… at the earliest due to the House rules limiting chairmanship of committees to three terms and impending retirement of Sen. Carl Levin.
This means the current chairman of the powerful Ways and Means committee, Dave Camp (Mich-R) is on his way out because he will soon hit the term limit although the battle for that quite coveted appointment has already begun, and because Camp is rumored to be making a run for Levin’s soon to be vacated Senate seat, he likely won’t be focusing on reforming much of anything anyway.
There is a whole lot of politics in play according to this article in The Fiscal Times, but the bottom line is that if American citizens abroad are hoping for an overhaul of the convoluted US tax code, and possibly relief from the tax on earned income worldwide in the form of a residence based tax, they shouldn’t look for that any time in the near future.
Congress hasn’t bothered with a comprehension refit of the US tax code since 1986, and there are more than a few issues that need attending to, but for the time being, they appear to have lost momentum and are allowing themselves to be more concerned with the titles and positions coming up for grabs than they are with Americans in or out of homeland.
Sad but likely true. Save what you can and prepare to fight FATCA in the courts of Canada, in the public media and force the issues to be debated.
No one said this was going to be easy. But it is totally winnable in a court of words. Don’t give up!
Looks like that article is supporting my views on the issue that change is not coming soon.
Whitecat – thanks – I agree. I think I have now become a strong Libertarian citing Ayn Rand and George Orwell, and cheering Eric Snowden on – not because he broke the law but because he was brave enough to change his life to disclose the activities of a secret government overreaching. When a government becomes a predator of its own citizens living lawful lives in another country.
U.S. citizenship is considered a privilege; compliance burdens are part of the price of holding that ‘exceptional’ passport. I concluded that I would have not made a good citizen because I would have resented all the restrictions and huge ongoing tax preparation costs. I thus decided to renounce and, looking back, am sure I made a wise decision for me.
However, a younger person might have wanted to retain the blue passport if they wanted to make the mpart of career and educational opportunities in the states; if my spouse we’re no longer living and was still young enough to pay in enough stamps to still qualify for Medicare, then I might have cut my losses and moved back to the U.S. But as things stand, I’ve already been settled where I am for 25 years so have made my life and home here. So going back would still have probably been unrealistic.
Things are just the way they are and each person has to weigh it all up before deciding. It’s not black and white.
I also understand that the UK is collaborating with the US with all the internet surveillance going on behind the scenes…I suspect that if the US or even UK really wanted to go after someone, they would bend the rules so they could. We’re entering into an Orwellian world. But in saying this, I need to live my life and cannot let paranoia keep me frozen in fear. 😉
On the bright side, at least Tom Coburn didn’t mention the FEIE in his tax reform letter to Levin & Grassley about the 25 tax expenditures he hates the most
Rather surprising, giving the sentiments Coburn has expressed in the past
Be careful what you wish for. Every “reform” I’m familiar with that the US Congress has tried made things worse and more complex, not simpler. The US Congress is IMO constitutionally (pun intended) incapable of doing anything cleanly, simply, fairly and sanely. That whole political system is a terminal basket case and always has been. But I suppose I might be proved wrong on the score some day, in my wildest and most unlikely dreams … Not my problem personally, I left long ago, am not one of theirs, and I’m quite happy with the Canadian tax system (if not always with the results nor how the politicians spend the money they collect) which is a hell of a lot simpler, fairer, and more comprehensible. Almost no deductions, at least none I’ve ever been able to collect, but boy that does make for a short and simple return and a relatively much shorter and simpler tax code. Pork-barrelling and “log-rolling” (do they still use that word at all, or favourably, in describing the US Congressional system in high school down there) for two centuries or so comes at a terrible price. And the people charged with doing the “reform” are the same people operating under the same system that created the problem in the first place. Don’t hold your breath.
… besides I believe the majority of the Congresscreeps are lawyers, and they have a vested interest in making things so complex and messy that they and their present/former law partners and descendants can make fat incomes when they retire or get thrown out of office, “helping” Americans to make heads or tails out of their laws and procedures. If you want to reform a messy legal quagmire, arguably lawyers are the last people you should entrust for that reform job.
It’s been very quiet on the IGA front. Like to be a fly on the wall in the worldwide secret discussions.
You are not a fly. You are a mosquito.
I see that Bermuda has now agreed to a Model II IGA.
Monalisa: The statement that worldwide US tax is the price of US Citizenship has been a party line by many US based politicians and other ‘policy makers’ to justify the current laws/regs. No one ever makes the point that an Australian dual US citizen living in Oz may pay, after credits USD $ 3k more for the ‘priviledge’ but a US citizen living in Hong Kong may pay USD $200K for the same worldwide income for the ‘priviledge’ of holding the US passport. So the cost of the US citizenship (i.e. paying your fair share as a US citizen) varies widely based on where the US citizen in living – a disparity that can only be rationalized not as a cost of US citizenship, but rather, as the policy of the US that you either pay the government where you live or you pay US, but you can’t keep the money yourself. Of course, a nonsensical policy.
@Steve, of course. A lot of it also stems from America’s self-righteousness.
any meaningful and lasting tax reform can not tale place with reform of the legislative process in Congress.
last year Fareed Zakaria had a “may take on it“ topic of the inherent corruption of the tax code. For as long as I can remember public funding of pet projects and concessions in the tax code has been the American way of baksheesh. it is as corrupting as a scheme of bribery and back payments ever devised.
this Sunday he discussed rampant corruption of the legislative process, nearly 50% of retiring congress persons become lobbyist. he compared tow pieces of legislation 2 from the early 1930’s the one regulating the banks was less than 40 pages, to recent legislation Dodd-Frank 840 pages and Obamacare exceeding 2000 pages, the difference being concessions to the industries being regulated. Instead of being a legislature acting in the national interest, congress has become a finishing school for lobbyist
some of the changes must include a definition of the merits of any concessions made in the law
and mandatory review of the actual results against expectations within 5 years
and automatic expiry without a review
ending the practice of allowing amendments after a bill has been fully vetted in committee and scheduled for a final vote
fly on the wall? fly on the plane?
oops, wrong song, it isn’t on youtube, oh well
I wouldn’t be too quick to rule tax reform out. What is important is that some form of tax reform legislation happens – it may or may not pass. For a slightly more optimistic point of view:
“Mr. Baucus and Mr. Camp have been working on a tax package for months, but still refuse to discuss details. Both promise legislative proposals in the fall.
The seriousness with which Washington is taking that prospect can be measured by the number of trade associations that have popped up to engage on the issue, sporting names such as the RATE Coalition and the Alliance for Competitive Taxation.”
You might want to make some comments to this article.
Never say never, but with the debt ceiling fight upcoming, the nightmare of the new health care stuff rolling out in October (and it is a nightmare according to a good friend of mine who works in the home health care industry down there) and Obama offering only corporate tax proposals while the GOP is adamant that individual reform should also be on the table (and let’s not forget the latest “terrorist” nonsense and the growing unease on the NSA front), 2015 is probably the more reasonable guess. Congressional anything moves at the pace of a glacier down there. No way this gets done before year’s end and RBT will be the dead last reform they consider making at any rate. It’s corporations, wealthy, very poor, working poor and then the middle class (when they are very lucky). Yeah, I am a bit jaded but the current Congress is one of the least productive ever.
I hate to break your bubble but middle class pay a lower % in USA versus Canada. This is where the voters are and you have ridiculous mortgage interest deduction there. The rich pay a higher % in US than Canada.
Ranked 20th. Ranked 10th. 89% more than Canada
Contribution by middle 40% 33.4% 28.4%
Ranked 7th. 18% more than United States Ranked 13th.
Contribution by poorest 30% 6.2% 6.3%
Ranked 10th. Ranked 9th. 2% more than Canada
Contribution by richest 30% 60.4% 65.3%
Ranked 8th. Ranked 3rd. 8% more than Canada
I wasn’t speaking of how much in dollars they pay but just ranking them in terms of how their needs are assessed via Congress. While the middle class is a great and frequently referenced talking point, in terms of how much the benefit from the various programs and such – they are usually last. It’s not really about how much they actually pay but how much they THINK they are paying and where they think that tax money goes.
And it is really hard to gauge how much people pay in tax down there b/c they are taxed a variety of different ways and at multi-levels of govt – federal (maybe), state, county, municipality, maybe be school districts, possibly property tax, and then the various nickel and dime user fees. There can be sales tax at the state, county and city levels – depending. And let’s not forget that wages in the US are stagnating, so every year, they are actually making less than the year before but the various taxes don’t go away..
But tax vs individual income is a shell game. Look at the recent boast by the CRA that it raked in 1.7mil in unreported tax on tips. That’s money that is no longer being circulated in the micro-economy of that particular region, which ripples through the local service and retail industry. This loss probably results in more funding via federal programs needing to flow into that region. Shell game. Either the workers spend it or the Feds have to infuse it. But it is the same money.
But I am wandering in the weeds, the USG has debt. Lots of it. And it has social obligations via Medicaid, Medicare, SS (in its many different forms) and it has interest on its debt. And they labor under the nonsense idea that cutting taxes spurs job growth and investment in jobs. Wrong and wrong. But it buys votes. It’s all about buying someone’s vote.
If reforming the tax system would buy votes, it would probably happen this year. But I still don’t think so and remember, making USC’s “overseas” pay their “fair share” is a vote getter. Why get rid of a win/win?
“Unless the thinking at the White House radically changes, a grand tax reform deal is dead for this year and probably for the remainder of this presidency.”
Don’t mess with Taxes… The Daily Show
Part I – An old refrigerator full of rotten food. http://bit.ly/14Ghes1
Part II – Tax Reform just another of the countless 3rd rails. http://bit.ly/1bnK3s0
Part III – 50 yrs of secrecy to avoid Lobbyist Backlash. http://bit.ly/11XWjwD