Updated with a poll at the end.
Wayne State law prof article reveals interesting attitude toward #FBAR #FATCA and #Americansabroad https://t.co/9QfEjdxr6z
— U.S. Citizen Abroad (@USCitizenAbroad) November 26, 2015
Thanks to Trish Moon for her “work in progress” documenting the history of the “FBAR Fundraiser” and how President Obama, Secretary Geithner and Commissioner Shulman launched their assault on those they considered
U.S. taxable property U.S. citizens abroad. The post referenced in the above tweet references a blog post by Wayne State Law Professor Linda Beale which reveals much about the “Homelander Mindset” towards these matters. Professor Beale has been he subject of previous discussion at Brock.
As we consider how to explain our position to Homelanders, I strongly suggest reading some of her posts and comments. She (like many Homelanders) appears to be unable to conceive that there is a world outside the United States. Because of the strength of her convictions (ill conceived or not) it’s important to understand her positions.
Wayne State Law Prof Linda Beale explains why the FEIE is unfair to Homelanders https://t.co/G8ZDGJdkhZ – Time for #Homelanderreachout
— U.S. Citizen Abroad (@USCitizenAbroad) November 26, 2015
Mike Citizenship carries both benefits and responsibilities. So renounce. Fine with me. But til you do, all I ask is that you comply with the law. As for the exclusion for foreign earned income, one could easily see how the person staying at home could find it unfair that someone from their company working broad for 2-3 years and earning the same or more in gross income from the firm would pay taxes on a very small portion of that. Like the “active business exception” to offshoring company assets, the exclusion acts as an incentive to encourage working abroad and results in tax discrimination against those who don’t do so.
I would be interested in how to best counter the argument that the FEIE (Foreign Earned Income Exclusion) discriminates against Homeland Americans because they can’t exclude part of their income.
Is the answer the same as that suggested by many Homelanders:
Well, the same laws apply to everybody. If you don’t like it then you can move abroad too. Just don’t let the door hit you on the way out.
By the way, I have just discovered that Wayne State has a new faculty member – Senator Carl Levin himself. Understand that this provides the best opportunity for dialogue that there ever was. This is great news and the possibilities are endless.
See the comment below that asks the question:
Should Americans abroad take the position that the FEIE be abolished?
@Don, I realize that; I’m just shooting ideas.
One pernicious effect of the FEIE is how it breeds complacency. I’ve a few friends who work for NGO’s and pay no local taxes in their home country, so with the FEIE, they pay no government any income taxes. They don’t see “any issue” with CBT and cannot understand the big fuss.
The other issue I see with the FEIE is that homelanders are basically right. FEIE is arbitrary and has no bearing to anything real. It’s just another loophole in the terrible system. I find it really hard to defend purely on the basis of fairness.
@Embee, re Harper’s pick of Daniel Therrien as the Privacy Commissioner, and Trudeau’s enthusiastic endorsement of the pick “…Trudeau backed Harper’s choice of Daniel Therrien…”. Thanks for confirming that Trudeau backed him.
Good to know where we stand in terms of the Harper AND Trudeau choice of Privacy Commissioner – apparently a friend and accommodator of US extraterritorial incursions. “Jump” says the US predator, “Is this high enough?” say the Canadian collaborators http://maplesandbox.ca/2014/3896/ .
Glad I voted NDP and wouldn’t have voted for Trudeau based also on his support for Bill C-51 and other issues (and voting Liberal wouldn’t have made a difference in my confirmed Con riding anyway).
Did Therrien subject the FATCA IGA to the kind of scrutiny he describes here re FINTRAC?
“…In terms of review, the office of the commissioner is mandated to conduct biennial reviews of FINTRAC’s personal information handling safeguards, under section 72 of the enabling legislation. We also measure their activities against sections 4 to 8 of the Privacy Act, under our authority to conduct reviews as outlined in section 37 of that act.
While we know that current laws and regulations contain reasonable standards, our audits have found problems with the collection and retention of personal information in excess of these standards. We have found that some of the information shared with FINTRAC related to activities that did not demonstrate reasonable grounds to suspect money laundering or terrorist financing, and that FINTRAC was retaining data that is not relevant to its mandate. This presents an unquestionable risk to privacy by making available personal information for use and sharing that should never have been provided to FINTRAC…..”…..
Isn’t the data the CRA sent to the IRS under the FATCA IGA equally ; “…related to activities that did not demonstrate reasonable grounds to suspect money laundering or terrorist financing…”.. ?
Therrien didn’t see fit to answer Blaze http://maplesandbox.ca/2015/disappointing-response-from-privacy-commissioner/
How can the Canadian Privacy Commissioner justify staying silent on the FATCA IGA and the recent sending of Canadian citizen and resident personal and financial data to the US, which is more invasive and less relevant than what Therrien has examined and criticized FINTRAC for?
Chinese RMB to become reserve currency in IMF SDRs basket. Each step forward for the RMB is a step back for the USD.
Question? Will there be a bank outside the US that will only deal in RMB? And would such a bank bypass FATCA reporting?
Don’t Bug Us Daniel was an abominable selection for Privacy Commissioner (Mulcair knew this but Trudeau did not). He has shown indifference to the plight of the FATCA-afflicted, million-plus people who live here and pay Canadian taxes which pay his salary. I want him to be gone, gone, gone — just like Harper — but sadly he’s something that an election can’t fix. The last Privacy Commissioner held that office for 10 years … lard help us if Daniel Therrien is around that long!
The poll about abolishing FEIE employs extremely leading language:
NO: “…a subset of Americans abroad benefit…” (may as well add a frowning emoji and a thumbs-down)
YES: “…available to all Americans abroad…” (add a little bouncing emoji waving a flag and saying ‘correct answer!’)
I know that “no” is winning (as it should be, IMHO), but please, if you’re going to add a poll, kindly make it straighforward. May I suggest an alternative wording, biased the other direction?
“Should the FEIE be abolished?”
NO: An enormous number of Americans abroad depend on the FEIE to keep their tax filings simple and avoid accounting costs.
YES: All Americans should suffer the same outrageous accounting fees, not just those in Canada and the EU who are stuck with having to file the FTC forms.
Or maybe just:
(Sorry, I don’t even see why we’re having this discussion just because one academic with corncobs up her backside made a remark)
@Orwell: Trouble is, at heart I believe the FEIE is the most (and maybe only) fair thing connected with US extraterritorial taxation. Those of us in “low tax” jurisdictions almost always pay through the nose in other government fees–property stamp duties, government land rent (in Hong Kong), and other such fees and duties that are not claimable against a Foreign Tax Credit. And, crucially, we endure an outrageously high cost of living in many “low tax” countries, as well as paying for our own health care, which is just as much a tax as the portion of your EU or Canadian taxes which go toward health care…but you can claim it under FTC and I can’t claim anywhere close to the actual cost of my damn expensive private health insurance or medical bills.
The only valid criticism I can see to the FEIE is that the number is arbitrary and imprecise, since it applies worldwide regardless of the situation in each jurisdiction. But what are they going to do? Set a different FEIE for each and every country? They could, I suppose. Would that make it “fairer”?
@Barbara I agree in regards to the survey, that is why I did not do it. However, surveys may be a useful part of engagement at Brock.
Let’s sum, the majority of homelanders will not be convinced. Here is my leading part: best to pose such questions to help convince Homelanders on the margin and to help build the community to help attract funds on the legal front.
“But what are they going to do? Set a different FEIE for each and every country?”
They already do this for those who qualify for the “Foreign Housing Exclusion or Deduction” of FEIE.
See pages 6 to 12. The US Code is filled with anomalies.
Americans only allow China into the SDRs because its percentage of the weighted average remains virtually unchanged. China’s percentage is from downgrading the Euro, Pound, and Yen to make up its 10%.
Next move for China in a few years – demand its currency a bigger percentage (which would probably downgrade the dollar at that point). The US buys itself a little more time.
OAP beat me to one of them but I’ll do the other.
“as well as paying for our own health care, which is just as much a tax as the portion of your EU or Canadian taxes which go toward health care…but you can claim it under FTC and I can’t claim anywhere close to the actual cost of my damn expensive private health insurance or medical bills.”
If you have medical bills you can claim part of them as deductions on Schedule A, though that’s not helpful unless you have enough other deductions to make Schedule A worth while instead of taking the standard deduction. It still doesn’t alleviate double taxation because if you use Schedule A you don’t get to deduct sales taxes that you paid during the year, which homelanders get to deduct — and countries that have low income taxes likely have high sales taxes (and/or import taxes) to make up for it.
If health insurance is legally mandated, as it is in countries that were copied from first by Romney in Massachusetts and then by Obama nationally, and furthermore if the price of the health insurance is computed based on income rather than some constant amount or other criteria, then my understanding is that the legally mandated income-based fee qualifies as an income tax for the foreign tax credit. In the one and only year that I had an amount of earned income larger than the FEIE limit, in that one and only year that I had a nonzero FTC for a proportion of earned income after FEIE, I included the proportional amount of health insurance along with the proportional amounts of other income taxes corresponding to the proportional amount of earned income that exceeded the FEIE limit.
Oops, sorry it took me so long to figure out how to retort to “Does the FEIE available to #Americansabroad discriminate against Homeland Americans?”
Does RBT, in exempting all the non-homeland-sourced income of #AnyCountry(exceptUSAandEritrea)Diaspora, discriminate against Homeland AnyCountryResidents?
Yes, but that discrimination is fair. Canada taxes residents of Canada. Same for around 188 other countries.
Even the US counts itself in, by taxing residents of the US (including aliens with temporary employment visas). To remove the unfairness, should the US tax aliens who don’t go to the US equally heavily as aliens who do go to the US?
Does a partial, inadequate mitigation of double taxation discriminate against people who don’t get subjected to double taxation in the first place? There is no answer to this poll. Both yes and no are defective answers.
@Norman: Your discussion of how to deduct medical costs is, to me, yet another strong argument in favor of the FEIE. You and I still can’t claim the full cost of medical coverage (and I always seem to live in places without mandatory private health coverage), and, worse, when an employer pays it for me, the USA taxes me on that as income; meanwhile, those living in countries blessed with socialized medicine can deduct every tax-paid cent. When the rules and forms are complicated beyond belief, and don’t offer full relief, the FEIE is a great but imperfect help, and to me only strengthens the arguments about how sickeningly arbitrary and subjective the rules are regarding extraterritorial taxation. Eliminating the FEIE would do nothing to change Homelanders’ opinions, but it sure would ramp up the torment of an enormous “subset” of US persons abroad.
Haven’t time to read through all the comments, but why not inform these dolts that we are NOT paying less in income tax that the homelander due to FEIE. The difference is not how much we pay but to whom we pay it. They need to learn that we pay taxes to the countries in which we live and the FEIE is the realization of that fact on the part of the U.S. Congress that wrote the law.
Repealing it to remove an arrow from their quiver does not help us, unless you can make your bills with what very little you have left after supporting two tax and spend governments. I do not and I doubt that many of the 8 million of us out there could.
“why not inform these dolts that we are NOT paying less in income tax that the homelander due to FEIE. The difference is not how much we pay but to whom we pay it. They need to learn that we pay taxes to the countries in which we live”
Japan T, even though you didn’t have time to read this thread’s comments, surely you’ve read the answer in other threads? People have tried to explain it to those dolts over and over and over. Been there, done that. They’ll never learn.
(Except for members of Congress. They learned but they don’t care.)