Media and Blog Articles Open for Comments – Part 3 of 11 (Year 2016)

2,818 thoughts on “Media and Blog Articles Open for Comments – Part 3 of 11 (Year 2016)”

1. @Charl,

   I doubt there’s any way to get Zelinsky to change his mind. His paper does not address the issue of dual citizenship or dominant nationality. He also ignores the very real problems of taxation of “foreign” retirement savings and PFICs. If foreign retirement plans (and other tax-advantaged savings plans) were respected by the IRS and PFIC rules removed for investments in your country of residence, much of the opposition to CBT would evaporate. Add a clause that dual citizens can be treated as only citizens of their country of residence, and there would be very few people disadvantaged by US CBT.

2. @karen, one other major obstacle is the tax on the gains when you sell you principal residence. For those of us who bought decades ago, the prospect of being taxed on those gains is absolutely mind boggling.

3. @charl
   Another thing Zelinsky overlooks is that citizenship is only a good proxy for domicile if you look at things from the state’s perspective, since the state knows who its citizens are. It is not a good proxy for the individuals, especially those who have not had a U.S. passport for decades.

4. @no name — I agree

   @Publius — internal to the US it is easy to transfer “citizenship” from one state to another. Move from CA to WA, register to vote, get drivers license, done. It ought to be just as easy to transfer tax residence between countries when the move is indefinite or permanent. You should only be able to be claimed as a tax resident by one country (state) at a time.

5. Zelinsky is a fiscal imperialist and government propagandist. People like him remind me of why I renounced.

6. CBT is cannot be defended. It is the reason for all the inversions and that is going to ruin the american economy. The politicians want their cake and to eat it too ( is that how the saying goes?) They want to collect all the taxes they can and then some, and in addition hope that the corporations will play along. They aren’t.
   Rand Paul is the most thoughtful and discerning of all the rep candidates. But as we can see with the popularity of Trump, America wants a pit bull- something ferocious. Rand Paul comes across more like a standard poodle. Very smart- but not threatening enough.

7. @Polly, “The politicians want their cake and to eat it too.”

   US Politicians expect “American Corporations” to pay US Tax based on their operations outside the USA.

   and

   US Politicians expect ALL Businesses operating in the USA to pay USA tax.

   That is why they believe ALL USA human residents to pay tax in the USA and all US Citizens and Green card people to pay tax to the USA no matter where they live and work.

8. @Karen: Add a clause that dual citizens can be treated as only citizens of their country of residence, and there would be very few people disadvantaged by US CBT.

   Zelinsky apparently thinks that this is how CBT & treaties actually work. See e.g. his comments about tax treaties in his last paper on this topic five years ago

   I doubt there’s any way to get Zelinsky to change his mind.

   More to the point, he doesn’t care about international taxation anyway; just have a glance at his publications list. His areas of expertise are pensions, health care, and US state taxes. He sticks his nose into the area of CBT on occasion because he thinks he sees an analogy to one of his areas of expertise, and of course when you have a hammer then everything looks like a nail.

   Since he doesn’t care about international taxation, he isn’t going to bother to learn about how it affects individuals actually subject to it, least of all if us unwashed masses send him e-mails trying to teach him about it. From reading his paper (and his comments about how CBT only affects the wealthy) it’s clear that he hasn’t even bothered to learn about the most basic fact of CBT which is most closely connected to his research interests: how the US taxes e.g. Australian Superannuation.

   (Which is too bad. Someone who actually knows both US state taxation & international taxation could probably write at least a mildly interesting paper comparing the US’ international tax treaties in the context of CBT and, e.g. the Multistate Tax Compact.)

9. @Karen
   Sorry, when I said state, I meant like in State Department, not sub-national unit. Maybe I should have made this clearer, but the individual states of the U.S. don’t have citizens, just residents.
   @Eric
   Unfortunately, there’s a real lack of intellectual curiosity with Zelinsky, worse than Kirsch.

10. @Eric, I agree. Zelinski hasn’t a clue, and doesn’t care about the real world consequences of CBT.

    @Publius, Zelinski was comparing the method of determining residence for state (i.e. Iowa) taxation to CBT for determining national taxation. I was just pointing out the inadequacy of that analogy given the difficulty of removing the US citizen taint. In the older article that Eric linked, Zelinski seems to be saying that USCs who do not renounce must, therefore, be happy to pay CBT. There is no recognition of the administrative and financial difficulties of renunciation (and, of course, no acknowledgement of the compliance nightmare for US taxpayers with “foreign” accounts and investments). As I said above, clueless.

11. @Karen
    I completely agree with what you are saying, particularly in light of the fact that it costs a considerable sum now to renounce or relinquish (not just much more than it did when Zelinsky wrote back in 2010, but even much more than it cost a year ago). He is also assumed back in 2010 that a) U.S. persons abroad had a good idea of their tax obligations and b) that they understood that they were considered U.S. persons for tax purposes. Competent adults could reasonably be expected to know which countries they have resided in over the past year, but not every country where they would be entitled to citizenship. And greencard holders haven’t been getting the necessary info. Even with the fees, there are loads of renunciations.

12. Singapore’s Income Tax (Amendment) Bill 2016
    http://www.jdsupra.com/legalnews/singapore-s-income-tax-amendment-bill-73706/

13. U.S. Emerges as the Largest Tax Haven in World

    Read more: http://www.care2.com/causes/u-s-emerges-as-the-largest-tax-haven-in-world.html#ixzz3yjp8XoJD

    http://www.care2.com/causes/u-s-emerges-as-the-largest-tax-haven-in-world.html

14. “when you have a hammer then everything looks like a nail.” Eric, those are brilliant words. I haven’t read anywhere a more accurate indictment of the US attitude toward the rest of the world.

15. @Edelweiss, thanks for that link you posted on
    January 28, 2016 at 6:26 pm
    re
    https://theintercept.com/2016/01/28/canada-cuts-off-some-intelligence-sharing-with-u-s-out-of-fear-for-canadians-privacy/

    An important issue to try and follow. I first found out about it via following some of the work of EU MEP Sophie int Veld;
    ex.
    “…. would like to remind people that privacy and data protection – contrary to what I believe Mr Zuckerberg once said – is not a social convention. It is actually a legal right on a par with the right to free speech, the right to life, a ban on torture and all the other fundamental rights. It is a legal right, Mr Kirkhope. It is not something the Court invented: it is actually in the Treaties.

    We do not want a fence around the European internet. We want transatlantic data flows, but it takes two to tango – as Mr Juncker said in the previous debate – so that means our US counterparts will also have to move.

    Finally, this is also a governance issue. This is very much about the quality of legislation and about enforcement. Therefore I would also call on the Vice-President responsible for better law-making to look at it from that perspective.”

    ‘Consequences of the ECJ ruling invalidating the US Safe Harbour decision (debate)’
    Date : 14-10-2015
    Reference :
    P8_CRE-REV(2015)10-14(17)

    http://www.europarl.europa.eu/sides/getDoc.do?pubRef=-//EP//TEXT+CRE+20151014+ITEM-017+DOC+XML+V0//EN&language=en&query=INTERV&detail=1-214-000

16. This article was just sent to me via email, wondering if it was at Brock (and it was previously identified by JC in this thread).

    It is such a well-written article regarding Accidental Americans (as are our brave plaintiffs at http://www.adcs-adsc.ca/) — I encourage everyone to read it and know why we must fund this Canadian litigation for Canada and, by extension, those so affected around the world: http://www.keepcalmtalklaw.co.uk/accidental-americans-the-us-citizenship-conundrum/

    The effects of FATCA on the financial security of many ‘Accidental Americans’ is significant. The consequences (which are listed below) of being treated as a US citizen are not only life-changing, but life-threatening.

    1. Closure of Bank Accounts: European banks do not want to have the complex reporting requirements imposed by FATCA for US citizens so they ask those clients to close their accounts.  ‘Accidental Americans’ are therefore not only unable to use banking services, but insurance and mortgage services too. Joint accounts held with non-US spouses are equally affected.
    2. Inability to Open Bank New Accounts: Many foreign financial institutions are refusing to allow US citizens to open replacement bank accounts for identical reasons to that of the bank account closures. Indeed, until the European Payment Accounts Directive comes into force in late 2016, there is no right to a bank account in European law, whilst for non-European ‘Accidental Americans’, this right may never come into existence. Others have had their inheritance blocked as banks have refused to open the necessary probate accounts.
    3. Narrowing Employment Opportunities: Due to FBAR disclosure requirements, US citizens must disclose all accounts over which they have signing rights. As a result, many corporations and companies do not want US citizens in responsible positions where they have signing power for corporate funds because this would entail full disclosure of the company’s accounts. FATCA is adding further burdens to US citizens working abroad.
    4. Blocking of Investments: Under Dodd Frank and other investment rules, US citizens are not permitted to make certain kind of investments, meaning that the ‘Accidental American’ is thrown out of pension funds and other investment saving plans available to other European citizens.
    5. Double Taxation: FATCA does not change tax law but it has enabled the US to conduct a tax census on a global scale. The lack of respect shown by the US for other countries’ tax breaks and retirement saving schemes will destroy the retirement plans of individuals working and resident outside the US. While the US will tax many non-US retirement pensions as though they were a corrupt pension fund, the US will not provide any benefits in compensation as these ‘Accidental Americans’ have not contributed to the US social security system.
    6. Advisor Costs: This situation is so complex – compounded by the fact that many ‘Accidental Americans’ do not speak English – that some professional help is often always needed to navigate the tax and compliance rules. The costs for this can often be substantial.

    The negative financial effects are not just restricted to the ‘Accidental Americans.’ Their countries also suffer, as FATCA represents a raid on resources which European states have encouraged their citizens to save so as to be able to be financially independent in old age. The double tax treaties do not recognize European tax breaks, so the financial support which European governments give their citizens will now be transferred to the US coffers. The burden of filling things such as pension gaps will fall to the European states in which these people are resident and to which they have contributed. Commonwealth countries are also being adversely affected in a similar way, among them Canada and Australia.

    Meanwhile, as was written in an editorial for The Economist,

    the drug dealers and sophisticated tax evaders who inspired all this will switch into non-financial assets, such as art and property, or hide behind shell companies and trusts. The latter would be easier to penetrate if reliable ownership information were collected, but often it is not—and America is one of the worst laggards (see Delaware, Nevada and all the other money-laundering paradises within its borders).

17. Great article @calgary. And makes the invaluable point that;
    “…Their countries also suffer, as FATCA represents a raid on resources which European states have encouraged their citizens to save so as to be able to be financially independent in old age. The double tax treaties do not recognize European tax breaks, so the financial support which European governments give their citizens will now be transferred to the US coffers. The burden of filling things such as pension gaps will fall to the European states in which these people are resident and to which they have contributed. Commonwealth countries are also being adversely affected in a similar way, among them Canada and Australia….”…
    re http://www.keepcalmtalklaw.co.uk/accidental-americans-the-us-citizenship-conundrum/

18. Well written rebuttal to the usual arguments and myths the US and State Dept. use to discourage renunciation:
    http://rachelheller.org/7-reasons-not-to-renounce/

    The US consulate where I relinquished brought up #1 on Rachel’s list;
    “Reason to renounce #1

    But what if something happens where you are—an invasion or a natural disaster or something? The US would come and get you out!……………”

    And, in the blog, the author gives a recent *example of why that is an inaccurate claim (and I would add that I feel in my case that it was extremely disingenuous of the Consular official in Toronto to use US emergency rescue as an argument wielded in order to shake my resolve):

    *
    “…In Paris, when the attacks happened in November, some American tourists headed for the US embassy. They were turned away.”

    Here are the stories of US citizens being denied assistance in Paris recently:
    http://www.macon.com/news/local/article45033342.html
    http://www.wsbtv.com/news/news/local/georgia-couple-arrives-home-safely-after-paris-ord/npNMN/
    http://www.theblaze.com/stories/2015/11/16/american-college-students-tell-of-being-turned-away-from-u-s-embassy-during-paris-attacks/

    What did the US State dept. say about turning US citizens away during the recent terrorist attack in Paris?
    http://www.infowars.com/us-embassy-turned-away-citizens-during-paris-attacks/

19. the drug dealers and sophisticated tax evaders who inspired all this will switch into non-financial assets

    This leads to the interesting question of whether FATCA will help make Bitcoin a viable currency.

20. From the Australian Financial Review:

    US criticises ‘fairness’ of EU tax probes against Apple, McDonalds (paywalled)

    A senior US Treasury official questioned the “basic fairness” of European Union investigations into tax deals struck by American companies including Apple and McDonald’s.

    Robert Stack, the US Treasury’s deputy assistant secretary for international tax affairs, said following meetings with EU regulators he’s concerned that EU Competition Commissioner Margrethe Vestager is making unreasonable demands of US companies in her sprawling probe.

    The warning comes a day after Vestager signalled she’s willing to add Google parent Alphabet’s £130 million tax deal with the UK to her growing list of investigations.

    Despite probes into Apple, Amazon, McDonald’s and Starbucks, Vestager says she isn’t focusing just on American companies.

    Earlier this month she announced a probe into Belgian pacts with mainly European firms.

    “While in the Starbucks case, the sums were relatively modest, 20 million to 30 million euros, they may be substantially larger, perhaps in the billions in other cases,” Stack said, following talks with EU officials in Brussels Friday.

    “The retroactive application of these new approaches calls into question the basic fairness of these proceedings.”

    The commission declined to comment on the outcome of the meeting, which Vestager didn’t attend.

    DISJOINTED POLICY

    The probes follow years, if not decades, of disjointed EU fiscal policy where different countries had wide latitude to set their own tax rates.

    “We’re concerned that the EU commission is in effect telling member states how they should have applied their own tax laws over a 10-year period,” Stack said.

    US lawmakers have also weighed in over the EU’s attempt to rein in tax deals that it says may amount to unfair state aid.

    The top members of the Senate Finance Committee, the panel in charge of writing tax code, wrote a letter to US Treasury Secretary Jack Lew this month urging him to lobby European regulators against imposing a penalty on Apple and other US companies.

    “We are greatly concerned that the EU commission is reaching out to tax income that no member state has the right to tax under internationally accepted standards,” Stack said.

    “The mere fact that the US system has left these amounts untaxed until repatriated, does not provide under international tax standards a right for another jurisdiction to tax those amounts.”

    I smell a bit of hypocrisy here.

21. https://www.twitter.com/bracing/status/693567510856220672

    This table might me worth a cover story on IBS?

22. @Karen Re: your quote at the end. Sounds like from US Treasury? The chap has not read the tax treaties where source country has first right of tax.

23. @Karen
    “I smell a bit of hypocrisy here”
    It stinks to high heaven. All of it. The fact that America is now the third ranked tax haven in the world is more than nauseating.

24. From: http://www.huffingtonpost.ca/cleo-hamel/us-citizenship-problems_b_9070622.html — the unwed mothers of the border transmitting or not US citizenship to their child…

    Along with James Cagney, some 4 million people (“missing Americans”) that the State Dept. estimates were born abroad to US citizens and never recorded, are saying “Come and get me, Copper!” Of course the IRS has no jurisdiction abroad, least of all to determine who are US citizens. And birth abroad raises a presumption of alienage. In addition to prior parental presence or residence, marriage matters: http://www.afsa.org/citizenship-and-unwed-border-moms-misfortune-geography.

25. Explains why the FATCA IGA gets little media coverage:

    The problem with Postmedia: Olive

    …”Postmedia has laid off more than half of its employees. And the staff reduction continues, as recently as another round of layoffs this month. Which means that countless news stories are no longer reported, and costly investigative and “enterprise” journalism is now an unaffordable luxury.”…

    …”Postmedia is giving private ownership of an essential public service a bad name. Its charade of pretending to operate its papers in the public interest cannot end soon enough.”

    http://www.thestar.com/business/2016/01/30/the-problem-with-postmedia-olive.html

    Postmedia’s brands:

    http://www.postmedia.com/brands/

Comments are closed.