Cross posted from the Renounce U.S. Citizenship blog.
Assistance required. Many people defend (not justify) citizenship taxation on the basis that:
- All U.S. citizens are subject to the same provisions of the Internal Revenue Code
- Americans abroad are U.S. citizens
Therefore, Americans abroad should be subject to the same provisions of the Internal Revenue Code as Homelanders.
Or in Homelanderspeak:
All U.S. citizens are subject to exactly the same set of tax laws. What could be unjust about that? We are ALL citizens. Therefore, we should ALL be subject to the same set of laws.
Could you please address your mind to the following question:
What is the best response to this argument? How can one best explain that it is wrong to justify citizenship taxation on the basis that ALL citizens are subject to it in the same ways?
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"not sure why u believe the tax law ur asked 2 adhere 2 is unequal. It = tax system that all other citizen r held 2" https://t.co/e7HSt5hgCZ
— U.S. Citizen Abroad (@USCitizenAbroad) November 8, 2015
The above tweet references the following recent comment on a Robert Wood’s blog.
I’m not sure why you believe the tax law you’re being asked to adhere to is unequal. It’s the same tax system that all other citizens are held to, except you get income exemptions due to not being resident. I agree that relinquishing should not be a financial burden. However, if the burden of complying is less than the one time $3000 cost of relinquishing, then how much of a burden is it?
This is very similar to the rationale used by Judge Rose in denying the injunction in the Republicans Overseas FATCA lawsuit.
You will find Judge Rose’s decision here. Commentary on the ADCSovereignty blog included:
You may recall the wisdom from 17th Century France (I wasn’t there) …
“The law in its majesty equality prohibits both the rich and the poor from sleeping on the park bench.”
Which Judge Rose carried forward into 21st Century America (I am here) …
FATCA in its majestic equality requires both Homelanders and Americans abroad to report their “foreign” bank accounts.
In the same way that the practical impact of the “park bench” law is to apply only to the poor, the FATCA reporting requirements apply only to Americans abroad.
In other words, Judge Rose is NOT looking to the effect of the law to consider a denial of equal protection.
Your thoughts would be greatly appreciated.
What a great collection of common-sense ways to explain why the mere fact of US *citizenship* does not include the automatic requirement to obey US law of any sort! It is the *location* of the citizen that requires him/her to obey the law. (I love the speed-limit analogies!)
I once had a conversation about dual citizenship with a US consular officer. She told me that as a dual citizen it was important that *when in the United States* I obey US law because if I got into trouble the Canadian government would not be able to help me. The issue was my *location* as a citizen.
But my personal favourite reason that all citizens *cannot* be subject to the same tax laws remains the very existence of the United States itself. The American Revolution came about because colonists were sick and tired of being bilked and harassed by the mother country, of which they were “citizens” but from which their interests and needs had grown apart. Instead of recognizing that fact the British government stubbornly clung to the status quo.
Following in its parental footsteps the US government is now repeating history and clinging to its own status quo. The interests and needs of US citizens outside the US are entirely different from those within the 50 states. The US government would do well to recognize this and release its external citizens from the current tax bondage before their relationship is soured and severed forever.
“Therefore, Americans abroad should be subject to the same provisions of the Internal Revenue Code as Homelanders.”
Many Homelanders are really stupid people anyway. They are taxed only once by Uncle Sam whilst overseas US Persons (defined as?) are taxed twice — in their country of residence as well as by Capitol Hillbillies…
Hypothesis: “’1.All U.S. citizens are subject to the same provisions of the Internal Revenue Code’
Norman Diamond: “False. Residents of Puerto Rico, Guam, etc., are US citizens but don’t have to obey the Internal Revenue Code unless they have income from the US government. Only if they move to Mexico, China, etc., then they have to start filing US tax returns.”
Andy05: “It’s more complicated than that, on two accounts:
1) Persons born or naturalized in a US territory are statutory, not 14th Amendment, citizens.”
Naturalization is statutory. However, after naturalization is accomplished, the 14th Amendment makes the person a citizen and that cannot be taken away by statutes.
Andy05: “There is Supreme Court dictum that if, there is a transfer of territory (e.g., if Puerto Rico gains independence) US citizens by reason of that connection with PR can lose their US citizenship.”
Was that before or after Afroyim v. Rusk?
Suppose four US citizens visit Canada, and during that time Hawaii and Puerto Rico obtain independence. Does the person born in Hawaii lose US citizenship? Does the person born in Puerto Rico, naturalized at birth by statute, lose US citizenship? Does the person born in Canada, naturalized in Hawaii by statute, lose US citizenship? Does the person born in Canada, naturalized in Puerto Rico by statute, lose US citizenship? The 14th Amendment says no, Afroyim v. Rusk says no, and I ask you to cite which case says yes.
Rabang v. Boyd said that a non-citizen national can lose their nationality by statute. Afroyim v. Rusk makes the issue cloudy because the Supreme Court used the words citizenship and nationality as if they were synomyms. I asked elsewhere if Afroyim v. Rusk overturned Rabang v. Boyd but no one answered.
Andy05: “2) Native-residents of US territories pay a “mirror tax” instead of US income tax but only on their local income; other US income is taxable by the IRS.”
That looks pretty irrelevant to me. They and I and persons who never had any US taint pay US tax on US sourced income. They and I and persons who never had any US taint pay taxes to the places where we reside.
“Only a dominant nation such as the US could, in practice, attempt to bully citizenship-based taxation onto the world.”
Only a dominant nation such as Eritrea or the US could, in practice, ATTEMPT to bully, and if I understand reports correctly, sometimes succeed to BULLY, citizenship-based taxation onto the world.
That might be our best sound bite. US policy has just one friend among all the countries of the world, and the US’s friend is Eritrea.
“All U.S. citizens are subject to the same provisions of the Internal Revenue Code.’
Such statement incorporates US exceptionalist myopia. We should not to acquiesce to such view point. How about this:
Only US citizens living in the US are subject to the tax and compliance code of only one nation.
“Only US citizens living in the US are subject to the tax and compliance code of only one nation.”
Not true. Canadian citizens living in Canada are also subject to the tax and compliance code of only one nation, unless they have income sourced in another nation or buy something in another nation etc.
Barbara, I like your point about the speed limit and it got me thinking. I Bet there is a federal regulation that says all traffic must drive on the Right and to drive on the left is illegal.
This puts those of us who live in any of the following countries in a real legal bind!
UK
Ireland
Australia
New Zealand
Japan
South Africa
India
etc etc
Clearly we are flagrantly in violation of this law every time we take to the road!
@Norman Diamond If we add lots of qualifying statements then it becomes a book. We just need a soundbyte to flip back that is generally true.
My statement was not about Canadian citizens. And yes if you have money/investments/income in a second country then you get exposed to the tax code there.
Ask them if they have 7,322 pages of forms and instructions ( as of 2001) they must sort through every year for their individual tax return. When they answer “No.”, ask them why then you should be required to do so.
Ask them if they are required to report their locally held assets to the Treasury’s Financial Crimes Network. When they answer “No.”, ask them why then you should be required to do so.
Ask them if they are required to report the assets of their spouses, children, employers, business partners and private civic groups to the Treasury’s Financial Crimes Network. When they answer “No.”, ask them why then you should be required to do so.
Ask them if they are required to report the assets of their spouses, children, employers, business partners and private civic groups to a foreign government. When they answer “No.”, ask them why then you should be required to do so.
Ask them if they are under threat of a minimum $10,000 fine for each and every unintentional error or omission no matter how small when providing the above information. If they answer “No.”, ask them why you should be.
Ask if we are all able to exercise our rights the same, for example voting. If they answer “yes” ask them how one who is a permanent resident in another country can claim residence anywhere in the US. Ask them if they still vote in the state of their birth if they have moved to another state. If they reply that we can vote via Federal Absentee ballot, remind them that allows us to vote only in Senatorial and Presidential elections.
Then ask them how many Senators the United States have. If they foolishly answer, “100”, let them know that they have so little knowledge about the formation of our government and laws that they should be ashamed to be commenting at all on any related subject. Educate them to the fact that the United States has zero Senators. Each STATE has two. Before they can deliver the inane response that that is just a question of semantics, educate them of the reason each State has two Senators. The citizen residents of New York are likely to have different concerns and interests than those of Georgia. As none in our home states have the same concerns as U.S., we are without representation.
If overseas Americans continue voting in Congressional elections in their home districts, at some point they may be at risk of committing voter fraud. Putting that possibility aside, we are still with out representation. No homelander has to obey the same set of laws we overseas Americans do. We do not share interests and concerns with our fellow citizens resident in our home districts. Further, representatives are allotted to each state by population as determined through the census. As we are not counted in the census, we are not added to the population of our home states and thus representatives are not allotted based upon our existence. We are without representation in both the House and Senate. NO TAXATION WITHOUT REPRESENTATION.
Educate the homelander that FATCA FBAR applies to non US citizens residing outside that U.S. They surely can not vote in elections in the U.S……not legally anyway. NO TAXATION WITHOUT REPRESENTATION.
Overseas Americans are also denied our right to due process. The U.S. has extorted the nations we live in and the banks operating therein to violate U.S. and local laws by providing our private, confidential financial and other personal information without a warrant nor even the suspicion of wrongdoing.
Overseas Americans are also denied our legal right to a trial by our peers. As U.S. Courts can not convene outside the U.S., we must be transported back to the homeland to stand trial for not following the above requirements. As no homelanders are required to follow the same laws as they are applied to overseas Americans, there are not any persons in the homeland who could legally sit on a jury and judge us or our actions. We have no peers within the homeland.
Ask them why we pay taxes. If they answer “To provide for a well ordered society.” Or other such nonsense, slap them silly. Err they already are silly…hmmm. With as much emphasis as required for the dullard to comprehend, reply with “NO!” ” Taxes are to pay for services citizens can not be expected to provide for themselves.” Ask them to pay for the school’s you send your children to, to pay for the roads you drive on, to pay for the firefighters who will put out fires in you neighborhood, for the hospitals you go to and for the police that keep you safe in your chosen land of residence. If they refuse, tell them that they then have no right to demand that you pay for these services for them.
For fun, you could also ask how well the paying the huge amount of taxes that the Treasury collects has been providing that “well ordered society” the homelander proclaims to be the purpose of paying taxes.
If they tell you that you are paying for the U.S. Military to rescue you in times of crisis or disaster, educate them on the fact that in the unlikely event we need military evacuation, we have to reimburse the government for it. Educate them on the fact that very recently our government has refused to offer such assistance to US citizens in both Yemen, when it was overrun by terrorists, and Tibet after the massive earthquake there.
If you are resident in Japan and the homelander foolishly claims that you are being protected by the U.S. military at the expense of the homelander taxpayer tell the punk ass ignoramus that they are yet wrong again. Japan, thus all who pay taxes in Japan, pay a huge amount of money to the U.S. as a “host nation” to our armed services. As a taxpayer in Japan we pay more than the homelander does for that portion of the U.S. Armed Forces stationed here.
When homelanders accept turning over their spouses’, children’s, business partners’, employers’, civic organizations’ etc private financial data to a foreign government, then perhaps we will too. Not really, but this may help get the point across. When homelanders submit to the requirement to self report all their assets to the Treasury’s Financial Crimes Network under threat of massive fines without warrant nor suspicion of wrong doing, we may also consider doing so. When they submit to taxes without representation, we may also consider doing so. Until then, tell them to shut the F up, follow the law and if they want it, to pay for it themselves and leave us the F alone!
If you feel that less hostility and more tact might be more helpful, then you may not want to slap them senseless or call out their ignorance, but as you can probably guess, my patience has been quite worn out with these whineyass, crybaby, know-nothing nitwits.
Just my 二円 (2 yen) worth.
Boy, that was actually therapeutic.
Thanks, Japan T. Reading your words is just as therapeutic. And I may borrow when I next come across someone who I want to just finally say to, *Leave my Canadian family the F alone!*.
@ Japan T
I’ve got a whole folder of “keepers”. You just provided another one for it. Well done!
@Japan T:
Everything you wrote above should be printed in a flyer to hand in person to Homelanders. Terse, eloquent, and jaw-droppingly true. In fact, I’m copying and saving it for future use (with due credit given). That said, we nevertheless face the problem of finding a soundbite answer to a soundbite question. If you choose any one of Japan T’s eloquent points in isolation, as powerful as the restrained moral indignation behind his words may be, each point alone is not enough to convince a Homelander, and they are not going to stick around to listen to a second point, or if they do, by the time you get to point five, they’ve already dismissed you as an angry zealot.
In the past I’ve tried the retort, similar to Japan T’s: “Do you have to file your taxes with the Financial Crimes Enforcement Network?” (Yes, I know it’s not literally true, but it is attention-getting, and truth takes a back seat to effect for sound bites). This is usually met with stares of disbelief, but ultimately, instead of asking for clarification, I always get, “Well, if you have nothing to hide…” I’ve stopped using that argument as an opener.
We need a one-sentence riposte to “fair share”, a slogan, if you will. I’ve racked my brain and haven’t come up with one yet.
@Calgary
You’re welcome. Use any of it or all of it as you please. Goes for everyone.
@EmBee
I am honored!
@ Barbara
I agree, we need a short, sound bite sized retort. I too have been searching and asking for ideas but have not found anything that works. To my knowledge, I have not won over a single soul. As I am sure it is with many here, this whole episode has affected so many areas of my life, many that are surprising to me.
I teach English to Japanese. College students, medical students, business men and women, house wives, retirees and children. For what purpose when even native English speakers, even other English language teachers are incapable of understanding anything that does not fit their preformed positions, beliefs and opinions. Why bother teaching English to Japanese when my colleagues respond to my warning “Banks around the world have been closing accounts held by Americans.”, with “I’ll just withdraw my money every payday, then.” NOTE everyone is paid through direct deposit in Japan. When I ask “From what are you going to withdraw you pay from when your bank account is closed?” They give a blank stare, walk away and ever after leave the room every time I enter.
As we send our students to the U.S. on study abroad programs or for work, we must warn them of the dangers, not only regarding FBAR FATCA but certainly these included, of going overseas. My colleagues are most displeased at my efforts to warn our students about FBAR and FATCA.
Sadly, I know this is true of myself, how many of us would have believed this if we were not forced to do so by our bank or tax consultant or some other entity that we must listen to? If any of you wrote what I posted above and I read it three years ago, I would have thought you needed mental and emotional help. This so huge and so unbelievable that no one in their right mind would believe it…except those you have been forced to deal with reality of it.
Therefore, the thought that keeps entering my mind of late is, “This IS THE reason for the second amendment of the U.S. Constitution”.when all else fails the sovereign individual; the law, political discourse, civility even language, we still have the right and ability to protect ourselves from those who would take from us that which they have no right to take.
Doubt it would work, but there is a simple statement from our past that worked wonders and is very relevant today…”NO TAXATION WITHOUT REPRESENTATION”.
In the mean time, when homelanders state that “everyone must pay their fair share”, ask fair share of what? Then depending on their idiotic answer tell them “I pay for the roads and bridges I drive on, why don’t you?” . Tailor it to their statement of course.
Typo above
They give a blank stare, walk away and ever after leave the room everything enter.
Should read
They give a blank stare, walk away and ever after leave the room every time I enter.
I like the reply that the laws are UnAmerican, thus to claim being American before you get labeled traitor.
@ JC
I like that too, does it work?
“ It’s the same tax system that all other citizens are held to……” (Therefore, Americans abroad [are] subject to the same provisions of the Internal Revenue Code as Homelanders.)
I agree with this statement. Right now, all US citizens are bound by Title 26, Title 31, and Title Obamacare of the US Code. So, the point is?
The IRS views the Code not only as law, but as regulations. All citizens living in Cucamonga CA. are bound by Federal, State, and local building regulations. Would the above person, living in Cucamonga, be upset if we expressed a wish for them to tear down their 3 bedroom bungalow, and pay a penalty, because the foundations don’t meet the requirements for foundations of a 20 story tower block/hi-rise? The regulations for such foundations are clearly defined in the same building code, and all buildings must adhere to the code. May we start work tomorrow?
The statement is an oversimplification, and ignores the infinite consequences of misapplication of specific regulations.
“I’m not sure why you believe the tax law you’re being asked to adhere to is unequal.”
I also take exception to the implication that all US citizens are treated equally under the Code. That’s not true, not only for US citizens living abroad, and not even for US citizens living abroad in the same country.
Joe works for an American organisation in the UK. Joe has a reasonable salary. Joe is a US citizen. Since his work is performed in the UK, he pays UK Tax, UK National Insurance for retirement, unemployment, health care, his UK mandated pension, etc., and he pays UK VAT on all purchases, including at his local supermarket. Joe has a bank account at Barclays Bank, a UK organisation. He is paid in Pounds Sterling and his bills are in Pounds Sterling. He cannot have a local bank account in US dollars, nor exist on US dollars day to day. Joe is also expected to file, and occasionally pay, US tax.
Jane works for an American organisation in the UK. Jane has a reasonable salary. Jane is a US citizen. Jane’s work is also performed in the UK, but Jane does not pay UK tax, UK National Insurance, contribute to a UK pension, nor pay VAT on all purchases at her local supermarket. Her pension is a US pension. She can bank at a US banking facility, and pay her bills, locally, in US dollars. She only pays US tax.
Joe lives in a flat in London. Jane lives on a US Air Force base in Cambridgeshire. Even when the US Government lives abroad, it still doesn’t understand, and I fear, never will. We could talk about the IRS agents stationed at the London or Paris embassies, where they pay tax, and their pensions, etc., but since they’re not there anymore,….. we won’t.
The statement above also ignores the fact that the US readily acknowledges that special treatment, allowances, and forfeitures are required when considering the tax treatment of income derived by those who are residents of a different country, and without reservation when related to those countries. It acknowledges such treatment is mandatory if it wishes to continue in an international environment. It establishes the fact by submitting to specific international standards which most advanced countries acknowledge. The standards are expressed in tax treaties; except all US treaties are unique in the world since they contain a special saving clause which voids equal treatment for its own citizens.
@OAP
Do you mean Joe works in a U.K. organization? That’s the only way the example makes sense. Alas, I suspect that the U.S. government is really only interested in giving a reasonable tax code to people it sees as serving its economic interests.
Of course, the inequality is also political:
* There are citizens abroad who have no right to vote since they have either never resided in the U.S. or have citizenship by descent through a parent from a state that does not grant them voting rights.
* The legislators’ websites require that constituents enter contact details for an address within the district.
* U.S. citizens abroad must re-register each federal election year to vote , while U.S. residents usually don’t have to reregister unless they move.
@Publius
“Do you mean Joe works in a U.K. organization? That’s the only way the example makes sense.”
Fair enough, that’s what I get for trying to keep it simple. 😉 Let’s say Joe works for the UK subsidiary of a US organisation (Citibank, GM, whoever). That doesn’t mean Joe is necessarily a US employee. He could have hired directly into the UK position while resident in the UK with no US pension rights from the company, but only UK pension rights. Regardless of whichever situation, as a permanent UK resident preforming work in the UK, he pays UK tax, etc. That’s what we mean when we say every tax situation is unique.
Jane is obviously in the US Air Force, although she could be the spouse of a US serviceman, teaching at the base elementary school. As such, she still would not pay UK tax, etc., could buy groceries from the PX VAT free, and would have a US pension from that employment.
GCHQ is probably going nuts. I’ve been googling Lakenheath all evening to confirm the situations and came upon some great comments. US servicepersons do not pay VAT for services “off base”. They get a voucher from the base for reimbursement. One letter complained because a local veterinary wouldn’t accept the voucher, so the airman would have had to pay £150 VAT (and was most upset, so went to another vet). The base newsletter response suggested staying on base for services since there is no sales tax and they accept $US. US personnel are reimbursed Council Tax if they live off base.The good news is they do have to pay for a motor vehicle tax disc (or whatever it is now).
The voting raises an interesting situation. Some of those abroad who may vote in a US election do so at their last residence in the US. Some States (I do know this from experience) allow the voter to vote for local, State, and National candidates, as well as on local proposals, in both the primaries and general election. So, they have the right to vote, but both the locality and the State agree, after a period of time, that they do not have to pay tax (even in Virginia with its clinging rules). That makes them contrary to the US Code regulations and CBT. Inconsistencies? Obviously, voting rights stem from citizenship, not CBT.
“Right now, all US citizens are bound by Title 26, Title 31, and Title Obamacare of the US Code”
No, US citizens residing in Puerto Rico, Guam, etc., are not bound by Title 26.
Although birth in American Samoa ordinarily confers US non-citizen nationality[*], a US citizen can move to American Samoa and then I think such a citizen also becomes not bound by Title 26.
[* therefore remaining exempt from Title 26 even if they move to New Zealand, unlike Puerto Ricans etc.]
“Do you mean Joe works in a U.K. organization? That’s the only way the example makes sense.”
The example (U.S. organization) makes perfect sense as long as the U.S. organization doesn’t have a treaty giving it exemption from U.K. law. For example the U.S. organization might be a U.S. company sending someone on an extended business trip, or by U.S. definitions it might be a U.K. subsidiary of a U.S. organization (which by U.K. definitions would be a U.K. organization).
@Publius: a minor error in your facts: “U.S. citizens abroad must re-register each federal election year to vote, while U.S. residents usually don’t have to reregister unless they move.”
Not true. My husband and I have only ever registered once in a district, using his parents’ address, and continued getting absentee ballots every election for the next 20 years without re-registering. In fact, when his parents moved to another state, and we changed our registration, we sent notices to the previous state/county registrar, yet he (but not I) continues to receive absentee ballots from both the old and new registered addresses. He only votes in one. Though henceforth we will abstain from voting, to support our case for renunciation or relinquishment.
On the other hand, it is true that in some (but not every) state, non-residents can’t vote for local offices or ballot initiatives, but only for federal offices.
Yes, it’s a small issue, but may as well remain true to facts when arguing with Homelanders who are quick to pounce on any inaccuracy.
One more point re: voting. I’ve pointed this out to Homelanders. They want us to “pay our fair share” for the usual list of things–schools, bridges, water, highways, etc. But in most states we are barred from voting for such local positions as water commissioner, highway commissioner, etc. Nor can we vote on state ballot initiatives on such matters (though they may be state matters, many such initiatives depend on federal funding). An absolutely clear case of “taxation without representation.”
Homelander reaction: head scratch, then changing the subject to how the Navy SEALS will come in and rescue us when our cat gets stuck up a tree.
Me again. I’m really interested in this topic, and trying to find answers, so let me put out this question:
What arguments, points or questions have you used that Homelanders actually responded to?
Just like most of us here, I have tried all the arguments. I get their attention by naming the Financial Crimes Enforcement Network. But the one point that almost always makes them stop and think, is the $10,000 non-willful FBAR penalty.
On just about every other point–Eritrea, double taxation, excessive fines, bank account closures, etc.–my Homelander buddies always have a retort, such as “Well, if you have nothing to hide…” or “Just use a US bank account…” But all take serious issue with the FBAR penalty. Sadly, that is not our core problem.
But maybe I’m just not wording my points right to them. If anyone has any debate “successes” to share, I’d like to hear them. Maybe then we can try to distill those arguments that do work into a workable short-n-simple platform.
@Babara,
I just sent this to a friend in the States. Don’t know if it will work, but just putting ideas in the hopper.
Imagine, one day you are a law abiding citizenzen of your homeland. The next you are a criminal, and a criminal retroatively at that! The only way to comply with the new law of your homeland is to send your spouse’s, childrens’ and company’s confidential financial data to foreign nation, violating not only the trust of those but also violating the laws of your chosen land of residence.
Failure to report these, to a foreign land, brings a minimum $10,000 fine for each unreported asset multiplied by six years. As Far as I can figure, I owe at least $300,000 for not spying on my wife and child,who are Japanese living in their native land, to the US.
If I spy on them on behalf of the Treasury Department’s Financial Crimes Network, I am a criminal in Japan where I live. If I protect my family from what is to them a foreign government, I am a criminal in my homeland. That is the reality of FBAR.
FATCA forces all Japanese banks to report to the Treasury Department of the US or pay a fine of 30% on all US derived income. Thus, the US will find me out and then be able to extract the fine, well no one can squeeze blood from a stone but that will not keep from trying.
Or banks here will do as they have done in over 50 countries so far workd wide and kick US Persons, which includes non US spouses of US citizens, out of their bank accounts.
A very, very rough synopsis of the reality facing all US expats and the reason behind the recent surge of renunciations. Why should we remain citizens of a country that extorts us to break the laws of the nations we have chosen to live in and the trust of our freinds, family and business associates? Sadly, I can not become Japanese. I am trapped.