A law enforcement officer who is an “Accidental American” writes the Prime Minister asking for the protection of the Canadian government.
Dear Mr Harper;
According to a story in the National Post dated September 20, 2012 the Canadian government forced Eritrea to nix a ‘2% extortion tax’ on its citizens in Canada. According to the story, the RCMP and United Nations reported that those who refused to pay were subjected to threats, intimidation and coercion. Canadian Foreign Affairs officials sent off a strongly worded diplomatic note making it clear Canada would not renew the accreditation of the Eritrean consulate unless Eritrea agreed in writing to stop the scheme.
Eritrea, referred to by many as the “North Korea of Africa”, is one of the most highly militarized, secretive, corrupt countries in the world. And that is not all it has in common with the US under this current administration. These are also the only two countries in the world that collect taxes based on citizenship, not residency.
I am a “border baby”. Back in the 1950’s, when the US was a friendly, benign neighbour, it was not uncommon for expectant mothers to cross the border, have their babies and return home to Canada. That is my only connection to the US. My parents are Canadian and I am Canadian, but I was born in the US. That fact was always just a novelty until recently.
As you are no doubt aware, on March 18, 2010 the US government (Democrat) passed the Foreign Account Tax Compliance Act (FATCA) which is set to come into effect on July 1, 2014. Under the guise of targeting tax cheats and money launderers, this law affects and will potentially devastate hundreds of thousands of honest, law-abiding, tax-paying Canadian citizens. Many of these Canadian citizens, myself included, have never lived, worked or voted in the US. We do not have the same rights as “other” US citizens. For example, I have a daughter attending university in the US. Her life would be made simpler if, like real US citizens, I could pass on my citizenship to her. Because I have not lived in the US for five years (I have never lived there), I cannot pass citizenship on to her. In other words, because I have never lived there I do not have the same rights as other US citizens, but apparently I still have the same obligations.
FATCA is an obvious violation of the Canadian Charter of Rights and Freedoms (not to mention privacy, human rights and banking laws). Having worked in law enforcement for 32 years, I have seen the worst criminals in Canadian society afforded protection against unlawful search and seizure. I may be naive, but I would like to believe that the Charter affords the same protections to honest citizens that it does to our most heinous criminals. FATCA is a classic “fishing expedition”, and I trust your government is not going to sign any Intergovernmental Agreement (IGA) with the US in an effort to deny me, and others in the same situation, the same rights afforded Paul Bernardo. It is clear that the current US administration has no respect for their own Constitution, so I do not expect them to have any respect for ours. I do expect you, as leader of our sovereign nation, to ensure that our laws are respected.
Your government has been talking a lot about bullying recently. Public Safety Canada has a document dated November 18, 2013 titled “Protecting Canadians from Bullying and Cyberbullying” which starts, “The Harper Government recognizes that bullying and cyberbullying are serious concerns for Canadian families and communities.” Is your government going to back up its talk with action, and stand up to the bullying by the current US administration? Please do not pretend that you are concerned about bullying if you are just going to be bullied into signing an IGA as a way of bypassing protections that should be afforded all Canadians. It appears I have the misfortune to be a second class citizen in two countries. After a lifetime of paying taxes and volunteering and making a positive contribution to this country, I think the least I can expect is for my government to afford me the same protections given those who came here from Eritrea who likewise were subject to threats, intimidation and coercion by a foreign government. It is easy to stand up to Eritrea, but it takes a principled government to stand up to the most powerful bully on the planet. I would like to point out that my Certificate of Canadian Citizenship certifies that I am “a Canadian citizen under the provisions of the Citizenship Act and, as such (am) entitled to all the rights and privileges and (am) subject to all the duties and responsibilities of a Canadian citizen.” I have lived up to my obligations, are you going to live up to yours?
The actions of the US would appear to be a violation of The Master Nationality Rule, which is listed under Article 4 of The Hague Convention on Certain Questions Relating to the Conflict of Nationality Laws of 1930. In terms of practical effect, it means that when a citizen is in the country (Canada) of one of his two or more nationalities, that country (Canada) has the right to treat that person as if he or she were solely a citizen or national of that country (Canada). In other words, I am solely a citizen of Canada while in Canada. If I am not afforded the same protections as other Canadians, that is a violation of section 15(1) of the Charter which states, “Every individual is equal before and under the law and has the right to the equal protection and equal benefit of the law without discrimination and, in particular, without discrimination based on race, national or ethnic origin, colour, religion, sex, age or mental or physical disability.” Am I not entitled to the same protections offered Canadian citizens born in Canada or Eritrea?
As I understand it, some other countries (including China and Russia) are resisting the implementation of FATCA, particularly unless the US reciprocates, which is clearly not going to happen. Under Article 6, Paragraph 1 of the IGA released today, under the heading Reciprocity, it states, “The Government of the United States acknowledges the need to achieve equivalent levels of reciprocal automatic information exchange with Canada. The Government of the United States is committed to further improve transparency (comforting from the most transparent administration in history) and enhance the exchange relationship with Canada by pursuing the adoption of regulations and advocating and supporting relevant legislation to achieve such equivalent levels of reciprocal automatic information exchange.” I am no lawyer, but I can easily see that we are selling them the farm and they are promising to try to come up with the money (which they know they cannot achieve). I have learned two things watching the current US administration: 1) they treat their friends like enemies and their enemies like friends; and 2) they are bullying thugs who, like most bullies, will back off when someone stands up to them. I am quite certain that you know there will never be reciprocity, but you let them use the weasel words to avoid something they cannot achieve.
Was taxation without representation not the catalyst behind the Boston Tea Party? Jacob Silverman, in How the Boston Tea Party Worked states, “Unlike their British brethren, the people living in the 13 colonies did not have direct representatives in the British parliament. Because of that, the colonists had no way to vote for how they would be taxed or who would represent them. And because of this lack of representation, the British government was free to tax the colonists in any way — and for any amount — that it saw fit. With no way to fight taxation and no way to claim their rights, many colonists feared that their property could be taken away through debilitating taxes.” As a result of the current US administration’s disdain for their own Constitution, the US has come full circle and turned into what it once despised. Like those colonists, I have no good option. I should have an advantage over them, in that Canada is allegedly not a colony of the US, but whether that is true or not will be seen in how our government resolves this issue.
From my investigations, here are my options:
1. Turn myself in to the IRS and admit I am a tax cheat and a money launderer and trust that they, in their benevolence, will figure out that the fact I do my banking in Canada where I live, work and pay taxes has nothing to do with hiding money in offshore bank accounts. While I cannot imagine that I would owe any US taxes, they have it set up so their penalty schemes (in particular regarding FBARs) could amount to hundreds of thousands of dollars. Even to try to become “tax compliant” at this stage would cost a minimum of thousands of dollars in tax lawyers/preparers fees and tens (or hundreds) of thousands of dollars in penalties – all for no taxes owed. This is not a good option.
2. Renounce my citizenship. I would be happy to do that to avoid FATCA, FBAR and having to deal with an out of control US administration. From my investigation, in order for me to be allowed to drop my citizenship, the IRS will require a net worth assessment of all my assets and will tax me on what I have spent a lifetime accumulating before letting me go. This is also not a good option.
3. Trust the Canadian government, who I have paid taxes to for the past 40 years, to exert its sovereignty and stand up for its citizens. Trust that the Canadian government will assert that all Canadian citizens are equal and have equal rights and will insist that the US leave Canadian citizens alone, or at least provide an easy means to relinquish US citizenship without being extorted. This is the option that I am hoping for so I do not have to resort to option 4.
4. Bury my head in the sand and hope for the best. Do my best to hide my modest bank accounts from the IRS and continue to provide for my family. Trust that the Canadian government (which did not live up to its obligations under option 3 above) and Canadian banks will not take my money and turn it over to the IRS. Run the risk of spending the rest of my life in jail the next time I cross the border into the US. Recent postings out of Belgium indicate that Belgian banks are seizing customers bank accounts until they can prove they are US tax compliant. Is this what is in store for Canadians?
This is not a situation I even could have imagined would be possible as I approached retirement. This type of behaviour is not surprising for Eritrea, and I guess it is also the norm in Obama’s US. I recently read an article with the headline, “U.S. Treasury Department officials dispute claims that FATCA is causing hardships for law-abiding Americans living outside the U.S.” They know the hardship it is causing, but are wilfully blind and people like me are the low-hanging fruit. There is no political downside to this for an administration whose every act is based on politics not principles. If they raised taxes on Americans, there would be a political price to pay. If they try to financially decimate Canadians, who cannot vote and do not have representation in the US, there are no consequences.
Canada is definitely not a tax haven and the taxes paid here far exceed what would be paid in the US. This should not be a matter where the Minister of Finance tries to find a way to acquiesce with American demands, but where the Minister of Foreign Affairs lets the US government know that we are a sovereign nation, not a US colony. Otherwise, you should seek an amendment to the IGA released today, under Article 1, Definitions, Paragraph 1 b) to say, The term “U.S. Territory” means American Samoa, the Commonwealth of the Northern Marian Islands, Guam, the Commonwealth of Puerto Rico, the U.S. Virgin Islands, or Canada.
The doctrine of dominant nationality deals with situations where two or more nations claim jurisdiction over an individual based on dual nationality, which may lead to disputes between the nations claiming the allegiance of the person. Considerations by which an individual’s nationality would be evaluated include habitual residence, the conduct of the individual in his economic, social, political, civic and family life, as well as the closer and more effective bond with one of the two States.
I grew up near the US border and crossed the border almost daily. I have met lots of Americans and had lots of American friends. The best man at my wedding was an American. Most Americans I have met are just like me: honest, decent, hard working people, trying to earn a living and raise a family – and banking where they live. I have always had a great deal of respect for Americans and the US as a general rule. That is why my criticisms of the US have all been prefaced by the “current US administration”. I have seen a big change in the US under this administration. Currently, each branch of the US government (including IRS, FBI, EPA, NSA) is used as a weapon to punish political opponents. For the Canadian government not to recognize this, and take a firm stand against this tyranny, is to do so at your own peril. If you are willing to sacrifice people like me today, who will they come after tomorrow?
The Republican National Committee approved a resolution on January 24, 2014 calling for the repeal of FATCA. Headlines around the US are portraying the GOP as trying to shelter millionaire offshore tax cheats. Americans have no idea that this law will not catch tax cheats or money launderers, but will devastate millions of honest citizens who are no different than them. This piece of legislation has forced traditionally pro-American people like myself to come to detest Obama’s America. Should the Canadian government not be trying to engage the US media and enlightening them on the true nature of FATCA?
Please assure me that your government, fresh off a principled tour of the Middle East, is now going to exhibit the same principled stand against the current US administration. It is worthwhile considering the number of Canadian voters who will be affected by this (they all will at least indirectly, some just do not know it yet). I, and all the others directly affected by this, will easily recognize if we have been betrayed by our government and act accordingly where we do vote (Canada).
(I used my real name in the letter forwarded to Stephen Harper and CC’ed to Scott Armstrong, John Williamson and Ted Hsu.)
This post first appeared, February 5, 2014.
Your MP needs to be educated. Does he not understand that anything outside of the specified registered accounts over 50K are reportable? Not even ALL of the registered accounts were included in the list, for example LIRA’s which are pretty common. I have one of these that I got when my pension plan was closed up after I left a company I worked for. It is like a RRSP only, untouchable until age 65. Does he know that when you sell your house, and the money goes in to your bank account, it becomes reportable?
The way our politicians are acting, its like this is such a good deal, and no one (except for those who haven’t structured their accounts properly) is going to be reported on. If that is the case, then why are we doing any of this? If it is only a tax sharing agreement, and USA will never be able to collect, why are we doing all of this?
For three pieces of silver…
I just talked to my lawyer and he confirmed what we have discussed here – that MP’s are mistaken in telling people that the IGA protects them from reporting to the IRS. He also told me that there’s a well known CPA spreading this misinformation around too.
He did say, however, that he feels confident that the carve-outs in the IGA (RDSP’s, etc) will be dealt with in the next treaty negotiation.
“why are we doing all of this?”
Because they can. Information sharing and integration from disparate sources is the ultimate in IT, the new wave. Once it’s accomplished the natural question for “stake holders” is: what to do with it? The combination IRS/Treasury/Homeland Security tapping into other countries data bases is a solution looking for a problem…
As I try to wrap my brain around all of this (while continuing to perform my daily duties), a number of thoughts occur to me. When I inform someone of their rights (e.g. to counsel, to remain silent) they can choose to waive any or all of their rights. I have never been allowed to waive any of their rights for them. In this case, I did not agree to waive my right to be treated the same as every other Canadian, but it appears that the Canadian government waived that right for me. I recognize that the Canadian government is in a difficult position, but I was naïve enough to believe that an individual’s rights were not something a government could negotiate away for economic reasons, or to benefit others. Guess my “clients” better watch out, now that I know I can waive their rights for them! As many have stated here, I believe that I have been discriminated against based on my national origin.
Canada was bullied into negotiating away my rights without my consent and I still oppose that decision and hope we can be united in finding recourse, either through the courts or at the ballot box (or both). Having said that, it would still appear to me that the architect of this situation is the US government. I often hear about American Exceptionalism and have wondered what exactly it means. From my perspective (based on Citizen Based Taxation) it seems that the US suffers from Narcissistic Personality Disorder, and constantly needs confirmation that it is superior. Anyone who rejects the US (i.e. renounce, relinquish) needs to be punished. It seems people like me should just feel so blessed to have American citizenship that I would willingly sacrifice all I own for that privilege – all while getting nothing in return.
As has been stated repeatedly by many posting on Isaac Brock and Maple Sandbox, the cause of all this grief is Citizen Based Taxation. I don’t think any of us have a problem with targeting tax cheats – at least I didn’t until I found out via FATCA that I somehow got included in that group! Is there enough intelligence in the US government that someone there may realize that CBT is well past its “best before” date and do something about it?
We all have some things in common (e.g. “US persons”), but at the same time we each have certain specific differences in our situations that make each case unique. I believe that I should have a strong case for relinquishment, but right now I have the same mindset as @Petit Suisse above. Until I am confident that I can relinquish without problem, I will continue with option 4. If the next time I cross the border I am led away in handcuffs, I will say, “I made a relinquishing act back in 1982!” and hope for the best.
Right now, I should have no worries about reaching the FATCA threshold of $50,000 (kind of sad at my age). My concern remains FBAR, which as I understand it does not exempt RRSPs, RESPs or TFSAs. My children now have spent the RESP’s getting an education, but they were still in my name within the required filing period. It seems to me that the longer I can fly below the radar, the more distance I put between myself and those accounts. I still find it unbelievable that you put aside your “after tax (Canadian) dollars” to educate your children and the US somehow feels they are entitled to it. Is that sense of entitlement part of the narcissism known as American Exceptionalism?
I’m resigned at this point to where the only thing I can deal with anymore is my marriage. If only I could do that, go back to being blissfully ignorant, and just let the rest of the world go to Hell, maybe I can salvage the remainder of my sanity.
As troubled as I am as a US person to see the US government bully the world with FATCA, as a resident in Canada, I am much more troubled that the Canadian government would just roll over and sell out its own people like this, and for what? To protect bank profits? To get a pipeline in a quest to be a crooked petrostate?
I’ll never understand it.
From one of the most valuable documents on this site, pacifica’s Consulate Report Directory, lined at http://isaacbrocksociety.ca/consulate2/:
I agree with everything. However, I can’t help but think that your parents made a gamble when you were born, hoping there would be benefits from you being born in the States. You kept that up with dual citizenship. You’ve been going back and forth almost daily. Hardly sounds like a novelty.
Who are you and what do you base your opinion on? In a word, Bulls***.
tonyr, your statement comes from a position of assuming that US is special. Get over it. Its not.
In rural areas near the Canada/US border up through the mid-20th century, it was rather common for both Canadians and Americans to use the nearest doctor and hospital, regardless of which side of the border. It was a different era. So much for ulterior motives.
@pacifca, Of course your point is right on, but regardless of that, who the hell are people like TonyR, to even suggest that someone born in USA who left as a baby (or left anytime for that matter assuming they paid their US taxes WHILE THEY LIVED THERE), owe the USA fuck all.
@Pacifica, just in case it was not clear, I was not directing my question at you! I was expressing my disgust with TonyR’s uneducated, arrogant, ignorant comment.