I found an interesting video this evening describing the debacle of Margaret Thatcher’s famous poll tax back in 1990. I found a lot eerie similarities between Thatcher’s tax policies back then and what is going on today with US FATCA, FBAR, increased enforcement of citizenship based taxation et all especially the stubbornness of both Thatcher and the US political establishment.
This does give a pretty good visual overview of what a real tax revolt is like.
I witnessed first hand the poll tax troubles in the UK in 1990. It failed not only because of its unfairness, but it was a hard tax to collect because people did not register to pay it (like today’s 1040 non-filers).
The poll tax only worked if everyone was honest and registered how many people lived in each house so the council could work out the correct tax – which people didn’t of course. So you had the family of 4 down the road paying who registered, and the one next door who registered one person paying less. It was left to the council to go door-to-door to find out the truth – unworkable.
It’s the same narrow minded thinking the IRS is trying to impose, get over 200 countries with different legal and tax systems to implement US tax law – then all “US persons” will have to comply!. Like the poll tax people will find ways around this FATCA reporting system making the whole process unfair. Message for the IRS and Carl Levin – concentrate on taxes that you can effectively collect inside the US’s borders – like a US style VAT. The ex-pats are not mugs, and some of us do have influence inside of our new countries our residence to thwart FATCA.
Carl Levin and Doug Shulman don’t have the b*lls to face the ex-pats in town meetings abroad to explain the rationale of their tax policies.
But going back to the poll tax, Maggie’s bubble birth during the summer of 1990 with the London poll tax riots resulting in Margaret’s resignation in November 1990. The rioters brought the message right to her front door – we don’t want this. In the end the “poll tax” was replaced by the “council tax” which was essentially the old “rating” system by another name, and VAT was increased by 2.5% to 17.5% to pay for it.
However how are Americans abroad going to bring the message to Carl Levin’s “front door?”
Perhaps a FBAR protest, if every American overseas filled in one fictitious FBAR each (maybe a form 8863 as well or 1040) to add to the IRS’s stack and bog down the system it might make a statement in someway – put the arrogant US Congress would either hire more people to process the forms, or pass a law to “hunt” down these people abroad in a Bin Laden fashion and bring them to justice!
I still believe getting your “local” overseas political and legal system involved to put roadblocks in FATCA’s way would be useful to frustrate Mr Levin’s jihad. He’s definiately at war with his own citizens like Maggie was but he gets away with it because it’s difficult for us to bring it to “his front door.”
Let’s see what happens when the banks start either trying to collect data or send it to their local tax authories via the inter-governmental agreements – the time is NOW to let the 5 countries know that you are unhappy with the arrangement particularly if you’re a dual citizen.
The main reason why riots and revolts like those shown in the video are possible in England is because the ordinary police don’t carry firearms. If the NYPD didn’t carry firearms, then I think revolts would be more likely to happen in the US. Maybe not ’cause of FATCA or FBARs though.
The rationale for the “poll tax” is that everybody gets government services and therefore everybody should pay (or have somebody pay on their behalf) for those services.
I can’t see “poll tax” working anywhere (it is just unenforceable). But, a National Sales tax, by taxing consumption, is way to ensure that all people pay taxes.
It is obvious to anybody (except of course the idiots running the U.S.) that a National Sales tax must be implemented. A system of raising revenue, that a large number of people are exempt from (income tax) cannot be the sole source of government revenue.
So, let them come after the expats. It won’t help them. It will cost them hugely (and it has already started to). Sooner or later the U.S. must wake up to the realization that everybody must pay – and a sales tax is the only way to do this.
Or maybe the U.S. could implement a tax on bank accounts.
I have some memories of the introduction of Canada’s national sales tax and it was not particular popular although it has stood the test of time. In fact it was being introduced right during the very summer of the poll tax troubles in the UK. Here are a few public service announcements from the time period.
@ John who wrote: “Perhaps a FBAR protest, if every American overseas filled in one fictitious FBAR each (maybe a form 8863 as well or 1040) to add to the IRS’s stack and bog down the system it might make a statement in someway – put the arrogant US Congress would either hire more people to process the forms, or pass a law to “hunt” down these people abroad in a Bin Laden fashion and bring them to justice!”
That sounds something like a variation on the “5th Amendment FBAR”. I was thinking about something along that line regarding the 1040s except with no fiction involved, just overwhelming and complete disclosure. I thought what would happen if people filled in only “name, rank and serial number” on their 1040s, left all the rest blank and then signed their names at the end? They would then “bend, fold, mutilate and staple” (just kidding, make that “neatly attach”) a copy of their completed foreign tax forms (plus whatever information slips they had used) to their 1040s. The IRS would have all the information and more that they needed to complete the 1040s and they’d get a gander at how rational some foreign forms can be but if they are not terribly rational then too bad, the IRS would have to work a little harder. (And being written in a foreign language would simply mean they’d have to find a translator.) I’d love to see the americentric IRS workers having to learn about extraterritorial tax codes and tax treaties. It would be a relief for overseas filers to not have to spend hours and hours trying to decipher the 1040s, 1116s, etc. with all of their mind-numbing instructions and publications.
Last year my husband, while visiting his elderly mother in the USA, took all of her information slips to a local IRS office and they did the tax calculation for him. It seems Americans abroad should be able to expect at least that much service from the IRS too. If the IRS can’t tolerate any errors on the 1040s then the best thing to do is have the “expert” IRS workers do them. I know this is probably a flight of fancy though because undoubtedly, somewhere in the 72,000 pages of US tax code there is a “thou shalt not make the IRS work to collect our blood money” clause.
Oops, re: that last sentence … meant to say our “blood, sweat and tears” money.
Although i have never actually read the law, cuz god knows which one it would be or where i’d find it, I always understood that the only actual requirement in the US is to submit the 1040 with your signature at the bottom, plus whatever slips and receipts are required. You may have to provide contact info, but at least at one time in the past, you were not required to fill out the entire form. Since CRA and IRS seem to recalculate tax returns at least sometimes, why should we bother?
The main difficulty is that they might not go looking for all the deductions you are allowed since they have no incentive to minimize your taxes. But the point is, you actually could make them do all the work.
I have a cousin in Ottawa who was born in the US but grew up in Canada. He simply fills in his address on the 1040 and signs it, then submits it with the first page of his Canadian tax return. The IRS never bothers him and they even sent him the stimulus cheques every US taxpayer was supposed to get.
Common sense by the US IRS is something most of us could live with. Thanks for again posting this suggestion, foxyladyhawk!
Right on both counts above. My late mother, who always lived in the United States only submitted the 1040 with her name and address on it. She had very minimal income and never owed tax.
I have a friend (dual ciitizen) living in Ontario. After she has received her Notice of Assessment from CRA in Canada, she sends it in to the IRS. She has never had a problem and in fact received the stimulus cheque a few years ago.
Em could be on to something. Perhaps if all of us just this one year did that we could bring Washington DC to its knees.
Wow, when I threw that comment out I really thought it was a long shot. I didn’t realize that someone has actually done it and I’ll bet your cousin isn’t the only one. We’ve never taken anything other than the standard deductions anyway (there’s not much available to people filing overseas who have nothing but wage and/or interest income). This is something I’d really like to look into and even if I don’t find confirmation in the 72,000 pages of US tax code (ah, who am I kidding, I won’t even attempt to wade through it all) I think it would be worth a try this year. If the IRS wants to make everything complex and convoluted and terrorize us into near catatonia regarding the possibility of making even innocent mistakes on their tax forms then I’d love to let them have at it and do the work themselves. Maybe that way we’d get a written acknowledgement that they have received our 1040. CRA sends us Notices of Assessment each year but we get nothing back from the IRS. That has always bothered me. We’ve seldom had to send the IRS a cheque either so we don’t even get that as proof of filing. Thank you for this new information. It’s definitely something to think about. Does anyone out there see any “unknown unknowns” with filing a blank with signature 1040 (with copies of all information provided of course)? Would they still apply a foreign tax credit for us?
@Em, you’d need to show that you paid taxes in Canada to get the foreign tax credit, or else all they’d have to go on was how much income you made. Is that what you meant by copies of all information provided? From tiger’s comment and my cousin’s experience, yeah it sounds like we could all get away with that. If we actually fill it in, the IRS would go over it, and then if there are errors, anything could happen. But if they are stuck filling it all in, I bet they wouldn’t do it!
I was thinking of even giving them copies of our completed Canadian tax forms (in addition to our T4s and T5s plus Notices of Assessment) which show how much we paid and let them do the currency conversion too, of course. Meanwhile back at home we would do the 1040 for ourself to make sure they get it right. Guess we’d have to fight it out afterwards about who was correct or not but then the IRS does seem to like paperwork.