if USA were to operate on a residence based taxation system like 99.9% of the rest of the world. They argue that citizenship based taxation is the root cause of all US persons’ problems worldwide and therefore is the dragon to be slayed: freedom from CBT is freedom for everyone, whether that person considers themselves to be an American Abroad, or just a Canadian who happens to have been born in the USA.
Others worry and wonder what the USA will dream up next to inflict on its persons living outside USA. Some see US citizenship as the root problem, particularly those who have never identified as American or who are fed up with US imperialism and have fully embraced the nationality of the country they now live in, and are citizens of. Freedom from US citizenship would relieve a US citizen from FATCA and CBT and from all extraterritorial US laws aimed at US citizens.
Unfortunately, so far no one is championing a fight against this particular battle – the right to be able to easily rid oneself of unwanted US citizenship. It could be argued that the Canadian government should intervene and help Canadians rid themselves of clinging US nationality. Canada has the most US persons numerically and per capita in the world. In addition, Canada is unique in that it shares not only a border with the USA, but also a very similar culture. Canadian US persons, unlike US persons elsewhere in the world, don’t have the distance between them and the ‘home country’ that tends to make the heart grow fonder. US persons in Canada look and act and sound for the most part (minus an accent perhaps) like every other Canadian. They blend in. They assimilate more readily than say for example Americans who expatriate to Japan or Germany or Sweden or Australia.
Canada, should be saying to the USA, “These people you call ‘Americans living in Canada’ are Canadian. They live in Canada. They don’t belong to you. Make it easy for them to cut the ties and formally renounce a citizenship that they don’t want. We don’t care about your FATCA laws or your CBT laws or any other US laws. Do not apply your laws to Canadian citizens living in Canada. If you are going to insist that those you deem US citizens obey your laws while living in Canada, then give Canadians the freedom to choose whether or not they want to be US citizens”. The governments of all countries should be saying this, but they are not. The Canadian government should be leading the way, but it is not.
Maybe it’s time for some legal action from Canadian citizens with ‘boots on the ground’, to insist that the USA let people who do not want to be US citizens, go free. As with the Canadian FATCA IGA lawsuit, Canada with its unique position as neighbour to the USA is the obvious country to lead the way towards freeing people world wide from the chains of unwanted US citizenship. But so far, this has not happened. Is anyone up to the challenge?
I am curious what people think with regard to the following two options. And since we all have different backgrounds – some are Canadian, some identify as American, some are US tax compliant, etc – those differences will impact our choices.
If you are deemed a ‘US person living outside USA’, and you were to be presented with the following two choices, which would you choose?
1. You may remain a US citizen, but citizenship based taxation will no longer apply to you. You will no longer have to file US tax forms while living outside of the USA, and USA will forgive you of any prior non filing. Note however that you may or may not be subject to FATCA (that hasn’t been worked out yet, as you are still a US person), and the same goes for FBARS since technically your accounts are foreign (not in the USA). There is of course no guarantee that additional US person rules will not be imposed on you in future but rest assured that CBT is history.
2. You may renounce US citizenship with no strings attached. It doesn’t matter if you never filed a US tax return or FBAR in the past. There will be a small, administrative fee (approx. $200), to process your request, but there will be no past compliance issues to deal with. You will receive a Certificate of Loss of Nationality for your records.
In order to help understand the choice you make, it would be appreciated if you would also answer the following questions:
1. What country do you live in?
2. Are you a citizen of the country you live in?
3. How long has it been since you left the USA?
4. Do you plan to return to the USA to live at some point in the future?
UPDATED June 20/2016 (thanks to Char for the suggestion): For a person with a disability rendering him/her incapable of making a decision for himself/herself, his/her guardian can make the decision between choices 1 and 2 above on his/her behalf.