This post appeared on the RenounceUScitizenship blog.
Why I'm Giving Up My Passport http://t.co/c6EdyxZR3T – AKA why it's impossible for #Americansabroad to live under U.S. laws @Jtepper2
— U.S. Citizen Abroad (@USCitizenAbroad) December 8, 2014
The above tweet references an op-ed that appeared in the December 7, New York Times. The “Op-Ed” was interesting, well written and didn’t add any new insights or information. I then researched who this person is. He is a highly accomplished author, fund manager in London. In fact I intend to read at least one of his books.
Q. Does the U.S. really want to lose citizens of this calibre?
A. They don’t care and they don’t care that they don’t care.
“Stupid is as stupid does.”
This sentiment is confirmed in:
Homelander explains why #Americansabroad are not real Americans http://t.co/IBwErsNu1k – I guess t follows that they should not pay taxes
— U.S. Citizen Abroad (@USCitizenAbroad) December 8, 2014
In the words of this Homelander:
I think the real question is what makes you an American. If you don’t live here and feel no responsibility for supporting the country, why would anyone care if you decide to renounce your citizenship? There are plenty of people in the world who WANT to be Americans. Many of them come here, contribute to the country and want to become citizens. Those are the real Americans, not the folks who inherited the moniker but seem to think they have no responsibility for the contributing anything to the country.
The “op-ed” by Mr. Tepper includes:
The I.R.S. doesn’t tax the first $97,600 of foreign earnings, and usually doesn’t double-tax the same income. So most expatriates owe no money to the I.R.S. each year — and yet many of us have to pay thousands of dollars to accountants because the rules are so hard to follow.
The extraterritorial reach of the income tax dates from the Civil War, when the government wanted to prevent Americans from fleeing to Britain to avoid taxes. This outdated and harmful relic has only gotten worse.
It’s one thing if a New Yorker creates a shell entity in the Cayman Islands to evade taxes. It’s another if an American who has spent most of his life overseas, as I have, creates a legitimate company. The I.R.S. doesn’t care about the distinction. Under a 1962 law, it treats the two companies I’ve started as “controlled foreign corporations,” subject to detailed regulatory requirements, though a majority of our employees and clients are foreigners.
Moreover, if you are an American, you can’t invest in foreign mutual funds without paying punitive tax rates. This is a blatantly protectionist measure for American funds, but it also makes saving for retirement very difficult.
Renunciations of citizenship have soared because of a 2010 law, the Foreign Tax Account Compliance Act, which requires foreign financial institutions to report assets held by American clients or face a 30 percent withholding tax. In response, many foreign banks will no longer take American clients and are terminating existing accounts. The Economist says this “heavy-handed, inequitable and hypocritical” law will cost American banks alone $800 million a year to implement. Moreover, the magazine reported, “seasoned tax dodgers are not so naïve as to hold money in their own names.”
Most of us who are overseas long term simply accept the status quo. Some may fear that renouncing their citizenship will put a bull’s-eye on their back with the I.R.S., even if they’ve complied with all laws. It does not help that members of Congress occasionally threaten to bar any Americans who renounce from ever visiting the United States again.
Like many Americans, I didn’t choose to grow up abroad. My father is from New York, and my mother, who died in 2012, was from North Carolina. They moved abroad for work in the 1970s, and ended up in a poor neighborhood in Madrid, where they ran drug rehabilitation centers. I went to an American school in Spain and recited the Pledge of Allegiance each morning. Except for two years in childhood, four years at college in North Carolina, and two years in New York, I’ve lived overseas all my life. At 38, I’ve voted in only one American election and I don’t have much connection to the United States. Almost all my friends are cultural mutts — people with hybrid backgrounds, for whom nationality isn’t the most important part of their identity. If America makes it so difficult to be American, I’ll happily just be British.
The challenges facing expat Americans abroad would disappear if the United States taxed and regulated only those who lived in America. Sadly, American politicians don’t care about Americans living abroad. It is easier to demonize us as tax dodgers than to fix irrational policies that no longer make sense in an interconnected world. The founders agreed on “no taxation without representation.” Why can’t Congress?
Perhaps “Patricia” the clueless Embassy Consular has been drinking that same government Kool-Aid as Jack Townsend, the willfully blind ex-DOJ tax practitioner.
@BC Doc “Officially, I am a dual Canadian-US citizens.”
Let me say it again.
Read my lips, “You are a Canadian Citizen, period..stop..having relinquished your USC…stop.”
Never ever say nor repeat what you said…..ever……build the file…burn the blue book.
Savvy……..
Peace man….
PS. Some day, I hope we can share a coffee along with other Brockers.
@Calgary 411, @Blaze, @Stephen Kish….. “Real americans…..”
This former USC is a REAL AMERICAN.
Comment section now closed!
Hi George–
Thanks you!
You’re familiar with my consulate story– relinquishment refused by the Vancouver consulate this past April. That said, I continue to enter the US on my Canadian passport declaring myself to be a Canadian citizen. If “challenged” by the US border people, I will insist that I relinquished back in 2001. Thus far, I’ve had no issues going this route. Before I went into medicine, I did my undergrad degree in political science. I lean back on the UN “Universal Declaration of Human Rights” for moral support– the right to ex-patriate is mine as it the right to return home to place of origin. The US belongs in the rogues gallery of international scoundrels who try to restrict the mobiity of its citizens– the former East Germany, USSR, North Korea, Iran, et al.
When it comes to bankers, “I am Canadian. I was born in Montreal.”
Keep fighting the good fight, George! This is a long slog but FATCA/CBT is doomed to fail.
Cheers,
BC Doc
@ Sam Adams. All the US government types drink the official standard issue Kool-Aid. It is most likely a condition of US government employment as far as I can tell. They sent a sample batch to the Canadian government a while back. That’s why we got our IGA. (You know, “Congress has spoken”, etc.)
Comments may be closed but you could still recommend ones you like.
Lucky me, after all that and delays and all I scored a comment at position #3. You might recommend if you have not done so already.
The one showing has fatcalegalaction . I did have another comment referencing Isaac Brock Society and ADCS – and I thought that the reason that one was not showing was too much in the way of web reference.
@BC Doc…..
When someone hears my voice and asks where in America I am from, I then ask them if they would ask me where in Africa I am from if my skin was black? The silence is then deafening…..my point is made…..
You know Brock is part of the “therapy” in this rotten road we are on and you are right these policies are doomed to fail. When it does, we all need to make efforts to meet up for that cup of coffee call it closing the circle.
Boris is like having a major chunk of ice break off a glacier in an Alaskan fjord. He set the Tsunami moving and this an example of the first fishing village hit. I am not sure if the wave can move beyond the Alaska fjord though. @george I agree with everything. What would we have done 20 years ago with no internet?
@kermitzii 20 years ago without internet: we would have been divided and conquered.
@ Tricia
“… not enough time in the day”
True but I’m retired and I often ignore chores so I read 1150 of them. By the time I got through that bunch there were almost 100 more. Now my eyes are blurry and my brain is fuzzy, but my opinion is that the White Hat Expats in the comment column won this one. I wonder what Jonathan Tepper thinks.
The university instructor from Australia (formerly New York) did absolutely great rebuttals to some truly inane comments and of course all of our Brockers were excellent — Atticus-Liz, Bubblebustin-Suzanne, JC, BC_Doc, American Overseas, Swiss Pinoy-Techie, Tim, Sam Clemmons, mjh49783 … oh dear, I’d better stop because no way will I be able to name them all.
@ Proud Aussie
I think I recognized you (see above).
@ calgary411
This is one comment I saved which is dedicated to you. I’m sure you did something more productive with your day than I did.
nic (New Jersey) wrote
I think our infamous Mr. Hunter (ugh) may have written this one …
Tom (Los Angeles) wrote
It doesn’t matter what you or I think. If anyone wants to escape high taxes and live somewhere else they should be able to send a certified, notarized letter to the U.S. State Department and tell them their forwarding address and if they owe no back taxes they should be able to renounce their citizenship. making it harder than voting, in the Jim Crow South, it is stupid indeed.
The U.S. joins with that great country Eritrea, as the only other country taxing people based on citizenship.
We need to send Engineers, technical help, salesmen and service people abroad to help with the products we always sold and no longer do, because they simply cannot pay the taxes required and if the owe no taxes they cannot afford the professional help it takes to comply with the citizenship based tax form requirement.
This nonsense has caused us to approach a trillion dollars in trade deficits annually and the D.C. Pukes don’t even seem to recognize the cause. They are firmly and comfortably buried in their cocoons they call political office and the only thing that concerns any of them is re election every two, four, or six years. God Help Us……
@Jtepper2 “you can’t invest in foreign mutual funds without paying punitive tax rates. This is a blatantly protectionist measure for American funds,”
Is the above allowable under the North American Free Trade Agreement?
@EmBee
Sadly, that wasn’t me. As per usual I was a day late and a dollar short. I was just warming up and only got out a couple short replies. I had a couple more replies and a fairly lengthy piece on the likely long term ramifications of threatening the major banks of your friends and allies with punitive sanctions. Those items were in moderation when comments closed and are lost somewhere in the cosmos.
One thing I noticed that was very encouraging (aside from all the great comments in our favour), was that the vitriol being hurled by some ignorant homelanders would have to be considered mild compared to what it would have been 20 years ago. This gives me great hope. They may not quite be ready to listen to the voice of reason, but it seems like they could be warming to it.
@Wilton Tidwell – The US is shooting itself in the foot. Having worked for non-US companies, I’ve seen first hand the ‘local’ customers like to meet the nationals of the company they’re purchasing products.
The Americans have ‘outsourced’ that to foreigners abroad because of the tax situation while at the same time starves US employees of the vital experience overseas assignments give.
Hey the Germans, Japanese, Koreans, Chinese, British and others see the US as a declining power and laugh because the US is so so insular when it comes to world events.
FATCA will just hasten this process and continue to move the world’s economic centre to China. The US will be only a regional superpower with fewer strings to pull in future.
@ Proud Aussie
Nuts — so much for my intuition. Anyway the university instructor’s comments were so good they sounded like you. I was surprised by the closing of the comments too — it happened while I was still reading. However, I doubt I would have commented even if they had stayed open because honestly the level of the comments of those who I call White Hat Expats was so high there really wasn’t much more to be said. It was encouraging to find this comment from an obviously thoughtful homelander.
Sajwert wrote
@ Embee I too was really impressed with the quality of the comments on our side. There was even a woman who posted that lives in my city and has the same circumstances as myself. I am also getting the impression upon reading many of the more recent media articles that there are less ignorant comments and more people who understand what is going on. I try to remain hopeful.
@JC
Pluses and minises. Without the internet FATCA would be impossible, and CBT would be much less intrusive. My US parents now departed lived for decades overseas and never knew they were supposed to do tax forms.
@Gordian
No disrespect to your deceased parents, nor mine, but there would be a lot of ancestors rolling over in their graves if they knew what they’ve gifted their children. Ignorance is bliss, they say, but ignorance is a blindfold. I would rather be painfully aware than blissfully pass this scourge on to my progeny. If global awareness is what’s ensnared us, then global awareness will be what emancipates us!
Gordian and bubblebustin,
No parent would knowingly pass this along to their kids. Good statement, bubblebustin,
Gordian and bubblebustin,
No parent would knowingly pass this along to their kids. Good statement, bubblebustin,
I must do right for my kids – now that I know.
Yes, Calgary, what strange and remarkable times we live in.
Yeah, what used to be a “Consular Report of Birth Abroad” has now become a “Consular Report Ratting Out Your Non-US Born Kids to the US Government so They Can Assume Their Proper Place on the US Tax Plantation”.
EmBee,
I missed until right now your highlighting a comment from The Economist that was then quoted in the comments of the Jonathan Tepper “Why I’m Giving Up My Passport” December 7th piece at the New York Times. I didn’t read that comment originally in the The Economist (almost sounds like NDP MP Mike Sullivan talking) nor did I spot it in all the most recent comments of the New York Time article. You are meticulous in your reading. Thank you so much for noticing it and putting into a comment at Isaac Brock so I’ve finally seen it! (And, thanks to whoever made the comment at The Economist to start with.)
kermitizzi and JC, 20 years ago the USG/IRS didn’t have the technology to do what they are doing now.
It wasn’t benevolence on the USG’s part that kept them from enforcing CBT or misusing FBAR or coming up with FATCA.
They needed the Internet. Ironic, eh?