This post appeared on the RenounceUSCitizenship blog.
We know that Mr. Cruz plans to renounce his Canadian citizenship. The assumption is that this will be easy for him to achieve. This is because:
1. Unlike the United States, Canada views citizenship as voluntary membership in a political community. The United States views citizenship as as a form of “servitude” to the state;
2. The assumption is that Cruz was also born a U.S. citizen or will become a U.S. citizen. In other words, Mr. Cruz would have another citizenship to go to if and when he renounces his Canadian citizenship. Mr. Cruz better hope that Canada will simply accept his claim of being a U.S. citizen (without forcing Mr. Cruz to prove his U.S. citizenship).
In any case, nothing will ever change the fact that Mr. Cruz was “foreign born”. Nothing will ever change the fact that he was born Canadian. But, that’s not necessarily a bad thing. After all the number one pick in this years NBA draft – Anthony Bennet – is a Canadian. Perhaps Senator Cruz should position himself as the “Anthony Bennet of U.S. politics”.
As has been well documented, Senator Cruz should be eternally grateful that he is trying to divest himself of the citizenship of a country that regards citizenship as a voluntary association. He would have great difficult divesting himself of his U.S. status.
— U.S. Citizen Abroad (@USCitizenAbroad) August 23, 2013
As one RothCPA noted:
Ted Cruz is lucky it wasn’t the other way around. The Texas Senator recently learned that he is an accidental Canadian citizen because he was born in Calgary. His American mom moved back to the U.S. when he was four and the Senator apparently never considered himself a Great White Northian.
Now he plans to “renounce” his Canadianhood, presumably to make his political life easier. That’s fine for him, but I hope he ponders just how lucky he is that his life didn’t go the other way. If Ted Cruz’s mom were a Canadian who brought him into the world in Fargo, and then moved him as a toddler back to Canada, he would be up to his toque in problems with the IRS.
Assume our alternate-world Ted Cruz – we’ll call him Canada Cruz — had become a successful Canadian lawyer and politician. Given his $3.5 million net worth, he certainly would have opened substantial bank and brokerage accounts in Canada. He would have significant retirement plan assets. And, like many accidental Americans, it would probably never have occurred to him that his American citizenship obligated him to file FBAR reports and U.S. tax returns reporting his Canadian income.
The Treasury might claim half the balance of his financial accounts for each year he failed to file Form TD F 90-22.1 – or a mere $10,000 per year if they decided his violation wasn’t “willful.” If he attempted to participate in the OVDI “amnesty” program to clean things up, he would probably be told to cough up “only” 25% of the balances in all of his Canadian accounts, and to file US returns paying tax on “all tax years” covered by the disclosure. Assuming $3 million of his $3.5 million net worth represents financial assets, Canada Cruz would have to fork over at least $750,000 as a result of being an accidental American. Just in case you wonder why people might renounce U.S. citizenship.
For those who doubt this, let’s compare Senator Ted Cruz of Texas who born in Canada and left Canada for the United States when he was four, to New Brunswick Premier David Alward who was born in the United States and left the United States for Canada when he was a young boy. In a 2011 article, the Wall Street Journal’s Laura Saunders included Premier Alward in an expose of non-U.S. residents who “confess”ed to having not notified the IRS that he had a bank account in his province of residence. If Premier Alward wished to renounce his U.S. citizenship he would be forced to come into U.S. tax compliance (remember he lives in Canada). In fact, it has been widely reported that Premier Alward is in OVDI. What might it mean for David Alward – middle-aged man, born in the U.S., but who has lived most of his life outside the United States? Consider the following comment:
Those now faced with an unprecedented, even retroactive, enforcement campaign and who must, if they wish to become compliant and avoid penalty or even prosecution (should they be identified in the future), sacrifice much of their wealth, even become insolvent.
The above quote is “lawyerspeak” for:
The IRS is stalking U.S. citizens abroad. Once found the IRS is confiscating the assets of Americans abroad under the guise of PFIC penalties, the FBAR Fundraiser and the like.
But it gets worse. With FATCA the U.S. is attempting to get other countries to at the expense of that country to:
– find U.S. citizens who reside in their country;
– turn them over to the IRS;
– allow the IRS to confiscate money and assets earned and accumulated in that country.
In other words through the combination of citizenship-based and FATCA the U.S. is attempting to extract a share of the economy of every country with resident U.S. citizens. So far, there has been little backlash. The reason is that these countries don’t understand the confiscatory intent and effects of FATCA.
But, back to Senator Cruz:
So, “born in Canada” gives you Canadian citizenship but “born in the USA” gives you American ownership. Once that wad of US personhood is attached to your sole you will have to pay a big price to have it scraped off and you might even have to chew your foot off, like an animal in a leg-hold trap. Canada just attaches an easily removable post-it note with instructions on how to let them know you no longer want or need to be a Canadian.
Fortunately for Mr. Cruz he won’t have to “chew” his foot off to end his Canadian citizenship. Many a U.S. citizen abroad will be forced to choose between their feet and their freedom. Such are the laws in the “Land of the
flee, sorry I meant free.” The irony is that Mr. Cruz is using the laws of a relatively free nation, which provides “post it note instructions” for how be free, to enter an “animal trap”.
It would be interesting to know what Senator Cruz thinks of the immorality and conduct of the Obama IRS and citizenship-based taxation in general!
With that introduction, I thought it might be interesting to meet Senator Cruz. He is clearly a fan or Rand Paul. Would he share Rand Paul’s bill to repeal FATCA? Who knows. He could be the first Canadian born President of the United States. He comes with a very impressive resume. I found this be of particular interest:
Cruz graduated cum laude from Princeton University in 1992. While at Princeton, he competed for the American Whig-Cliosophic Society‘s Debate Panel and won the top speaker award at both the 1992 U.S. National Debating Championship and the 1992 North American Debating Championship. In 1992, he was named U.S. National Speaker of the Year and Team of the Year (with his debate partner, David Panton). Cruz was also a semi-finalist at the 1995 World Universities Debating Championship.
Cruz’s senior thesis on the separation of powers, titled “Clipping the Wings of Angels,” draws its inspiration from a passage attributed to President James Madison: “If angels were to govern men, neither external nor internal controls on government would be necessary.” Cruz argued that the drafters of the Constitution intended to protect the rights of their constituents, and the last two items in the Bill of Rights offered an explicit stop against an all-powerful state. Cruz wrote: “They simply do so from different directions. The Tenth stops new powers, and the Ninth fortifies all other rights, or non-powers.”
He fully supported the #standwithrand filibuster to protest the Obama drone attacks. For that alone, he would have my vote.
I encourage you to watch the video in its entirety. Don’t want to watch the whole video. Pick it up at the 28 minute mark. It strikes me there are areas where he could be an ally. I can see a Rand Paul – Ted Cruz ticket in 2016!
What he doesn’t acknowledge is how lucky he was born in Canada and how unlucky Premier Alward was to be born in the United States!