On my post of November 11, 2015 I asked the question:
Why do Homelanders believe it is okay to impose taxation on Americans abroad (meaning people who reside in other nations and on income earned in other nations).
I believe that there is little chance of achieving RBT without understanding the “Homelander World View”. The comments to the November 11 post were incredibly articulate and interesting. Before going further I want to make it clear that “Not all Homlanders Are The Same”. There are many Homelanders who see the injustice of “place of birth taxation”. There are others who do not. I am concerned with what I would call the “critical mass of Homelander Opinion”. I would also point out that the “critical mass” includes the tax preparation industry. It is important to focus our educational initiatives on: Mainstream Homelanders, Tax Compliance Homelanders and Politician Homelanders. The problem is to get their attention.
In any case, both the comments to the November 11 post AND an interesting article in the Wall Street Journal by Eric Scali of HR Block, raise the question:
Do Homelanders even know that Americans abroad pay taxes in the countries where they live? As crazy as this sounds, I am increasingly of the view that:
1. Homelanders simply do NOT know that Americans residing outside the United States are required to pay taxes where they live; or
2. While recognizing the reality that Americans abroad do pay taxes in their country of residence they regard the taxes that are paid to the country of residence as a kind of “additional tax” that exists over and above their primary obligation to pay taxes to the Homeland; or
3. While recognizing that Americans abroad are subject to two tax systems, they don’t understand how the U.S. tax rules applied to Americans abroad make it impossible to live as an American abroad.
Here are some comments that generated interesting discussion.
First, from Walt:
Do homelanders know that #Americansabroad pay tax where they live? "that's terrible why are you paying tax there?" https://t.co/oOpSv21s5Z
— U.S. Citizen Abroad (@USCitizenAbroad) November 17, 2015
Something that just dawned on me.
Whenever I tell homelanders that we pay plenty of taxes to the countries where we live. They look at me almost in disbelief. Sometimes they even say, “that’s terrible, why are you paying there?”
It is as if only the US has some sort of exclusive right on taxing us, no other country should be allowed to do that. Yes, homelanders are actually that US centric in their way of thinking.
Second from Patrick Mooney to the Wall Street Journal article:
Puncturing Common 7 Myths about U.S. Expat Tax Rules https://t.co/m2IVafTdlJ via @WSJ – But #Americansabroad already pay tax where they live
— U.S. Citizen Abroad (@USCitizenAbroad) November 17, 2015
It is extremely odd that homelanders view the FEIE & FTC as some sort of “gift” that expats do not deserve. I often wonder if those in the US really understand that we are already paying tax on that income in the countries where we live (and more importantly, earned it). For the US to tax on money earned outside the country amounts to nothing more than stealing from the economy of the other country. No other country bases taxes on citizenship (which is not the same as reporting on worldwide income). Eritrea is often quoted but it is in no way similar.
Why the tax compliance industry is a special problem …
The comments to the Wall Street Journal post reveal that:
There is no relationship between knowing what the rules of U.S. place of birth extraterritorial taxation are AND how they affect people’s lives. Time after time we see this disconnect revealed in the posts of tax professionals. They describe the rules in terms of “Forms” and potential “Form Crimes”. One gets the feeling that if they understand the implications at all, they see them as a minor inconvenience. They don’t understand that U.S. place of birth taxation destroys the lives of those who attempt to comply with it. It has become increasingly clear only those Americans abroad who are NOT U.S. tax compliant can survive.
In any case, if you are so inclined, could you comment on the following three questions:
1. Do Homelanders know that Americans abroad really do live under the tax rules of the countries where they reside (even if they are Americans and should have special privileges)?
2. Do the tax compliance people understand what the rules actually mean in real life and real time?
3. What are the best strategies to educate the tax compliance industry?
