Funny how you can move so quickly on this issue of corporate inversions but not those of American expats. So long then
While they may not be breaking U.S. laws, many of these companies are navigating a loophole in America’s broken and dysfunctional tax code. And while their shareholders may secure a temporary win, workers, taxpayers and this country all lose. America’s tax base erodes at a cost of hundreds of millions of dollars in revenue, increasing the burden on other companies and individuals. America also loses good jobs, talent, investment, and the ability to compete on a global stage.
Legal or not, this loophole must be plugged. Current law requires that U.S. companies reincorporating overseas must ensure that at least 20% of their stock is owned by their new, foreign partner. As chairman of the Senate Finance Committee, I am committed to raising this floor to at least 50% for all inversions taking place from May 8, 2014, on. I don’t approach retroactivity in legislation lightly, but corporations must understand that they won’t profit from abandoning the U.S. (NOTE: Senator what you are proposing is a massive treaty override that Canada and other US Treaty partners should fight tooth and nail).
@Polly: It was the Civil War Congress that first instituted citizenship based taxation–taxing Americans Abroad on income from US sources higher than wealthy Americans living in the United States (Wealthy was over $800 per year).
http://blogs.wsj.com/washwire/2012/05/18/tax-history-why-u-s-pursues-citizens-overseas/
While Union soldiers fought and died (Confederate soldiers too), Congress “ate peanuts and chewed tobacco.” They expanded the tax on Americans abroad in 1864 to include income from outside the United States. Even they didn’t dream of FATCA.
That is a short history lesson in how we got here. I don’t remember studying it in American history class.
@Blaze
And then too America was in some kind of desperation: Civil War. Now America is facing bankruptcy. But I still don’t get why they don’t find good solutions: tax reform to stop companies from leaving should be top on any priority list. This land of so many innovations – and yet they hold fast to an antiquated tax system which is harming the country`s revenue.
@Do you think this guy nails it?
Yes, he nails it. I am blessed to live in one of those countries and happily pay high taxes contributing to a stable society with across the board educational opportunities. However nothing is perfect and there is room for improvement. One of the challenges is making sure the system does not get exploited via EU laws insisting on equal access to education and grants etc for other EU citizens who come from nations without such a generous system. OTOH – the more well educated young persons that can be attracted to- and kept in- a country – the better. I am so lucky to be a Scandi.
http://m.tickld.com/x/wtf-is-wrong-is-wrong-with-americans-this-guy-nails-it
@Polly. Companies and People moving out of the US is NOT a matter of tax “loopholes” being exploited to let them escape. It is a matter that people come to the conclusion that they are no longer at peace and at liberty to build their lives whilst subject to the burden of continued existence within the “Berlin Wall” of regulations and taxation (and sometimes physical confinement as in the actual Berlin Wall or the sea surrounding a place like Cuba) and all else that they see wrong including the direction of politics and the cost of lobbying for “permissions” to do certain business (vide the Keystone thing presently as a large scale example). It is not a matter of Government and Politicians “allowing” companies and people to escape the burdens said Government and Bureaucrats are imposing on their fiefdom. If one is to be free of Tyrants and Enslavement then there comes a time when companies and people vote with their feet …. that is what built America over the centuries as people and businesses voted with their feet and left Old Europe, Eastern Europe, The USSR, Africa (in more modern times – in older times not so much), Asia and other locations around the Globe in search of freedom and opportunity. So America is now becoming a middle aged Tyrant and people and companies WILL vote with their feet. If History holds true then these people start doing this subconsciously as they grow up and start to be “juked by macca” at most turns and since there are few restrictions to leaving they do so – as time passes and things worsen and more restrictions are imposed then more people try to do EMIGRATION outwards Legally (aka using so called “loopholes”) – in due course as yet more begin to realize what they are stuck in they become more desperate to provide a better future for their children and grandchildren and they will start to ignore the laws perceived as unjust and will find any means necessary to move what they can (whether through black markets or otherwise) to a more free environment. These people are not of Criminal personality … they are not Evil People …. they are not mere “Tax Evaders” …. they are simply real, peaceful, mostly Middle Class people who just want to build their lives in peace and freedom … these tend to be the Producers of the Society, the Artisans, the Farmers, the Small and Medium sized Business People and then the Professional classes and the Oppressed Minorities … generally these are the people who do not fear hard work and risk … and they do often risk everything to escape the torment of Tyranny. FATCA and self important Politicians seek to further enslave these people. The true Robber Barons will survive happily within almost any Tyranny … with access to the Tyrants and privileged to extract more and more whilst making suitable “contributions”.
@nervousinvestor
I don’t know if we are talking past each other or not- but that was my point. Its NOT about the tax loopholes. Its about the antiquated taxation system.
Mr. Wyden, from Oregon, is chairman of the Senate Finance Committee seems to be one confused puppy. A dangerously powerful confused puppy.
@Polly: Citizenship based taxation has NEVER been about taxes or revenue. Going back to 1861, it has always been about punishing anyone “any citizen of the United States residing abroad” for having the audacity to choose to live outside of the United States.
Congress knew it in 1861 when they “ate peanuts and chewed tobacco.”
Today, Congress is using Foreign Account Attack to Control All to control and punish people, banks and countries around the world.
I think the situation we’re at now is that multi-national corporations are going to move their headquarters to anyplace with a competitive corporate tax rate (which is why the headquarters for Boots is now a PO box in Switzerland instead of Nottingham). The UK have a comparatively much lower tax rate than the US is simply doing what Ireland did in the 1990s to attract investment.
I haven’t lived in the US for some years but I get the impression that the attitude is “we’re number 1, we’ll always be number 1 and we don’t have to do a thing to attract people or businesses to stay here or come here, because we’re number 1”
@Polly. Sorry. I guess that I misunderstood the context of your post “But I still don’t get why they don’t find good solutions: tax reform to stop companies from leaving should be top on any priority list. This land of so many innovations – and yet they hold fast to an antiquated tax system which is harming the country`s revenue.”
I was responding to the concept that a Government must “STOP” companies from leaving. I argue that in a free country people and companies must be free to vote with their feet, no Government holding itself out to be the Government of a FREE and Democratic country has any right to STOP any freedom whatsoever. If Governments dont like that then the GOVERNMENT must change how they seek to control the environment (in every sense) within their country in order to ENCOURAGE and give companies (and people) the DESIRE to stay therein.
Sorry for the misunderstanding.
@ Blaze
It might have been about punishment in the 1860s. But now it is about tax revenue. They wouldn’t lift a finger if it didn’t make them money.
@Polly – As Blaze also notes …. the “country’s revenue” is not the point.
IMHO what matters is the Government’s Oppressive attitude of ownership, slavery and punishment versus a more Positive attitude reflected by the actions necessary to provide an economic and other environment in which people PRODUCE willingly and energetically and so generate growing Income and thus are able to contribute reasonable taxes to their community for the communal benefit. No government has any RIGHT to any revenue whatsoever – Bureaucrats produce nothing. Yet once again, it may be that I am just misunderstanding the words used … You may well have meant the same thing as I have just stated.
Peace and One Love
@CreatureOutside. Many is the country that has thought that “we’re number 1, we’ll always be number 1 and we don’t have to do a thing to attract people or businesses to stay here or come here, because we’re number 1″ ….. at some stage in History or even so far removed as in Antiquity …. and some even now still boast “we USED to be number 1”. LOL
The harder they come, the harder they fall.
Remember Rome …. before the Barbarians arrived in the scene …..
@Polly: It’s NOT going to “make them money.” It is going to cost them far more than any small revenue they may get.
It’s not about money. It’s about power, control and punishment.
You are trying to apply logic to people who are totally illogical.
Polly, if it were only about the US making money (to continue, among other pursuits, their warring ways) there are other ways of taxation they could try that might work better than their very punitive means of Citizenship-Based Taxation that they show no thought to changing. We see over and over again that some in the US Congress will try until something like the Ex-Patriot Act works (http://www.theatlantic.com/politics/archive/2012/05/why-the-ex-patriot-act-is-a-creepy-law/257368/).
As far as I’m concerned, US persons “inside” or “outside” are indeed chattel and the US policy is that it must control chattel leaving. Besides the legislation introduced, I see that over and over again in the comments to US media articles, the belief that those who chose to emigrate and make lives elsewhere, for whatever reason, are traitors with no rights to have left the homeland. So many US homelanders actually believe that and will not use their god-given brains to think beyond that. “One nation, under God, indivisible…” (with liberty and justice for all).” US “pride” is compulsory, over the top, misplaced. It really has little regard for the worth of other SOVEREIGN countries that their chattel has chosen to live and work in, whether permanently as most of us or temporarily as some of us. That any of our children who are “Accidental Americans” are caught in this is perverse — they had no choice where or to whom they were born. I was born and raised in the US, chose to leave the US, and chose to complete my penance in order to receive my Certificate of Loss of Nationality to be able to show to my local, CANADIAN “foreign financial institution” that I am no longer a US citizen, no matter where my Canadian passport shows I was born. For those who had no choice of where or to whom they were born, surely there should be an “opt-into” US citizenship if the facts permit rather than an “opt-out” of US (or any other country’s) citizenship. Anything else is ENTRAPMENT. I find that very punitive.
Even of those “accidentals”, my son and others like him with some “mental incapacity” cannot — for any amount of money paid to any US tax, accounting, immigration / nationality professionals, obtain that same release I have. In fact, I paid good money for this advice:
I have asked Members of the Canadian House of Commons Finance Committee to ask themselves if, since the US continues with its Citizenship-Based Taxation and will not release such persons with “mental incapacity” from their ENTRAPMENT into a US citizenship,
The US is well into the process of building their own Berlin Wall, absolutely by punishment — monetarily and by labelling those that leave “traitors” / “tax evaders”.
@Polly – My last post to you was in error … I needed to add the final paragraph that FATCA and CBT are about Ownership of a population of slaves or serfs. FATCA has a cost that exceeds any possible revenue that it is going to garner. One has to question the motivation for such a system …. the answer comes clearly … this is a perceived weapon of CONTROL and Domination (as has been threatened by Levin (D) and McCain (R) in the circumstances of the Russian / Ukraine difficulty).
There was a post on IBS a day or two ago regarding Columbia’s response to FATCA …. that it will now be taxing the assets secreted in the US by Colombian residents … 25% if the Colombians come forward now … or 70% when the Colombian Government discovers the assets. Seems to me that every country around the world will now see an open season to raid the US Treasury … since the US has been the Tax Haven and Money Launderette of choice for millions around the globe. I am sure that Mexican and Venezuelan and other Government jowls are dripping with saliva presently … FATCA is going to bite the US in the rear end … hard … and may do the same to Canada and elsewhere as well if they go along with FATCA ….since even Canada has been the recipient of investments from millions around the world seeking to hide money or other assets out of sight of whatever Tyrannical Government those people presently are subject to.
Let me go further … this might go so far as the seeking of reparations by (for example) say South America for the gold and silver and so on removed forcibly by Spain, Portugal and others including Yankees in the post Columbus era. This is a can of worms that could upset the entire world. Hotel California comes to mind.
@Calgary
Yes- I am acquainted with your case and it sounds like your son has become a warden of the state. I don’t know of any other countries that would not allow for an appointed guardian to make decisions for somebody who cannot think for themselves, but I suspect that America has previous cases where retaining citizenship was more than advantageous for that person- so they want to make sure that they don’t set up precedence where the law to protect somebody`s US citizenship could be endangered. So they don’t discern or differentiate. But I don’t think that they necessarily want to “control” your son. They just don’t want to have an exception to the rule which might cause them more headaches in future court cases. That doesn’t make it any easier for you or him. Its a very sad state of affairs.
@Blaze
I think we are trying to analyse the american psyche here and seeing that I have been away for over 50 years, i don’t think I could even do that anymore. Whenever I visited America in the past decades, I felt more and more like a foreigner who didn’t understand the mentality of the people. But still and even if it is about power – I think money = power. I think in the end, it is about money perhaps because as long as America remains the largest economy, America can retain its number one status in the world and nobody will attack it as long as they are buying their products. It is one of the main reasons that China doesn’t feed America to the wolves. They need those customers, and for the customers to remain, they have to retain buying power. Once that is lost most likely all is lost and the dollar will no longer be the worlds leading currency. But I don’t think anybody in America lifts a finger anymore if it doesn’t bring in a profit or attempts to. And if FATCA turns out to be financially disadvantageous, then they will bend it until it does work for them with a quagmire of changing rules and regulations. I don’t think it is good to underestimate the people who rule America. They might have their shortcomings, but I think many are very well-educated and they will (ab)use their power to reach their goals one way or another. In the end, they can always threaten with their immense armies. We can only hope it doesn’t come to that. But people with Ivey League educations aren’t dumb. We wonder why they won’t listen to reason ( even if there is a total lack of compassion) and thats why I think their is another plan behind what we see. It cannot be a total mistake? I just don’t know, because the Vietnam War was already a huge mistake. And as you said- the congress is eating peanuts and doing nothing. But whoever is in charge must be thinking SOMETHING?
@nervousinvestor
I think that once the system is in place, they will want to widen the definition of US person and tax the hell out of everybody else. But it is very possible that they really did not foresee the fact that they are the biggest tax haven, and felt invincible. For all their scapegoating they actually might have forgotten their own dirty secrets? I mean- they fuss about UBS and Credit Suisse harbouring tax evaders- when their own american banks have taken in South American drug cartell monies for decades. The big question is whether their own hypocrisy is going to come back and bite them in their own butt? But I am not a clairvoyant and cannot look into the future. I just would not underestimate the possibilities that might be sought out and enforced ( once again with force) and can only see a view to change from within. But having read here for quite a while, I am at a loss to see what could actually influence change in American policies if they don’t see any benefit for themselves in that change. This is why I think most arguments have to focus on what is good for America – because every time other countries have yelled “ouch” it was met with closed ears. And it just so happens that RBT would be better for the US economy than CBT, and FATCA itself is a bad law for (((America))) ! But lots of propaganda has been going on to create a common enemy- a culprit that everybody can love to hate, and makes people forget about their own problems and dire state of affairs. In some ways, it sounds like history is repeating itself in a sinister way. I worry a lot about the world.
My son is a ward of a foreign state — his country is Canada. Canada is where his family is and Canada is the country that provides his benefits and his culture. He receives absolutely NO BENEFITS by being a ward of that foreign country, the USA. The US is his warden (as in jailer). If citizenship is advantageous for any person (in any country), it should be by choice (an “opt-in” if the facts determine that is possible and wanted — with full realization of their responsibilities for that choice).
In my view, what happens right now is a HARVESTING of our children — they have absolutely no choice and the only out for them is the same convoluted process as for me or for you. That, in my opinion, is VERY, VERY wrong. I’m not talking about retaining citizenship — I am talking about ever having that extraneous citizenship “gifted” to you. It should be a CHOICE. Is that not part of what democracy is? Harvesting of our children into US citizenship is something I now see as something wrought of a tyrannical dictatorship type of country.
Of course the USA wants to control my son. And I’m not talking about JUST MY SON. I am talking about every “Accidental American” who had no choice to whom or where they were born. CHOICE is the operative word. No “Accidental American” should have to go through the hoops of losing a US citizenship. They should be able to CLAIM that US citizenship if that is their educated choice when they are of age and mental capacity to know what that means and to accept the responsibilities that go along with that choice. Having that automatically bestowed upon them (their butt tattooed with a red, white and blue US flag) is beyond belief to me. Choice would give any one of these “Accidental Americans” the ability to become US citizens if that was their well-researched decision. That is democracy. That is what a country with a moral conscious would offer. Their parents could, in rare cases — if there were some way that they would have no citizenship in the country they were born. That should be only an anomaly. Choice of citizenship as other choices guaranteed by a Canadian Charter of Rights and Freedoms or a US Bill of Rights should be that of the person — not a country. Anything that would allow entrapment is not based on any morality or justice.
@Polly: “You can lead a man to Congress, but you can’t make him think.” (Milton Berle).
You are giving them too much credit for intelligence. If there is any question about that, remember they renamed French Fries to Freedom Fries and renamed French Toast to Freedom Toast in Congressional restaurants because France refused to invade iraq with them.
Now, that was an educated and intelligent move! So much so, they even called a news conference to announce it.
http://www.cnn.com/2003/ALLPOLITICS/03/11/sprj.irq.fries/
One persons ‘border baby’ is another’s ‘anchor baby’. Very few homelanders have ever explored the concept of US citizenship being a burden to any one. I can’t see how even defenders of CBT can find any merit in it when it comes to your sons situation, which is the most egregious application of this stupid law. Did Mr Kirsh address your son’s situation during the CBT vs RBT debate?
Abraham Lincoln; “The best way to get a bad law repealed is to enforce it strictly.”
CBT has only survived because it’s never been truly enforced against anyone, let alone against people who for whatever reason cannot renounce US citizenship. America’s dirty little secret needs to continue being told by people like you. Thank you.
@Blaze
I remember the response from the French Embassy was something to the effect of
“As far as we are aware, ‘French Fries’ come from Belgium. Other than that we have nothing more to say…”
More recently, “Chuck” Schumer advocated sanctions against the UK for the decision of the Scottish government to release al Megrahi.
That’s real gratitude to the UK for ‘standing shoulder’ to shoulder in Afghanistan and Iraq
I just came up with a new saying that applies to CBT:
The best way to keep a bad law on the books is to continually make exemptions to the application of it!
@bubblebustin
I had no clue the US had CBT to begin with. I thought if I am not there… I pay taxes on the items I have there & they don’t care about the rest. US is suppose to be progressive & want growth…. because of this… I now know about CBT & a leash around our necks. I ask my friends & family in the US about CBT… not one person knew & they were educated in the State. Maybe the new immigrants & emmigrants now know because of the internet… didn’t have the internet when I started moving place to place… Never even thought of checking tax info.. should have studied the tax code instead of worrying about roof over our heads & food.
@creatureoutside
…and the message trickled down to the people is that it’s ok to key the cars of Canadians who choose to spend their Canadian dollars in Washington state -all because Canada didn’t join the US in Iraq. Violence begets violence…
@Calgary
I hope you know that you are preaching to the choir here? I`m on your side.
@Blaze
Even Hitler was intelligent. Sadly.
But yeah- nothing worse than power sans intelligence.