Small update
Thanks to USCitizenAbroad for posting links re Ms Ran Kim. Here is a piece she is listed on while interning at Caplin & Drysdale in Washington, D.C. (2012-2013, 2014)
Scott D. Michel, Zhanna Ziering & Young Ran Kim, U. S. Offshore Account Enforcement Issues, 16 J. Tax Practice & Procedure 65 (Aug./Sep. 2014).
U. S. Offshore Account Enforcement Issues
CONSIDERING "CITIZENSHIP TAXATION":
IN DEFENSE OF #FATCA– Hands Down Worst Academic Piece About FATCA ever Written https://t.co/qYvsrzpEyL— Patricia Moon (@nobledreamer16) May 27, 2017
Profesor Paul Caron, on his TaxProfBlog posted the following article:
CONSIDERING “CITIZENSHIP TAXATION”:
IN DEFENSE OF FATCA 20 Fla. Tax Rev. 335 (2017):
by Young Ran (Christine) Kim
If any description could possibly be demonstrated over & over in this piece it would be the term “offensive.” I confess to a hard-edged bias against academia, likely for the same reasons as most people; i.e., the rather noticeable and consistent lack of everyday common sense. Even in my own field (piano performance, where a doctorate is called a DMA not a Phd) there is a prevalence of people who may be perfectly schooled in the accuracy of Baroque ornaments, precise methods of articulation in Classic-period pieces or any number of other tedious accomplishments yet their actual playing (which is the whole point of a performance degree vs an academic one) is so devoid of vitality and inspiration it is enough to make one weep. I don’t know if the same exists in all disciplines but one thing that does apply here is a complete (and I mean complete) lack of awareness on the part of the author, of the harshness of how these theories play out on the lives of REAL people. What would make much more sense would be to address these problems head-on rather than justify “concepts” through a lot of theoretical jargon.
The following comment says it well:
The people affected by “citizenship-based taxation” are U.S. citizens and Green Card holders who live outside the USA and are “tax residents” (and often citizens) of other nations. The paper discusses (sort of) “citizenship-based taxation” as an abstract concept without considering the brutal effects that it has on the people subjected to it. The acknowledgement of the difficulties with pensions, retirement planning, foreign spouses, mutual funds, CFC rules, etc. (the reality of citizenship taxation) is most notable in its absence. And no, FBAR and Form 8938 (as obnoxious as they may be) are reporting requirements and not the specific tax rules (PFIC, etc.) that affect Americans abroad. I suspect that this paper will be subjected to the criticism that it so richly deserves.
Posted by: John Richardson | May 26, 2017 1:14:02 PM
While this criticism can be equally leveled at the members of Congress who passed FATCA, the Treasury Department personnel who wrote the regulations and last but not least, the heartlessness of many tax compliance practitioners, there is something especially repugnant about those pontificating from their ivory towers, proclaiming that FATCA, citizenship-based taxation, global transparency and all the rest of it, are worth the grief being caused.
Ms Kim indicates her paper finds its origins in Ruth Mason’s recent article, Citizenship Taxation, [89 S. Cal. L. Rev. 169 (2016),
A major difference between the two is that Ms Mason basically sees citizenship taxation in a negative light while Ms. Kim attempts to find it as a natural basis to support FATCA.
She addresses three main arguments; the fairness argument, the efficiency argument and the administrative argument.
I.) THE FAIRNESS ARGUMENT
Individual taxpayers’ obligations to file Foreign Bank Account Reports (FBAR) or report under the Foreign Account Tax Compliance Act (FATCA) are not seriously onerous. The fact that citizenship taxation along with FBAR and FATCA enhances global transparency further supports the case for citizenship taxation……..because the rules have been improved through various exceptions and substantially high reporting threshold amounts.
Ms. Kim asserts that the obligation to file FBARS is not “seriously onerous.” The very real threat of a non-willful penalty of $10,000 per account per year (or worse for “willful) is certainly enough to strike the fear of God in even the most reticent individual. The idea that this reality is not considered when evaluating FBAR is beyond reasonable. Articles about FATCA often cover only the reporting done by the FFI’s. However, the other component is the requirement to file 8938’s which duplicate information from the FBAR and can incur serious penalties. The average person is not able to complete an 8938 and will have to pay to have a professional do it. Nowhere in this article does the author address the issue of compliance costs for individuals which can easily be $2500 a year for someone owing no tax and involve 50 or more pages of returns. Not onerous? Furthermore, there are simply NO FIGURES yet, to make any claim that FATCA “enhances global transparency.” Professor William Byrnes describes
the oft-quoted figure of $10 billion. This amount has absolutely NOTHING to do with FATCA; it is largely comprised of penalties and interest collected through the OVDI programs (and does not even represent actual tax recovered). While the FATCA thresholds are higher, please, the threshold for FBAR remains at $10,000, the same figure when the Act was created in 1970 – 47 YEARS AGO!
FOCUSING ON THE ABILITY TO PAY PRINCIPLE
First, consent theory argues that taxing nonresident citizens is justified because retaining citizenship represents consent to such taxation.
One cannot consent to something one doesn’t even know about. Is the author completely unaware of the history underlying the persecution of expats once Treasury/Justice went after the Swiss banks in 2008? There are still likely more Americans abroad who remain unaware of the obligation to file taxes and worse yet, the oppressive information returns with penalties simply for not filing a piece of paper (i.e. no tax due). For those who do know and who retain citizenship, keeping it is much a matter of confusion and fear and could hardly be described as “consenting to taxation.”
Second, benefit theory attempts to justify citizenship taxation as an obligation of nonresident citizens in return for the benefits they receive from the government.
This argument is so ridiculous at this point it is hard to believe it remains part of the discussion. Cook v Tait is nearly 100 years old and does not address the large changes globalization has produced. There is the endless nonsense of hearing how “The Marines will come to rescue you,” after which you receive a full bill. How many living in first-world countries have any need for “rescue?” And last but not least we “owe” the U.S. for consular services (for which we pay, dearly in the case of renouncing – $2350 or $50 USD to notarize a single page). All tiresome and nowhere near justifiable for being taxed “the same” as Homelanders.
Third, social obligation theory
the underlying assumption of this theory is that people have an obligation to pay taxes to support the members of the society to which they belong in accordance with their ability to pay taxes, which should be measured by their worldwide income.
I remember my reaction to Prof Michael Kirsch’s comments (at the ACA Program in Toronto, May 2014, “CBT vs RBT”)regarding polity and such. It seemed ridiculous to me to consider those of us living outside the United States as being a member of that society in any meaningful way. In my own life, now 35 years outside the U.S.(over half my life), the only times I identified as a “member ” of U.S. society was when defending against strong anti-American sentiment (the first few years away) and national tragedies such as 911. I cannot see any way that those infrequent occurrences defined me as being an American more than being a Canadian. I would say a more meaningful and valid way to apply the social obligation theory is whether or not I support policies that promote the social welfare of those around me, whether or not I give the homeless guy I see everytime I go to the bank, a bit of money so he can buy some lunch. IOW, except in an idealistic or nostalgic way, one can really only measure his/her “social obligation” based upon what they come face-to-face with, i.e., where they live.
Due to the different factors affecting the ability to pay, such as difference in the standard of living or amenities between places, “it would be fairer to calculate a person’s ability to pay by reference to the place where she lives rather than to the place where she holds her citizenship.”
“actually tax them alike,” which would require the repeal of the foreign-earned income exclusion and the allowance of unlimited foreign tax credits, including foreign consumption taxes, as well as the implicit taxes and subsidies to compensate the differences.
While all expats readily understand the reality that they are NOT “taxed the same” as Homelanders, the idea of being able to adjust all these factors to the number of foreign countries with all the differences in structure etc., absolutely discourages any realistic notion that this could ever be accomplished. Current retirement-oriented plans such as the Australian Super; the lack of recognition of tax-deferred vehicles registered by governments being treated the same as their US equivalents; requiring capital gains tax on the sale of principle residences which are tax-free in the countries where they are located ; and above all else, the obscene “savings clause,” all speak to the built-in bias the US has for anything “foreign” and its pronounced tendency to punish people for making use of non-US instruments. Add the effect of the Patriot Act, which makes it impossible to even open a US account with a foreign address and a non-resident American understandably lacks the will to try and weave one’s way through all these complicated, impossible-to-delineate requirements and procedures. The fact that the IRS does not clarify ambivalent sections such as §877A as well as the fact that no two compliance professionals can be counted on to give the same opinion is proof positive that disparate tax systems simply cannot be adjusted “fairly.”
when its critics condemned the new obligations to file FBARs and FATCA as an excessive compliance burden for nonresident citizens created by the Bank Secrecy Act.
There are no “new” obligations to file FBARs; they have been required (and unenforced) since 1970 and are part of Title 31. FATCA was NOT created by the Bank Secrecy Act. It comprises part of the H.I.R.E. Act (2010) and is part of 26 U.S.C. § 1471–1474, § 6038D.
II.) THE EFFICIENCY ARGUMENT
citizenship taxation may distort both Americans’ and non-Americans’ citizenship decisions, is not convincing
American citizenship renunciation rate is not particularly serious compared to other countries
residence-based taxation confronts an additional hurdle on top of enforcement difficulties: determining the residence of the individuals. Determining residence by considering all facts and circumstances creates problems beyond enforcement difficulties. The facts-and-circumstances test itself contains inherent problems when compared to a bright-line test
….and to what extent renunciation is treated as immoral and/or illegal, and so on.
The idea that citizenship taxation does not affect the decisions of Americans abroad concerning their citizenship is patently absurd. Without question, citizenship taxation IS THE MAIN REASON anyone renounces. Not because of tax per sé (don’t even think of trying to scare with the Reed Amendment) but rather, due to all the complications of trying to match two different tax systems. Add the non-financial issues such as the stress on marriages (to “aliens”), passing U.S. citizenship on one’s children, etc. etc. It has become a nightmare not worth living and something to escape if one can.
Ms. Kim devotes a long section to establishing the idea that the renunciation rate of U.S. citizens is “not particularly serious.” Again, we have someone indicating that unless the numbers are large, whether compared to that of other countries, the proportion of renunciations to the numbers of those abroad or to the number of entering immigrants, there is nothing being lost here. If that is the case, then the U.S. has virtually nothing to lose by simply letting these people go without all the forms, swearing under penalty of perjury and so on. One might occasionally consider that Americans abroad were once the best ambassadors the country could have. Now those tables are turned and some are more anti-American than any “alien” could ever be. Nothing like betrayal to warm the heart.
Regarding determination of residency, it is interesting that all 191 other countries of the world are able to surmount this difficult obstacle, which will be even more pronounced once CRS is operative. The “bright line test” which I presume means using citizenship rather than residency to base reporting on, is not truly useful given the fact that only the U.S. (Eritrea does not count) does this. When a U.S. citizen is living abroad with dual citizenship, with no determinant indicia, ask any bank how easy it is to establish whether or not one is a U.S. citizen. If it were clear, one would not see so many institutions refusing to serve Americans.
The Expatriation Act of 1868 gives all Americans the right to give up their citizenship if they so desire. It is not an issue of illegality. When a country treats its own citizens in the manner we have experienced from 2009 onwards (particularly the Accidental Americans who are not American in any normal understanding of the term), who is there to even suggest renunciation is immoral?
III.) THE ADMINISTRATIVE ARGUMENT
ENFORCEMENT DIFFICULTIES
Citizenship taxation has been criticized as difficult to enforce on nonresident citizens abroad….Determining residence by considering all facts and circumstances creates problems beyond enforcement difficulties
Next to failing to point out the outrageous 30% withholding “sanction” inflicted on every other country of the world, this has to be the weakest argument in this paper. The fact that the U.S. cannot effectively collect anything outside of the country is the number one reason people feel safe in remaining “under the radar.” After the initial scare of 2009/2011 seeing that the people hurt the worst were those who tried to do the right thing, people started considering the reality that being identified (“caught”) may amount to virtually nothing for a number of reasons. First of all, the majority of expats who are not compliant are NOT wealthy tax cheats with foreign accounts in order to deprive the U.S. of tax revenue. They are first of all, compliant where they live, which speaks volumes. Secondly, they have these “foreign” accounts in order to live their lives. This is in no way comparable to Homelanders who are guilty of tax evasion when they stash money in tax havens (and let’s not forget Delaware, Nevada, South Dakota and Wyoming, shall we?). The Revenue Rule still stands; even the 5 countries with Mutual Collection Agreements (Canada, Denmark, Sweden, France and the Netherlands)WILL NOT collect on those who were citizens of their countries at the time the tax was incurred. Canada WILL NOT collect FBAR penalties. With regard to fear about crossing the border, if one is not in the U.S. system, there is nothing for the IRS to report to DHS or CBP etc. All these things may change over time but as it stands now, the most IRS can do to most people, is send them a letter asking them to pay. EXACTLY WHAT IS THE POINT OF HOLDING ON TO CBT IF THERE IS NO WAY TO COLLECT?
Is the Compliance Burden Actually Onerous?
the IRS has provided the OVDI that a U.S. taxpayer can utilize to avoid criminal sanctions for the failure to report the existence of, and income earned on, a foreign account on tax returns as well as for the non-filing of the FBAR. In exchange for avoiding criminal sanctions, taxpayers will generally be subject to a 27.5% penalty on the highest aggregate value of their undisclosed offshore assets.86 In addition, for non-willful violators, IRS provides Streamlined Filing Compliance Procedures (SFCP), a program that was expanded in 2014 to cover a broader spectrum of U.S. taxpayers residing abroad and to provide penalty relief. Therefore, nonresident citizens who no longer have a strong economic and social connection with the United States or happenstance Americans are no longer likely to be subject to the severe FBAR penalties.
To suggest that OVDI and Streamlined “make everything alright” is to avoid the real issue altogether which is that citizenship taxation is simply wrong. No other country on earth “claims” its citizens for life. (Eritrea does not count). No other country on earth taxes its citizens after they abandon residence. No other country on earth applies an Exit Tax on assets that were acquired prior to obtaining residence in that country. There are reasons why no other countries do any of the things associated with citizenship taxation. It’s high time the United States stop this appalling abuse of human rights.
THIS ARTICLE FURTHER AIMS TO DEFEND the administrability of citizenship taxation in conjunction with the Foreign Bank Account Reports (FBARs) and the Foreign Account Tax Compliance Act (FATCA).
FBAR-absolutely not the way it is being conceived of now. FBAR, created in 1970 was aimed at uncovering money being laundered in smuggling, the drug trade and terrorism. It also was not originally conceived of being applied to those outside the U.S. Once the DOJ/Treasury departments went after the Swiss banks, they realized they could stretch the intent of FBAR to apply to non-resident Americans and the penalty regime thickened.
The criticism… has continued even after the U.S. government committed to enter into Intergovernmental Agreements (IGAs) in an attempt to address those concerns
A huge oversight on the part of the author. FATCA was without question an extraterritorial imposition on other countries. Only the United States would be as uncivil as to suggest imposing a 30% withholding charge on their allies and trading partners. The U.S. appeared not to understand that other countries could not comply even if they wanted to as privacy laws prevented the level of reporting required by FATCA. Banks would be sued were they to comply. To suggest that the US committing to the IGAs was a gracious act is revolting. Under the guise of being rooted in tax treaties, the IGAs simply bypassed what should have been required; that Congress ratify such agreements and implement legislation to do so. There is nothing in FATCA that warrants the creation of the IGAs. The U.S. downloaded ALL of the costs of compliance to the other countries. There is no mention of any penalties for the U.S. failing to comply. The U.S. made only the vaguest promises of reciprocity. It is simply unbelievable that the immorality of taking capital out of other nations is considered acceptable by the United States.
IV>) FATCA:MERITS AND CONCERNS
The OECD’s AEOI and the U.S. FATCA are two important developments, but FATCA plays a more important role.
First, FATCA provided critical momentum
Second, FATCA facilitates multilateral implementation of AEOI by creating an extensive network with more than 100 countries in the world, at the center of which is the United States.
This is unsubstantiated nonsense. First of all, it is bizarre to say FATCA “plays a more important role” Who gains from FATCA other than the United States? So far, nobody. The United States is at the Center of AEOI/CRS? The US has not even signed on to CRS. There are huge differences that matter greatly. The OECD AEOI/CRS agreements are determined by the countries involved; the terms of residency are established by those exchanging the information. FATCA is vastly different in that the United States alone determines who is/is not a “US Person” “US Citizen” irrespective of the status of such a person to the other country. And so far, the U.S. is not “paying its fair share” by requiring its banks to implement the same systems and legislation required (imposed) by FATCA. The IGAs do not constitute “acceptance” by other countries. To think otherwise is ridiculous. One could not possibly view such stipulations as reasonable.
criticism that…. FATCA exposes taxpayers’ private information to potential abusive use by foreign tax authorities.
This is a matter of real concern to Americans abroad living in some of the more troubled areas of the world-or those living Colombia in South America and particularly in some of the Middle East countries. Ironically enough, the U.S. has had some of the worst breaches of security and leakage of private information; certainly this is disturbing and worrisome.
Ms. Kim’s discussion of the Bopp FATCA lawsuit I will leave to someone else.
Second, opponents of FATCA and EOI argue that an EOI system removes a country’s unilateral control over its own tax policy, resulting in the forfeiture of sovereign autonomy. Although such argument has withered since the U.S. government entered into IGAs with other countries, it was strongly asserted by Canadian opponents of FATCA when the IGA Implementation Act included in Bill-31 was debated in Canadian Parliament.
How outrageous to suggest a foreign country does not have the right to have unilateral control over its own tax policy. The proof is in the pudding. The U.S. would never allow the equivalent. The IGA’s are the proof.
I have watched the video of the Canadian FINA hearings on FATCA many, many times. It is not possible to convey the absolute disgust we have for the majority Conservative government which minimized completely, the capitulation that occurred with the implementation of the IGA. It was nothing more than protecting the banks, without any regard to the effect it would have on Canadian citizens resident in Canada.
However, a government’s control over its tax policy is more severely harmed when a country segregates itself from the global community and loses the ability to enforce effectively its own tax laws against its taxpayers with interests in foreign jurisdictions
More unsubstantiated nonsense. This is an opinion completely unsupported up by any facts.
A Case for American Exceptionalism
conclusion, if FATCA makes the world better off by enhancing global transparency on tax information, then this may serve as another support for citizenship taxation, as well as an example of constructive exceptionalism.
While all of us raised in America understand unconsciously what exceptionalism is, it truly takes living outside the country to appreciate how incredibly arrogant and offensive it is. It is questionable whether FATCA “makes the world better off….” that a questionable tenet should “serve as a support for the imposition of citizenship taxation.” It is nothing short of reprehensible that the author should suggest what the U.S. has done is “constructive” or in any way justifies the gross aberration of power demonstrated by the creation of FATCA.
The author is a doctoral student at NYU. Why not just write to her directly and let her know your views:
youngran.kim@law.nyu.edu
Ah good, you already responded to this paper. I’ve been banging my keyboard for 3,500 words and I still haven’t made it out of Section II.A. =)
@biscuit–> email sent. Thanks for that. I feel lots better. 😉
Please refrain from doing anything that might be construed as harassing her, although this would not exclude sending her polite criticisms.
Thank you, Tricia, for a great post. I’ve slogged my way through the original article – it was painful.
My comments on the original article (which overlap those in the post above):
Fairness
The author ignores taxes imposed by other countries in much of the analysis. In Table 1, for example, it is seen as unfair that the non-resident will not pay tax to Korea on US-source income – but they will pay tax to the US on the US source income as well as any excess US tax on the Korean source income. If she is looking at fairness, shouldn’t the entire tax liability to both countries be considered?
She also ignores the difficulty of navigating two different tax systems simultaneously. Since every other country on the planet follows RBT – CBT is even more onerous and unfair to US citizen residing outside the US.
It is a well known doctrine that “separate but equal” is not equal. Similarly, applying the same laws to residents and non-residents is not necessarily fair. The financial life of non-residents is, by definition, “foreign” to the US. It is not fair to apply rules that treat “foreign” assets punitively to non-residents if their local assets are treated as “foreign”.
While she talks extensively about the problems of determining residence, she does not consider the issue of dual citizenship.
Efficiency
In all the discussion about whether CBT affects the decisions of either renunciants or those obtaining US citizenship, she ignores the evolution of the practice of US law both with regard to enforcement of CBT and the exit tax. She also ignores the fact that green card holders are just as liable for CBT as citizens (so CBT is, to some extent, a misnomer). We all know how enforcement of CBT and FBAR ramped up in the early years of the 21st century, with ever increasing penalties for “form crime”. Many were also caught by surprise when the exit tax was imposed in 2004 (and increased in 2008). Some green card holders now find themselves caught in the US, unable to leave and extinguish their liability for US tax without paying a financially crippling exit tax. How is this justified?
Administration
As Tricia notes in her post, every other country on the planet can manage the determination of residence. The article bases its argument on a few high profile “edge cases” – these are exceptions. Most individuals live in one country or another, and the tax treaties provide tiebreaker rules that work well in those circumstances.
The conflation of FBAR and FATCA is evidence that the author isn’t entirely up to speed on the compliance issues facing non-resident US taxpayers. Even more worrying is the lack of recognition of the compliance burden that flows from PFICs, CFCs, foreign trusts, and foreign retirement accounts. The author can only conclude that compliance is not a burden because she ignores all the forms that cause expat returns to balloon to 50+ pages at a cost of $1000+.
FATCA Merits and Concerns
I’ve said this many places before: offshore tax evasion is a global problem that requires a multilateral solution. FATCA is a heavy handed one-way attempt to bully the rest of the world into submission. The underlying assumption is that other countries are unable to police their own residents and their own banks. As a citizen of a sovereign (non-US) country, I find it offensive that US lawmakers and academics think that only the US can police the world.
The fact that FATCA provided momentum to CRS is ironic, given the lack of reciprocity provided by the US. The worldwide financial system is no longer a level playing field – US banks have a marked advantage due to the reduced compliance costs they face. The EU and OECD are coming to understand this and may end up placing the US on their tax haven blacklist. (Tricia, I agree that her assertion that the US is at the center of the AEOI network is utter BS)
The article claims that several benefits flow from increased international transparency – but none of those benefits depend on citizenship taxation. The “benefits” flow from the reciprocal multi-lateral AEOI framework and would remain if the US were to move to RBT.
As for the privacy concerns that the author rebuts, here the false equivalency with 1099s rears its ugly head again. There is more information reported under FATCA and CRS than on 1099s. Account number and balance are not required for tax administration. Income and, perhaps, proceeds from the sale of securities, is sufficient. Furthermore, FATCA does not require FFIs to inform account holders of the amounts reported to the IRS (either directly or via the local tax authority). While some countries do mandate this reporting, many do not.
The author further justifies intrusive FATCA reporting by arguing:
But this argument makes much more sense in an RBT environment. Under CBT many of the reported account holders do not have “offshore” accounts – they have accounts down the street. Most of the account holders reported under FATCA are not “Fat Cats”, they are ordinary folk.
When the author argues the case for US exceptionalism, she again fails to recognise that CRS is NOT the same as FATCA. Reciprocity is the key, and without it FATCA is just international bullying.
And US exceptionalism turns into pure arrogance when she argues:
Under CRS, the rest of the world is fine with allowing participating jurisdictions to police their own financial institutions with domestic fines and penalties for non-compliance. In fact, the Australian IGA does the same for FATCA.
Of course the article concludes that “citizenship taxation is actually good policy” and that the costs do not outweigh the benefits of American exceptionalism in citizenship taxation – she has ignored the true costs (xenophobic tax code, expensive compliance, difficulty of navigating two incompatible tax system), so of course citizenship taxation looks great!
If I see one more article about how someone or other made a speech, wrote a paper or prepared a case I will run screaming, stabbing at the wind. You all have missed the point. IT is deep government as well as elected officials who determine how the rest of us lives. They know better than you do and they have programmed their computers to reject summilarily any article that doesn’t somehow buy into the 77,000 page code that they will add several thousand pages to and call it reform.
The whole code need to be thrown in the crapper and a different system of taxation added to raise revenue and stop all the social engineering. Citizen based taxation is unfair, and a new territorial system using the constitution as their guide . nuff said
“Please refrain from doing anything that might be construed as harassing her, although this would not exclude sending her polite criticisms.”
This person has used her position to post mis-truths as fact & outright ignores the terrible reality of many caught in FATCA. I’d say she deserves what she gets for doing piss-poor research & then presenting a damaging counter-position which affects ONLY those involved– not her.
@Jane: I understand your anger. I’m struggling not to use foul language as I work on a post responding to her claims about conscription vs. taxation.
But in practical terms the last thing we want is another Linda Beale. (For those who don’t remember ancientt Brock history, Beale previously just held offensive opinions about CBT & FATCA without putting much thought into her opinions or effort into spreading her claims. Then a few Brockers gave her a piece of their minds, and she got defensive & became “radicalised”, as it were. Afterwards she started going around claiming that the FEIE discriminates against Homelanders and other such really damaging nonsense.)
@Ziaod She is a full blown academic – who is clearly too heavenly to be of any earthly use. Any expression of disagreement with her will be construed as harassment. But that said, …
Those who want to read the article online without contaminating your hard drive by downloading it, see here:
https://poseidon01.ssrn.com/delivery.php?ID=874121115073064011000115113110094029117043064003031030025127073026003094014107117122122049008101104109008001018070023118064125040060087061002004000016122070118103072057062022125014023084094078025009096107027007127070086018021029080026015087122012007105&EXT=pdf
The more interesting question is this:
How, after being a student participant in Allison Christian’s October 2015 Academic Conference on Citizenship taxation, (which deliberately excluded as participants those affected by CBT and FATCA) could this paper actually have been written?
A list of attendees is found on Professor Christians’s blog here:
http://taxpol.blogspot.ca/2015/10/taxation-and-citizenship-workshop-at-u.html
The author’s page at NYU (where she is apparently finishing her SJD degree) specifically lists her “scholarly presentations”, and lists Professor Christian’s citizenship taxation conference as a venue for one of those “scholarly presentations”:
http://www.law.nyu.edu/llmjsd/jsdprogram/jsdcommunity/youngrankim
Sure, the paper is probably the worst piece of fantasy, sophistry, stupidity and ridiculous reasoning ever constructed on this issue. It even surpasses the Professor Zelinsky’s laughable assertion that “citizenship is a proxy for domicile” and for this reason citizenship-based taxation is justifiable. For a good laugh and a trip down memory lane see:
http://isaacbrocksociety.ca/2013/01/10/cook-v-tait-3-legal-scholar-agrees-reasoning-in-cook-v-tait-weak-but-offers-new-justification-for-citizenship-based-taxation/
What could have produced this kind of “thinking” and this kind of “paper”?
The abstract and background information about the paper is interesting and includes:
My point it that this woman participated in Allison Christian’s academic conference and her paper is the result. (By the way Professor Elise Bean was apparently the keynote speaker at the conference at the conference.) Somehow other participants – notably Professors Spiro, Mason and Christians – have subsequently published helpful research.)
For a description of Ms. Beans’ participation, see this “conference report” here:
https://www.law.umich.edu/newsandinfo/features/Pages/taxation_conference_101415.aspx
which honours the participation of by Elise Bean in the following paragraph:
A bit of trivia: Elise Bean (along with Linda Beale and Carl Levin) are affiliated with Wayne State Law School across from the Canadian border in Detroit. They probably spend their days gazing across the river, nurturing their hatred for the tax haven to the North. But, more recently “Professor Bean” was the representative of the Democratic Party at Mark Meadows FATCA hearing. Those who have not seen, the video (words really do not do her justice) should watch the meaning of “Truth, Justice, and the American Way” here:
https://www.youtube.com/watch?v=FKrbvau42Ok
Perhaps the author came under the spell of Elise Bean (who is a wonderful example of what happens when extreme ideology meets extreme ignorance) and wants to emulate Ms. Bean.
What else do we know about her? If we go to her NYU page we see:
http://www.law.nyu.edu/llmjsd/jsdprogram/jsdcommunity/youngrankim
We see the usual stuff: Harvard, NYU, Caplin Drysdale, etc.
So what does all this mean in terms of change?
This paper simply confirms that the issues of FATCA, CBT, FBAR, etc cannot be understood by those do not directly experience them. Americans abroad are at war with: academics, politicians and the tax compliance industry. It is very possible that there will be NO changes to any of these laws.
What should Americans abroad do?
The first reality is that most Americans abroad cannot comply with the rules of citizenship-based taxation.
The second reality is that most Americans abroad cannot afford the costs of expatriation.
The ONLY thing that most Americans abroad can do is – exactly what they are doing – NOTHING at all.
Do we have any examples of academics supporting, or even considering as a thought experiment, a global switch to citizenship based taxation?
Because one of my most fervently held wishes is for the EU to finally get a backbone, declare all 2nd and 3rd generation emigrants in the US to be EU citizens for tax purposes, and then start fining all US banks that don’t hand over money from the US accounts of their newly minted ‘non-compliant’ citizens.
Of course they shouldn’t be unreasonable about it. Any newly created EU/US dual citizen should be able to renounce their second citizenship for a reasonable price, say 3k EUR. They would of course first need to file 6 years back taxes in Italian or whatever.
I know this will never happen, but I will laugh my ass of if it ever does. A person can dream.
As far as I can tell, she is just a graduate student who has written an article most of us disagree with–one of probably thousands. But if you think she has committed some sort of ethical violation (and can name the violation), then the thing to do would be to lodge a complaint with her university and/or bar.
I would like to see her invited to answer questions on Brock, to give her a chance to defend herself and/or rethink her conclusions.
As an aside, I wonder what her own citizenship situation is. Her resume states that she was born in Korea. If she naturalized in the USA, until recently this would have meant automatic loss of her Korean citizenship. Perhaps this made her resent duals. On the other hand, she may be dual herself, or have only a US green card. In that case, I wonder about her own experience with compliance.
@Zla’od: South Korea still has automatic loss of citizenship upon voluntary acquisition of foreign nationality, or even upon involuntary acquisition if you don’t notify the South Korean government within six months that you want to retain citizenship (Nationality Law, Art. 15). The 2010 legalisation of dual citizenship (in Art. 12) applies only to duals-at-birth.
I’m not going to read it. Just reading Tricia’s brilliant critique and the comments of those who have laboured through Ms. Kim’s ode to CBT and FATCA is enough to know I don’t want the aggravation … not after five years of FATCA awareness and angst … not after witnessing and experiencing the fallout from the FATCA bomb … and not after hoping with all my being that sanity would return to put an end to this nightmare created by arrogant, insensitive, ignorant, self-serving, pro-establishment US legislators. My resolve to never feed the beast below the border is now even greater than before.
Give me a break. Getting all worked up over a graduate student’s article . She’s merely trying to qualify for a degree by pleasing her professors at NYU. Nobody outside of NYU or IBS would ever read this thing. I certainly wouldn’t waste my time.
As I said on Twitter. Ms Kim would be singing a different tune if it was South Korea taxing her on her world-wide income.
“Even in my own field (piano performance, where a doctorate is called a DMA not a Phd) there is a prevalence of people who may be perfectly schooled in the accuracy of Baroque ornaments, precise methods of articulation in Classic-period pieces or any number of other tedious accomplishments yet their actual playing (which is the whole point of a performance degree vs an academic one) is so devoid of vitality and inspiration it is enough to make one weep”
Exactly, Patricia, and as a former “music student” myself with a love of Baroque Music, I have seen that all too often. You see that coming out of the “musician factories” in Asia where the emphasis is so much on the technical side of the music leaving it “technically perfect” but completely devoid of emotion. To them they don’t see that Bach, technical though he was, also had emotion in those notes; they miss the beauty of the technicality…and leave out the emotion that was also inherent in Bach’s pieces.
It is exactly the same with FATCA. People are so focused on the boring minutiae of what it is supposed to do that they completely forget about the all too human factor of how the legislation affects those people who have been hurt by it. There is no emotion in the legislation nor do they care about the harm they do. And frankly the US-jingoist zombies who make up the populace of the United States (and you saw that clearly yesterday with the twitter war that I got into)…that these people are so blind and caring nothing for others other than themselves that their only response is “Pay Up.” They have sold out their humanity in favour of sitting like a lapdog at the feet of the avaricious cretins of the United States Government and bay in agreement that we should be harmed, irreparably.
Yes, I have a deep un-abiding hatred for those zombies. I refuse to treat with them. I also will rip them apart at every available opportunity. And I have no repentance for behaving like a colossal asshole with them. They seek to do me (a Canadian family member of an expat) and many other expats and their families harm so I will treat them like the scum-sucking avaricious bloodsuckers they are.
I’ve read enough to know that this is just another long-winded version of “don’t let the door hit you on the way out”. I won’t read it either, but appreciate others doing so and offering their analysis.
On renouncing and the problems associated with FATCA, CBT:
X is a thing
Y is a problem with X
eliminate Y by eliminating X
No citizen, no problem.
Stalin could not have said it better.
Ms. Kim wrote in that article as a justification for CBT:
That’s a damn insult to people who have no connection to the US except for place of birth (or birth outside the US to a USC parent). You cannot be a member of a society you have absolutely no connection to or interaction with. And people should be recognised for what they are, not what one would like them to be or think they should be. So, not right to call people something they’re not in the first place — and second, she’s implying that persons outside the US classified by the US as US citizens, are societal deadbeats if they’re not in the US tax system.
It is false to contend that such people have a moral obligation to pay taxes based on membership in US society. They are not part of that society, so they have no moral obligations to the people of the US whatsoever. In reality, they’re part of the tax system of their country, the one they actually are a member of society in.
What’s immoral, IMO, is for a country to take money from people of other countries (unless it’s in return for something, eg, money made by investing in a US company, hotel tax on travellers, etc.). But income tax? Citizenship Based Taxation reminds me of the situation when a country is invaded during a war and persons in the overrun country are forced to pay taxes to support the people of the invader country. It financially drains the individuals and it financially drains the economy of the overrun country — for the benefit of the people of the invader country. As with that situation, CBT has nothing to do with paying one’s fair share, but rather with exploitation, and exploitation is inherently unfair.
“Hands down worst” indeed.
I nearly had blood shooting out of my eyes as I read it, and was going to leave a polite but nasty comment, ha ha indeed, on the article’s website, but some other people did such a good job of it I left it alone.
All I can say is that it is increasingly disheartening to realize that more and more of my fellow citizens (in America) seem to have fallen in love with big government tyranny. It’s also funny how the majority of them seem to hold fancy university degrees…PHD’s and sech, don’t you know…
I guess that when you’re really, really smart, I mean incredibly above the others, the idea of crushing and controlling the lesser of your fellow citizens becomes naturally seductive, almost like sport…shooting dairy cows comes to mind.
Just remember you guys, my dear fellow expats; you can’t make a good government tax omelette without really taking it to those bastard eggs and kicking the living shiite out of them.
@TheAnimal
I remember hearing you mention Bach many times but I did not realize you were “a former music student.” Would be fun to exchange stories sometime. Vocal or instrumental? Where? Bach is subtle and sublime. While not particularly of the Baroque temperament myself, I love JSB much more now than I did in younger years. Just a slow reading of a chorale -where the rich contrapuntal textures result in unexpectedly advanced harmonic tonalities-nothing more satisfying than experiencing that IMHO. Scholarship often imposes extreme limits on what pianists can do given the differences with instruments. But a “purist” orientation has virtually nothing to do with communication-ask any audience!
As to the music factories, it seems to be a disease that has spread everywhere. This used to kind of play in my favour if competing somewhere. I never went anywhere near anyone until right before playing. Everyone presumed I was Korean with the last name “Moon.” (I have no physical features that suggest an East Asian background). So it was always a surprise that I was a completely different package than what that stereotype suggested. While a lot of these kids ARE perfect technically (and that’s no small feat and deserves respect), most of them are not mature enough to have anything to say. Not enough life experience. Give me Rubinstein, Sokolov, Dietrich Fischer-Dieskau, etc any day of the week……
I like your analogy with FATCA.
I think it is likely simple. If they were to admit what they are doing, they would not stand a chance of getting away with it. Some things really are not very complicated. It’ just people making it so by diverting the reality of what they are doing by misrepresentation, lying, etc. Sometimes there is a little peace in knowing this is what the reality is.
@Zla’od: also, I don’t think inviting her to Brock would teach her anything new. She’s already been here before (see footnote 25, at p. 341), but apparently everything we wrote here went in one ear and out the other.
@Eric
Great stuff! For all, here is what Eric is referring to:
I find the “extended empirical analysis” irrelevant for a variety of reasons. Primarily her own statement regarding the comparison of “apples with oranges.” The only country I recall having higher rates of renunciation was South Korea. Obviously a rather skewed result given the huge gap between the next closest, Croatia. An unchanging estimate is not a particularly believable number for Singapore each year. The only relevant numbers for the U.S, commence with 2009.
“Could be” related to to the UBS scandal and the subsequent Offshore Voluntary Disclosure Initiative (OVDI)? “May be” related to the imminent implementation of FATCA? Here we go with the useless discarding of common sense. I would like to see some reasonable substitute suggestion-otherwise K.I.S.S. a la Occam’s razor; Among competing hypotheses, the one with the fewest assumptions should be selected. As Duke says, Why muddy the waters?” The problem is evident, focus on the solution………..
Interesting she does not mention the reality of the FBI and NICs.
@Patricia Moon: according to Kim’s table, Singapore, South Korea, and Taiwan all had higher rates of renunciation than the US. She tries to attribute that to conscription (apparently she wants to imply that other countries also get citizens abroad ‘shirking’ their ‘civic duties’ but those countries go right on imposing those duties so the U.S. should too). In reality, childhood emigrants and emigrants’ kids are exempt from conscription in those countries, and it looks like their high renunciation rates are due to prohibitions on dual citizenship (Taiwan doesn’t forbid dual citizenship, but most of their renunciants were naturalising in South Korea or Japan which do forbid dual citizenship). Am working on a post about this theme.
Re Singapore stats, that’s one thing you can’t really blame on her. The government only releases the renunciation statistics in response to parliamentary questions, and their responses have been getting more and more vague as the years go on.
https://sprs.parl.gov.sg/search/topic.jsp?currentTopicID=00010353-WA¤tPubID=00010370-WA&topicKey=00010370-WA.00010353-WA_6%2BhansardContent43a675dd-5000-42da-9fd5-40978d79310f%2B
However the numbers didn’t seem to fluctuate that much from year to year even back in the days when they were giving more detailed statistics, e.g. https://sprs.parl.gov.sg/search/topic.jsp?currentTopicID=00063447-ZZ¤tPubID=00076966-WA&topicKey=00076966-WA.00063447-ZZ_1%2Bid045_19930226_S0010_T00431-written-answer%2B
Finally, here’s a totally off-topic quote from the Singaporean government that I tripped over while searching for all this junk:
https://sprs.parl.gov.sg/search/topic.jsp?currentTopicID=00002635-WA¤tPubID=00004767-WA&topicKey=00004767-WA.00002635-WA_1%2B%2B
Compare to the State Department treating us like delinquent children and inventing $2,350 worth of administrative work.
@Patricia Moon,
I was both a vocal and piano student with a major in vocal (I went to Douglas College where I studied voice under Ruth Huang-Suzuki and piano under Edward J. Parker (uncle of Jon Kimura Parker)) but I found that I couldn’t compete with those who had “perfect pitch and perfect memorization skills” . So, I headed into real estate in 1993 after floating around for two years wondering what happened. Then in 2006 I found that my true love was photography and the visual arts after marrying my wife in 2000 whom I met online in 1999 through a mutual love of a television show about the US Navy Judge Advocate General Corps. (JAG) Turns out that she was American. We fell in love, did the whole talking on the telephone for hours and hours via calling cards for seven months (proposed online) and she came up to Canada in July of 2000 and we were married August 4th.
Little did we know that 8 years after my wife and I exchanged vows; Obama would throw a major monkey wrench into the works. I refuse to divorce my wife to protect my own finances; it would betray my vows to her (for better or for worse) and have thrown myself into pitched battle, even if it is a war of words against the United States who seeks to destroy my family and our children out of a marriage based on love and not nationality.
#FATCA has made me hate the United States more than ever before because they are attacking someone I love.
@Patricia Moon;
Dietrich Fischer-Dieskau, Rubinstein…Oh, how I loved those masters of keyboard performance. And my other favorites were Daniel Baremboim and Murray Perahia. I loved Baremboim’s interpretations of Beethoven’s Sonatas. Ed Parker tossed me the Pathetique Sonata on the first day I studied with him (I started with him as a Gr. 6 RCM at the age of 16. Frankly…that piece scared the living pee out of me… “All the complicated notes…” *freakout*.
“Just a slow reading of a chorale -where the rich contrapuntal textures result in unexpectedly advanced harmonic tonalities-nothing more satisfying than experiencing that IMHO”
110% agree with you there. When I had a piano, I used to pull out my Henle Verlag ed. of JS Bach’s French Suites and sight-read through them. The funny thing was I used to hate practicing when I was young but as I grew older (into my teens and early twenties, I used to love going down to the piano and playing Bach for hours on end. It was an escape.
With the stresses nowadays…with FATCA and all that, I could certainly use a piano in the house again…and probably start off with the Anna Magdalena Notebook to ease myself back into piano-playing. Hopefully like muscle memory/riding a bike it comes back to me. I topped out at Gr. 10 RCM.