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*).
“The democratic mob has found they can get benefits from the treasury by voting for progressives.”
Most of “the democratic mob” doesn’t vote. Politicians are beholden to the 1% not to the 99%.
“The benefits are paid to the majority and paid for by the minority or with borrowed money.”
Yes, politicians of most stripes in most countries have enacted progressive income taxes. This seems out of character since the politicians are beholden to the 1% not to the 99%. However, they make up for it by enacting some regressive taxes (e.g. social security and sales taxes) and doughnut holes where the middle class pays higher rates than either the lower or upper class.
Oddly enough, I don’t oppose progressive income taxes. I’m not even a Marxist. I have trouble understanding how a Marxist could oppose progressive income taxes.
The problem we have here with ET isn’t progressiveness of tax rates.
Marx proposed yhe progressive income tax in his Communist Manifesto to destroy the middle class and it was prohibited in our constitution until the Marxist Socialists got the 16th amendment passed.
If you favor a progressive income tax, then by your belief, you are a Marxists.
I know The Manifesto by heart. I was raised by Marxists, who were ready willing and able to accept a hand out.
I am a Paul the younger supporter and I believe he is also for the FairTax.
@foo, I already tried to estimate the revenue of RBT vs. CBT using IRS statistics. I don’t remember the numbers exactly, but I think I found that CBT generates about $6 billion, while RBT would generate $4 billion, even under very favorable assumptions. I also considered the cost to process returns, but it’s insignificant. ACA’s assumptions are very unrealistic in my opinion. However, I disagree with Solomon Yue that the obstacle to RBT is revenue. Congress didn’t say this at all, the obstacle is simply that they don’t care enough to sit down and write a proposal. Congress passes laws that decrease revenue all the time, and in this case it would be insignificant.
Regarding the terminology, it seems to me that CBT and RBT have been used for a long time, and they do describe the situation accurately. There is also SBT (source-based taxation, the country taxes all income generated there regardless of who receives it) but it’s not mentioned often because it’s not controversial. All countries that tax income use SBT, most also use RBT, and the US also uses CBT. They are additions, not mutually exclusive. That’s why I formally named my proposal as the elimination of CBT, not a change to RBT.
The case of green card holders is different. Although I agree that the green card itself should not be used to determine tax residence, I don’t think it’s a big problem, because the status is lost anyway if the person stays outside the US for too long, and it can be overridden by a tax treaty (the saving clause only applies to US citizens).
@Shadow Raider Good points about eliminating cbt. Yet that language and nuances may easily be missed by those not as versed with the topic, and think we are asking for an unpatriotic solution. You might also include in the explanation aka Extraterritorial Taxation, and note the inaccuracies of the term cbt when the US does not just tax its citizens but everyone resident in the US. I believe this will ease the explanation.
@Shadow Raider
Revenue neutrality is a load of crap. Countries should change laws that are bad, regardless of what effect they have on revenue. If CBT is found to be unconstitutional, it wouldn’t matter how much revenue it brings in. CBT has only been allowed to exist because relatively no one knows about it. However, if CBT remains, I predict that in the not too distant future the only people who will leave the US and maintain US citizenship will be people moving abroad temporarily. The US will then boast nearly perfect compliance statistics amongst this group, but on a greatly reduced number of Americans living abroad. How does this potential reality factor into any revenue predictions?
Revenue predictions for nearly percect compliance? A big drop. 99% of amounts of tax will be zeroes, the same as they are now. Revenue from penalties will go way down.
Revenue neutral. Compliance costs of individuals should not be excluded in such calculation. They should be included: individuals and FFI. This is a key Taxpayer Bill of Rights not listed: while files should not be excessive, compliance should not be excessive – or out of line in a discriminatory basis (especially in view of tax owed) as well.
@Shadowraider
What about all the companies in Delaware and Wyoming? How much revenue would they bring if they came out from the shadows?
@Bubblebustin
I agree- it shouldn’t matter when the constitution is being violated and people are being unjustly exploited. But tell that to a nation which is drowning…. Personally however, I think they should try to make ends meet by cleaning up at home and getting the revenue from those living there.
OK Folks, Face Facts, Corporations do not now, nor have they ever, paid any taxes. I was involved in cost accounting for some time and taxes like ALL costs of operation, are simply added into the base costs and passed on to the end consumer. It hides from the taxpayer that 30% of everything they buy is added in because they are complying with tax law and the costs of tax compliance, tax advice, tax lawyers, tax accountants, and the taxes themselves are added in and comes to about 30% of the base costs.
A tax system that hides the source and is fleecing the consumer is a moral travesty.
Here is what we need to do: 1.Repeal the 16th amendment to the constitution. 2. Repeal all Federal tax laws including the Social Security taxes. 3. Pass the revenue neutral FairTax which doesn’t hide where the taxes come from and brings those who are tax cheaters, into the tax system. 4. If all the above were done we’d have to import workers from everywhere, to keep up with economic growth. Our politician of both parties who are socialist dominated, are the problem. Throw them all out and vote only for FairTax proponents. The FairTax is Capitalist. Our current system is socialist.
This paragraph does not attack any program or the spending, which is out of control, but attacks the tax collection system, that is based on citizenship rather than residency or presence in the U.S. including the 50 million tourists who would pay, as well as the criminal element who evades all taxation. If they didn’t evade all taxes, we would collect 50% more taxes and could stop worrying about evasion, but alas human nature is they will evade as long as permitted to do so.
@Norman Diamond
Exactly, the better the IRS gets at enforcing US taxation within the non-resident demographic, the sooner they’ll realize there’s no gold in them thar hills (I believe the statistic is 20% of non-resident filers end up paying US tax).
Once the IRS finishes with its “gotcha” campaign of tax enforcement and fleeces the previously unsuspecting masses of taxes and penalties, they will be dealing with a diaspora that will either,
A) renounce
B) arrange their finances to owe little or nothing in US tax
C) avoid the US like the plague
If I’d known about my tax filing obligations, I would have never incurred a tax liability to the US government on the sale of my home where I live, and neither would Boris have.
Good grief. I just took my dogs for a walk and a car in the parking lot had a bumper sticker which said “Time for Hillary”! SAY WHAT?
@Polly
Twenty to life, maybe?
“Norman Diamond says
July 18, 2015 at 7:32 pm
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.”
I am not going to defend everything William Tisdale says but some of the stuff about taxes are in line with Ayn Rand and Milton Friedman I think both would be hated by KKK and Stormfront.
I think he was wrong about millionaire moving to Canada.
Regarding Canadian green carder going down to USA and the American coming up to Canada
economics.uwo.ca/undergraduate/wuer_docs/2003/1_Uhm.pdf
The Brain Drain: The Loss of Canda’s. Brightest Minds. To the United States. By: Stan Uhm. Introduction. Alexander Graham Bell was one of. Canada’s greatest ..
“Why Canada is failing at tech
This summer, Facebook is cutting the ribbon on a brand new office in downtown Vancouver. The social media giant will employ some 150 staff, mainly recent software engineering grads from the area. According to the company, Vancouver was an ideal choice: close to Facebook offices in Seattle and Silicon Valley and attractive enough to pull in talented new recruits.
For Vancouver tech boosters, this would seem validation: bricks-and-mortar proof that the city is on its way to becoming Silicon Valley North, a new hub of tech innovation north of the border.
Unfortunately, the reality is quite nearly the opposite. Facebook’s new office has a one-year lifespan. It’s a pop-up boot camp for training local software engineers and then shipping them to the U.S. In fact, one year happens to be roughly the time required for a Canadian engineer to secure a permit for full-time work in the states.”
http://business.financialpost.com/entrepreneur/fp-startups/why-canada-is-failing-at-tech
The Canadian government tries to say that third world university are producing the same quality student as Canadian university. If you want to believe that I have some swamp land to sell to you.
You had a lot of draft dodger and people who want to take advantage of Canadian social safety net coming to Canada. Calgary411 was right not a lot of millionaires coming to Canada from USA.
But Mr Tisdale has a point about third world immigration
“Howie Carr: Trace terrorists to Ted Kennedy
…
Will prisons be inundated, senator? According to the Bureau of Prisons, 24 percent of the inmates in federal penitentiaries are now non-citizens, and 16 percent are Mexicans. One man’s flood is another man’s leakage, right Deval Patrick?
…..
How about all these refugees and “asylees?” Like the Tsarnaevs — that crime family came over here on a tourist visa, then claimed they were victims of persecution from the government that granted them tourist visas. Once they got settled in on welfare in Cambridge, they became tourists once more, returning annually to vacation in Dagestan, where they were so grievously oppressed. Some persecution, huh?
According to the Office of Refugee Resettlement, Arabic has become the most common language among refugees. Among refugees from the Middle East, 91 percent are on welfare, collecting food stamps.
http://www.bostonherald.com/news_opinion/columnists/howie_carr/2015/07/howie_carr_trace_terrorists_to_ted_kennedy
Mr Tisdale may be interested in this about Trudeau and why he felt that way about draft dodgers
“How he became the Prime Minister of Canada is a mystery. Many cooler heads knew that he had been an anti-war activist and draft dodger during the WWII; the war to save civilization from the multiple nightmares of the Nazi European conquest and mass genocide. Trudeau’s personal papers revealed that:
Trudeau was a vociferous Anti-Semite, and hated Jews
Trudeau was a Nazi and Fascist supporter
Trudeau supported the pro-Nazi Petain Vichy government.
Trudeau was an admirer of any dictatorship, loathed parliamentary democracies and wished for a Nazi and Fascist victory.
Trudeau thought that reports of Nazi atrocities against the Jews and others were mere British and allied propaganda.
Perhaps most shocking was the revelation that P.E. Trudeau secretly plotted “La Revolution Nationale” together with an upper class cadre of Quebec anti-war activists and government leaders in 1942 to attack Montreal government and media establishments.
The fall of France, the rise of Italian Fascists or the Japanese rape and pillage of China and the Far East didn’t move Pierre to join the fight.”
http://canadafreepress.com/article/a-book-report-the-young-trudeau
Of course Trudeau came up with an attack on Province that did not support him. Ever hear of NEP of course Quebec hydro electricity and the coal industry were not effected. They voted for him.
The NEP was a lot worse than Canadian FATCA.
Mr Tisdale is mainly right about companies passing along taxes to consumer but OPEC monopoly oil is not subject to our tax regime. He also forget that corporate profit are taxed a second time because dividend taxation is double taxation. Capital gain is based on what people expect from future dividend so it can be included in double taxation. I also remember that Mr Tisdale hero Ronald Reagan talked about double taxation of dividends but he then allowed that idiot James Baker III to tax dividend and Capital gains as regular income. In USA they also have inheritances taxes as well. You will not see dividends, capital gains and inheritance in a country GDP you will only see corporate profits. Some businesses may privatize to avoid double taxation.
Have you seen the letter to Dear Abby from an anonymous writer. It read: ”My husband cheats on me openly and everyone knows it, He lies about that and everything else. All he wants to do is drink, smoke cigars, and hang out with his buddies. He hasn’t had a job in years and takes money for speeches and for a foundation and expects me to fulfill promises he made, to get the money. He has hinted to some that I am a Dike and that my friendship with some Lesbians were for sex. Abby what do you advise me to do?
Answer: Shut up girl, you are a grown person running for and will probably be the next president. You had a chance to dump him years ago but obscurity wasn’t in your plan so shut up and suck it up and live with your choice.
Mr Tisdale may be intersted in thsi article as well
“The Fiscal Cost of Unlawful Immigrants and Amnesty to the U.S. Taxpayer
“Over a lifetime, the former unlawful immigrants together would receive $9.4 trillion in government benefits and services and pay $3.1 trillion in taxes. They would generate a lifetime fiscal deficit (total benefits minus total taxes) of $6.3 trillion. (All figures are in constant 2010 dollars.) This should be considered a minimum estimate. It probably understates real future costs because it undercounts the number of unlawful immigrants and dependents who will actually receive amnesty and underestimates significantly the future growth in welfare and medical benefits. ”
http://www.heritage.org/research/reports/2013/05/the-fiscal-cost-of-unlawful-immigrants-and-amnesty-to-the-us-taxpayer
I also think there is no way that fair tax will be approved by the electorate.
Wow, this thread has more loop-de-loops than a Midway ride.
“…….. International tax law presently recognizes two types of
jurisdiction to tax—worldwide and source.40 Worldwide jurisdiction
derives from personal connections between the taxing state and the owner
of the income, whereas source jurisdiction derives from economic or
territorial connections between the taxing state and the income.41
Worldwide tax jurisdiction is said to be unlimited because a state
with worldwide tax jurisdiction over a person can tax all of her income, no
matter where in the world derived.42 Although international law recognizes
three independent predicates for worldwide taxation—nationality,
domicile, and residence—no state other than United States assesses
worldwide income taxation solely on the basis of nationality.43 Instead,
states apply worldwide taxation to residents or domiciliaries, terms
typically defined by reference to physical presence in the jurisdiction. For
example, a common rule determines or presumes residence if the taxpayer
is physically present in the jurisdiction for more than half the days of the
year.44 States also determine residence by evaluating connecting factors
such as whether the taxpayer has a dwelling in the jurisdiction, whether her
family resides there, and whether she has social and economic connections to the jurisdiction.45 This Article adopts common practice of referring to as
a “resident” any person who meets a state’s threshold for worldwide tax by
reason of her domicile or residence. The term “resident” as used in this
Article therefore excludes anyone who is subject to worldwide tax solely
on the basis of her nationality.”……………
from
n, Ruth, Citizenship Taxation (May 15, 2015). Southern California Law Review, Vol. 89, Forthcoming; Virginia Law and Economics Research Paper No. 2015-07. Available at SSRN: http://ssrn.com/abstract=2606744
open source for download at http://ssrn.com/abstract=2606744
Re the issue of revenue neutrality, I agree with bubblebustin that shouldn’t be the overarching concern – this is an issue of equity, discrimination, injustice and unethical treatment of those the US claims as US property for life.
In any case, here are some further quotes from the Ruth Mason paper http://ssrn.com/abstract=2606744 re the lack of any reliable information on which to calculate the #s and $s involved:
…….”……..it would be helpful to have a clear picture of the
demographics and incomes of nonresident Americans. But the United
States government does not (and, by its own admission, cannot65) keep
track of nonresident Americans. So, not only is it impossible to obtain a
detailed description of this group and its income, it is not even possible to
get an accurate account of the number of U.S. citizens residing abroad.66″…..
…………” D. Revenue from Citizenship Taxation
Because we don’t know how many overseas Americans there are,
where they live, or how much income they have, it is impossible to get an
accurate picture of how much tax overseas Americans owe.76 “…..”Even if we had good estimates of the revenue raised by the
citizenship taxation, we would need more information to understand the
revenue impact of reforming it..”…………
@ badger
Yes it would be interesting to know those numbers but I think at this point a great many US persons overseas would just as soon stay out of the count for as long as they can. If they get counted, they get tagged and then comes trouble. You’d have to make CBT go poof before anyone would willingly put up their hand to signify their USness now.
@ Deckard1138
I’m getting dizzy with the loop-de-loops but through the swirls my mind is saying we probably should stick to CBT because it has become a recognizable term but it really is a control mechanism which extends beyond the US borders. When I see the C in CBT I think of CONTROL. Maybe it’s hidden meaning is Control By Taxation.
@ news
It’s Wilton Tidwell not William Tisdale and he has many valid points about the fair tax. It would solve some problems for outlanders but the US government revels in its problem making abilities and powers.
I don’t know if it’s all that bad that the word “citizenship” is incorporated into any description of what plagues us if it results in the realization that US citizenship is something you don’t want to have if you live outside the US. Important to remember is it’s we who by living in other countries make it bad for those other countries and its citizens. US taxation only becomes extraterritorial when there ‘s a USP involved, otherwise they are like any other country. We are the disease carriers. Denying us banking services is really the first step for a nation in the eventual banning of all US persons, and if their governments let them do it against their own citizens and permanent residents, then they condone it across the board. Who’s next after the banks?
The US, other than Eritrea, is the only country in the world to subject it’s non-residents to Taxation Bearing Citizenship.
@badger
I find it really perplexing that Democrats are so worried that the court would find FATCA to be unconstitutional. It’s as though catching offshore tax evaders should come at any cost, and that the greater war on tax evasion wouldn’t be complete without some collateral damage.
@Embee, I agree. I have always had questions about the ability of the ACA to persuade based on their projected numbers though I support their valiant attempt to do so. Those in the US divert our advocates by saying “well show us the numbers” and “we’d like to hear from ….” but all the while knowing that the numbers are hard or impossible to come by, and that they’ll ignore them and what we say anyway in any event. Look at the recent result re the SFC report. They have no intention of doing anything no matter what. And people like Townsend are still saying that the bank denials of service are purely “anecdotal” – no evidence will ever persuade him – it is a worldview.
The US government’s numbers are pure BS pulled out of an orifice, blaming the US ‘tax gap’ somehow on those ‘abroad’ and existing only on someone’s used cocktail napkin – a source which, though extremely and obviously shaky, is repeated and published for its propaganda value – now even more so re FATCA. I cited the Mason paper because she states formally some of what we already know. Those ‘abroad’ can’t be counted with any certainty. Various parts of the US government have said it is too costly, and they also really can’t be bothered – it is of no use to them and they don’t care about any use to us. As we know, even fewer will come forward voluntarily now, in any way that may be counted unless they are unaware of consequences, or because of pressing necessity. Those ‘abroad’ who are aware of the pitfalls will refrain from registering their children, and children born abroad yet affected via US parentage will choose not to identify themselves as US citizens. Quiet filings and backfilings as well as streamlined will continue for those who can afford to/or feel they must choose a formal exit with filings in order to obtain a CLN.The revenue that could ever be assessed seems by its very nature unquantifiable. The actual potential for collection of that revenue is even more so.
As long as the current approach costs the US government and Congress nothing – or a cost that they feel comfortable with, they’ll just keep using us for our scapegoat and diversionary value for homeland consumption and propaganda purposes – which is also hard to quantify. They also have more ready government communications outlets of their own (ex. all the PR pieces issued by Treasury, and Senators and Congresscritters, and as well as all the media willing to publish their BS unquestioningly.
@bubblebustin, I think it is all politics, and saving face, and our continued value as scapegoats. There is a reason why they changed their tune so suddenly re expats between 2008 and 2012. Now they’d have to admit the magnitude of the harm. That will never happen.
Actually when fully understood 92% of those educated in its benefits were for the FairTax. The reason it never gets a hearing in ways and means, where all taxes start, is the benefits congressmen and women and senators get from having the income tax.
Two reasons, one is the majority of both houses are Socialists at heart and the second reason is their main job is to be re elected.
The tax law was stripped down to its core in 1986. It has been amended 9,000 times since then and most of the amendments are for what they call tax extenders. A tax extender is an amendment that gives a tax break to a person or business that only they and their congressman knows about. That is an average of over 6 amendments for each day the congress has been in session. here is how it works.
A lobbyist from ”K”Street is hired for a very large fee. The Lobbyist is a former congressman or senator whom the current guy trusts. The lobbyist has a meeting with the current guy and has a check already made out to the re election campaign fund. As soon as they agree on the tax break, the lobbyist leaves and drops the check off at the desk of the ”campaign chair person”.
These amendments have a life period, to expire on the next election year. If the lobbyist reappears, with a new campaign contribution when the amendment (tax extender) is about to expire, then the amendment gets extended. No check, no extender.
There is an inverse incentive for a politician to do whats right for the country, when they know the FairTax is the best for the country, but not good for their chances to hold onto their seat.
Congress has an approval rating of 9% but get re elected 95% of the time. Go figure!??#*?.<