Liberty and justice for all United States persons abroad

The Isaac Brock Society

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The article referenced in the above tweet includes the following radio interview. If you want to get inside the minds of Homelanders – this is a must listen. Only once is there an acknowledgement that all an inversion would do is mean that the U.S. would not tax profits earned in other countries. It’s as though they assume they have the god given right to tax activities in other countries that are NOT connected to the U.S. (Well except for the fact that the company is incorporated in the U.S. But, then again, maybe this does make sense because the U.S. citizens and U.S. companies are U.S. property!)

The interview is in the above tweet.

Of course one could look at this from a non-U.S. perspective:

 

 

This all raises the issue reflected in the following comment on a recent Robert Wood article:

Robert – great to see you continue you on. I am convinced that the blogs of today will be the history books of tomorrow. Your blog is giving a – play by play description – of the end of America. The fact that some will laugh when they read the previous sentence is proof.

This is a fascinating topic which spreads beyond tax. It involves politics (the dysfunctional nature of it), sociology (what kind of country is America), psychology (how can be people stupid enough to believe the Obama lie?) and more.

All these points aside, what strikes me is this:

Few (and mean very few) even understand the issue here. This is NOT about U.S. companies paying U.S. tax on U.S. profits. It’s about whether U.S. companies should pay taxes on non-U.S. profits that are in no way connected to the U.S. In broader terms its about whether the U.S. has any moral right to tax anything that is not connected to it. It’s about whether the U.S. has the right to levy taxes on citizens of other nations, on residents of other nations, on profits and incomes earned in other nations because those people may have born in the U.S.? (Yes, that’s exactly what the U.S. is doing and it’s why people are desperate to prove that they are not American.)

Yet, nobody sees the problems in those terms. Why not? Obviously because the U.S. tax code is so complicated that nobody understands it. In fact few tax lawyers and accountants understand it in its entirety (or even close).

Since the tax code can’t be understood, it makes it impossible for anybody to even participate in an intelligent discussion about tax policy. The extent of the complexity also means that the Internal Revenue Code is the best place to hide “legislative evil”, “legislation that is designed only to benefit special interest groups”” and more. So, if you are an evil person, you call up your Congressman and get him/her to do some “legislative evil” by:

1. Making a change to the Internal Revenue Code (ensuring it won’t be understood); and

2. Tacking it onto a completely unrelated piece of legislation (ensuring that nobody will know it’s there anyway) until it’s too late.

Oh my God! That’s exactly what FATCA (as one of many examples) is.

In other words complexity coupled with the form of “democracy” (dysfunctional) in America is making all this possible.

Anyway, there should be an open debate. But, the debate is NOT about Patriotism. It’s about whether:

The U.S. should be attempting to tax profits, property and people that have no economic connection to the U.S. Of course it shouldn’t. But it is trying to do just that.

The attempts to tax people, profits and property that are not connected to the U.S. are the reason why:

1. U.S. citizens abroad are forced to renounce their citizenship to even survive (the numbers don’t include the large majority who are just giving up and never returning to America); and

2. U.S. corporations are doing inversions (what some suggest is corporate renunciation) in order to be competitive.

You know, I was describing this situation to a friend who like me is a “Patriotic American” and his response was:

If that is true, I am worried about the very survival of the U.S.

It won’t survive without major change. The country is crying for change. The country must have change that “we can believe in” – the real kind, not the platitudes of election rhetoric.

To those reading this post in the year 2124 (probably in a course called “The Rise and Fall of the American Empire):

Hello.

 

 

 

 

27 thoughts on “Must listen interview with @SenCarlLevin – Corporate inversions, renouncing citizenship”

  1. You must understand the mentality of the U.S.Politician. They are mostly descendants of European Socialists who came here to subvert our Capitalist system to their version of Socialism. The Americans won’t accept socialism if they are told what it is, so the politicians pretend to let us keep our homes and businesses and then they over tax the property for teacher pay and palacial schools used 9 months a year and about 8 hours a day and with the Marxist Income Tax they take what the businesses earns without any management responsibility. They also have control of our schools, from grammer school thru university and our younger generation will be good socialists without even knowing what socialism is. This is why Carl Levin and his ilk keep their political jobs long after they are rich from insider trading, legally, then using our own money they buy our votes, from a new majority who vote for a living instead of working for a living. Got It???

  2. Instead of adapting to the world as it is, Levin and Company are trying to handcuff individuals and companies to the US tax system.

    It may work in the short term, but long term companies won’t commit to the US and will keep their business ties at arms length. Ironically it’s US corporations that will suffer most allowing foreign companies to swoop in the US and take their profits.

    As it was once said the US was founded by geniuses and is run by idiots. Somethings never change.

  3. This interview provides a window into the mindset of Homelanders. What they are really trying to defend is the right of the U.S. to levy taxes on things that are not connected to the U.S. It didn’t even occur to the people interviewed that there is anything wrong with that.

  4. Prediction: Without a change in attitude and understanding in the U.S., the United States of 100 years from now will be similar to the North Korea of today. The Homelanders (because they have never seen anything different will believe that they live in the most free and most wealthy country in the world).

  5. I have not seen the word “double taxation” in these articles, or emphasis that the tax being avoided is not US tax on US earnings, but US double tax on foreign earnings. Nor have the corporates highlighted in these articles how they are getting caught between two tax regimes. Such getting caught between two different regimes is one of the themes of IBS,

    There is a downside for the aims of IBS for officials in the US to draw parallels between inverting companies and US citizens abroad renouncing. In many countries the taxes are far higher than for people living in the U.S. Higher even before the U.S. tax is added on top + the U.S. compliance burden and time involved with this.

    May we try to influence commentary on these inversions to make sure certain points are called out?

    Obama appears to be diverting attention with his aim at inverters. For one he is aiming at a symptom rather than the problem itself. Next what about the companies like his top 20 donor GE who makes billions yet pays no US corporate income tax? Mr. Obama, shouldn’t you focus on GE, and the laws that allow a GE to pay $0 corporate income tax? I would not mind that marginal tax rate, maybe I make a few billion too short!

    How about all those companies using legal techniques such as the double dutch sandwich to really minimise corporate tax and locate in corporate tax haven countries such as Ireland. Mr. Obama, maybe a law change is needed here, as these practices are not only hurting American corporate income tax but also the corporate income tax revenues of all countries of the world. Hopefully this really will be highlighted at the upcoming G20 and spotlight the US as a “bad” actor in this scene.

    Speaking about inverting and diverting, is this a diversion from the aims of IBS?

    Just saw this one: http://www.birchgold.com/economy/fatca-after-july-1 On more downsides of FATCA to the world economy.

    “get inside the minds of Homelanders”

  10. @George
    Yes- sometimes I find it too excruciating too. I`m not a genius by any means – but the “solutions” these people come up with and are endorsed make me feel sick to my stomach not only because they are cruel, but they don’t really make any sense.

  11. @USCitizenAbroad – Once the North Korean’s government falls in the next 10 years or so and reunites with South Korea, it’s possible the former North Korea will have a better standard of living than a United States in 2114. It’s all very possible.

  12. I think GE has a very substantial international presence.

    As long as the marginal tax rate of the US is higher than all other countries, GE and other companies will do everything in their power to make sure that profits are taken in the correct countries.

    For example, an independent supplier has the ability to determine (with his customer) the markup upon his component that he sells to an OEM. It could be 50% or it could be zero.

    The Oiginal Equipment Manufacture (OEM, such as GE) has the ability to determine (with its own customer) the markup upon his final product. The final customer puts a limit upon the final product price and the profit is shared between OEM and supplier.

    When the supplier is a separate company that is a fully owned subsidiary in another country, the supplier can decide the markup with his customer. This has some controls (transfer pricing) but is difficult to control.

    So, any company can, should, and does manipulate its costs from suppliers and markups to customers in order to place the profits in the appropriate country. The country that has the most attractive tax rates will be the country which receives the most profits and gains the most wealth for itself.

  13. I can’t bear to listen to that destructive old dinosaur. I object to their use of language conflating what companies are doing with giving up citizenship.That’s a truly aggregious way to frame this as it is using the plight of individuals and conflates their problems with the problems of big corporations who will NOT have to “renounce” They are reminding me very much of the McCarthey era witch hunts and fear mongering about a communist around every corner. They are using fear and capitalizing on the pain of others. What a crock this whole thing is. All propaganda and circus rhetoric. If they were so worried about inversions they could just make them illegal and be done with it. They aren’t going to do that so this is all just destructive posturing and base ramping up.

    @Wilton, will have to disagree with your analysis. I’m not nearly as afraid of a social democracy which Canada has been as I am afraid of all this patriotism talk going down the path of McCarthy era witch hunt status. I have no problem paying my taxes where i live and am most especially happy that some of that pay goes to teachers.

    At any rate the fall out to individuals and familys who are innocent from FATCA is real. Their “fall out” is being exploited as a way to attack these inversions. Carl and Sandy are shameless.

  14. If I am not mistaken, both Sandy and Carl are running of election in November of this year. This could explain picking on a en emotionally-charged topic which will face limited resistance given the right spin.

  16. My comment was made upon the inference …. the terms of both brothers expire in 2014….

    Thanks for the clarification.

  18. @Atticus, the same “patriotism” garbage is used in Canada when someone objects to government waste and graft. Embedded in this waste are hefty crony fees, mind you. (Track some of Catherine Austin Fitts interviews for more on this). I don’t know where you live, but newspapers in Toronto reported in June that government spent $300K for a couple large beach rocks and $11K each for beach umbrellas. And they defended the purchase! And now newly-elected Ontario Premier Kathleen Wynne is saying she will be hiking up taxes to solve the province’s debt problem. Who’s really got the problem?! I assume that those who object will be smacked down as unpatriotic. So the US, under Obama, is by no means alone in utilizing this kind of propaganda. Note Martin Armstrong’s various postings on bureaucrats and the political class. Those entrenched in power will never admit their mistakes. IMF and OECD never cease to advocate for taxes on the global consumer while they themselves pay none. Bureaucrats and politicians would rather sink us and our respective countries to remain in their privileged positions. In short, they’re the ones that lack any sense of patriotic or moral feeling. As to Levin, he’s another thing altogether. I think Wilton summed up the setup quite well.

    Btw, a friend of mine who is shedding his US ties told me that the US Consulate in Toronto has no more appointments available this year. They’re booking for January 2015 right now. The system has also been experiencing glitches which affects their global operations. Is it any surprise that patriotism tirades are ramping up?

  19. Pingback: The “inversion” issue is about whether the U.S. can tax income of other countries NOT patriotism! | U.S. Persons Abroad – Members of a Unique Tax, Form and Penalty Club

  20. @Sally, the State Dept. had a data base crash last week. Over fifty thousand records were lost in one embassy alone and untold documents, passport renewals, everything was lost. They are probably now totally backed up with the appointments due to all of that data being lost!

    Not ever advocating for waste and graft but, do prefer Canada’s system of social saftey nets such as they used to be to the way the U.S. has always and will always do things. Politicians definately waste tons of money that should go to programs that people need and pay for. No system is ever going to be perfect.

    At any rate I guess the story about the data base crash of the State Dept. went under reported. They have big problems! No wonder they aren’t taking any new appointments. And after ten months I can see I’ll be waiting some time more for my CLN.

  21. Here’s an article (not main stream) about the crash Atticus is referring to:
    http://www.computerworld.com/s/article/9249958/State_Dept._database_crash_leads_to_passport_visa_delays

    @ Atticus
    Your prolonged wait for your CLN has passed into the realm of cruel and unusual punishment. It’s unfair to keep people dangling like that. I dangled for 2 years waiting for an I-407 approval … and then I gave up. It will never come. It’s something so simple that others have received theirs in less than a month but my application, sent registered mail, obviously ended up in a circular file, the trash, behind a desk, a black hole … who knows what they did with it. I’ve wondered at times if someone might have pawned off my returned GC and I wish I had written VOID over top of it to prevent that. Anyway, I hope your CLN arrives very soon so you can get on with your life.

  22. EmBee and Atticus,

    Thanks — and here’s another interesting article on the same: http://diplopundit.net/2014/07/30/state-depts-critical-national-security-database-crashes-melts-global-travelers-patience/.

    The Consular Consolidated Database (CCD) is central to all consular operations. It is run by CST where according to the OIG, “the smooth functioning of every part of the office depends on its contractors.” And because it runs such an important element of U.S. national security systems, if all CST’s contractors, all 850 of them quit, this critical consular data delivery to the State Department and other Federal agencies would screech to a a halt.

    To carry out its mandate, CST must provide uninterrupted support to 233 overseas posts, 21 passport agencies, 2 passport processing centers, and other domestic facilities, for a total of 30,000 end users across 16 Federal agencies and in nearly every country. CST faces 24/7/365 service requirements, as any disruption in automated support brings operations to an immediate halt, with very serious implications for travelers and the U.S. image.
    […]
    CST is led by a director and is staffed by 68 full-time equivalent (FTE) employees (62 Civil Service and 6 Foreign Service). There are 12 positions (3 Foreign Service and 9 Civil Service) currently vacant. CA recently authorized CST 19 additional FTE positions. There are also more than 850 contractors operating under nearly 30 different contracts. In FY 2010, CST’s annual operating budget was approximately $266 million.

    If CCD is compromised for a lengthy period such as the last couple of weeks, what is the back up plan to keep the operation going? Obviously, none. It’s either down or running under limited or full capacity. No one we know remember CCD problems persist this long. Right now, we know from a reliable source that the system is not down, and some cases and going through but — what if the CCD is completely down for two weeks … four weeks … wouldn’t international travel come to a slow stop?

    What if CCD goes down indefinitely whether by hardware or software glitch or through malicious penetration by foreign hackers, what happens then?

    Currently, it appears nothing can be done but for folks to be patient and wait until the fixes are in. We know they’re working hard at it but there’s got to be a better way. Perhaps we can also agree that this has very serious national security implications on top of disgruntled travelers and a grave impact on the U.S. image overseas.

  23. They are back up at limited capacity and are addressing some issues above others such as overseas adoptions, travel visas and passport renewals. Therefore, I think appointments and processing for CLN’s will be slow for some time. They had already told me in June that they were “very backed up with these” when I inquired about my case as it had already then been nine months. I was then told ten months to one year and that was before this crash of the data base. I’m going to assume if you are behind me in the processing line which was Sept. 2013 then you’re going to be waiting a lot longer than the people before us. After that I am wondering if this is going to get a lot harder to do.

    Their facebook page is full of people stuck, trying to get to first day of classes as international students, people not able to travel having flights re arranged. I imagine it is quite the headache for State. trying to catch up.

  24. @ Atticus
    There has been a passport log jam in the UK too this summer. People who had plans to travel have had to cancel and take what they have dubbed “staycations”. If they pay extra for expediting the process they get their passports faster but that’s government bureaucracy for you. When they should be refunding people for slow service they extort more just to get “normal” service.
    http://www.theguardian.com/travel/2014/jun/19/passport-office-backlog-holiday-britain-staycation-uk
    http://www.dailymail.co.uk/news/article-2713941/Susanna-Reid-forced-staycation-passport-backlog-Home-Office-stops-family-holiday-going-ahead.html

  25. NEWS FLASH
    Department of State Unable to Issue Visas!

    The Department of State Bureau of Consular Affairs (DOS) is currently experiencing technical problems with its system that issues visas, passports, and related documents. The U.S. consulates worldwide are experiencing delays in issuing visas and it’s not limited to any particular country or visa type.

    Background
    The background of the problem is rooted in the DOS’ global database (Consular Consolidated Database or CCD) used to approve, record, and print visas and other documents. On July 20, to “improve overall system performance and address previous intermittent performance issues,” DOS updated its software. As a result, the database essentially crashed with the root cause unidentifiable. Not only was the main database affected, but the DOS’ redundant system crashed as well. As a result, DOS is able to access its CCD only on a very limited basis.

    ——————————————————————————–

    What DOS is Saying

    On July 28, DOS issued a statement that as it works to restore its system to full functionality, it is prioritizing immigrant cases, including adoption visas. Subsequently, DOS stated that it is making progress on restoring its nonimmigrant visa system but that it “anticipate[s] it will take weeks to resume full visa processing capacity” (emphasis added). On July 31, DOS updated its progress stating that it has begun issuing nonimmigrant visas at a reduced rate, reiterating that it will “take some weeks before we are back to normal turnaround times,” and that it continued to prioritize immigrant and adoption visas.

    Click here for DOS provided FAQs

    ——————————————————————————–

    The Effect on Students

    Student (F-1 & M) and Exchange Visitor (J-1) nonimmigrant visas are affected as well. This is particularly alarming as the fall semester will begin soon for F-1/M students, and J-1 programs have short start turnarounds as well. DOS maintains that visa processing continues for these visa types but the issuance rate is clearly impacted. While the DOS states that “we understand the importance of” issuing these nonimmigrant visas, it is clear that DOS is unable to make any promises as to when full functionality will be restored. Nor has DOS stated it will give F-1/M/J-1 nonimmigrant visas priority.

    If students and exchange visitors are unable to arrive to school or join their program on time, the foreign nationals need to contact their Designated School Official (F & M status) or designated U.S. sponsor’s Responsible Officer (J status), to discuss with them what arrangements can be made to begin programs after the start date on the Form I-20 (F & M status) or DS-2019 (J status).

    ——————————————————————————–

    What Can be Expected?

    Until DOS is able to restore full functionality to its CCD system there will be an increasing amount of pent up demand for visas. The Consulates are continuing to conduct nonimmigrant visa interviews and there will be a backlog to fill once the DOS is able to issue nonimmigrant visas again. All foreign nationals needing nonimmigrant visas will be forced to wait to obtain their travel document as the backlogged is cleared. Foreign nationals should plan ahead for the possibility that their nonimmigrant visas will be delayed by communicating with their schools and employers to make allowances. A foreign national should not finalize travel plans until the DOS issues his/her nonimmigrant visa.

    Anecdotally, some of our clients that were waiting abroad for visas recently received them. Hopefully, we will see more of this in the next few weeks.

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