“Today the President laid out a very different vision, one where everyone—no matter who you are, where you’re from, or how big your bank account is—pitches in together to rebuild the foundations of our country and economy.”
Did you hear the President today?
While this sounds, in theory, to be a noble idea worthy of taking into consideration, it is, in practice, troubled with a number of significant hurdles which need to be overcome.
Around 6.2 million American citizens abroad already pitch in together to rebuild the foundations of the countries and economies where they reside outside of America, as explained in Taxation of Americans Abroad. Asking them to do the same for two countries and two economies puts a greater burden on them than any other group of people, with the exception of the totalitarian nation of Eritrea.
“Congress could amend the Tax Code to end the discriminatory practice of taxing U.S. citizens with a bona-fide residence abroad. However, this appears highly unlikely—U.S. citizens living abroad have essentially zero influence in Congress.”
100 Year Legacy of Expatriation Due to Taxes
In a totalitarian regime, citizens living abroad have essentially zero influence in Congress. America is likely not defined as being a totalitarian regime, and yet Americans abroad are told that they can’t vote when they attempt to register with their address or documents where they live. To register, they have to ask someone in the US if they can use their address for that purpose. For example, the Massachusetts Voter Registration Form Request requires a US address. The same applies to Americans abroad who attempt to get an id card or drivers license, as further explained in “Your are an Invalid Resident!”
“Approximately 6 to 7 percent of civilians living abroad voted in the 2008 election. There is evidence that a large portion of the population was not successful in its attempt to participate. The largest problem for Americans abroad is not having their ballot rejected, but ensuring that their ballot is returned on time.”
Overseas Vote Foundation
Even if they can register to vote, they are told that they can’t vote locally, or their vote doesn’t count. Americans abroad are further compensated with their lack of political representation with an up to 50% slash to their US Social Security benefits through the Windfall Elimination Provision. If they lose their employment abroad, they will be denied unemployment benefits in the US.
“The U.S. Government does not offer an unemployment insurance plan in which overseas Americans could voluntarily enroll to protect themselves upon their return to the United States.”
American Citizens Abroad
The idea of being together seems to stop at the border, such as with Medicare, or State Farm which writes:
“Each of the investment products and services referred to on the State Farm Mutual Funds web site is intended to be made available to customers or prospective customers residing in the United States. The customer’s U.S. permanent residence address must be a street address.”
Yet, it doesn’t end there. When Americans apply for some bank accounts abroad or even banking services in the States, they may be rejected or treated differently from other Americans.
“As a direct result of existing and newly proposed U.S. regulations, many U.S. and overseas banks have closed accounts held by U.S. citizens living outside of the U.S., and many banking institutions outside the U.S. now refuse to open any new accounts for Americans. Recently enacted legislation from the Treasury and Congress will only worsen this situation.”
Banking Services Denied to U.S. Citizens Abroad
Of course, there are other issues as well, such as Americans abroad being the target of terrorist attacks responding to US foreign policy. Americans abroad may also be denied residential tuition rates at US colleges. We can’t even sign up for an American Sweepstakes, get a credit report from AnnualCreditReport.com, buy an app from Barnes & Nobel, watch a video at Amazon or subscribe to Netflix. Yet, the most serious issue is the excessive government spending on that which does not “rebuild the foundations of our country and economy”:
“Uncle Sam is like the neighborhood wastrel who buys everyone a drink and cosigns everyone’s loans even though he is unemployed. When faced with bankruptcy, he immediately goes down to the bar and buys another round for the road.”
Solving The Debt Crisis: A Military Budget For A Republic
America does not need to be a super power. Rather, It needs to cut its spending to repay its debts to “rebuild the foundations of our country and economy”. A 50% slash on Social Security Benefits for all Americans rather than singling out Americans abroad, would qualify under the concept of “pitching in together” and cut spending by $407 billion. One could even work together more and stop Medicare within the US border too for all Americans, pitching in a few more billion.
Did you hear the President today? Sadly, I heard no mention of residency-based taxation or even representation for Americans abroad in the House and Senate. What I did hear appeared to be a collection of bipartisan chatter which stopped in relevance at the border. Maybe the President should hear Americans today for a change?
Cross posted from ExpatAmi
“…There are an estimated 117 million Americans abroad”.
I hadn’t realised that nearly 50% of the US had already jumped ship. The Washington DC overseas electoral district must be overwhelmed:P
“…the IRS assumes it may be able to repatriate upwards of $100 billion in taxes”.
I would however hope that 117 million people would generate a bit more than 100 billion in club fees for the IRS though 🙂
117 million is close to the number of US citizens with valid passports (http://www.travel.state.gov/passport/ppi/stats/stats_890.html). The estimate of US citizens actually living abroad is around 6 million, and I suppose
that the number of green card holders abroad is very small, as they
usually lose US permanent residence if they remain outside the US for
more than a year.
@ Shadow Raider and @Mr. Mopsick,
If it were only so easy to lose the Green Card by remaining outside the US for more than a year. Actually, this is the way to make sure you are free and clear: http://photos.state.gov/libraries/164203/dhs/I-407.pdf
There are many references to losing the Green Card if it expires, but not sure that should be counted on. Maybe we could get a legal opinion on this too.
@Shadow Raider, the 117 figure includes green card holders and was calculated by Paul Cochrane in the article he wrote for the Executive. I don’t know how Paul Cochrane came up with that figure, but I’ll swap the two to make it more clear that it does not refer to only US citizens.
The 111 million Green Card holders are being taxed without representation even though they do not live in America. The American Colonists were citizens, rather than Green Card holders, when they protested the taxation without representation of the British Empire, kind of like how only 7% of 6 million Americans abroad bother to vote for their currently underrepresented circumstances.
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@swisspinoy, thank you for the well constructed article.
I find the quote you started with very scary “where everyone—no matter who you are, where you’re from, or how big your bank account is—pitches in together to rebuild the foundations of our country and economy.”” because in light of what we’re experiencing, there is no limit to where they’ll go in pursuit of their assumptions about untapped revenues from those ‘abroad’ – always deliberately without any mention of the full taxes we pay already, to the non-US countries where we permanently live and work – and in many cases, are born.
I should have researched the 117 million figure myself instead of relying on the work of others. It appears that there were 1,042,625 Green Card Holders in 2010: http://www.dhs.gov/xlibrary/assets/statistics/publications/lpr_fr_2010.pdf. As such, I’ve left out Green Card holders and simply used the data on Americans abroad from the Association of Americans Resident Overseas.
@badger, that’s the line that caught my attention. The rest of the speech got lost at the border and sounds great if one is an American in America who never had a passport. Many Americans, including the US president, seem to think up to the US border and not beyond it.
Okay, Obama can give amnesty to hundreds of thousands of illegal immigrants that were brought to the US as children by their parents, saying, “They pledge allegiance to our flag. They are Americans in their hearts, in their minds, in every single way but one: on paper,” President Barack Obama said of those young people in a press conference announcing the policy change.
Surely the next step is to recognize that those of us who were brought by our American parents to other countries are Canadians in our hearts (or Swiss or British) and owe our allegiance to our countries, not the US?
And, another thought, perhaps the reporter, Neil Munro, who ‘heckled’ the president by asking him a question about favouring foreigners over americans might be good to contact? Maybe he could understand and write about how citizen-based taxation is hurting the US economy and jobs, and how FATCA may drive people back to the US from abroad to join the unemployment lines?
That 117 million number has absolutely no credibility with me. That is one third of the total population of the US at the last census, roughly. It smells to me like one of the numbers the CIA used to invent and report to the Johnson administration during the Vietnam War, about the number of NVA and VC soldiers supposedly killed, to justify the lie that just one more push and they’ll collapse. They didn’t collapse, they’re still running Vietnam long after the US left with its tail tucked between its legs, and it’s now generally accepted those numbers were wishful thinking based on reports of ground observers saying “gee look at all the bombs we dropped in that forest over there, they must have killed X people” with no actual body count. Figures lie, liars figure, and the liars who figure and tell the boss what he/she wants to hear, always get promoted before the lie gets found out and the liar’s successor has to carry the can. Saw that in our Canadian government on other issues when I was working there, there are all sorts of accounts of that in David Halberstam’s excellent book The Best and the Brightest (about Vietnam), also see Anthony Downs “Inside Bureaucracy” published by the RAND Corp in 1967, about how all sorts of distortions get reported in bureaucracies. That 117 million number and the $100 billion tax revenue estimate is IMO a very odiferous pile of festering horse manure.