From JC:
I nominate ,,, for a IBS feature.
The ACA RBT plan got a feature so this should as well. Karen wrote the into there. I don’t think much intro is needed. Just post as a feature and to highlight for comment.
Democrats Abroad survey report now out.
Can We Please Stop Paying Twice – Tax Reform for Americans Abroad
“I am not a member so I don’t get their e-mails, yet I imagine that any Congress person, congress staffer, press, DA intern, or anyone else who may go to the DA website may perhaps on 95% of the days of the year get impression/message that DA = The Democrats on issues and that there is no difference between the two.
If they were genuine about shift to RBT then this should be reflected across all their communications including boilerplate on all press releases and NEWS items.”
Isn’t it likely that some members support one issue, and campaign on that issue, while other members support various other issues? It’s a membership organization – they don’t necessarily all agree about priorities.
Republicans Overseas is different – part of the Republican Party, created by a RNC member who has been tasked with “outreach” – getting votes and donations from various subsets of the US electorate with low voting turnout, such as those who are young, those who live abroad, etc.
RO’s legal actions against FATCA, and their proposal to switch from CBT, and the Meadows hearing, and the bill to repeal FATCA, and Posey’s letter, are all in line with party policy; which in a different country with different politics might lead to action. In America, who knows?
DA has an organisational structure and leadership to set strategy and tactics.
“DA has an organisational structure and leadership to set strategy and tactics.”
Yes but looking at their website it seems they have a number of different issues on the go – one being FATCA reform (which the DNC now supports), and another being RBT (which the DNC does not support).
They’ve done very well, it seems to me, within certain constraints. It all helps shift opinions away from “hooray for FATCA, nabbing those evil tax dodgers” towards “FATCA is unfair and unworkable, and so is CBT.”
Funny how Dems Abroad are willing to get serious now that there’s an R in the White House and an R congress.
I have absolutely no idea [/sarc] why they soft pitched the issue until now. I can’t imagine…
As @Karen writes:
What this does better than the RO and ACA submissions is that it gives specific examples of how the current system creates “actual” “unfairness” to “normal people” who are attempting to live a “normal life outside the United States”. It shows why the rules must change. But, it gives no real “road map” for how to make the changes. The lack of a “road map” is the real weakness because there are just so so many problems with U.S. taxation applied to those who don’t live in the USA AND are subject to the tax systems of other countries.
it is best used as evidence for WHY the USA must stop imposing U.S. tax rules on the residents of other countries.
Although the document notes that “residence based taxation” would solve a number of these problems:
1. It does NOT advocate for residence based taxation; and
2. Makes no attempt to explain what would be meant by “residence”.
The RO proposal avoids the necessity of dealing with “what is residence” by focusing on “territorial taxation”.
The ACA proposal (which is disliked by many) at least offers one test for “nonresidence”.
It’s fascinating that not a single one of these proposals actually recommends abolishing U.S. “citizenship-based taxation” and this is really the weakness of all of them.
All this talk of territorial taxation, faux RBT, same country exception are missing the point that one’s citizenship should not come into the equation when paying taxes. People have no control over where they were born. and this event should not determine tax.
And it is ludicrous stating that foreigners investing in the USA are getting away with tax. It’s called RBT. These people pay taxes to the country of residence, in some cases, worldwide taxation to the country of residence. that’s how it works all across the world. I am tax resident in the UK, so the UK taxes me on my investments, here and abroad if a tax needs to be paid. In exchange I am provided services, healthcare and I am part of UK society.
Until this mentality of citizenship taxation is changed, there will always be a danger it could come back even with reform.
Of course I understand that people must get behind these initiatives because it may be the only chance and even I have gotten behind it but to me it is very sad that a country that preaches freedom, can not see a simple solution that is starring at them right in the face. let people be free and tax solely on residence. The arguments in this survey support this too.
“And it is ludicrous stating that foreigners investing in the USA are getting away with tax. It’s called RBT.”
I was deeply disappointed to see the suggestion that the USA rips up tax treaties and yet again ignores all world norms when it comes to residency based taxation and force foreign investors to pay full US taxes, a country where they do not live or use services.
Despite these being the very people who seemed to be coming around to understanding the principles of residence based taxation, they still don’t get it and I suspect they never will.
If nothing else, it vindicates my personal decision to cut all ties with this madhouse and to make sure I have no US investments of any kind. I wondered what they might suggest next, didn’t need to wait long.
I just wish they would get their wall built, all the way around the place. They’re doing it anyway.
UK Rose and Mike –
“And it is ludicrous stating that foreigners investing in the USA are getting away with tax. It’s called RBT. These people pay taxes to the country of residence, in some cases, worldwide taxation to the country of residence. that’s how it works all across the world.”
As I’ve said before, not taxing non-resident aliens on portfolio capital gains is a feature rather than a bug. It’s actually written into the tax code – §865, which states that the source of capital gains on personal property (including shares) is based on the residence of the owner. For RO to call this a “loophole” is ludicrous. I only hope that this part of their proposal doesn’t make it into the actual bill.
As for tax on interest and dividends – there’s already withholding on nonresident aliens receiving this income. The treaties provide for lower rates in some cases and allow investors to take a credit against local tax for US tax paid. Overriding the treaty rates on US source interest and dividends is likely to be opposed by the investment banking industry as it will make the US a less attractive place for overseas investors. It should also cause some anger from international trading partners as increasing the tax rates will be a direct grab (through FTC) on the tax revenue of all treaty partners.
“It should also cause some anger from international trading partners as increasing the tax rates will be a direct grab (through FTC) on the tax revenue of all treaty partners.”
Yes, just as FATCA is in conjunction with CBT. The fact they won’t actually raise much tax with FATCA is almost meaningless (except for those directly impacted) but it shows a pattern. FATCA also caused some anger, but it’s still there and I suspect may always be in some form.
The USA is reaching out and extending its tax net across the globe.
I’m just glad I’m out, no stocks, no shares, no property and on principle, I buy no US goods, no services – Nothing. Let them cut themselves off from the world.
@Mike If nothing else, it vindicates my personal decision to cut all ties with this madhouse
Yes, I totally agree, that is why I renounced.
@karen I only hope that this part of their proposal doesn’t make it into the actual bill.
I can’t see how it could pass as it is, the financial industry and congress will see it for what it is and that it will take capital out of the US. Who in their rightful mind will invest in the USA after that? It’s only there now to say the plan is or could be revenue neutral. This is also ludicrous. Most people don’t owe tax. The only ones gaining from CBT are the compliance industry. The USG gains control though with CBT. Something we know they like
Following.
@fn0 posts :
My apologies if this post is redundant, but in case it’s not, here are two links that Democrats Abroad just emailed out.
1. Tax Reform for Americans Abroad Campaign in a Box.
https://d3n8a8pro7vhmx.cloudfront.net/democratsabroad/pages/13965/attachments/original/1508584342/Tax_Reform_for_Americans_Abroad-_Campaign_in_a_box_October_2017.pdf?1508584342
2. RBT FAQ, including differences between Democrats Abroad and Republican Overseas policies
https://docs.google.com/document/d/1s6AZ9wSqtjb_jm4cNWeDlVlDFDUnHQOYYiClYkY3sxs/edit
Unexpected telephone call from Democrats Abroad, who apparently are updating their membership database.
A gratifying opportunity to explain to the caller that I am no longer eligible to be a member of Democrats Abroad and also am no longer eligible to cast a vote for Democratic candidates in US elections – having been obliged as a result of the Democrats’ introduction of FATCA to renounce my US citizenship in order to be able to hold a bank account.
.
That must have been quite satisfying.
I suggested she might want to feed my comments back to her organization. I believe, from the tone of her voice as she agreed, that she will be doing that.
However, feedback from a single ex-member won’t have much impact on DA, and none at all on the Democratic Party.
I enjoyed it though. 😉
No, won’t make any difference but I too would have enjoyed that call if I were you.
I’ve noticed recently that some commentators have gone from being shocked at thousands renouncing to saying “only a few thousand” renounce US citizenship every year. It’s strange how the remarkable can soon be played down as the norm and nothing remarkable.
Still, with all hope of getting the US government to see sense here apparently gone, I do wonder what the numbers will be like this year.
@plaxy Bravo!
@Mike
I expect the numbers to remain at “only a few thousand” a year for a couple of reasons. First, the State Department intentionally limits the number of appointments (plus increased the cost) so as to keep the numbers at the current level. Second, by now many of the people affected have figured out how to safely ignore the whole stinking CBT/FATCA mess with impunity unless they happen to live in a country where their banking is severely restricted. People unfortunate enough to live in those countries have mostly already renounced.
It strikes me as incredibly ironic that the US government tries to force people outside of the US who don’t want to be US citizens and don’t want to pay US taxes to do so while at the same time they deny millions of people who would like nothing more than to do just that; i.e. live in the US, become citizens, and pay those taxes.
@maz57
I’m no expert on this, but I think a great many “illegals” in the US do pay taxes. They have obtained SSNs, one way or another, and have money withheld from their paycheques.
But to your main point, as usual we completely agree. As a dual citizen living in a country where the banks do almost nothing to enforce FATCA and the government won’t assist the US in collecting taxes and penalties, I see no reason to spend money on renunciation when it is so easy and risk-free to remain non-compliant.
@Nononymous
I think you’re right. I’m not sure how they get those SSNs…maybe from dead people? I’ll bet there’s a huge profitable cottage industry, lol.
But there are also a significant numbers who live and work in the all cash economy totally off the radar. Many of those folks probably would love nothing better than a path to citizenship and eventually to start “paying their fair share”.
If the US government were to ever actually try to fix these problems, I wonder what would happen to all those folks who are now using bogus SSNs. It might be far more complicated for them than just continuing the status quo.
When my husband and I decided to start filing US tax, we found out that the SSN that he’d acquired in the 60’s was being used by someone in N Carolina. We may responsible for a subsequent deportation.
“I think you’re right. I’m not sure how they get those SSNs…maybe from dead people?”
From living ones, apparently.
https://www.huffingtonpost.com/adam-levin/irs-stop-letting-taxpayer_b_9844642.html
“But there are also a significant numbers who live and work in the all cash economy totally off the radar.” I know people who hire illegals because they are cheaper. The demand unfortunately won’t go away. Those who do are as much to blame for this crisis.
Speaking of bogus SSNs … after getting no response from my I-407 submission, the thought crossed my mind that my enclosed GC might have ended up in illegal hands.
“I’m not sure how they get those SSNs…”
When the US Department of Justice persuaded US Court of Appeals for the Federal Circuit that US courts would not have jurisdiction to consider a lawsuit for refund of overpaid withholding until after I fabricate an SSN for my non-resident alien wife, I complied. The SSA never granted nor rejected the application for SSN which was submitted in 1994 before ITINs were invented, and the IRS had rejected ITIN applications four times before the event where the court said I was required to report an SSN for her, so the only way to report one was to fabricate it, and I complied. The DOJ used to be proud of convicting criminals for fabricating SSNs, but now they must be proud that they can’t any more.
Another way to obtain SSNs: Read court filings. When the DOJ filed its exhibit proving that I failed to fabricate an SSN for my wife, the DOJ disclosed my SSN to everyone who has an internet connection and a credit card. The DOJ says in its publication Criminal Tax Manual that in litigation, disclosure from the IRS to the DOJ is allowed, but disclosure from the DOJ to the public is prohibited by statutes (as well as being prohibited by court rules etc.). However, US Court of Appeals for the 9th Circuit ruled that in litigation, the DOJ is supposed to disclose SSNs to the public. Now holding my breath waiting for the DOJ to correct its Criminal Tax Manual and waiting for courts to correct their rules on redaction.
Another way to obtain SSNs:
https://www.random.org/integers/?num=1&min=0&max=999999999&col=5&base=10&format=html&rnd=new
Geez, if its really that easy, I might as well grab myself a few more and get ’em to send me a half dozen SS cheques every month! (Just compensation for what a pain in the ass they’ve been.) Thanks for the tip, Norman.