More #CookvTait: Why do some Homelanders believe that US taxation of non-US residents is okay? https://t.co/a8OOKaUYx1 – Why??
— U.S. Citizen Abroad (@USCitizenAbroad) November 11, 2015
On November 15, 2015 I wrote a post asking for your assistance with the following question:
How should Americans abroad address the Homelander attitude (and argument?) which I expressed as:
Assistance required. Many people defend (not justify) citizenship taxation on the basis that:
- All U.S. citizens are subject to the same provisions of the Internal Revenue Code
- Americans abroad are U.S. citizens
Therefore, Americans abroad should be subject to the same provisions of the Internal Revenue Code as Homelanders.
Or in Homelanderspeak:
All U.S. citizens are subject to exactly the same set of tax laws. What could be unjust about that? We are ALL citizens. Therefore, we should ALL be subject to the same set of laws.
Could you please address your mind to the following question:
What is the best response to this argument? How can one best explain that it is wrong to justify citizenship taxation on the basis that ALL citizens are subject to it in the same ways?
Thank you very much for the responses. Please keep this coming. I would now like to use the following comment by Barbara as the basis for this post:
Me again. I’m really interested in this topic, and trying to find answers, so let me put out this question:
What arguments, points or questions have you used that Homelanders actually responded to?
Just like most of us here, I have tried all the arguments. I get their attention by naming the Financial Crimes Enforcement Network. But the one point that almost always makes them stop and think, is the $10,000 non-willful FBAR penalty.
On just about every other point–Eritrea, double taxation, excessive fines, bank account closures, etc.–my Homelander buddies always have a retort, such as “Well, if you have nothing to hide…” or “Just use a US bank account…” But all take serious issue with the FBAR penalty. Sadly, that is not our core problem.
But maybe I’m just not wording my points right to them. If anyone has any debate “successes” to share, I’d like to hear them. Maybe then we can try to distill those arguments that do work into a workable short-n-simple platform.
Barbara raises an important question. How do we know what arguments Homelanders might respond to? We need (I think) to understand what is going inside the head of a Homelander. Why would a Homelander believe that those who live outside the United States should be subjected to U.S. taxation as though they live in the United States?
Therefore, the purpose of this post is to solicit your comments on the question of:
Why exactly do many (but NOT all) Homelanders believe that the U.S. should impose taxes on those who don’t live in the United States? What is their world view? What are the assumptions they are working with? Why do they believe that equality means that everybody should be subjected to the same rules?
There is often a difference between what people way and what their real motivation is
The question is NOT what they say. The question is why do they say what they say! In other words, what is their motivation? What is the “hidden issue” that they are not articulating?
Some possible suggestions …
– as citizens we all have an equal responsibility to support the U.S. government no matter where we live
– taxation is a punishment. Why should someone be able to escape punishment by leaving the country?
– what the f…? You think you are going to leave the USA and NOT pay any taxes? (In other words, I have the distinct impression that many Homelenaders don’t realize that Americans abroad pay higher taxes than they do, which is why you are generally better off with tax preparers in your country of residence)
My point is that:
In order to educate Homelanders and to address their arguments/responses we need to understand why they think/feel the way they do.
So, could you please comment on what is the motivation for Homelanders (those that do) to support the imposition of taxation on people who don’t live in the United States. Although, I am primarily interested in the thinking of “Everyday Homelanders”, you might find the following CBC Interview of Michael Kirsch interesting:
@CBCAllInADay interviews law Professor Michael Kirsch about his reasons for supporting taxation of #Americansabroad http://t.co/FcVL4QJIXa
— U.S. Citizen Abroad (@USCitizenAbroad) August 16, 2014
The interview referenced in the above tweet was the subject of a separate post on the Isaac Brock Society. See the comments as well.
Thanks very much.
I suggested reading the NTA’s words to ordinary homelanders not to the NTA.
Perhaps homelanders feel as they do because they need to work their asses off in order to keep themselves from drowning in the debts incurred from living beyond their means (McMansions etc).
Deep down inside homelanders realize that they are slaves to a system of perpetual debt. Anyone who leaves America is viewed as escaping debt bondage and somehow getting over on everyone else.
In other words, homelanders feel jealous. But this is not a healthy kind of jealousy, it is the jealousy of narcissists who believe that their nation is superior to all others and therefore special. Anybody who leaves America invalidates that sense of superiority and specialness.
Homelanders can not accept the idea of anyone leaving America for the following reasons:
1. They are envious of anyone perceived as not having to work like slaves as they do.
2. They believe that they are are superior to everyone else.
3. They believe everyone should be grateful to live in America.
4. They believe nobody else is entitled to live with better conditions than they.
5. How dare anyone want to leave America? Leaving is an act of ungratefulness.
Narcissists have the tendency to take revenge on people who leave them. CBT and the Exit Tax satisfy homelanders’ need to punish those who do.
Hence, “pay your fair share” and “don’t let the door hit you in the ass” will be part of homelanders’ attitude towards expats and emigrants for as long as America exists.
Something that just dawned on me.
Whenever I tell homelanders that we pay plenty of taxes to the countries where we live. They look at me almost in disbelief. Sometimes they even say, “that’s terrible, why are you paying there?”
It is as if only the US has some sort of exclusive right on taxing us, no other country should be allowed to do that. Yes, homelanders are actually that US centric in their way of thinking.
“that’s terrible, why are you paying there?” Because if you don’t you will be a tax evader and treated as such … fines and jail time. Actually I can barely believe their disbelief. They actually think moving to another country means paying no taxes there? Wow!
“They actually think moving to another country means paying no taxes there?”
Yes that’s a common belief among homelanders … and there’s even almost a good reason for it!
Tax treaties mostly benefit multinational COMPANIES so that those companies really do pay almost no taxes in every country.
The original Canada – US tax treaty was somewhat exceptional. It included clauses that people who had been subjected to double taxation and protested double taxation would no longer be prosecuted for protesting double taxation. Other tax treaties pay lip service to the idea that humans need some amount of reduction in double taxation, but the emphasis is on companies. Anyway, maybe it could be pointed out to homelanders that the reason tax treaties pay lip service to reducing double taxation of humans is the fact that taxes exist in both countries.
#Walt: I’ve had the same incredulous looks when I say I pay taxes to my country of residence. They say, “Why are you paying taxes there? You’re not a citizen.”
It just goes to show that the concept of citizenship is akin to religion, drilled into Homelanders from an early age, starting with the Pledge of Allegiance (with or without the “under God”, it still smacks of reciting the catechism). You contribute your tithe only to the arbiters of your own faith and congregation. Truly, no hyperbole here, we need to start addressing this whole argument with Homelanders in religious terms.
I have similarly begun to notice a common tendency among the “Feel the Bern” Moonies infesting Facebook and Twitter, in particular those who butt into US Expat forums to shout “tax the rich cheaters!” These people, like all fanatics, religious or political, lack the capacity for irony. If I tell one, “Sanders considers you a billionaire tax cheat,” the response is always like blinking eyes and saying, “But I’m not a billionaire. And those evil one percenters blah blah blah…” This isn’t politics they’re espousing, it’s religion. I almost came close to cracking through the consciousness of one by using a religious cadence in return: “Sanders sees you as the devil. If one-percenters hide money abroad, then all people who have money abroad are one-percenters. Yes, you. Your family. You are a tax cheat, a money launderer. He wants to punish you because you, like a rich one-percenter, put your money abroad…” and so on. They do seem to respond to preaching, repeating big keywords over and over. No actual facts necessary. It isn’t about logic, it’s about fighting indoctrination with counter-indoctrination.
When you buy food from Walmart how come you pay Walmart when you’re not even a member? You should pay Costco, you’re a member of Costco.
@ Norman Diamond
“When you buy food from Walmart how come you pay Walmart when you’re not even a member? You should pay Costco, you’re a member of Costco.”
About the Costco membership:
Perhaps Barbara should respond with the following:
You’re a MEMBER of Costco! So when you get food from Costco, why do you have to pay COSTCO T-W-I-C-E ?!!!!!
A “Feel the Bern” indoctrinated person might understand the “Why should you have to pay at all when you’ve already paid” argument a bit better.
Stereotypical homelander: ‘I’ve had the same incredulous looks when I say I pay taxes to my country of residence. They say, “Why are you paying taxes there? You’re not a citizen.”’
Barbara: “we need to start addressing this whole argument with Homelanders in religious terms.”
Therefore I suggested a way to address it in religious terms.
The matter of paying Costco twice only confuses matters, as far as I can see. I pay income tax in Japan and consumption tax (sales tax) in Japan and property tax (indirectly) and stamp taxes for various things but that doesn’t mean I’m paying 4 times. If I pay HST on a purchase in Canada and then have to pay consumption tax (separate from customs duties) when importing it to Japan, that would be a double taxation, and we need a treaty to get Canadian HST refunded in such a case.
I agree with a lot of the comments on this thread. My short answer to the question “Why do some Homelanders believe that US taxation of non-US residents is okay?” is this: Because the idea of people living real lives and paying taxes in other countries is beyond their comprehension — like non-English languages, non-Greenback money, the metric system, and non-“American” football.
From Paul Mooney on the WSJ Expat Article: http://blogs.wsj.com/expat/2015/11/15/puncturing-7-common-myths-about-u-s-expat-tax-rules/tab/comments/
“”the US to claim that it taxes those living outside the US exactly the same as those who live in the US. There is no way one can say the treatment of (“foreign”) government tax-deferred accounts that are the equivalents of IRA’s, Roth IRAs, 529 plans etc is equal..””
While the US tax and compliance may be the same laws for both US residents and those US persons living overseas, the tax and compliance required of both is vastly different as those overseas must comply and pay tax to their countries of residence and at the same time deal with the overlay of the 74,000+ page overlay of the US tax code.
@JC Your statement excludes the “foreign” discrimination inherent in US laws against accounts, assets, and income that the US considers “foreign.”
A US tax professional explains some of the reasons why even US IRS and US tax lawyers don’t understand US extraterritorial CBT:
“…..Some in the IRS erroneously think U.S. citizens residing overseas do and should understand U.S. tax law. I posed one simple scenario to a very sophisticated IRS attorney not very long ago who specializes in the FATCA rules.
Her view is (hopefully was) that U.S. citizens throughout the world know or should know the U.S. tax laws because the instructions to IRS Form 1040 are clear….”………
“….My question to her was: “Why would you, as a U.S. born individual not be reviewing the tax laws, tax forms and tax instructions of the country where your parents were born prior to immigrating to the U.S.?” I asked: “Are you not reviewing those laws in the original language of your parents (not English, but the other language of your parent’s country) to understand what tax forms and returns you should be filing?”
The IRS attorney’s response was: “What: of course, I am not reviewing such tax forms or filing information or tax laws, as I would have no tax obligations in that foreign country where I have no income, no assets or no bank or financial accounts!”
My follow-up question was a simple one: “Don’t you realize that U.S. federal tax law (Title 26) and financial bank reporting laws (Title 31) do just that!”
“Hmm she paused: how can that be?” I don’t recall if she said this out loud, or just said it with her puzzled expression.”…….”……
I keep looking at all these arguments against FATCA,and find them a bit indirect and diffuse.
Judge Rose’s opinion and those of Homelanders is predicated on the premise that all US citizen’s everywhere are subject to the same laws. This is nonsense!
US citizens abroad are also subject to the laws of the country in which they live, whereas US homelanders are not. It’s when these laws conflict that one has problems. One is bound to adhere to the laws of the country in which one resides above all else.
Think about if the roles were reversed. Suppose that all these immigrants from China and elsewhere living in the US were expected to abide by the laws of their home country, even when these laws conflicted with US law. Would that be tolerated? Not for a second. It’s galling enough when diplomats with immunity play this card.
Other countries realize this, and wisely remove this expectation from their citizens living abroad (for example in the US). Why should the US be any different?
The US insistence on being different amounts to an attack on the territorial integrity of other countries. There’s no legal basis to do this, so FATCA amounts to blackmail. Employing tactics reminiscent of neighborhood protection racketeers, the US legitimize skimming off of any money it can get its hands on destined for a foreign banks unless that bank plays along, even if that means high compliance costs. It’s insulting and likely criminal.
The only options for US citizens abroad are to renounce US citizenship, or to return home. Renouncing keeps getting made harder. So what if all US citizens abroad came home? Would the US still be able to pursue international commerce? Only with great difficulty and expense. You think the balance of trade and the federal deficit are bad now — wait until several years under FATCA have passed. America will be more isolated and deeper in debt, which may be great for control-freak government bureaucrats who believe that printing money is the answer to all problems, but will be terrible for everyone else needing to add value to make a living.
It’s as simple as that.
Thanks for your thoughts, CEB, and welcome.
Unfortunately, when it comes to the US, “might makes right”, even if it means shooting itself in the foot. It’s as simple as that.
“Suppose that all these immigrants from China and elsewhere living in the US were expected to abide by the laws of their home country, even when these laws conflicted with US law.”
Don’t forget children of immigrants. That is the reason why many American homelanders have to file tax returns in the UK, Spain, Italy, etc. That is also the reason why many American homelanders have to register for the draft and fight when Her Majesty needs them. The US joined the War of 1812 on Napoleon’s side because the US didn’t feel the same way in those days, but times have changed.
“The only options for US citizens abroad are to renounce US citizenship, or to return home.”
Yeah, persons born in Canada to one Canadian parent and one US parent should return home to the US even if they’ve never stepped foot in it before.
“Would the US still be able to pursue international commerce?”
Roger Conklin explained the same thing to Congress in or around 1978, right? Do you think Congress will care?
Norman Diamond wrote “Yeah, persons born in Canada to one Canadian parent and one US parent should return home to the US even if they’ve never stepped foot in it before.”
I was being half ironic, mocking the bigoted way in which so many homelanders like to think Of course “home” here is a really superficial, misguided, media-made concept. I was trying to obliquely point up the need for either injunctive relief. There’s also this Convention of States movement which is developing, though I’m a bit afraid it may be a bunch of well-intentioned people heading for a handler hijack.
Norman Diamond further wrote “Would the US still be able to pursue international commerce?” Roger Conklin explained the same thing to Congress in or around 1978, right? Do you think Congress will care?”
Most Congresspeople are well-intentioned when they get into the game, but the legislative dynamics are such that they have to make severe compromises to avoid gridlock (and get reelected). Which is a way of agreeing with you. No, they would likely not care, but they might pretend to do so.
Congress should have fast-tracked a solution to CBT and the whole harassment of US citizens outside the US nonsense over 4 years ago if not before. It’s not hard. The fact that they haven’t shows how dysfunctional they’ve become. If they stop stalling and act, great. But in any case, it’s time to pursue injunctive relief, which is exactly what several groups in Canada and elsewhere are doing. Bravo to these actions.
It’s an interesting observation that that Marco Rubio, Senator and presidential candidate, admitted in one of the Republican presidential debates to missing key Senate votes because he feels the Senate rigamarole is a waste of time. That’s a pretty damning admission, though I wonder what it says about his effectiveness in working with this dysfunctional organization.
“I was being half ironic, mocking the bigoted way in which so many homelanders like to think”
In that case I beat you. I was 75% ironic.