cross posted from Quora
NB: This title comes from the question asked
at Quora and represents that individual’s
mindframe
by John Richardson
Lawyer (1982-present)
President Kennedy at the “Berlin Wall”
How would these thoughts on mobility restrictions be viewed in the world of "Exit Taxes" – "JFK speech on wall, democracy and immigration" https://t.co/LpQ83wM6NM via @YouTube
— John Richardson – lawyer for "U.S. persons" abroad (@ExpatriationLaw) April 9, 2018
On June 26, 1963 President Kennedy gave his historic “Ich bin ein Berliner” speech. After World War II, the administration of the City of Berlin was divided among the allied powers (Soviet Union, USA, Britain and France). In 1961, the Soviets created a wall in order to prevent their people from leaving the Soviet Sector. (The City of Berlin was actually inside East Germany). Among other things, President Kennedy’s speech included the line: “We have never had to put a wall up to keep our people in – to prevent them from leaving us.”
Congressman Ron Paul speaks about “walls”
As Ron Paul once said: “The wall could be used to keep people in!”
Ron Paul 2011: In times of economic turmoil when people want to leave with their capital there is "capital control" and "people control" – the way could be used to keep Americans in https://t.co/yol3HiWEZC
— John Richardson – lawyer for "U.S. persons" abroad (@ExpatriationLaw) April 12, 2018
Does the United States have any prohibitions on leaving the United States?
As a matter of fact yes.
In order for a U.S. citizen to legally leave the United States, the citizen must have been issued a U.S. passport. This is a legal requirement. U.S. citizens are NOT permitted to leave the United States on a non-U.S. passport. There is an interesting history to the United States using refusals to issue passports, as way to keep people inside the United States. See for example this discussion from “Today In Civil Liberties History”:
“Some of the more famous passport denial cases involved the famed African-American singer and left-wing political activist Paul Robeson, whose passport was cancelled on August 4, 1950; the noted artist Rockwell Kent, who was denied a passport extension on August 7, 1950; and the distinguished scientist Linus Pauling, who was denied a passport on May 11, 1952.”
The United States does have a history of attempting to prevent U.S. citizens from leaving the United States. But, the United States (unlike those who tried to climb the Berlin Wall) has not (to the best of my knowledge) shot for attempting to leave.
See also:
U.S. Passport as Instrument of Control
An excellent “scholarly” review of the Passport requirement is here:
The history of the requirement that U.S. citizens only use U.S. passports to enter the U.S.
Is there an analogy between the building of the Berlin Wall and the “Exit Taxes” imposed under Sec. 877A of the Internal Revenue Code today?
First, what are these “Exit Taxes” anyway?
“Exit Taxes” are taxes that are imposed on people who sever “tax residency” with a country. For a comparison of Canada’s Exit/Departure tax and the U.S. Exit Taxes see:
The U.S. “Exit Tax” is particularly draconian. It has no equivalent anywhere in the world. In part this is because the U.S. imposes “Exit Taxes” on renouncing citizenship (in addition to the $2350 administrative fee). Other countries impose Exit/Departure taxes when one physically moves from the country. (This illuminates one of the differences between U.S. “citizenship-based taxation” and “residence-based taxation” as applied by other countries. On this point see:
http://www.citizenshipsolutions….
U.S. citizens who live in the United States are fed a steady diet of “The United States is the “Land of the Free”. Although absolute freedom is NOT possible (JFK said “Freedom has many difficulties”), even in a comparative sense, Americans have fewer freedoms than the citizens of many other countries. I have provided a Quora answer to this question before.
John Richardson’s answer to Which country’s citizens enjoy more freedoms than Americans?
How do the Internal Revenue Code S. 877A Exit Taxes Work?
Renouncing US citizenship? How the S. 877A “Exit Tax” may apply to your Canadian assets – 25 Parts
U.S. “Exit Taxes” are imposed by Internal Revenue Code Sec. 877A. They are imposed by the Internal Revenue Code on certain people “covered expatriates” who relinquish U.S. citizenship. A “covered expatriate” is a person who relinquishes U.S. citizenship and triggers one or more of these three events: (1) has certain levels of income (determined by the U.S. tax payable), (2) a net worth of 2 million USD or more or (3) who cannot certify U.S. tax compliance for the five years prior to his/her relinquishment.
Part 4 – “You are a “covered expatriate” – How the “Exit Tax” is actually calculated”
For examples that demonstrate how incredibly punitive the U.S. “Exit Taxes” are (and specifically how they operate to confiscate non-U.S. pension plans) see:
The Section 877A Exit Tax impacts primarily Americans who already live outside the United States and are “tax residents” of other countries
The U.S. “Exit Tax” is triggered by relinquishing U.S. citizenship.
Most people relinquish U.S. citizenship when they already live outside the United States.
Therefore, I would say that:
The Berlin Wall was to prevent people for leaving Easy Germany!
The U.S. Exit Taxes are designed to punish those who have ALREADY left.
Furthermore, the Berlin Wall was to prevent EVERYBODY from leaving. The U.S. “Exit Taxes” are to punish only SOME (“covered expatriates”) who leave the United States.
Therefore, although both the Wall and the Exit Taxes are/were bad things, the are not the same.
A more relevant comparison “might” be between the German “reichsfluchtssteur” and the U.S. Exit Taxes. Both of these taxes are (at their core) ways to prevent capital from leaving the country. It is described in the above Wikipedia link as:
“The Reich Flight Tax ( German: Reichsfluchtsteuer) was a capital control law implemented in order to stem capital flight from the Weimar Republic. The law was created through decree on 8 December 1931 by Reich President Paul von Hindenburg. The Reich Flight Tax was assessed upon departure from the individual’s German domicile, provided that the individual had assets exceeding 200,000 RM or had a yearly income over 20,000 RM. The tax rate was set at 25 percent. In 1931, the Reichsmark was fixed at an exchange rate of 4.2 RM per USD; 200,000 RM was equivalent to $47,600 USD (equivalent to $766,000 in 2017).”
Although not triggered by tax non-compliance, note that (like the U.S. Exit Tax) it was triggered by both income and asset levels. The “Reichsfluchsteuer” was apparently a 25% tax. The “U.S. Exit Tax” (when applied to pensions) could very easily exceed 25%. Furthermore, the “U.S. Exit Tax” is largely a tax on non-U.S. pensions and other U.S. assets (making it the only known Exit Tax that effectively imposes confiscatory “taxation” on foreign pensions” and other foreign assets).
That said, (in fairness) it is possible to physically move from (or otherwise leave – provided you have a U.S. passport) the United States and NOT be subjected to the U.S. “Exit Tax” (it applies on relinquishment of citizenship). Therefore, the U.S. Exit Tax although harsher when applied, applies to fewer people AND is NOT a physical barrier to leaving the United States (although it is a clear barrier to creating a life in another country).
Possible conclusion:
How is the IRS levying taxes to renounce US citizenship different from the Berlin Wall?
U.S. Exit Taxes are more like the German Reichsfluchtsteuer than like the Berlin Wall (but financially more punitive than the Reichsfluchtsteur).
The Berlin Wall was designed to punish people who tried to leave East Berlin.
The U.S. “Exit Taxes” are used to punish those who have already left the United States.
Both, are designed to punish those who attempt to sever relationships (physical or political) with their respective “Homelands”.
But, considering the future …
It is interesting that the United States is now considering building it’s own wall. Those who don’t learn the lessons of history are doomed to repeat history.
Well I’m all for offering up the entirely practical advice that breaking US law and evading US tax and reporting obligations is a safe, viable and even honourable (call it civil disobedience) option for many non-resident US citizens, particularly your classic dual-from-birth, no-US-ties accidental. I make no apologies for promoting inaction as the best course of action under the right conditions.
IMO, one of the great strengths of this site is that a wide variety of views are tolerated. The situation of nonresident USCs is excessively complex. It is very useful to have that variety of opinions that people can evaluate in light of their own particular facts and circumstances. However, I agree with BB that the site has degenerated into a chat room, which unfortunately makes it more difficult for new participants to find what they need.
For many, the US claim of tax jurisdiction is unreasonable, and ignoring that claim is not tax evasion but an assertion of the right to NOT be considered American when one has emigrated or otherwise obtained another citizenship.
Quite frankly,even the accusers have used IBS as chatter at times. There is whole compendium od dead websites that ceased to exist because of the lack of “chatter”.
Geographically Canada is to the USA what West Berlin was to East Germany. Canada is surrounded at least on a couple of sides by the USA–the lower 48 to the south and Alaska to the west and northwest. Just as West Berlin served as something of a thorn in the side to East Germany and by extension to the entire Warsaw Pact, Canada has a strong duty not necessarily shared by other countries caught up in the FATCA web to be a thorn in the side to the USA and CBT.
Perhaps we need less braying and more praying right now. Trump the chump, goaded on by that bastard Bolton, has ordered an airstrike on Syria and the bombing has begun. I simply do not have the words to express my despair and anger at this moment. My heart goes out to the Syrians who have suffered so much in the past 8 years in their valiant effort to defend their country and retain its sovereignty.
@plaxy
I don’t think we could ever come up with a set of rules due to the basic nature of what Brock was meant to be. I am not saying that it is wrong to sometimes suggest that non-compliance may be an appropriate choice. What I am saying is that to have that as the only response is not useful and not appropriate for all people.
There are two rules at Brock. Actually there used to be another. They are:
1) Only one alias. There are several reasons for this. I don’t know if it is necessary to go into this now. But one thing that never seems considered by those who do it, is that it creates dishonesty in a place where we should at least be able to trust each other. There have been times where one individual would post as 5-6 at the same time; even replying to oneself. This is not the purpose of the site. And people do continue to try this after they have been asked not to.
2) No vicious attacks on people.
3) Stay on topic.
It is hard enough to try and keep these 3 rules in place. I am pretty sure I can speak for the Committee that we would not want to create more. That is not to say it could not be discussed but it would take a lot of convincing……..
Thanks for your good wishes. We will find out overnight/in the morning whether we have rain or ice. Small towns are not equipped to handle these ice storms which can be surprisingly destructive. And to have no heat is brutal!!
@Nononymous
No one doubts that you have no qualms about advising non-compliance. For accidentals, duals from birth living outside the country, sure. But it simply does not address all situations. And some people are simply not comfortable with it, regardless of how much it can be justified.
As to suggesting that one not pay and yet remain a citizen in order to make use of/possible make use of the benefits of US citizenship, that does lend itself to the notion that someone is okay about evading tax. It was actually the first comment/complaint made to me about the notion that Brock is a site that has been reduced to promoting tax evasion.
@Robert Ross
If you are referring to myself, Bubblebustin or Karen Alpert, it might be worth your while to go back and review all the posts (not comments) that we have written and that could not possibly be construed as “chatter.” Chatter is fine as long as it does not constitute the majority of what is said. I don’t recall you being at Brock in the early years. You might be interested to read the early stuff as it was primarily research-based and or, support-based. This was definitely not a chat group. And people valued the content of posts. Showed respect to the author by discussing what was offered. And some are doing quite a bit more than commenting on a blog. That is one reason it is upsetting to see Brock reduced primarily to “chatter.”
By all means go and make a site that meets your needs. As Karen said, Brock has always been about having a variety of observations, opinions and information. If you do not like hearing that compliance is an option for some people and that some people are uncomfortable with the notion of tax evasion, this is not the site for you.
I wonder how many people commenting on this thread have actually sat down and read all the way through this post (not the comments)?
Patricia Moon – “I don’t think we could ever come up with a set of rules due to the basic nature of what Brock was meant to be. I am not saying that it is wrong to sometimes suggest that non-compliance may be an appropriate choice. What I am saying is that to have that as the only response is not useful and not appropriate for all people.”
I’m not urging the owners of the site to draw up rules, and I’m certainly not suggesting what rules “ought” to exist. Just suggesting that if the owners are concerned about what’s being said on the site, it’s obviously only the owners of the site that can control that. Setting rules about what people are allowed to say usually does have a dampening effect; on the other hand, if the owners are concerned that some things shouldn’t be said, there’s ionly one way to achieve that, which is for the owners of the site to draw up an acceptable use policy and enforce it.
As to the Exit Tax, for anyone interested, there is a video of a Senate Finance Committee hearing regarding the Taxation of Expatriated Individuals. It definitely demonstrates some unsurprising notions (“it is dishonourable to renounce one’s US citizenship”). What is worth observing is that the Chariman, Senator Bob Packwood (R-OR) has reasonable questions that mirror our points of view. This video is nearly 23 years old. It proves that the Senate Finance Committee has been aware of these issues from the beginning. At least two of the individuals are still on the committee. Sen Baucus reminds one of Carl Levin. He is discussing ten individuals. Ten people. People who could not be more dissimilar to us (minnows).
In general, they are discussing whether a bill proposed by Ways & Means (HR 1812) is more likely to address the problems that the then-current S877 failed to address, or whether Senate bill 700 is better.The witnesses are Leslie B Samuels , Assistant Secretary Department of the Treasury->Tax Policy and Kenneth Kies , Chief of Staff Joint Committee on Taxation. Mr. Samuels is certain that the proposal he supports (S700) is not in violation of any human rights issues and that overriding/violating tax treaties is quite ok. Mr. Kies on the other hand, is concerned about the consequences of violating tax treaties, issues of double (even triple) taxation and so on. I need to listen again as I thought I caught a statement that directly contradicts what is happening today, with the transition tax.There was mention of the inappropriateness of trying to tax people who had previously relinquished and who were not receiving any of the benefits of USC. All so very familiar. As well, how the tax advisors for the wealthy will continue to find loopholes for avoiding tax. How ironic that they are largely the source of our problems.
At any rate, the video is just under an hour (unlike the timing that appears on the screen).
There is a little sidebox that is a printout of the dialogue. Or you can see a permanent record here.
When I was a US citizen I had no thought of failing to comply. But silly me, not only did I think it was legal to comply, I even thought it was legal to tell the truth on a US return.
Once upon a time it was virtually unimaginable to think of renouncing US citizenship.
Once upon a time we thought US courts would uphold a person’s right not to be a witness against oneself in a criminal case. US Tax Court does actually still honour that; they issued an order maintaining seal on some of my testimony. No other US federal court honours it though.
Once upon a time some people thought the US could be persuaded to stop abusing its diaspora. Maybe we thought the US would listen to the US when the US sponsored a UN resolution condemning the US’s only friend in the practice of diaspora taxation because the US called it a human rights abuse.
Well, we’re learned some lessons since those days.
If we’re not satisfied with lessons we’ve learned here
http://isaacbrocksociety.ca/2014/10/17/rahabs-renunciation-of-citizenship-was-she-a-harlot-liar-traitor-and-tax-cheat-or-a-heroine-of-faith/
and here
http://isaacbrocksociety.ca/2016/08/02/petros-principles-10-on-lying/
then maybe we can try here
https://www.irs.gov/pub/tas/2011_arc_internationalmsps.pdf
I don’t like tax evaders, but is evasion of Cook v. Tait the same thing? The US government and courts don’t comply with Cook v. Tait, so why should anyone else? Government by its nature benefits the citizen wherever found, but US courts don’t use courtrooms in states where the US government has permanent establishments capable of hosting courts (embassies, consulates, military bases), the US government and courts don’t affix sufficient postage to their letters, the IRS tells people to phone the IRS toll free but the IRS contracts with ATT to block our attempts to obey, the IRS sends letters by methods reasonably calculated to be delivered later than deadlines that they set for recipients to act, there are no Low Income Tax Clinics in states where we reside. Brockers can observe that Cook v. Tait is dead even though Brockers didn’t do the killing.
MB appears to be violating rule number 3
Well I didn’t do duty on the Berlin Wall, but I did do border duty on the Czech-German border from 1988 to 1990.
You want a comparison: my next-door neighbor applied to legally leave East Germany in the late 80’s. First he had to go through a lot of red tape, all the while under suspicion, spied on, and being accused of being a traitor. In the end, he was allowed to go, but he could only take one suitcase and the shirt on his back with him. I heard his tales of how he was forced to “clean” his apartment by taking everything and putting it all in a dumpster he had to pay for.
Sound familiar?
@ Portland
Right you are re: #3. I’m also non-compliant. Too sad right now to feel bad about either of those strikes against me.
You’d better watch what you pray for. If you keep complaining, the US will bring its troops home from Afghanistan, Australia, Bahrain, Belgium, Brazil, Bulgaria, Canada, Cuba, Diego Garcia, Djibouti, Germany, Greece, Greenland, Honduras, Iraq, Israel, Italy, Japan, Kosovo, Kuwait, the Netherlands, Norway, Oman, the Philippines, Portugal, Qatar, Saudi Arabia, Singapore, South Korea, Spain, Turkey, United Arab Emirates, and the United Kingdom, and then you’ll really regret it.
Wait, who am I kidding. If you keep complaining the US won’t care.
My list is far too short. This article says it’s 177 countries:
http://www.visualcapitalist.com/u-s-military-personnel-deployments-country/
Maybe they’re not quite that extreme (yet), but the mentality is there and I can only say: “get out while, the getting’s (still) good”.
Renounce and rejoice, while you still can.
Long live IBS. This site is still a lifeline for 9 million people. It’s extraordinary contributors have now pretty much researched and published all the data that is relevant to our plight so yes, we get less frequent articles and more discussions. I’d like to point, however, that IBS has been and still very much is one of the very few sources of moral support for many people hurt by the fear, uncertainty and doubt fostered knowingly and willingly by the US. I am sure many of us would have resorted to suicide, financial or biological, without this. I have been involved in pretty much every “solution” described here and no other place was as accurate and informative while remaining warm and caring. My thanks to all for the chatter, I owe you my sanity.
@AbN
Without changing my opinion about where this is going, those could almost be my words. I owe all here what’s left of my sanity and probably my life.
So, thank you all, even when I am a bit aggressive sometimes.
Gee, looks like Portland is volunteering to be the judge/ enforcer……
After I found out what the US was up to, but before I found IBS, I thought I was just stupid for not knowing, and a bad husband/father for putting my family’s future in such danger.
Now I know I’m just one victim among many, so I’m just angry instead of scared.
Ditto to AbN. I’ve testified many times already that IBS saved my sanity and my health. Yes, it has become something of a chat room recently. But that’s only because there is a temporary lull in atrocities perpetrated by the US government against its diaspora.
It’s also why my bookmark goes directly to the Media & Blog Articles page, where there’s a greater concentration of new material.
“But that’s only because there is a temporary lull in atrocities perpetrated by the US government against its diaspora.”
No there isn’t.
http://isaacbrocksociety.ca/2018/04/05/part-7-responding-to-the-sec-965-transition-tax-why-the-transition-tax-creates-a-fictional-tax-event-that-allows-the-u-s-to-collect-tax-where-it-never-could-have-before/
Well said, AbN.
For the plethora of situations and opinions here I think the backbone of IBS do an incredible job, presenting the facts, giving advise and keeping us sane. We are human and communication is not chatter, and we all deserve downtime from this persecution.
Back in 2012 I would not have had a clue where to start to navigate through this nightmare if it wasn’t for Brock and Petros.
The fact that so many of its refugees have frreded themselves, survived and remained here to give advise to others is a testimony of its success.
It is through the very wisdom and bravery of Brock that ADCS was spawned.
Thank you all.
Surgite
I think we’ve had a lot of slow news days lately, hence the chatter. We sometimes dig up some useful stuff that way, such as the recent (despite the usual we-are-not-lawyers disclaimer) conclusion that maybe executors are not personally on the hook for an estate’s US tax bills.
On the constructive and helpful front, now that I’m back in front of a computer, I’ll continue researching FATCA/CRS criteria for investment accounts in Canada, will try to organize an access to information request (maybe via my MP), and will harass Moodys when possible. On that note, looks like a seminar swing through central Canada in mid-June is now on their schedule, plus a webinar on the 26th of this month.
@Patricia
Yes, I am very comfortable advocating non-compliance! But I’ve never suggested that it’s a one size fits all approach. There’s a flow chart, as we all know. Where do you live, where were you born, what sort of US financial and family entanglements do you have? “Do nothing” is only one of a number of possible outcomes. What concerns me, and where I make my rhetorical efforts here and elsewhere, is when people in the “do nothing” box still think they need to do something. There, you can offer support and information. Many will still pursue compliance either because they are very risk averse or have some (in my view entirely misguided) belief that if a law applies to you, no matter whose, it must be obeyed. That is a sadly common view: comply because it’s the right thing to do, tell the truth because lying is wrong. Oh well. If we can reach a few of those folks and convince them otherwise, we’ve done good work.
As for the critique that non-compliance without renunciation is having one’s cake and eating it too, that’s a fair enough point that we need to consider it. There are counter-arguments. One, this law is so obviously effing stupid there’s no other choice (I will proudly wear the label of tax evader). Two, renunciation is expensive and puts you on the radar, so in purely tactical terms its better not to unless you need the CLN to solve banking problems. Three, if a person does choose to take advantage of their US citizenship, they will have to reckon with past non-compliance, so it’s just a question of when they deal with the paperwork, before or after. (Obtaining a US passport because of border harassment due to US birthplace is not taking advantage of anything.) My advice to anyone young and without complex financial affairs is wait until you move because it’s relatively easy to get caught up then, and if you don’t move you’re better off not having been in the system to begin with.
Regarding some of the value of IBS:
It is a gamble whether this strategy will work, but my focus is to sue the people who do us harm.
If there were no Brock, there would be no (slow-moving, but it will happen) Canadian FATCA IGA lawsuit in Federal Court.