The Government Printing Office has finally published the 284 pages of the Congressional Progressive Caucus’ bill we discussed earlier this month. For those who don’t recall, this bill includes provisions, as the CPC put it, to “Close Exclusion of Foreign-Earned Income Loophole”. I won’t bother quoting this bill at length since there’s nothing surprising in its the contents (aside from the hilariously non sequitur title: “Smarter Approach to Nuclear Expenditures Act”), but the list of sponsors is rather interesting in one regard: a third of them are children or grandchildren of immigrants.
In more detail, the list of people responsible for this “nuclear” attack on U.S. Persons abroad includes:
- Judy Chu (D-CA), whose parents are from Guangdong, China;
- Steve Cohen (D-TN) — a putative member of the utterly useless Americans Abroad Caucus — who is the grandson of Jewish immigrants from Lithuania and Poland;
- Raul Grijalva (D-AZ), whose father was a Mexican guest worker who came to the U.S. through the Bracero Program;
- And last but not least, Jan Schakowsky (D-IL), the daughter of Soviet émigrés — yet another member of the Americans Abroad Caucus so helpfully “looking out” for the interests of actual Americans abroad.
There’s also Luis Gutierrez (D-IL), who is a migrant in the cultural sense of the word, but not an immigrant in the juridical sense of the word: his parents come from Puerto Rico, part of the United States and of course — as Roger Conklin points out — one of the only places in the solar system that an American can move to and not have to deal with the Interplanetary Revenue Service anymore. The remainder of the sponsors are pretty much the usual suspects from the CPC’s 2012 attempt to repeal the FEIE: Keith Ellison (D-MN), John Conyers (D-MI), Jim McDermott (D-WA), Jerrold Nadler and Yvette Clarke (both D-NY), Barbara Lee (D-CA), Ed Markey (D-MA), Lacy Clay (D-MO), Eddie Bernice Johnson (D-TX), and Alan Grayson (D-FL).
Of course, none of these politicians’ forebears — let alone the politicians themselves — had to pay taxes to their ancestral countries after leaving to seek a better life. Yet they smear it as a “tax loophole” when American emigrants and their children do the exact same thing in Canada or dozens of other lands. This is an example of a more general phenomenon in U.S. politics: the children of the previous generation of people with connections to foreign countries are the most active in demonising the current generation of people with connections to foreign countries.
@Eric
Another great post to add to your collection.
We are trying to reason with people who have a different operating system. In dealing with them it is important to realize that their thinking is valid – given the assumptions they are working with. (Be honest here. Were you not different when you first left the US? Didn’t you believe that the US was superior in every respect? Didn’t you believe the version of US history that you were taught in school?) Homelanders have never had the opportunity for their thinking to be shaped by forces outside the world of CNN. We must work them as they are and NOT as we wish they were. So, what is their thinking?
The fundamental assumption of Homelander Thinking begins with an assumption of what citizenship is. The United States regards it citizens as property of the state. Therefore, for the most part they are to be kept locked up on the farm.
Imagine that you were a farmer and that you owned some livestock including some guard dogs. Imagine that you have one of those invisible fences, designed to keep the animals in (making it so that they don’t want to leave the greatest farm in the history of the world). Now, for some reason one dog gets through the fence. Let’s say that dog then finds a bag of gold. Doesn’t it make sense that the owner of the dog should own the gold? But, wait, what if that bag of gold is found on a neighboring farm. Or what if the dog is a free dog? Should the dog own the gold?
The dispute then becomes – is the gold owned by:
1. The dog
2. The owner of the dog
3. The owner of the neighboring farm where the gold was found
The US is of the view that they own the dog, and that because they own the dog, that whatever the dog owns is owned by the US. Now, why do they have that assumption? Well, it’s largely because they can’t see the world in terms other than their own interests – just like any other narcissist. Everything is an extension of the U.S. So, why then is there a foreign tax credit? Why an FEIE? Well, the reaon is that the US understands that it is not a good idea to antagonize neighboring farms/countries too much. In other words, it is in their interest.
http://renounceuscitizenship.wordpress.com/2012/05/18/national-narcissism-and-u-s-citizenship-being-a-u-s-citizen-is-like-having-a-narcissist-for-a-parent/
Now back to your post.
The Homelanders that you speak of – those with ancestral roots outside the US – believe that all citizens are owned by the state. They just take pride in being owned by the greatest of states: The United States.
Therefore, the arguments to the Homeland must be developed in a way that will:
1. Accept the fundamental assumption that US citizens are property of the state.
2. Show that by NOT asserting all incidents of ownership over their property that it will improve the good of those who are unable to escape over the border.
I believe that a good starting point is to link the idea of US citizens abroad to free trade. I.e. how can the US better use its property for the good of the whole? Remember the Obama view of citizenship – citizenship means that the lives of all citizens are intertwined. US citizens abroad must be depicted as the most loyal and partriotic citizens who endure the horrible living conditions outside the US for the sole purpose of opening markets for the homeland. They should be described as the Chrisopther Columbus and Marco Polos of the modern world. They endure the savages of Europe, Asia, South American and even Canada (does Canada even have electricity) to open markets for the Homeland. US citizens abroad can be used to colonize the world. But, hey remember that the US began as a collection of British Colonies. What happened there?
The use of US citizens abroad to further US interests MIGHT be something homlelanders could understand. As owners of US citizens abroad need to create conditions so that their property abroad is able to do good for the Homeland. This means that they must be able to live. They must not antagonize other governments. They cannot be seen as a danger to the countries where they attempt to live. Make no mistake – citizenship-based taxation, FATCA, FBAR, PFICs, taxing residents of other countries and all the other other horrors of the US passport implies to all three.
Moving to American’s historical roots noting that when British Taxation of the ancestors of modern day Homelanders became too great, there was a mass defection AKA The American Revolution. Look what the British lost. Does America want the same fate to happen to it?
Here is a qoute from The Origins of the Revolution by Miller:
This aspect of the American Revolution was best expressed by Thomas Jefferson when he declared:
I have sworn upon he altar of God eternal hositility against every form of tryanny over the minds of men.
At no time in history has this freedom of the mind been more essential to the welfare of mankind than at the present day. And at no time has it stood in greater jeopardy.
And finally your post implies the question:
How can CongressCritters with ancestral roots outside the US be so unsympathetic to US citizens abroad? The answer is simple:
They are now homelanders.
And in closing, a thought on the FEIE in general. Personally, I believe that the elmination of the FEIE is a necessary condition to a full, frank and intelligent discussion of citizenship-based taxation. As long as it is there, Homelanders will be able to suggest that somehow US citizens abroad are getting special treatment – making it hard to move to the discussion to the real issues. As long as Homelanders believe (and they do believe it) that US ciitzens abroad have special privileges, no disussion is possible.
Now, what is the prognosis for change? I belive that change is possible. It’s just that it will take time and it will require some careful thinking about how to develop the arguments.
Some of you may recognize a saying from a certain group of U.S. citizens abroad:
The difficult we do today, the impossible takes a bit longer!
And finally, as horrible as things are for US citizens abroad:
Remember, you have already escaped from the homeland!
Thanks, Eric and Renounce, for more great analogy for us to think about — which indeed helps me (us) internalize that we on the other side of the US border have escaped!
It is right up there with that other analogy, most recently put into a commen by Patric Hale:
http://isaacbrocksociety.ca/2013/02/22/bloomberg-cost-of-dropping-citizenship-keeps-u-s-earners-from-exit/comment-page-1/#comment-199206
USCitizenAbroad: I think the free-trade, unofficial ambassadors etc. argument will not work. The problem, as you say, is that Homelanders think we are getting some kind of special deal. The only thing that I think will work is to show them what a raw deal we are getting.
As for how to get accomplish that, however, I confess to being at a loss.
US history as taught in schools and touted on popular media is about as accurate as the movie Argo, which made the Americans the heroes when Canadians were responsible for 90% of the rescue. The fictional account of Paul Reveres midnight ride as written by Longfellow has now become ‘fact’ and taught as history. And of course we have all been brainwashed that the revolution was a taxation without representation issue, when it was largely because of a desire to escape British rule to avoid the end of slavery and pillage of native Indian lands, both of which the British parliament was putting an end to. George Washington and others like him had hoards of slaves and regularly accumulated Indian land contrary to British law. No wonder the wanted out. The US is full of chronic low self esteem which is compensated for by boastful self glorification. Hence it describes itself as the ‘shining city’ on the hill and is preoccupied with self described American exceptionalism. My goodness, the US did not even invent basketball. It was a Canadian who did!!
Forget trying to influence Homelanders. They’re so self-absorbed they are never going to understand the problems of expats. The only options for us are (1) retain US citizenship and move back to the Homeland (a dismal thought for many of us), (2) hope our own governments will protect us from US extra-territorialism (a very open question), or (3) get rid of all remnants of US “personhood” (as I and many others have done).
Sadly, even if many more of us apply for CLNs, the news probably isn’t going to have much impact on US Homelanders. The US has been averaging around 600,000 new naturalized citizens per year for the past decade or two. So even if 6000 CLNs are issued in a year — and they’re now hiding the actual total — that’s only 1% of the intake. Who’s going to care?
USCitizenAbroad- I have been saying the same thing for a long time. I agree that the FEIE has to go but I would also include the FTC in that. Can anyone imagine the logic of a murderer who claims to be responsible for giving you life because he/she doesn’t kill you? That is what the FEIE and FTC are like.
Just because the Americans themselves are fools they think that we also are all fools and so is everyone else in the world. They truly believe that we suffer from, Stockholm Syndrom”.
looks like I have found my next home…Puerto Rico
Oh, I don’t know about that, Mark. In the last election they finally had a majority vote to petition to become a US state. However, they elected an anti-state governor. Regardless, they are still a vassal of the US.
@USCitizenAbroad,
Very complementary to Eric’s thread. Though I balk, and reject it, I realize that we must be able to identify the homelander perspective in order to confront it from all sides, and to be flexible and creative in confounding the UScentric worldview. It doesn’t mean we have to agree with it – only craft our communications with them in their own ‘native language’ – homelander speak.
I liked the suggestion of ‘translating’ the situation for US homelanders using concepts they might be predisposed to grasp, and speaking to their self interest, though I wonder if their sense of US entitlement and exceptionalism makes it impossible to grasp that there could be any sufficiently negative outcome for the US in terms of;
“….This means that they must be able to live. They must not antagonize other governments. They cannot be seen as a danger to the countries where they attempt to live. Make no mistake – citizenship-based taxation, FATCA, FBAR, PFICs, taxing residents of other countries and all the other other horrors of the US passport implies to all three….”
I would add, that the creation of > 6 million dissatisfied and angry duals and families of US citizens and ‘taxable’ persons all around the globe can only work against US ‘foreign’ interests. Here outside the US, in our home countries, we can and do vote, and have more influence outside the US than we ever could on the US political stage. Does the US want to create and foster the opposition of > 6 million who are not going to be disposed to support ANY cooperation of their home countries with US interests? Now I look at all Canadian relations with the US through the lense of enhanced and heightened distrust and suspicion. I speak to my family and friends from that position, and that is what the US has wrought.
Enmity towards the US is a direct result of what I have experienced, and from seeing the unrelenting punitive policy direction that the US has towards anyone who lives outside it (ex. see the latest attempt by Levin and others to ratchet it up even further without regard to the fallout for the ordinary citizen). Those who deliberately chose to leave the US and have taken another citizenship are not going back. Those of us who were merely born there, but were raised and lived an entire life elsewhere, would never even consider a ‘return’. Our children, who inherited the US taxable burden from us, and were born and raised in other countries – they do not consider the US ‘home’ – it is a ‘foreign’ country to them.
I and the others here, and our non-US families and friends did not know of any of this before now. And now we cannot ignore it. We are renouncing, we are writing our home country politicians, we are voting where we live, we are trying to save our children from the predations of the US. We are highly motivated – by sheer necessity.
The loss of the FEIE and the Foreign Tax credits would be a serious blow to those who cannot renounce, but you are right that it would force the issue in a much more obvious way, increase conflict, and heighten the stakes.
As long as the assets that are being sought by the US are produced and sited inside other countries, and belong to citizens of non-US countries, there is going to be conflict and antagonism. Perhaps there was previously some kind of tacit agreement by Canada and other countries to allow this – and accept the cost to some individuals when the US wasn’t so aggressive in enforcing crossborder extraterritorial claims, but now, with FATCA, the competition for our assets is going to be that much harder for our home countries to ignore. There is only so much to go around. If the US sucks it out of other countries, and also demands that our government and financial sector create and fund an apparatus solely in order to report and remit information (and funds?) to the IRS, to the skewed benefit of the US, then there has to be some response on the part of the other country. A FATCA IGA is going to actively cost the Canadian treasury in terms of the Canadian domestic taxes redirected to support the whole FATCA reporting structure and in the private bank fees levied on every single Canadian account holder, just to in order to placate the US.
Also, in terms of conflict, our populations are aging. If because of the US, we are unable to save for our old age, unable to pass assets to our children and non-US spouses, and unable to pay for post-secondary tuition, that creates and entrenches an ongoing handicap for the country where we live – and is in direct contradiction to the social and economic priorities that the Canadian federal government espouses, and the incentives they use to encourage us to be independent of government services.
How do we get the US to take this seriously in terms of their own selfish interests? Their inflated UScentric view does not allow them to see that there could be a US cost to continue on this path. They are very likely to dismiss it the way we would swat at an annoying gnat buzzing in our ears. They do not believe that there could be negative results of a significance large enough to take us and our home governments seriously, because they are used to the US using power and force to get its way.
The USG has never and will likely never thought beyond its own selfish interests. That’s why the situation is what it is today.
Things just aren’t bad enough there yet for enough of the population for change to occur.
My husband thinks that a lot of the FATCA foot dragging is stalling. Countries are appeasing as much as they need to and waiting. In his opinion, they will slowly establish work arounds that will avoid US financial centers, companies that are too exposed to US over reach and that the eventual outcome will be an isolated US left alone in its decline. But that could take decades and in the meantime, it will be difficult for duals and USP’s aboard (though I think that job and education opportunities for USPs will dry up sooner rather than later).
We are probably better off working on our own governments where we live for our protection than pouring too much into trying to wake up homelanders and their representatives.
@AnonAnon and a
You are absolutely right. Homelanders aren’t going to care, at least not in any numbers that US politicians will pay attention to.
After all, the US is a country whose new Secretary of State boasts abroad about how America treasures the “right to be stupid.” What can one say after that, other than to thank whatever power or powers you worship that you’re no longer living there and no longer a citizen of that dysfunctional madhouse.
As I’ve said before, look to yourselves and to your country (your real, current country). Forget America, except to keep it at bay from you and yours.
Amen, schubert!
@John Green
Granted there is a lot of national mythology taught in the US school system. However, I disagree with some of what you wrote about the causes of America’s war for independence.
“… it was largely because of a desire to escape British rule to avoid the end of slavery and pillage of native Indian lands, both of which the British parliament was putting an end to. George Washington and others like him had hoards of slaves and regularly accumulated Indian land contrary to British law. No wonder the wanted out.” — This is probably true, particularly about plundering Indian land.
However,
“… we have all been brainwashed that the revolution was a taxation without representation issue” — You are wrong about this. Taxation was one of the biggest among many grievances against British rule. Please see below:
http://en.wikipedia.org/wiki/No_Taxation_without_Representation
http://en.wikipedia.org/wiki/Sugar_Act
http://en.wikipedia.org/wiki/Stamp_Act
http://en.wikipedia.org/wiki/Tea_Act
http://en.wikipedia.org/wiki/Taxation_of_Colonies_Act_1778
@Badger
You wrote,
“The loss of the FEIE and the Foreign Tax credits would be a serious blow to those who cannot renounce, but you are right that it would force the issue in a much more obvious way, increase conflict, and heighten the stakes.”
Unfortunately I think you are right. Things will need to get worse before they can become better.
Most of the taxes were removed before the revolution and in fact to pay for the wars that the British were engaged in, they taxed the British people more than the colonies. The one remaining tax at the time of the revolution was on tea, but this was going to be given to the Colonies. However tea smugglers had a problem with this and hence dumped tea cargos into Boston Harbour. There was a lot more to this revolution than taxes. A lot had to do with greed of colonial leaders. Sound familiar? Current American policy decisions are influenced in a major way by corporate greed and influence, which leads to the erosion of democracy and a widening gap between the rich and the poor. The ‘Founding Fathers’ set an example which is being followed today.
@Patrick Henry, early on, I did not even know that the FEIE has been regularly under bipartisan attack. It was several others here at IBS who first posted that scenario, as USCitizenabroad did earlier on in this thread – that the attack on and loss of the FEIE and Foreign Tax credits would result in a forced crisis which would prove how insane and unjust US extraterritorial citizenship-based taxation truly is – but at an unacceptably high cost. It wasn’t something I wanted to contemplate – because of how high that price would be – how many would be affected if that happened.
Just how long would our home countries continue to say that they ‘respect’ the US ‘right’ to ‘protect its own tax base’, in
the absence of the FEIE? The new Obamacare surcharge tax is apparently not covered by our current Canada-US tax treaty, yet I see no statements by the Harper government and Flaherty, (or the official opposition) about how unacceptable it is for the US to impose a new US tax on Canadian citizens and permanent residents of Canada who meet the threshold.
@John Green
“There was a lot more to this revolution than taxes.”
One doesn’t need to look much further than the declaration of independence for the reasons for rebellion:
– For cutting off our Trade with all parts of the world
– For imposing Taxes on us without our Consent
– For depriving us in many cases, of the benefit of Trial by Jury
– For suspending our own Legislatures, and declaring themselves invested with power to legislate for us in all cases whatsoever.
– For transporting us beyond Seas to be tried for pretended offences
– In every stage of these Oppressions We have Petitioned for Redress in the most humble terms. Our repeated Petitions have been answered only by repeated injury.
Sound familiar?
“Causes of the American Revolution: The Colonial Mindset and Events That Led to Revolt”
http://americanhistory.about.com/od/revolutionarywar/a/amer_revolution.htm
@badger
The US is the biggest and meanest bully on the planet. It has the power to destabilize almost every other country in the world.
Getting rid of US citizenship is currently the only real solution for ex-pats. I can’t imagine any other government out there being willing to stand up to the US for the sake of ex-pats.
I hope I’m wrong, but that’s the way I see it.
@Patrick Henry, this is why I am very worried about the children who inherited this burden, and those who cannot renounce now, or perhaps ever.
FATCA implementation and a loss of the FEIE would increase the awareness of the existence of citizenship based taxation, freedom’s enemy. One has to wonder and speculate how the knowledge of it will effect homelanders and their concepts of mobility and global competition. Had my mother known and made me aware of the condition that would effect me so greatly 44 years later, I could have avoided a lot of grief. We’ve read stories about how Americans have renounced citizenship to free themselves to get ahead. When Americans realize through awareness that they are not free to love and live outside the confines of the US, it will strike at the core of what it really means to be FREE.
I suspect getting rid of the FEIE would radicalize a lot of Americans abroad, but that any response from Congress would only be to restore the FEIE, and not to solve any of the real problems we face, such as access to financial institutions and products where we live, and insane penalties for paperwork errors unrelated to actual tax owed.
The FEIE is a loophole. It should be abolished.
@orwell says- surely you jest. Anyone who believes that the FEIE is a loophole in the U.S. tax code has absolutely no understanding of the principles upon which taxation operates. Loopholes such as exclusions, deductions and exemptions are ways of shifting the tax burdens of people who have accounts with the treasury of the taxing authority. They have the effect of either taxing one account holder less or forcing the government to borrow as a means of subsidizing none tax paying account holders. One thing that they do not do is to change the cost of running the government. So the question therefore becomes one of, if one does not reside within the jurisdiction of the taxing authority how does any action taken by its treasury benefit you? Contrary of U.S. assertions, mere existence does not of itself make one an account holder with the taxing authority of your country of citizenship or past residence.
If the FEIE is a loophole then so are the tax treaties and they should all just simply be abolished. Oh, I forgot that has already been done through the; Savings Clause, FBAR, citizenship based taxation and now FATCA.
@recal
“Loopholes such as exclusions, deductions and exemptions”
like FEIE
@orwell says- the idea that taxation follows as a consequence of citizenship is a, Non sequitur.