53 thoughts on “Debate: Citizenship & Worldwide Taxation: Is It Morally Justified or Unjustified, John Richardson vs. Edward Zelinsky, Friday 17 May”

1. Is there going to be a recording of this debate? I think it would be very interesting.

   Cheers,

   Krackerjack121

2. Thanks @ pacifica777 for giving this debate notice a prominent posting postition. I’ve just looked at the questions submitted and they are excellent. Now I need to read parts 3 and 4 of Laura Snyder’s series and review John Richardson’s writings. There will be many words used in this debate to answer the question, “Should The U. S. Impose Worldwide Taxation And Reporting On People Who Are Residents Of Other Countries?”, but I only have one word, “No!” That’s why I’m looking forward to John, in particular, to apply some word eloquence to my obviously biased, truth-be-told intractable, simple answer.

3. Can we please citizenship-based taxation and use citizenship-based double taxation ?

4. This is a very important debate. Zelinsky is some kind of tax guru that tax policymakers have been listening too for quite some time. If he has an honest bone in his body, he will accept John’s arguments and change his own position, then tell the world of academia that he has been wrong all along about Americans living outside US borders.

5. Citizenship based double taxation is outright immoral and detrimental. John Richardson is an excellent orator and have listened to many of his talks. Im hoping Zelinsky has his opinion changed on citizenship based double taxation.

   BTW will this be recorded? Please record this so I can listen and share with others.

6. https://www.bloomberg.com/news/articles/2019-05-15/france-should-consider-abandoning-fatca-lawmakers-report-says

   Interesting story from France on Bloomberg.

7. Did anyone else get an email from kat Jennings at taxconnections regarding the upcoming discussion? I’m a little bit peeved that out email addresses are being shared. I wasn’t aware I had yet another target on my back.

8. @ Dave,

   I would like to reassure you that TaxConnections didn’t get your e-mail address from Brock. Brock doesn’t share e-mail addresses with anyone. We don’t even provide a Brocker’s (Person A’s) e-mail address to another Brocker (Person B) — even if a moderator personally knows Persons A and/or B — unless we get Person A’s explicit permission to do so.

   If you register for an event with TaxConnections, they send an e-mail; and I’ve noticed since I registered for a TaxConnections CBT/RBT event some years ago, that I’ve got e-mails about other CBT/RBT events from them since then. Maybe if you haven’t registered for this debate, they have your e-mail address from some earlier event?

9. I just want to thank John Richardson, and also Laura Snyder, for recognizing the very real impact of the emotional injury many of us have suffered due to this CBT/FATCA mess. Recognition of depression (and other emotional disorders) is front and centre in the news these days. Government spokespersons have been interviewed at length saying more needs to be done to alleviate the suffering and to promote education about the nature, and treatment, of these conditions. Yet governments the world over support the United States’ “sovereign right” to its extra-territorial tax policies which we know . . . for certain . . . have caused much emotional misery within the community of its own sons and daughters in other countries. I truly appreciate the inclusion, in the discussion tomorrow, of this aspect of our ongoing issue. Good luck and best wishes!

10. I have received my e-mail with a link to the livestream tomorrow and I notice that there is an “unsubscribe” option if Dave wishes no further correspondence from Tax Connections. Actually I’ll probably use that myself after I watch the livestream. Meanwhile I’m reading the background links pacifica777 has provided for us. I’ve been looking forward to this debate and now there’s only one more sleep until it happens. I’m certain that John and Logos will prevail.

11. Even if one may claim justification for CBT on USP overseas,

    THEN argument may be made that it should not be at the same level, or with the same over-regulation as these people do not use US resident services.

    I hope JR pushes the Accidental Trojan Horse and justification for double taxation of them.

12. I hope it will all be recorded for those who may not attend online.

13. Pacifica777,
    Forgive me for sounding like I accused Brock of sharing my email address. I have nothing but respect for this community and I am sorry.

14. No apology needed, Dave. It sounded to me like you didn’t know from where your e-mail address had been shared, so I just wanted to assure you (and anyone else) that it wasn’t from here.

15. Live link – starting at 14:00 EST:

16. Only minutes to go. It would be nice to see some life in that livestream ahead of time, just to know it’s working. Anyone else seeing some streaming going on?

17. Ah, there it is … stream on!

18. It’s not surprising that a dependent of the realm is a defender of the realm. John couldn’t penetrate Edward Zelinsky’s intransigence but 95 viewers (why so few?) could understand and appreciate his arguments.

    “They’re hanging onto their passports for a reason.” Sheesh! It seems that was all he could come up with but I have to wonder what he thinks the reason might be. Do long term residents of Canada (dual Canadian/American), for instance, truly feel honoured and obligated to transfer their earned in Canada income to support the US economy, all for the right to hold US passports? I rather doubt it.

19. We tuned in to watch the debate with Edward Zelinsky at 6am Saturday NZ time. I wish the moderator had put some questions from expatriates.
    Anyway it was good and we were emphatically in the John Richardson corner. Many will have read that the French are considering a challenge to the US over FATCA. All FATCA signatories should join with France to confront the US over this issue. How can we organize this?

20. Zelinski totally lost my respect at the following moments:
    45:55 – About “I don’t get to write off $106K” whereas the offshore person does (???)
    48:15 – About the $725K write off of assets when renouncing
    49:50-50:25 – About the fact that compliance (AKA accountants fees) are high within the USA as well (as though there’s any comparison).

21. Wins from debate included:

    Some concessions from Zelinsky that major parts of the U.S. tax code need modification and simplification, particularly in regards to overseas pensions.

    Honing debate skills of John Richardson on the topic, especially in regards to responding to legal arguments that justify citizenship-based taxation.

    Drawing into this as moderator, Professor William Byrnes, author of research on FATCA and that its costs exceed expected amounts and revenue is far lower than projected, & suggesting that FATCA does not pay for itself. He has lived overseas.

    Support at the end by Byrnes and Richardson for a round II. There are certainly more areas to cover.

    Thank you John Richardson, we could not have done this without you! I liked the examples, facts, and stories sprinkled in such as the proportion of citizens abroad who contributed to Senate and House workgroup submissions on international taxation.

    I have some suggestions and opinion where I think the case against CBDT may be made more convincing (starting on the base of an exceptional presentation).

    Definitions: legal documents tend to put the definitions of terms upfront. You mentioned and asked about the definition in regards to “Domicile.” Maybe some definitions need to be cleared upfront, and be ready for the opposition to not agree to your proceeding on the definitions provided, but you will proceed anyway.

    I believe you have heard me say that we should not call it “citizenship-based” taxation but “Citizenship-Based Double Taxation.” We are not against citizenship-based taxation” as the U.S. may tax its resident citizens and noncitizen residents however it wants. What we are objecting to is the citizenship-based double taxation part of it, of residents of other countries. “Double taxation” is widely considered as a negative and should be deployed.

    I believe that you have not used “citizenship-based double taxation” as the accepted name is “citizenship-based taxation”, and from your legal background you know there is value in using proper names. Here is a way that may be acceptable to you: in the definitions part, and you could do this in debate format, you may say for the purpose of this debate I will refer to citizenship-based taxation as citizenship-based double taxation, as the double taxation part is what is objectionable. That would put more onus on Zelinsky to argue it is not double taxation.

    Then this leads to the necessity of defining “Double Taxation” in the context of U.S. persons overseas. If we concede the U.S. Treasury department definition then we concede to it as follows: in regards to U.S. taxation of tax residents of other countries, tax treaties eliminate double taxation and the tax rate is no higher than the highest rate of each country (for particular types of taxes). No higher for the Obamacare NIIT as the U.S. rate is 3.8% and other countries are 0% because they do not have such a tax so not higher than the rates of the two countries = meets Treasury Department Definition of eliminating double taxation, yet still flawed as without relief from tax credits for this and other instances.

    It would be best to use examples of those on the lowest end of the income scale getting the short end of this definition as Zelinsky kept trying to refocus the debate on those at the highest end and those subject to the exit tax. Another would be to take example of a relatively high tax country such as France and add in all the VAT and social taxes they have and show example of the tax incidence there of a person (with extra U.S. taxes to pay) vs U.S. tax incidence (maybe New York vs Paris). They are not avoiding taxation!

    Back to a proper definition of Double Taxation,/ul> and exempting it in the context of U.S. persons overseas: there is no double taxation when one pays all the tax required by the country of residence, WHEN there is $0 extra tax and zero extra compliance required by the U.S. Anything else is considered double taxation. Then another definition: Taxation is considered tax paid plus Compliance Cost (time and money spent on compliance). Compliance Cost is by no means trivial, just like for when someone buys an item that needs to be shipped that the actual cost of the item is the cost of it plus the shipping cost (the totality of tax should be considered = tax paid plus compliance cost (of time and money).

    Where Zelinsky was trying to say that compliance for individuals and business was complex for individuals and businesses inside and outside of the U.S. (as if no different), a reply could have been a comparison of those costs. I believe over the years there are sources that may be quoted such as the WSJ that indicate that the overseas person compliance is multiples the U.S. resident cost for similar income and assets. Of course Zelinsky would not be impressed by such facts.

    My sense of it all was that you, relatively speaking, were coming at it more that Zelinsky is a reasonable person who may be persuaded, while Zelinsky was coming at it as a debate and how best to win the debate. He showed some of his cards where he assumed and focused on the 1%, the exit tax, and those benefiting from the FEIE in countries where income has 0% tax. He knows about but would not bring in or concede exculpatory information such as that reported on Brock that ~92% of U.S. persons living overseas live in equal or higher taxing countries; or that many of those Accidentals referred to do not even have a passport where he was claiming all US Persons overseas hang on to that passport (do we have a percentage on that?)

    A good one to bring in when talking about citizenship taxation is that even in the U.S., the U.S. not only taxes citizens but also residents. Why does the U.S. tax noncitizen residents? Because they use infrastructure and are eligible for government services that need to be paid for by taxes. Those US persons tax resident overseas do not use such U.S. resident services nor are they eligible to receive them. They receive zero U.S. resident services. You might say that you have heard this as referred to as tax cheating by the U.S. government: providing zero U.S. services in exchange for the claim of double tax jurisdiction.

    I figured it out for the 9 million that the U.S. owes them $113 billion a year in resident services, based on domestic U.S. spend per person. Of course one would imagine there would be exemptions to this as U.S. persons overseas get tax credits and not the full U.S. tax etc. Yet lets start with the top line number here of $113 billion, and maybe not mention my note in the last sentence.

    We must break the assumption that all the anti-abuse measures against individuals are justified to some varying degree, and introduce and promote the notion that more balance needs to be implemented that includes that there needs to be way more focus on anti-abuse measures against U.S. government over-regulation.

    Maybe present all the Definitions in advance as well as defining during the debate.

22. I thought Prof. Zelinsky did well and made many good points. There were other aspects, however, that he just seemed not to understand.

    Why doesn’t he get a 106,000 USD exemption? Because he doesn’t live overseas and wouldn’t have to worry about double taxation (unless he somehow becomes subject to the CBT of some other country).

    Why do people hold onto their US passports? Often they don’t (citzenship =/= passport holding); some don’t understand that the US deems them to be citizens, or haven’t kept track of the changing legal structure.

    Who are these people who can’t afford a measly 2350 USD renunciation fee? Probably about 2/3 of the US population, but everybody seems to assume expats to be a little more on the ball than that, the big problem is compliance costs.

    Why doesn’t the US Congress do something? Because our votes have no real impact on the re-election of any particular politician, and besides, the optics of helping us are bad, since most Americans assume expats to be rich.

    A wider issue which the two really didn’t get into was, under what circumstances would a given country be justified in ascribing its citizenship to someone? Are there any limits? Presumably there must be, or else North Korea could tax us all if they just passed a few laws.

23. PS. I’m a fan of Andrew Henderson’s “Nomad Capitalist” blogposts and YouTube videos (and now book). The original idea behind perpetual tourism / digital nomadism was that through careful arrangement, one might organize one’s life in such a way that one is not “resident” anywhere for tax purposes, or else resides in a tax haven. This is becoming harder to do nowadays, due to changing reporting requirements for banks etc. Anyway, Prof. Zelinsky seems to have this sort of thing in mind around 27:00.

24. JC (3 posts above): ‘I believe you have heard me say that we should not call it “citizenship-based” taxation but “Citizenship-Based Double Taxation.” ‘

    Make that “Citizenship- or Green Card-Based Double Taxation.”

25. Zla’od JR made an excelled question of Z of the percentage of US residents who could scrape together $500. I think there was agreement that only a portion could do so. Yet then Z appeared to forget/dismiss this point in his later points about renunciation not being that much. Maybe a reply to all that would be to be ready to repeat points.