Canada appears to be putting up significant resistance in order to protect its citizens and residents according to its own charter of rights and democratic principles of fairness and justice. The continuing Canadian experience in this struggle ought to serve as a model for Switzerland’s (and other nation’s) necessary attempts to do the same.
NOTICE
ADDRESSED TO:
- info@gs-efd.admin.ch (Swiss Federal Department of Finance) — sent 1353 CET 15.02.2012
- info@eda.admin.ch (Swiss Federal Foreign Ministry) — sent 1353 CET 15.02.2012
- By email submitted through web interface (within the limits imposed by such) at : http://www.ejpd.admin.ch/content/ejpd/fr/misc/conform.html?contactid=0005&backpagepath=/content/ejpd/fr/home (Swiss Federal Department of Justice and Police) – submitted via aforesaid web interface 1358 CET 15.02.2012
- Webmaster of the Swiss Federal Chancellery webmaster@admin.ch — sent 1353 CET 15.02.2012
COPY TO:
- Isaac Brock Society (www.isaacbrocksociety.com) – posted ~1425 CET 15.02.2012 (issues with WordPress delayed intended release at 1405 CET).
Email subject= “Canada resists US extraterritorial tax policies, Switzerland must too”.
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TEXT TRANSMITTED:
Suisse Romande, 15 February 2012
Dear Sir or Madam, Swiss Federal Counselors, Swiss Federal Administrative Officials:
I would like to draw to your attention recent discussions on a Canadian website concerned with the fair and just treatment of US persons living abroad. These discussions are germane to the current negotiations between the US and Switzerland. Such negotiations, if not conducted in a conscientious fashion by the Confederation, may have catastrophic effects on the lives of US persons living legally in Switzerland (and even CH-US dual nationals) and their non-US (potentially Swiss) family members. If Switzerland and other nations do not oppose US policy, the US may in the future increasingly intrude into the sovereign matters of all nations and all persons regardless of their status of citizenship or green card vis-à-vis the USA. Remember the old English adage which has equivalents in many languages “If you give ‘em an inch, they’ll take a mile”.
Canada, like Switzerland, seems to be high on the US government’s list for its efforts to seek to enforce its extraterritorial (even imperialistic) tax policies. Nonetheless, Canada appears to be putting up significant resistance in order to protect its citizens and residents according to its own charter of rights and democratic principles of fairness and justice. The continuing Canadian experience in this struggle ought to serve as a model for Switzerland’s necessary attempts to do the same. Some evidence of the Canadian experience in this matter follows:
- It would appear that by signing the OECD treaty on “Mutual Administrative Assistance in Tax Matters”, Canada has reserved its right not to collect US taxes from Canadian residents and citizens: http://isaacbrocksociety.com/2012/02/13/3200/ This is an excellent start, however unilateral declarations of the inadmissibility and injustice of US extraterritorial double taxation needs to be forthcoming in the near future from Canada, from Switzerland, and all other nations on Earth.
- Letter from Canadian Finance Minister to a Canadian resident: http://isaacbrocksociety.files.wordpress.com/2012/01/hon_jim_flaherty_new1.pdf
- Particularly significant in this letter is the text on page 2, middle and end of paragraph 4: “…Canada-United States Income Tax Convention… this does not apply to penalties imposed under laws that impose only a reporting requirement [e.g. FBAR] Furthermore, the CRA [Canada Revenue Agency] does not and will not collect the U.S. tax liability of a Canadian citizen if the individual was a Canadian citizen at the time the liability arose (whether or not the individual was also a U.S. citizen at that time).”–Brackets “[ ]” and triple periods “…” mine.
- Here is the link to the Isaac Brock discussion of the Flaherty letter: http://isaacbrocksociety.com/2012/01/27/reply-letter-from-minister-of-finance-hon-jim-flaherty/
- It appears that the US has even condemned the use of a “Diaspora tax” by means of UN Security Council Resolution in the matter of Eritrean extraterritorial taxation of Eritrean nationals. (Please do search for “Diaspora tax” on the page given by the link in 2b above, please read the text and follow the links.) Such US international policy is inconsistent with the manifest US policy of attempting to subject US persons abroad to double taxation. Indeed, the double taxation attempted by the US is in violation of one of its core revolutionary principles of “No Taxation without Representation”.
Current US policy with regard to US persons living abroad results in unjust and unconstitutional double taxation, especially in view of the structural differences between US and Swiss (and other) domestic taxation systems, and the effects are further exacerbated by the current currency exchange-rate situation. US policy impedes the economic activity of lawful Swiss residents who pay Swiss taxes and contribute to the Swiss economy. The middle class is especially disadvantaged, but the issues can affect laborers in like fashion (e.g. Swiss mandatory 2nd pillar and optional 3rd pillar retirement savings are apparently considered as accounts that must be declared and taxes on therein-earned interest and capital gains paid to the US). The economic activities of the upper classes that may also drive innovation and contribute to the Swiss economy are hampered by US policy in a similar manner. Those that comply with US requirements (especially those in the labor and middle classes) may find themselves in a situation where they cannot pay their bills and cannot meet the high cost of living in Switzerland and/or find that their retirement savings yield a negative or substandard return.
Clearly, we are not speaking here of rich Americans living in the US who were actively solicited and tempted by some unscrupulous bankers to park their funds in Switzerland in order to avoid paying US income tax on the principal balance earned in the US, or on the interest earned in Switzerland thereupon. We are speaking of ordinary people who work for Swiss employers, establish innovative businesses, pay Swiss taxes, and raise their families. We must not allow the US to persecute honest and hardworking people because the IRS caught US-resident millionaire tax cheats using Swiss banks.
US persons and dual nationals, Swiss offspring of dual nationals, or people born in the US that did not stay in the US beyond childhood or young-adulthood (and may now ignore the fact that the US considers them their nationals) are being increasingly shut out of banking services in Switzerland (in violation of Art. 261bis, Swiss Penal Code) and subjected to “Excessive Fines” in violation of the 8th Amendment to the US Constitution (up to 300% of assets in the worst case, with penalties of 27.5-50% in the “Voluntary Disclosure Programme” [5% in some limited situations that are very difficult for the affected person to prove]) for failure to file information returns to the US as to their Swiss accounts (even if such accounts contain funds legally earned in Switzerland that were subjected to Swiss income tax).
This atrocious treatment also affects family members of the concerned US persons. All of this looms despite the fact that, in past years, Swiss banks, and some employees and/or functionaries of Cantonal tax authorities have told people (especially Swiss citizens and Swiss legal residents) not to declare Swiss accounts to the US and not to declare to the US any revenues already taxed in Switzerland. Personally, I had been told in the past by Swiss bank and tax officials that “Double taxation is forbidden”.
Swiss citizens and legal residents of Switzerland have the right to privacy, protection of the Confederation, equal treatment, and equal economic opportunity just as anyone else living under the authority of the Swiss Federal Constitution and the Confederation. They must not, under any circumstances, pay additional taxes to the US that result in higher tax burdens than those to which their neighbors living in the same Swiss Commune with similar Swiss-earned salaries/revenues and deductions are subjected to. They must not be subjected to invasions of their privacy that violate Swiss constitutional protections (and inter alia the 4th and 5th and 8th Amendments to the US Constitution).
The increasingly intrusive policies of the US will only go further (and with time affect even non-US residents of Switzerland and all Swiss citizens) if the Confederation does not firmly plant its foot down and insist upon the principles of fair and just treatment for everyone which are essential to our core Swiss democratic values.
I urge you to consult with your colleagues and to analyze how the lessons from the current Canadian experience of resistance to the US policy and efforts to protect Canadian residents are useful to the Confederation in its current negotiations with the US. I further urge you to protect the liberty and rights of the people and safeguard the independence and security of Switzerland (Art. 2, Swiss Federal Constitution) especially as to the unjust efforts of the USA to violate and/or abridge the same.
Please feel free to consult any other information on the Isaac Brock site that may be of interest to you. I cannot guarantee the 100% accuracy of anything in this present communication, or of information on Isaac Brock or any website, especially because the exact situation and nuances in the issues may frequently vary.
The present communication is a simple petition (not an initiative or referendum) respectfully submitted according to the 1st Amendment of the US Constitution and Art. 33, Section 1 of the Swiss Federal Constitution. In accordance therewith, I shall not be subjected to any prejudice for having submitted the present petition to the authorities, nor for submitting any other such communication, past or future. Acknowledgement by the authorities required under Art. 33, Section 2 may be done by press release to Swiss media (if subsequently actually published) and/or by posting to public discussion sites related to the issues (such as Isaac Brock Society). I am not a legal representative of Isaac Brock Society. I am neither a lawyer nor a chartered accountant and nothing herein shall be construed as professional legal or fiduciary advice. I shall remain anonymous.
Signed,
Jefferson D. Tomas (nom de plume)
cc: Isaac Brock Society public website (www.isaacbrocksociety.com)
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Pls consider as part of CC: (Reblogged at stopunconstitutionaldoubletaxation.wordpress.com)
A recent article from swissinfo.ch on the US / Swiss tax dispute. Notice the reference to the ratio of US green-card applications to citizenship renunciations (110 to 1). It seems the number of renunciations is being monitored by the powers that be and of course most probably manipulated.
http://www.swissinfo.ch/eng/specials/expat_woes/Ambassador_believes_worst_may_be_over_in_tax_row.html?cid=32123062
Another recent article: “A Swiss Response to American Fiscal Imperialism,” by Dan Mitchell
http://www.cato.org/pub_display.php?pub_id=14101
@InvoluntaryServant
The journalist should be ashamed to make such a comparison.
Green card lottery applicants (and yes, the article says lottery) vs. citizenship renunciants? Far closer to an apples-to-apples comparison: according to the Department of Homeland Security, 484 Swiss-born persons naturalised as US citizens in 2010. That is to say, the ratio should be reported as 4.7 to 1, not 110 to 1.
And that is just based on official statistics. As you mention the renunciation numbers look like they are manipulated. At first I didn’t believe this theory because the only renunciant I know personally in real life actually does have her name on the Federal Register list. But every time I look at the overall numbers or individual celebrity cases, I find something of which to be suspicious …
I bet if you could see a comparison of the wealth of those leaving versus the ones arriving the picture for the US becomes much bleaker.
So what if 5 average Joes become American citizens if the 1 that left is a multi millionaire and job creator. In the case of James Cameron he’s worth hundreds of millions.
That is probably why they created the exit tax, an attempt to corral the most productive–a method of “human capital” control.
@Eric – 484 seems kind of high for Swissies that naturalized US. 100 also seems very low for the number of Americans that gave up citizenship there.
I wish there were some way to warn these people who want to naturalize US… I don’t think that they know what they are doing.
@Jefferson Thomas
Great letter, I’d also recommend sending to Swiss Dept. of Economic Affairs (EDA) as it includes trade as well.
@Involuntaryservent and others
The 100 renounciations is a real joke. Everyone around Switzerland knows that the US embassy in Bern has been flooded with renounciations, probably the most of any embassy and they cannot cope with the demand. Last I knew it was a 2-year wait list to get an appointment. Thus, as the only requirement to renounce is do it outside US, there is a huge amount of embassy hopping around Europe to renounce, especially those living in Switzerland who face a 2-3 year wait. The 100 figure is just what the embassy would allow for appointments, and essentially all others turned away. Very good service to american citizens abroad, what a joke.
First things first.
Jefferson, that is a SUPERB post. I hope Swiss authorities, and those in other countries around the world, pay attention! Great work! Well summarized and very well argued.
OK, those of you in other countries, get going here! If nothing else, use Jefferson’s post as a template and change the appropriate references to local legislation, as and if you can. Or take it as a starting point and do it in your own words.
I’d hope some folks in those boot-licking countries that seem to have “partnered” with the US on FATCA (UK, France, Germany, Italy, Spain) will do the same.
@JeffersonThomas
This a double post but I wanted to make sure you saw it.
There is an article I linked to below that shows there continue to be major issues with FATCA and US tax policy worldwide. The bank in question is Raffiesen which is a Swiss retail oriented bank not a exclusive private bank. They don’t for example give account statements in English. Quote:
We decided last Autumn not to have any deposit relations with U.S.-Americans. Our business was never focused on them. We also don’t give out any bank statements in English,” Vincenz said.
“Still, we have 220 of such customers, which have close ties with Switzerland, and they have 58 million Swiss francs with the bank,” he said.
“What is clear is that we are getting rid of all clients who have a link with the United States. This includes Swiss clients who have children studying there,” Vincenz said.
I think the comment about clients with children studying in US is absolutely stunning. I believe Jim Flaherty himself for example has one of his kids going to school in the US and Flaherty and his wife Ontario MPP Christine Elliott are not necessarily low income by any means. I wonder how they personally would like their financial information being shared with the US.
http://www.reuters.com/article/2012/02/05/swiss-tax-idUSL5E8D50CY20120205
@all as to “We must not allow the US to persecute honest and hardworking people *because* the IRS caught US-resident millionaire tax cheats using Swiss banks.”
I think that most of you at IBS understood the sense of the above phrase, but in hindsight I would have replaced “because” with something like “…using the prextext that…”. I hope that the “because” doesn’t get twisted in translation: human or machine.
@all
I just found this today. It’s in German so you’ll have to use google to translate it.
http://www.nzz.ch/nachrichten/wirtschaft/aktuell/wie_der_steuerstreit_mit_den_usa_anfing_1.15082802.html
@nofatcat as to “@Jefferson Thomas
Great letter, I’d also recommend sending to Swiss Dept. of Economic Affairs (EDA) as it includes trade as well.”
Please feel free to forward to them using your “nom de plume” or otherwise. I would prefer not to be the only one who profers interventions to them. By the way, I still have not seen an “Acknowledgement by the authorities required under Art. 33, Section 2” on Isaac Brock or by any other means. They may have responded somewhere that I have not seen.
@schubert1975: Thanks. I agree that such a letter/transmission would be a good template, just as the Canadian experience in these matters would be (especially if Canada continues on the right path). But everyone seeking to profer such an intervention to their local authorities needs to research profoundly the local legal and constitutional situation (as well as history of tax treaties) in order to formulate a heartfelt and local perspective-oriented analysis. I would encourage everyone to look at their local government’s websites, and statute books and do what I did above (if not better!).