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*).
In university I was taught the first rule of a tax is it has to be easy to collect. Is US tax easy to collect off hostile US expats who will fight the US Government tooth and nail through foreign courts realistic?
It’s very expensive money. Is the US going to push the cost of collection onto foreign governments as well for the sole benefit of the US Government when foreign governments get nothing in return?
This FATCA farce will come to an end hopefully in foreign courts around the world.
However we *redefine* CBT for discussions with those in the U.S., we have to include the ongoing, year after year after year, obscene costs of US tax compliance, including for FINCEN114, (paid to US tax and accounting professionals needed for many or most, or maybe just those like me) to be able to correctly (and without penalties) meet all *US CBT tax and reporting requirements*.
And, the way to remove ourselves from that absurdity in $$ and emotional cost is the escalating renunciation of US citizenship costs, a true barrier for many, many individuals and families. To say nothing of the catch-22 of the U.S. exit tax phenomenon.
We (or I) want to live our lives where we reside without these needless, extra-territorial abuses. I want to once again use my energies for other things that will give value to the society that I reside in and am a citizen of. I don’t want to continually worry that my savings and my plans for those I leave behind will be raided by the U.S.
I want *homelanders*, U.S. legislators, and my Canadian government representatives to respect what are our human rights. Enough with the absurdity of CBT and its collateral consequences. That is the reason I regularly donate to http://www.adcs-adsc.ca/ what I can — for my family and yours. What I have unintentionally passed on to my Canadian-born children needs to be remedied. It is apparent to me that litigation is the only path to sanity and justice for *US Persons Abroad* however they are defined by the U.S.
@USCitizenAbroad
“Language is very important.”
Indeed. Words have real meaning, and FATCA itself is not the only thing the US is unilaterally imposing on sovereign nations – propagandistic language is another. We haven’t really paid enough attention to it, but I have noticed that every single press release announcing yet another IGA uses the same boilerplate language crafted by the US and fed to lazy and complicit domestic media outlets in every country that has capitulated to FATCA. Here’s just the latest example, from the Philippines, with my bolded highlights:
http://www.aseanbriefing.com/news/2015/07/17/the-philippines-signs-iga-on-fatca-with-the-united-states.html
Notice how the language is technically precise, from an American government perspective. Yet, most readers will not understand that the exchange of information on “U.S. persons” and “Philippine residents” is not a balanced quid pro quo. There is no equality or true reciprocity, even though there might appear to be on the surface. I have noticed the same thing with the many recent announcements in the Indian press about how India will now have all the information it needs to solve its Black Money woes. Malarky. The false promise of reciprocity is just a cynical sugar-coating to make the bitter FATCA pill go down easier. Very similar to what Democrats Abroad is clumsily trying to do with their disingenuous Safe Harbor ploy.
While this thread may have started as an examination of the term “citizenship-based taxation”, I believe it is also useful for us to reconsider the wider Orwellian lexicon surrounding FATCA. US propaganda has worked extremely well up until now to portray us as unpatriotic, champagne-sipping FATCAts. Since words are also our primary weapons, whether in blogs or in the courts, we must understand and wield ours even more skillfully than do our opponents.
Just repeating US green carder in Canada and US expat who have not done exit taxes are not considered US person under the current government of Canada interpretation. They just must not cross the border.
“I hold a U.S. green card. How does this affect my tax residency?
If you are a green card holder (that is, a lawful permanent resident of the U.S.), the U.S. considers you to be a U.S. resident.
However, if you are a resident of Canada for tax purposes and do not hold U.S. citizenship, you should not identify yourself as a U.S. person to your Canadian financial institution.”
http://www.cra-arc.gc.ca/tx/nnrsdnts/nhncdrprtng/ndvdls-eng.html
5. If I spend a certain number of days in the U.S. over a period of three years, does the U.S. consider me to be a U.S. resident?
According to the IRS website, you (unless you are a U.S. citizen) are considered a resident alien for U.S. tax purposes if you satisfy the substantial presence test. This test uses the number of days you were in the U.S. during a three year period. The IRS website has more information to help you determine if you are a resident alien based on the substantial presence test.
The IRS also says that even if you are a non-U.S. citizen and you satisfy the substantial presence test for a particular year, you can still be considered a non-resident alien, if you meet certain conditions. One of these conditions is that you maintain a closer connection to a foreign country in that year.
IRS Publication 519 states that the U.S. domestic rules that determine if a non-U.S. citizen is a U.S. resident do not override tax treaty definitions of residency. If you are considered a resident of Canada and the U.S. under each country’s laws and the Canada–U.S. tax treaty considers you a resident of Canada, the U.S. has to treat you as a non-resident taxpayer and you should not identify yourself as a U.S. resident to your Canadian financial institution.
http://www.cra-arc.gc.ca/tx/nnrsdnts/nhncdrprtng/fq-eng.html#q2-5
Earlier IGA and other countries may not have this provision.
news says
March 6, 2015 at 9:02 pm
This is legal logic behind decision
news says
March 5, 2015 at 8:34 pm
for rational people
Green Carder who live in Canada are considered resident of Canada (especially if you have not live in USA for a long time. I think Green Card are not valid if you leave a country for more than a year.
Canada USA Tax Treaty
“Article IV
Residence
1. For the purposes of this Convention, the term “resident” of a Contracting State means any person that, under the laws of that State, is liable to tax therein by reason of that person’s domicile, residence, citizenship, place of management, place of incorporation or any other criterion of a similar nature, but in the case of an estate or trust, only to the extent that income derived by the estate or trust is liable to tax in that State, either in its hands or in the hands of its beneficiaries. For the purposes of this paragraph, an individual who is not a resident of Canada under this paragraph and who is a United States citizen or an alien admitted to the United States for permanent residence (a “green card” holder) is a resident of the United States only if the individual has a substantial presence, permanent home or habitual abode in the United States, and that individual’s personal and economic relations are closer to the United States than to any third State. The term “resident” of a Contracting State is understood to include:
http://www.fin.gc.ca/treaties-conventions/usa_-eng.asp
additionally from Canada government
“IRS Publication 519 states that the U.S. domestic rules that determine if a non-U.S. citizen is a U.S. resident do not override tax treaty definitions of residency. If you are considered a resident of Canada and the U.S. under each country’s laws and the Canada–U.S. tax treaty considers you a resident of Canada, the U.S. has to treat you as a non-resident taxpayer and you should not identify yourself as a U.S. resident to your Canadian financial institution.”
http://www.cra-arc.gc.ca/tx/nnrsdnts/nhncdrprtng/fq-eng.html#q2-5
The IGA only asked talked about citizen and resident individual. I am not certain that for US citizens the exit taxes has to be done to be considered a non US person.
Has Congress considered that the renunciations make Americans abroad a dwindling tax base? Even a drip will drain a tub – eventually.
Bubblebustin says
July 18, 2015 at 12:42 pm
Has Congress considered that the renunciations make Americans abroad a dwindling tax base? Even a drip will drain a tub – eventually.
Look at stats between renunciations and how may people are becoming US person each.
“Still, it makes 2014 the highest year ever, with 3,415 total. In 2013, there were 2,999 published expatriates.
http://www.forbes.com/sites/robertwood/2015/02/11/thousands-renounce-u-s-citizenship-hitting-new-record-not-just-over-taxes/
I did not easily google the number of foreigner becoming US citizen but I have this.
“In 2013, approximately 41.3 million immigrants lived in the United States, an all-time high for a nation historically built on immigration. The United States remains a popular destination attracting about 20 percent of the world’s international migrants, even as it represents less than 5 percent of the global population. Immigrants accounted for 13 percent of the total 316 million U.S. residents; adding the U.S.-born children (of all ages) of immigrants means that approximately 80 million people, or one-quarter of the overall U.S. population, is either of the first or second generation.
http://www.migrationpolicy.org/article/frequently-requested-statistics-immigrants-and-immigration-united-states
@news
…and your point is?
There is 10s of millions trying to become America and maybe 10,000 thousands giving up US citizenship. Figure it out.
@news,
Pity at this point in the proceedings of FATCA (leading to GATCA) and consequences of CBT, these *10s of millions* aren’t fully aware of all the facts they need, full disclosure, in making their decisions. Why is that?
Just as for those deciding to expatriate, renouncing US citizenship and all of its tax and reporting consequences, decisions to become a permanent resident or a citizen of the US should be made ONLY with full knowledge of what that means, not just a US promise of *the American dream*.
The US doesn’t provide all one needs to make informed decisions, so naïveté through US propoganda rules. The path to US citizenship may be a wonderful decision or it may turn out to be the worse ever made for an individual or a family.
I figure one has nothing to do with the other, news. It’s about right and wrong. How does a positive net migration in the U.S. make up for the wrongs perpetrated against its emigrants?
Buttlebustin
Original comment was about Congress
“Has Congress considered that the renunciations make Americans abroad a dwindling tax base? Even a drip will drain a tub – eventually.”
Look at number from congress prospective.
Of course the problem is with the executive branch. Obama pretty much ignores the current congress. Obama is happy with using some decision from the Democratic congress of 2010.
@ news
Thanks for that compilation (July 18, 2015 at 12:25 pm) including these treasured words “… you should not identify yourself as a U.S. person to your Canadian financial institution.”
Even at that, news, I still don’t see how immigration factors into determining which would generate more revenue, CBT or RBT, and how the enforcement of CBT will be the end of American global migration on any significant scale. But that’s asking them (and Obama) to care about why people are renouncing.
EmBee rememer that the Liberals and NDP are Obama friend and in the 1995 Canada USA tax act passed by the Liberals recognized USA tax law and allowed CRA to collect from USA only citizens. This a huge reversal from revenue rule. I do not think many other countries signed this unlike FATCA.
“This convention is called “the revenue rule.”221
Effective November 8, 1995, the Canada-US treaty was amended to override the revenue rule and provide for each government to assist in the collection of taxes owing to the other government.222 For the CRA to accede to a request by the IRS in respect of US taxes owing by an individual,” page 36
Full text – PDF – Canadian Tax Foundation
https://www.ctf.ca/ctfweb/CMDownload.aspx?ContentKey…
Former Obama aides advising NDP, Liberals on campaign strategy
http://www.theglobeandmail.com/news/politics/ndp-liberals-using-grassroots-mobilization-tactics-from-obama-campaigns/article22216447/
@Calgary411
The more people running into the talons of this kind of condor, the better:
“To appreciate how many more persons want to immigrate to the U.S. compared to emmigrate from it, see an earlier post: The Number of Citizens Leaving (Renouncing) Versus Coming (Naturalizing) is Just a Speck
This is the other “side of the coin” so to speak, since individuals contemplating coming to the U.S. often should undertake pre-immigration tax planning. One means for non-U.S. citizens to become LPRs and eventually U.S. citizens, is through the EB-5 visa program.”
http://tax-expatriation.com/2015/07/16/expatriation-implies-leaving-the-u-s-but-many-more-want-to-come-to-the-u-s-tax-consequences/
Those trying to get in are the very poor and those who want to renounce are well off, to rich. I’d rather keep one millionaire than get a thousand poor potentially dependent immigrants. We are in danger of becoming another Argentina after Barak Juan Peron Obama and Hillary Evita Peron Clinton.
I believe you’ll find there are a lot more middle-class and poorer who want to renounce than the very wealthy (as referenced in the link to today’s comment: http://isaacbrocksociety.ca/media-and-blog-articles-open-for-comments-part-2-of-2/comment-page-18/#comment-6303369).
We come in all shapes, sizes, colours, net worths, religious and political beliefs. Many cannot renounce because of the $$$$ involved for their freedom from the homeland and its CBT consequences, both in renunciation and exit tax theft. Mind you — we are already outside the US, residing in other countries and many are citizens of those countries. You may be referring to persons residing in the US and *wanting to renounce* (which they cannot do from within the US), Wilton J. Tidwell. Your view is a lot different than many who communicate here at Brock, as is usually your reason for commenting here, the US flat tax which has little relevance to those of us abroad.
A consensus is forming about the language around CBT. USCitizenAbroad weighs in with informative posts:
@George says “words are very important.” @Decard1138 says “language is very important” and adds:
So we may play the word game as well and curb use of what the US government calls “Citizenship Based Taxation.” It is not accurate. It may be called “propagandistic language.” It may evoke a patriotic point of resistance from Homelanders when we say we want to change it.
We may say that we wish to end US Extraterritorial Taxation of US Persons living and working overseas.
@USCitizenAbroad points out that “US Person” is good to use as:
However, there will be instances where we wish to refer to the existing inaccurate term “citizenship based taxation” as well as US Extraterritorial Taxation of US persons overseas, to help bring our request into context: to end US Extraterritorial Taxation of US Persons overseas, and to replace this with US taxation of them as nonresident aliens. Note the lower case usage of CBT, or now cbt!
@foo In regards to building data on the revenue neutral prospect of an end of US Extraterritorial Taxation of US Persons living and working overseas, that should not be our primary argument which should be around equity and the US Constitution. Even Solomon Yue refers to this:
IMO we should focus on equity and the US Constitution. However, to help build an argument on the revenue neutral nature of what we ask would help achieve what we ask: An end of US Extraterritorial Taxation of US Persons living and working overseas.
Tidwell pretends to be an idiot, but I think he’s a skilled propagandist. Maybe one step away from the kind of propaganda usually used by KKK and Stormfront, and one step away from the kinds of tricks used by Republican campaign organizations. Or maybe actually trained there and just visiting here as a hobby.
There are indeed the 1% who renounce because of actual taxes. There are also the 99% who renounce when actual US taxes are $0.00 because we can’t afford the abuse. I think Tidwell knows it.
Don’t feed the troll.
Indeed I did know most renounce because of having to file papers that nobody will ever look at, but the real trolls will notice if they are not filed. Only 3 percent of the tax returns filed are ever audited for accuracy. A very large number of tax returns are filed to get the earned income tax credit and most of them are fraudulent. There is one address in Atlanta that had 750 filed from it and all were to get the earned income tax credit.
Marx, in his Manifesto, second chapter, made several demands. One was for a progressive Income Tax and he stated his reason clearly. It was to destroy the ”despised middle class”. He has had progressive help and has almost succeeded beyond his wildest dream. He and Engels would be proud of our political class for their efforts to fulfill his wish.
You may be right . I may be a fool or maybe pretending to be a fool. I was raised by Marxists, who waited for the redistribution to make them rich, but it never did, imagine that.
I simply want to do what my life long friend Roger Conklin, whom you all know passed away at age 82 this spring, wanted and that was to help the victims of citizenship based taxation.
If one millionaire renounces and 10,000 poor stream across our border it is not equal. I’d rather have the millionaire stay. At least he won’t become dependent on the rest of us.
“Indeed I did know most renounce because of having to file papers that nobody will ever look at”
Some of us renounced because the papers were looked at and we were penalized for telling the truth.
“Only 3 percent of the tax returns filed are ever audited for accuracy.”
Yeah don’t I know it. I try to compel the IRS to audit me and courts even reject those attempts. The IRS needs to rely on its fraudulently altered records.
Glad to see you’re not a troll. So why did you lump us 99% in along with the 1%?
I read bubblebustin and he is disturbed that the U.S. government is taxing the world.
I said this some time back:
We are the new Roman Empire. We have soldiers stationed in 150 locations. Our soldiers are the New Centurians and the English Language is the Empire. Rome fell as we are falling and for the same reason.
The democratic mob has found they can get benefits from the treasury by voting for progressives. The benefits are paid to the majority and paid for by the minority or with borrowed money. A formula in either case for failure as a nation. Bush 41, Clinton, Bush43 and Obama all are playin the fiddle whilst Rome Burns.
I mistake in phrasing perhaps. I knew better. i am an ardent supporter of the FairTax and use every chance to promote it.
See I made two mistakes by starting my note with I instead of A. Mea Culpa.
While I am waiting for Clinton to “grab” my vote, and consider myself independent, Rand Paul has a certain appeal for US Persons overseas impacted by US Extraterritorial Taxation representing double taxation with excessive compliance cost, and excessive compliance penalties. He has said something along the lines: we should not chase our citizens away. He said something similar for companies: that we should not chase US companies such as Burger King away from America.