Today (11/16/2017) the floor of the House passed the House tax reform bill. The earlier version is here .
Today also the Senate Finance committee passed the Senate tax reform bill. See link
Do not yet have the final versions of either bill but suspect that we are not helped in the bills. Will post here final versions when they become available.
Listen to the C-span clip found by BB in which Residence-based taxation is mentioned by Golding and Brady in the House tax bill debate — none of this however, appears to have been incorporated into the House or Senate bills passed on 11/16/2017
Republicans Overseas (RO) continues to press on, to make changes in the final tax package that will help us. The fight is not yet over, but it continues, right from the beginning, to be an uphill battle — and the odds don’t seem very good right now. RO says: “Again we need to focus on the Senate side since this fight is far from over.”
Personally, it makes no sense to me to blame Solomon and the handful of people at Republicans Overseas for trying to make a change and, so far, failing. Yesterday a friend reminded me that there was this Ismene, who kept telling her sister Antigone that it was pointless to even “try”: “…but you’re bound to fail…No sense in starting a hopeless task…Go then, if you are determined, to your folly, etc. etc.” Antigone responded: “When I have tried and failed, [then] I shall have failed.”
“A parallel argument, also referred to obliquely in the Preamble, is the US desire to have the aim of double tax treaties redefined to include not only avoidance of double taxation, but also avoidance of non-taxation (which seems to be the way the US justifies taxing USC income which is “tax-favored” by the home jurisdiction, such as tax-free savings accounts).”
Oh great! There is that pesky notion that avoiding taxes needs to be stopped again. I avoid tobacco tax by not using any tobacco products. Should I pay tobacco tax even though I do not use tobacco products?
““Local govs did not enact FATCA enabling legislation on their own nor for their own benefit.”
Actually, they did, and promptly extended it via CRS to cover all their residents, not just USCs.
“Several, in fact, fought against it.”
Yes, small countries whose economies depend heavily on US inward investment and US/EU corresponding banking relationships have been hard hit by FATCA.”
Canada too. So, how is it that the US is without the power to coerce other nations to change their laws to implement US law?
““Local govs did not enact FATCA enabling legislation on their own nor for their own benefit.”
Actually, they did, and promptly extended it via CRS to cover all their residents, not just USCs.”
No without be coerced to do so, they did not. What benefit do the receive from these local laws?
@JapanT
Sometimes I think we forget that there continue to be newcomers all the time, who are not familiar with all the terminology, and especially not with with ideas of renouncing, not becoming tax compliant, etc. I remember in the very beginning when the “R” word was considered “way-over-the-top.” A lot of sites didn’t want it used for fear of legal issues, etc. Early on, ideas like extraction and confiscation were not commonly used, except here on Brock. I cannot quite remember when you arrived here. A lot of these concepts were initially identified by USCA …….
“Local govs did not enact FATCA enabling legislation on their own nor for their own benefit.”
“Actually, they did, and promptly extended it via CRS to cover all their residents, not just USCs.”
“No without be coerced to do so, they did not.”
Control the keyboard warrior reflex and think for a minute. The US didn’t coerce nations into signing up for CRS.
The US can do quite enough damage to its citizens as it is – it doesn’t need totalitarian rule to do it. Nothing is to be gained by bigging up US power – that just causes more fear and anxiety for USCs trying to figure out what their options are.
It’s best to deal with the world as it really is – the world where the US cannot force all other countries to obey its command. That world is a much safer place than the world of unfettered US power you’re nightmaring about.
This has been an interesting journey, getting a better understanding the background and history and aggression that lies behind CBT and the mindless damage it inflicts. I’ve reached my endpoint and am putting it to bed. Thanks to IBS, and to all the many IBS contributors whose posts and comments I’ve learned from. And good luck to all. Stick it to America.
@Patrica Moon
“@JapanT
Sometimes I think we forget that there continue to be newcomers all the time, who are not familiar with all the terminology, and especially not with with ideas of renouncing, not becoming tax compliant, etc. I remember in the very beginning when the “R” word was considered “way-over-the-top.” A lot of sites didn’t want it used for fear of legal issues, etc. Early on, ideas like extraction and confiscation were not commonly used, except here on Brock. I cannot quite remember when you arrived here. A lot of these concepts were initially identified by USCA …….”
Then USCA is probably one of a few who have contributed greatly to my understanding if the situation, which confuses me even more. How is it that one who has the foresight to see where this is heading then give impossible to follow advice? Why advise keeping nationality secret to people who have not had any knowledge that this might at some future point be something they’d like to be secret? This ignores human nature, assumes that one could have normal, natural relationships with neighbors, coworkers, friends and, if they built a family despite this deception, family members without disclosing where we are from and that we all have done so. Or, it assumes that all social interaction during our time in our chosen nations could be erased.
USCAs advice to keep USCship secret could only be appropriate to USCs who have not yet gone abroad. However, if USCA knows that USCs are being used by the US as economic Trojan Horses then the advice should be to not go abroad.
“Control the keyboard warrior reflex and think for a minute. The US didn’t coerce nations into signing up for CRS.
The US can do quite enough damage to its citizens as it is – it doesn’t need totalitarian rule to do it. Nothing is to be gained by bigging up US power – that just causes more fear and anxiety for USCs trying to figure out what their options are.
It’s best to deal with the world as it really is – the world where the US cannot force all other countries to obey its command. That world is a much safer place than the world of unfettered US power you’re nightmaring about.”
So then, what is the 30% noncompliance fee for FFIs that did not nact FATCA regardless of their national laws preventing them from doing so?
@plaxy
My Japanese bank did not ask me for my US SSN to serve any benefit for Japan.
What benefit does Japan gain by enacting FATCA enabling legislation?
“I think that they equate residence with nationality and that residence/nationality is the norm.”
This is too true. A couple of years ago my family contemplated moving to the US. I tried to get all information in order to weigh the pros and cons. When it came to info on how the health insurance marketplace policies, however, the people at that office were completely baffled by the fact I was a US citizen, yet not a resident. They just coud not fathom that such a situation existed. Needless to say, they wouldn’t give me any details on what my insurance options were because I had no address. It was similar when looking into schools. How is anyone supposed to make an informed decision about relocation when they treat the relevant info as top secret? It raised much suspicion when I told officials I was a citizen, but not resident.
Our whole conundrum is based on US exceptionalism in which US residency is automatically a path to citizenship, which is the aim/dream of any normal human being. The American subconscious knows that things flow only one way: to the USA. People migrate to the USA and live the dream.
That US citizens may move (permanently) elsewhere, voluntarily, and be happy with that choice does not compute with the subconscious. Homelanders may know that this happens, but they cannot truly fathom it.
Utter American-ness is so entrenched that it seems natural to them that you continue to pay taxes and die (the 2 unavoidable things) even if you move abroad. It seems natural that you would continue to file returns to the IRS if you have whatever link to America.
Treaties (NAFTA, transatlantic, transpacific) are written by and for America (is which sense the transpacific treaty was in fact a tool of American power, and is why Trump is making America much weaker, while Obama was making it stronger, and Clinton would have been worse).
Therefore citizenship-based taxation (or Americanness based taxation) seems totally natural. Evolving is going to be tough.
“USCs need to be aware that they do have rights against the US. Complaining to the Competent Authority is the way a USC can call on their country to protect them from double taxation.”
The FATCA letter I received says “ If you have any questions regarding the application of FATCA or its tax implications, please consult with U.S. rax specialits, such as attorneys, certified tax accountants, etc.”.
I’ve seen complaints to the EU, their answer was to speak to your own country as it’s not their domain despite clear breaches of EU laws to comply with FATCA. They do NOT want to get involved in this.
I have seen three responses from countries when asked why US citizens in Belgium, the Netherlands and the UK were being discriminated against in their countries of residence to enable the USA to tax them, and that answer was – Speak to the IRS.
Yo can see this response in the youtube video of the Dutch citizens getting eaten alive by the IRS. The producers of the article asked the Dutch government what was going on and were told to speak to the IRS.
@Mike
Here as elsewhere in life there seems to be the following operating principle, whenever there are inconsistancies between laws or regs and actual experiences of others, go with the laws and regs.
Not sure whether this thread is still talking about the House and Senate proposed tax bills, but here is a nice summary in chart form of the differences.
http://src.bna.com/t7h
If you go page 27 you will see that provision that confiscates the retained earnings – consistent across both. But the Senate is proposing a 35% penalty on corporations who attempt to invert within 10 years.
Unbelievable, simply unbelievable.
@USCit. 35% penalty. For some of those companies “inversion” will be normal business activity. So for 10 years normal business activity will be blocked. Sounds like could run afoul of WTO.
Has anyone come across any information about how yesterday’s Washington door-knocking went for Keith and Deedee (possibly Heitor David Pinto, our dear Shadow Raider, too but I’m not sure)? I did read that Anthony Parent might have come up with a loophole closing that would help with the JCT’s scoring on TTFI which they hope to receive before Monday. It has to do with taxing the US assets of foreigners after death.
“If you go page 27 you will see that provision that confiscates the retained earnings – consistent across both. But the Senate is proposing a 35% penalty on corporations who attempt to invert within 10 years.
Unbelievable, simply unbelievable.”
Nothing in this regard is unbelievable given $20,000,000,000,000 US debt and $50,000,000,000,000 unfunded mandates and that the republicans now have the same tax mentality as the democrats, all tax cuts must be paid for.
Stand by for the unbelievable to become common place, “the new norm”.
Stand by for the unbelievable to become common place, “the new norm”.
Hey I resent that. Ordinary people find me unbelievable but there’s nothing new about me.
Somehow I just knew that will ellicit a response from you, Norm.
Ordinary homelanders are unbelievable.
Everything looks to be a right mess now but not sure what taxing the US assets of foreigners after death as to do with TTFI. Many countries have estate tax treaties with the US and many know how to set up affairs to avoid it especially the wealthy. The US makes laws it can’t enforce, it can’t enforce that and it can’t enforce CBT and tries to enforce it with Fatca. But still the majority don’t file.
The USA needs to adopt a plain and simple residence based tax system for individuals, one that is solely based on residence and adopted like the majority of the world. and the countries the USA has the most in common with. Call it what it is supposed to be called “RBT”and this is something that can be enforced much more easily.
UK Rose, Non-resident aliens have only a $60,000 exclusion death tax. It sounds like new laws will try to enforce this. A consequence will be liquidation and a flow of money out of the U.S.
This is still a mystery to me why put this in:
For individuals, the test for residence may depend upon nationality, or a physical presence test.
On the one hand, Homelanders believe, the immigration laws assume, and popular U.S. culture is based on the assumption that:
On the other hand, the U.S. tax laws have always assumed and continue to assume, that:
The popular culture is visible to all. The tax laws are visible to few and understood by none.
The popular culture reflect what is believed. The tax laws reflect what is true./
https://youtu.be/ZItzF0ldAUo
See particulary here at the 2 minute 41 second mark:
@JC
it is not $60,000 in all cases, the treaty countries get higher and there are ways to migrate the tax or reduce the tax, all legal. They won’t be able to enforce this then anymore with new rules anymore then they can enforce it now. they could turn the argument around and say what would happen if we really enforced CBT, how much more could we get. these are all fruitless pursuits.
Better to set a system that works. Territorial system for individuals has many drawbacks unless it becomes a hybrid system. It makes the USA less attractive for investment, people will start moving investments out of the USA, and residents (especially wealthy ones) can avoid taxation on portable income by moving it outside of the country. All this I am sure needs to be taken into consideration with any scoring.
A poster on Facebook asks:
https://www.facebook.com/groups/AmericanExpatriates/permalink/885400304959376/?comment_id=885597161606357
There are few people who will move from a country ONLY because of the tax laws.
There are few countries whose tax laws provide powerful incentives to leave.
I don’t think that the U.S. tax laws are a reason for Homelanders to leave the USA.
I do think that the U.S. “asset confiscation rules” are a reason to leave.
The bottom line is that U.S. citizenship is simply incompatible with life and opportunity in the 21st century.
@JC
Just to clarify for future readers… That miserly $60k US death tax exemption is indeed real. It creates a huge and mostly hidden mantrap, since it applies not just to obvious US assets such as a Florida vacation home but also US shares and US domiciled funds and ETFs.
For people in of any of the handful of countries with a US estate tax treaty though, the exclusion rises to the same as for US citizens, so $5.49mm (2017 number).
Quite what ‘closing a loophole’ means here is pretty uncertain, but enforcing US estate taxes on foreigner’s US shares and ETF holdings is certainly much more possible now that non-US brokers have to conform to FATCA, so that would be my guess.
Currently US brokers won’t release funds until given the all-clear by the IRS, which means the non-US deceased’s estate has to file a US non-resident estate tax return blah blah blah. But as it stands, non-US brokers seemingly rarely, if ever, try any such enforcement of US estate tax on non-US persons (why would they? — in fact, most would probably be surprised that it could even apply!).
That may be the change they have in mind. In which case, an exodus of direct NRA investors is possible, but likely quite gradual since this is not a ‘new tax’, just enforcement of an old one that will gradually percolate into the investing literature and firmament, in the same was as FATCA was not a new tax but nevertheless triggered a continuing exponential rise in renunciations. (Or maybe they propose scrapping all the US estate tax treaties, in which case a much larger exodus can be contemplated. Who knows.)
For what it’s worth, CNBC shrieked about precisely about this back in 2015, so the ‘loophole’ clearly hasn’t suddenly been uncovered. The CNBC article suggest that US estate tax on non-residents “could be the next front in the global tax wars.” Possibly prescient.