JC asks that the following be highlighted and discussed in its own post here at Brock.
@8888 Makes this interesting point about Citizenship Based Taxation
http://disq.us/8o0buo on the Washington Times article.
What is a tax? A tax is a government imposed LEVY on the Treasury account holdings of those who receive benefits and or compensation denominated in the none interest bearing debt instruments of the government’s treasury. This means that although all residents pay taxes not all tax payers are citizens. The only common denominator that obligates both citizen and non-citizen to pay taxes is, residency which gives both direct access to the treasury.
Expats have no such access to the U.S. Treasury because they receive their benefits and/or compensation under the jurisdiction of another Treasury and therefore are not under the taxation supervision authority of the I.R.S. Citizenship taxation is a fiction that exist only in the minds if those who don’t understand this basic principle of taxation. The U.S. is really taxing the Treasuries of other nations. This is something that is illegal under international law because all nations are equally sovereign. And no nation can tax another because that would subjugate one nation to another.If the U.S. cannot tax it’s nonresidents on their foreign account holdings with another treasury then the Foreign Earned Income Exclusion is equally fictitious as is any credit or liability that is connected to the income of nonresidents.In the end all taxation is residency based.
Perhaps we are doing some disservice to the cause by reinforcing the name “U.S. Citizenship-Based Taxation” as that name may get wrapped in the flag by patriotic *Homelanders* – the name including “U.S. Citizenship” triggers a patriotic response.
@8888 points out that in the U.S., anyone resident is taxed and you don’t have to be a citizen. So this “Citizenship-Based Taxation” does not describe what is going on. Something like this may be more descriptive and a better presentation:
America like all other nations of the world practices Residence-Based Taxation – they tax all residents whether citizens or not.
A key difference between America and all other developed countries is that America taxes its “persons” (including citizens and green card holders) resident in other countries as if they live in the U.S.
Makes sense to me — I have benefited from the wisdom of *8888* for several years now. I can add this to my list, the reason our *foreign financial institutions* are searching for *U.S. Persons* (not just *U.S. citizens*).
he only way to tax residents only is the FairTax which is a National Sales Tax paid on new good only that are purchased inside the U.S.
It does not tax citizens abroad. It does tax goods purchased with stolen money. It does tax goods bought by prostitutes. It does tax goods purchased by drug dealers. It does tax goods purchased by those in a cash business, such as hot dog stands, beauty shops, barber shops, taverns,flea markets,window washers, carpenters and other trades who demand cash payments.
It is a far superior way to tax than citizenship based taxation. It does not tax goods sold on the world market, making the U.S. able to compete again like they have not been able to compete since 1976.
Expats could stop filing papers, tax preparers could get real work, tax lawyers could represent other clients, The IRS could be disbanded and political parties can stop being made to stoop and bow to government agents. There are 55 other benefits to the FairTax, but space is limited. Expats—help yourself and your non expat patriots. Ask your congressman to vote yes to get HR25 out of the Committee on Ways and Means.
Funny, I was ruminating on this in the middle of the night last night. It’s a little more than my mind can handle, really. Is this not about jurisdiction – the US claiming jurisdiction of the entire world wherever its citizens may live? The idea that any American can infiltrate the tax base of any other nation is absolutely repugnant to me – all from a nation that purports to the world’s leader of freedom and liberty.
I read something very disturbing on Facebook today, that an American in Portugal said that she knows many other Americans living there who choose not to pay Portuguese taxes, saying (I’m paraphrasing) that they can only pay one tax master. Are many homelander’s abroad choosing to evade taxes in the countries where they reside, because no one can have more than one tax master?
@Calgary411 thanks for posting. An idea here is perhaps a way to avoid the patriotic resistance when “complaining” about US tax and compliance laws on US persons overseas. No easy ask that while “Citizenship Based Taxation” may be called a misnomer its usage is entrenched with ACA RA IBS and others using it.
A good aspect of the name CBT is that it is short. So then is there a better more accurate name, not too long, and less likely to attract patriotic resistance, that may be proposed?
Reducing the focus on “citizenship” would open it up to Green Card holders overseas.
How about Extraterritorial Taxation?
I think that describes exactly what most consider to be wrong about it, plus has an unpleasant Victorian-era colonialist ring to it.
How about my “Taxation Based Citizenship”? Seems harder and harder to refute these days.
Posted with Permission from Solomon Yue: I asked the question to Solomon Yue with reference to this page. Sounds like he is very used to the name CBT but offers other insights:
Thank you JC.
The resistance to replace citizenship based taxation with residency based taxation is that it is not a revenue neutral preposition in the mind of Republican and Democrat politicians. I know that ACA made a case that residency based taxation is a revenue net positive preposition. But very a few legislators are buying it. However, CBT is an equality issue because expats are paying double taxes on services they do not use in the states.
So we plan to cripple FATCA which is an enforcement regime of citizenship based taxation through our lawsuit in order to force everyone to negotiate a political deal. We will ask for replacing CBT with RBT in return.
This will be easier than rebranding CBT. I do not believe patriotism is an issue here because being a patriot also means that one must defend constitutional principles and stand up to tyranny on others behalf. Remember Thomas Jefferson’s “the tree of liberty must be refreshed from time to time with the blood of patriots & tyrants”. It does not have to be an armed revolution each time. What you and I are doing to combat FATCA is refreshing the tree of liberty…
Thank you for your efforts on that.
Solomon Yue
Republican National Committeeman for Oregon
Vice Chairman and CEO
Republicans Overseas, Inc.
Republicans Overseas Action, Inc.
https://www.facebook.com/republicansoverseas
Those are very good observations:
“America like all other nations of the world practices Residence-Based Taxation – they tax all residents whether citizens or not.”
“A key difference between America and all other developed countries is that America taxes its “persons” (including citizens and green card holders) resident in other countries as if they live in the U.S.”
That could be called American-Arrogance-Based Taxation.
That’s a great letter from Solomon (with whom I’ve communicated with several times) but the end gets a bit thick. I can almost believe that we aren’t being used as pawns to protect tax-haven America.
I take it “blood” is a metaphor for money now?
Well, we do know (or I know from comments directed at me) that patriotism is an issue. We see it from comments from many a homelander in media articles quite frequently! — along with the word we’re called that goes with that: *traitor*, *don’t let the door hit your ass on the way out*, pay your fair share and hope you’re barred from ever returning.
“How about Extraterritorial Taxation?”
Yes, exactly. You beat me to it. I was going to suggest ET, short for Extraterritorial Taxation, short for Eritrean Taxation, short for the only kind of alien that homelanders understand.
Not much to do with patriotism (or rather blind patriotism of some)?
Here was my opinion a while back: http://isaacbrocksociety.ca/2015/01/17/the-real-reason-that-roger-ver-renounced-us-citizenship/comment-page-1/#comment-5295420
or, said better than I: http://isaacbrocksociety.ca/2015/01/17/the-real-reason-that-roger-ver-renounced-us-citizenship/comment-page-1/#comment-5295876
Tax imperialism ?? Fiscal imperialism ??
Bubble’s ‘taxation based citizenship’ sounds good but some could read into it that one gets citizenship because they pay which is not true.
America even taxes green card holders who are NOT american citizens. Although I appreciate the sentiments in this thread ( DEEPLY AND FULL OF ANGUISH) and have always found “confiscation” a better word than “taxes” – I honestly don`t think USA gives a rats ass what we think or how it is formulated. Like I said- they need the money desperately. Somebody in the Canadian parliament said “They are turning over the sofa cushions looking for dimes.” They are not going to let any of this revenue go. EVER. Unless they are forced to. So I think we have to see who could force them? In my mind, it is the foreign countries whose treasuries are being robbed by America who would actually need to say “we will not assist you”. It is mind boggling that they almost all have pledged allegiance to the CBT cause. It really would have to be the rest of the world and the United Nations who say that this is not right. But the lawsuit, should it be successful ( and seeing that american courts are the judges and they are biased, who knows the outcome?) could stop the modus operandi and thereby paralyse the process. Maybe that could initiate a rethink.
But I will continue to ponder other psychologically more fortuitous means of expressing something so vile. I just don`t think anybody cares enough to listen one way or another. Homelanders LIKE to have a scapegoat to let out their frustrations on, in addition to the money gathered. So did Hitler`s nation.
When we say Citizenship Based Taxation and complain about that – one reaction we have seen is patriotism. Another reaction is everyone must pay their fair share (might be a patriotic duty to do so).
If we can get “citizenship” out of it then help alleviate perhaps the major opposition we have heard.
Taxation Based Citizenship – I know that this was talked about months ago. My view it still has “citizenship” in there and likely to spark patriotic response.
Extraterritorial Taxation . I like because it implies taxation that should not be. I may add US Extraterritorial Taxation. “Extraterritorial” may also help with the suggestion that these persons don’t get US government services in return for the tax and compliance.
All nations tax their residents on their global income and assets whether they are citizens or not. A key difference with the American system is the imposition of Extraterritorial Taxation on its “persons” (citizens green card holders) resident in other countries with the US taxing them on global income and assets as well as the countries in which they live.
Still kind of a mouthful yet I like the double taxation implication at the end. I might use the above unless anyone can say it better.
@Polly How about Extraterritorial Confiscation? Tax implies something in exchange. Without services it is more like confiscation.
I am not sure of the desperate for money argument. I think the tax treatment of US persons overseas has more to do with Congress not being able to look beyond their districts.
Solomon Yue made the point that there is resistance to RBT in Congress as the preference for it is to be revenue neutral.
“How about Extraterritorial Confiscation?”
That would make us sound like tax protestors. We should call a tax a tax and not call it confiscation.
“Tax implies something in exchange.”
It does not. Some famous arguments were made in court that the JUSTIFICATION or PURPOSE of a tax is something in exchange, but a tax remains a tax regardless of its justification or purpose or whether you get anything in exchange. A tax is a tax.
The first US-Canada tax treaty even agreed that the countries would stop punishing people who had protested against DOUBLE TAXATION prior to the treaty. People who had protested TAXATION (non-double) were not given such exemptions. Confiscation is things like penalties for trying to comply when laws prohibit both honesty and perjury. A tax (non-double) is a tax.
How about Extraterratorial Extortion? (EE) I like a bit of alliteration…
@JC
“revenue neutral” means that what they lose in money no longer taken from nonresidents has to be compensated somewhere else? This is why they wont stop with CBT. Because they cannot get the money elsewhere – unless of course they looked at their own tax havens in Delaware et al. The system is corrupt JC – because they are not going to look there. Somebody who runs healthcare for a profit only thinks in terms of profit and not in terms of casualties. They don`t care about the people- they care about the profit. I doubt that revenue “neutral” would be acceptable either if there is a profit to be made.
And I fervently believe that Greece will also not be able to repay their debt because people are still earning money they don`t tell the taxman about- restaurants, hotels, little shops- just sell and pocket the money and do away with the receipts- it is like a national sport with them. Possibly most countries with debt ( Italy, Spain) have that problem. People- residents- are not paying their taxes even in countries with RBT. With all the loopholes in America it might be the same thing. Talk about “fair share”. What a farce! Homelanders aren’t paying their fair share!
But I am not an economist who can balance a budget here. So what I am saying is that losing the expat tax base will never be turned into anything “revenue neutral” and the greed for profit on top of this makes it impossible to implement. ( Maybe it isn’t even just greed but horrendous debt.) Losing expat taxes would be a loss in an already bankrupt system which doesn’t want to tap into the real tax base it actually has.
“I like a bit of alliteration…”
No you don’t. If you did, you’d have said “I like a little alliteration.”
Anyway, words like “extortion” will not help us. Even though it’s true, it makes us sound like tax protestors. A tax is a tax and it’s better to just call it a tax.
“What a farce! Homelanders aren’t paying their fair share!”
Already known.
http://www.washingtonpost.com/blogs/federal-eye/wp/2014/04/23/irs-paid-bonuses-to-tax-delinquent-employees-report-says/
“Tax implies something in exchange.”
Yes it does. It is the basis of taxation. Yet one may not receive services in exchange yet someone it their community or jurisdiction does. Take unemployment payments. In the case of US persons overseas no matter if they need it or not, they are not getting unemployment payment if living in another country. Plaintiff Daniel Kuettel says he applied via a veterans program for assistance with a mortgage available for homeland veterans, yet was denied because he lived in Switzerland.
I agree words are very important, hence I have been banging the dream to use the term Clinging Nationality with respected to unwanted and unneeded citizenship.
I had hoped Arvey would have used the phrase Clinging Nationality in the lawsuit to break away from dual national. Dual national has positive implications and that something is wanted, valued and needed.
I thinking ET is outstanding with Extraterritorial Taxation. Its a negative phrase but not in your phrase. CBT is positive because it implies you are gaining something very valuable. But as others have pointed out CBT is not reality because the USA practices RBT on all who are resident.
Cook v. Tait 14: It’s NOT “citizenship-based taxation”, It’s “extraterritorial taxation”
https://renounceuscitizenship.wordpress.com/2014/03/28/cook-v-tait-14-its-not-citizenship-based-taxation-its-extraterritorial-taxation/
This is a good thread. Language is very important. Consider the differences in the connotations between the following:
“U.S. Persons” – The plain language implies “ownership” by the U.S. A “U.S. Person” is a slave. I.e. “U.S. personness” is U.S. slavery. FATCA speaks of “U.S. accounts”, etc.
“U.S. Citizen” – A much more neutral term. It does not by itself connote slavery.
In any case, there is NO doubt that “citizenship-based taxation” is a term that suggests that somehow the payment of taxes is a patriotic duty.
But, remember that it’s because “U.S. citizens” are “U.S. persons/slaves” that the taxes are required.
@JC,
Solomon Yue says:
Fair enough, I found ACA’s revenue projections to be poorly documented myself, as much as I wanted to believe them. (Well, not really fair; I’m not at all happy at the idea that fundamental justice can be held hostage to revenue neutrality rules but, well, if it helps the medicine go down, I’m willing to try to look for a spoonful of sugar.)
So to that end, shall we start a project to find a way to present a revenue-neutral version of RBT? A crowd-sourced analysis/discussion, maybe in a new thread?
Some thoughts that come immediately to mind are:
1) The vast majority of overseas filings generate no tax revenues, but incur processing overhead costs for the IRS. Can we quantify this?
2) Most US persons pay no tax on US-source dividends (because they fall within the standard deduction and personal exemptions). If we were taxed as NRAs, we would instead be paying some minimum withholding tax on those dividends. Can we quantify this?
Other things to think about might be the impact of, e.g., Canadian-style exit taxes, or even Japanese-style ones (which have become somewhat more harsh recently).
But first we need to crunch some data. I’m willing to pitch in. But we need data. For starters, I find some IRS stats on their overall costs and revenue here (through 2014):
http://www.irs.gov/uac/SOI-Tax-Stats-IRS-Data-Book
They have more detailed breakdowns by filing type here (through 2012):
http://www.irs.gov/uac/SOI-Tax-Stats-Individual-Income-Tax-Returns-Publication-1304-%28Complete-Report%29#_download
I’m working may way through http://www.irs.gov/file_source/pub/irs-soi/12inalcr.pdf
and http://www.irs.gov/file_source/pub/irs-soi/12databk.pdf
as a matched set for 2012 at the moment. Hope to come up with something preliminary in a few days.
Anybody else game?