Is it possible that the U.S. Supreme Court by saying that a person is presumed to have the intent of keeping U.S. citizenship is actually guilty of using negative option marketing. What you may ask is negative option marketing? Here is one definition:
Negative option marketing refers to a commercial transaction in which a seller interprets a customer’s failure to take an affirmative action, either to reject an offer or to cancel an agreement, as affirmative assent to be charged. http://itlaw.wikia.com/wiki/Negative_option_marketing
I recall that in Canada during the 80’s and 90’s there was a lot of controversy over negative option marketing with regards to the way that the cable companies were billing their customers. The problem was that the cable companies, without gaining customer assent, would add channels to a person’s service and bill the person for those services unless the customer said that the channels were not wanted. This was the way in which many new channels that could not find a ready market were able to establish themselves.
After this went on for quite some time the cable customers began to complain about having to pay for channels that they didn’t ask for but were being billed for. The eventual response of the Canadian Radio Television Commission was to outlaw this marketing technique because it placed an undue burden on the customer to respond to a solicitation that had not been asked for.
I believe that when the U.S. assumes that one is a citizen unless one states to the U.S. government that he/she is not that this is also negative option marketing. Given that we all have a right to freedom of association I do not believe that accidental Americans should be subjected to negative option citizenship. It used to be the rule that at the age of 18 a dual citizen had to choose which citizenship to accept. Maybe it is time that the U.S. go back to not allowing dual citizenship. Afterall the U.S. seems to still operate on the defacto principle of a single citizenship. The U.S. government has proven that it is not willing to acknowledge the reality of the second citizenship any and ONLY allows a person to live as the citizen of another country only as long as it doesn’t conflict with the demands of U.S. citizenship.
@recalcitrantexpat, The US recorded its largest trade surplus in its entire history in 1975. This was also the very last trade surplus in US history. During the period 1876-1975 the US recorded positive trade balances every year except for 5 of these years there were very slight trade deficits.
In 1976 the drop from the largest-ever trade surplus the year before deep into the red was dramatic. Hundreds of thousands of Americans threw in the towel and came home that year because the Tax Reform Act of 1976 increased the US tax so dramatically that they could no longer survive. Many foreign markets were abandoned by US exporters because this increase transformed them from profitable to unprofitable, or break-even at best. That tax increase destroyed US domination of the project design and construction market in the Middle East, which was very labor intensive. Several US, companies in this business were subject to massive non-performance penalties and went bankrupt. Their American employees absolutely could not survive. The GAO investigated and reported to Congress that with these new tax obligations on their salaries and all of the reimbursements for their out of pocket expenses directly related to their assignmentsm more thaqn a few were left with US tax obligations that exceeded their salaries thus leaving them with less than nothing to live on. Also the market for billions of dollars in US products to implement these projects was lost.
US companies became totally non-competitive in these markets because they were all low tax countries so the Americans working there had almost zero foreign tax credits to offset their US tax obligations. In most of those countries US citizens would have to be compensated from 3 to 5 times more than citizens of any other country in order to end up with the same after-tax income as non US citizens.
I testified before Congress in 1978 on the results of this tax legislation, along with a little over 100 others from business, government, etc. We all had the same documented facts on how this tax Act had destroyed the competitiveness of US citizens for being able to work abroad.
I was one who shut down a successful business selling US exports in Brazil because the day that law was signed my combined US + Brazilian tax obligation suddenly became 81% more than that of any non-US citizen in Brazil with my exact same income and family status. The French company that took over the market in Brazil which I opened was exporting $1 billion from France to Brazil 8 years later. They had hired most of my staff. Meanwhile the US share of that market dropped to almost zero. Just 730 cases like mine, and there were many like it all over the world, illustrate very well why the US last year recorded a $731 billion trade deficit.
The results were so devastating that Congress, after the 1976 tax returns were already submitted, delayed the implementation of the 1976 law by one year. But by that time the Americans abroad had already returned home and were not about to head back overseas and chance taking another financial bath like that. The subsequent legislation which Congress enacted to replace the delayed 1976 legislation was even worse.
Beginning in 1976 the cumulative US trade deficit through 2010 exceeds US$8.5 trillion and it is currently growing by $2 billion every day.
There is ample and very concrete evidence that this citizenship based taxation is the primary cause of the massive US trade deficit which, last year, accounted for 60% of the total trade deficits of the 129 countries that had trade deficits.
Among other things it used to be that a prerequisite to fill the top CEO position in a US corporation required a term of service abroad. But since the TRA of 1976 made such tours of service so horrendously costly, that is no longer the case. Few indeed are the top executives of US corporations today that have had any overseas experience whatsoever. Lacking this there is a total lack of vision and understanding of the foreign market, so few US companies pay any attention to it. This too is a direct long-term result of the Citizenship-based tax policy of the US.
Everyone in Washington loves to blame the US trade deficit on China and its currency value policies, but that is an excuse that just does not hold water when most of the high-wage industrialized nations of the world have trade surpluses with China. The US stands as the only one with a massive and out of control trade deficit with China.
@Don – I think you are absolutely correct. In both the UK and Germany there does not seem to be a problem with people going abroad for every long periods of time. I have friends here in the EU who spent 10- 20+ years working in the US, never got citizenship there and came back to Europe at some point. According to the director of my school the Germans were one of the very first and most successful at getting into the Chinese market. The sent people over, they set up exchange programs with universities and associations to boost business. When I was in Shanghai I visited the French equivalent to all this and they admitted to playing catch up. The Germans were the model.
@Don – It is possible for a German to naturalize in another country and retain German citizenship if the German government is willing to to accept the exception. The forms are on the consulate websites. Not clear to me under what circumstances such a waiver is granted but it is possible.
@recalcitrantexpat, I believe you are correct. The US citizen who renounces citizenship cannot have that renunciation revoked. It is permananent, But he may apply later for permanent residence and if it is granted he can, after five years of residence, apply for US citizenship, just like everyone else who meets this requirement. I do not know that there have been any significant number of cases because there is no published data that I am aware of. But I have read that former US citizens who are re-applying for US citizens are subject to a much more severe evaluation before it is approved. It is not a decision that people take in a casual manner. There is noting offficial that would either stubstantiate or deny this that I have been able to locate.
@Robert Conklin
Sadly I think that the vast majority of those renouncing would never want to regain US citizenship anyway. For me at least it is a question of trust, and even if the US were to adopt all of the tax changes that we all want, I simply don’t trust the politicians there anymore to want the citizenship back. If, for some reason I cannot now predict, I end up back in the US as an immigrant I would never apply for permanent residency, green card, citizenship, etc. Just renew the temporary visa as long as required and then be on my way. The US already has one of the lowest naturalisation rates for immigrants in the industrialised world. It will only fall lower as many new immigrants get hit with FBAR fines and others are simply too scared to move to the US at all. I imagine that the US is not only hurting itself by restricting its ability to sell its exports, but its losing educated immigrants to other English-speaking countries, the EU, even developing ones like Dubai or places like Hong Kong, Singapore, etc.
Even this Gallup poll seems to show that those with the type of background desired (university degree etc) tend to want to move to Canada or the EU and those with fewer skills are trying to move to the US:
http://www.gallup.com/poll/127604/young-less-educated-yearn-migrate.aspx
@Roger – I think Don is right. There is another report on this worth reading by MPI. They warn the US to be very careful in this regard because other places are becoming more attractive, US immigration policies are incoherent to the point of absurdity, and there is a lot of anti-immigrant rhetoric which doesn’t make the US seem very friendly right now. It is quite possible that more and more of the 10% of highly educated global migrants may look elsewhere. Canada is enormously popular and so is Asia these days.
For a case close to home, I have two daughters who get to choose where they want to live. The elder took a look and turned down the idea of going to a US university She was turned off by the cost and not at all turned on by American culture (something she thinks is just fine but not exactly a magnet). She is now happily studying at McGill in Montreal. The younger is a science student (science Bac) specializing in Physics. She’ll complete high school next year and she is looking around for schools. Again, the turn off is the cost of US universities and the sense that she could do just as well, at a better price, in another country. She is looking at both Canada and Japan. She is also OK with US culture but she finds Asia to be more attractive.
Both these kids have US citizenship so there is no barrier to moving and living there. I find it interesting that neither (in spite of all my efforts to promote US culture in my home all these years) seem terribly interested in doing so. The only pull seems to be the idea of spending time with their grandparents so perhaps they will do graduate school there or find jobs there later on. We’ll see.
Just an aside – I find it very amusing that the *French* are not doing more to keep my kids. For heaven’s sakes, they are bi-lingual, well-travelled, well-educated and smart as hell. France (and by extension the EU) just seem to be sitting on their hands and letting them go without so much as a counteroffer. 🙂
@Roger, if you lived in Brazil now, you would get taxed to death. The FEES are amazing for things such as a licenses. If you want to get a drivers license, it will cost around $1,000 US. Motorcycle, around $500 US. When I was getting my licenses here, everything has to go through the state’s computer system. They hit you up for several R$ 50+ (USD $30) fees during the process and it ends up being quite a bit of money. It’s NOT nickle and diming people here because the values are MUCH higher. I was thinking about this yesterday how we all just spend this money because it’s the cost of doing business…
^^ just to be clear – those $ values include the driving courses.
About twenty years ago, there was little to no cost of getting a drivers license here. Then the states figured out that they can make a lot of FEE money and prices have been going up ever since.
@Geeez, It was much easier when we moved from the US to Peru 46years ago. One of my subordinates told me the day I arrived he would help me. His dad was an official in the Departamento de Transito. That very night he stopped by our home with the papers all filled out qirh a certificate for having passed the written and driving test, the completed and signed doctors certificate that we had passed the medical and psychlogical tests requred for a new license, and the ink pad to affix our thumb prints to the application. We signed the papers and two days later both myself and my wife had our new driver’s licenses in hand. In those days Peruvian driver’s licences were valid for life, so they are still valid. And we still have them. The cost? Zero. Just a courtesy extended by a loyal employee to his new boss.
I’ll bet it isn’t even this easy in Canada.
@domodoro- That was a good article to post. I know that as an immigrant to Canada that I fit into the educational profile of many Canadian immigrants- 4 yrs. of college and a Masters degree.
I would suspect that things will get much worse for the States as this FATCA legislation gets more widely known by potential immigrants. When they realize that FATCA rules will make them aliens in their country of birth and that when they leave the U.S. that their lives are not “reset” back to what they were prior to living in the U.S. that they will go elsewhere.
U.S. tax law and FATCA place a financial IRON CURTAIN around your life. The U.S. is indeed its own worst enemy. Therefore I would never want my U.S. citizenship back. It is all pain and no gain.