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.
My family-member Homelander believes that “you knew when you left that CBT was the deal, so why are you yowling now?” He believes the US citizenship is the most desirable, precious citizenship in the world, and people will do “anything” to get it”, so why would I object to one of the prime responsibilities of US citizenship? (“With privileges go responsibilities.”)
That I have always filed my US taxes? This only “proves you accepted that fact of life.” That the US government changed the rules regarding taxation of garden-variety investment products because of US FI’s lobby? “I used to use certain investment strategies and now I can’t, either.” He’s a lost cause. The Homelanders I have been able to raise a pulse with are his young adult children, who are more clued in to the invasion of privacy issue, and see themselves as working in various parts of the world.
Any defender of citizenship-based taxation must, if s/he is to be honest, also defend the expansive assignment of American nationality (and US Person status) to persons with only a peripheral or accidental connection with the USA. It’s worth recalling that the Philippines, then a US protectorate, was made to apply citizenship-based taxation in 1913. Only in 1999 when it became obvious that devaluation and bracket creep had made the tax impossible to pay for most Filipinos working abroad was the law abrogated. Richard D. Pomp, The Experience of the Philippines in Taxing Its Nonresident Citizens, 17 N.Y.U. J. Int’l L. & Pol. 245 (1985) (prior law).
Prior to WW II, dual nationality was less common because it was prohibited by some countries or nationality (as with the USA especially prior to the 1920s) denied to certain categories of persons (women married to aliens, Native Americans, those who failed a retention provision).
As for Professor Michael Kirsch’s contribution, there are too many “I suppose” and other qualifiers: he thinks Americans abroad are happy to retain US nationality but, while admitting that some have a “tenuous” relationship with the USA he clearly has little knowledge about the technical rules, such as the discrimination against nonmarital children: http://www.afsa.org/citizenship-and-unwed-border-moms-misfortune-geography Nor does Kirsch talk about the draconian penalties appicable to nonresident citizens who fail to declare trusts, companies, bank accounts, about those who do not know they are US citizens, and others who have been brought into the scope of citizenship and obligation of allegiance by progressive court decisions and legislation — all on the assumption that citizenship is a source of rights and not so much of obligations.
In the case of a conflict of allegiance it is only the “other” country of citizenship that can speak up for the accidental American. At one time, citizenship obligations and risks were such that a network of treaties and agreements relieved dual nationals from such risks as military service, travel restrictions, allegations of treason and the like: the Bancroft agremements, and a series of consular conventions with East European countries and the USSR.
Today, nobody seems to care probably because, as you have written, few “Homelanders” think of either the tenuous nature of the US status of some “expatraites” or the draconian nature of the penalties. The fact is there are millions of persons living abroad for whom the cost of preparing a US tax return, never mind the cost of expatriation, is far beyond their means. But, today, Congress and indeed much of the legal profession concerns itself with the top 1% or the top 10%, not the bottom 50%. Because, as Frank Costello is said to have remarked (in connection with his bank robberies), “That’s where the money is.”
Unfortunately the USA dominates the international organisations that could be of help in this matter. The US tends to ignore international law, or refrain from adopting treaties, that in its view impinge on its sovereignty or its political rules. Yesterday’s Republican presidential candidate debate suggests that neither truth nor realism has much of a role to play in Washington. Some have told me that the only defence left to them is to deny US status and to stay outside the country, forever. It would be nice if such persons could get the support of their (other) government of “dominant nationality”, especially in the inevitable (given USG treaty negotiation efforts) pursuit by the USG to expand tax and extradition treaties to cover tax claims and tax crimes. This is a particular risk in Europe where the right of establishment means that many citizens live and work and have assets in a European country different from their EU/EEA/Swiss nationality.
As far as I know, only France has provision for its expatriates to elect representatives to its legislature http://www.senat.fr/expatries/documentation/representation_des_francais_etablis_hors_de_france.html The USA deprives not only many of its expatriates but citizens of the District of Columbia and of its offshore territories of voting representation in Washington.
Thanks for using my comment as the catalyst for this post. I’d like to encourage people to keep their answers brief. I think we all seriously need to find pithy, one-sentence responses to Homelanders’ one-sentence justifications for CBT. Looking at this site and the Facebook American Expats forum, most of us are happy to go off into long-winded detailed discussions, bringing in topics of zero interest to Homelanders, such as French Overseas Representatives and Eritrea. I’m sorry, folks, but the Eritrea argument is a waste of breath, even though we latch onto it because it’s one of the few points that can be described in a single sentence. We really, really need to focus on how to distill our arguments down to a few hard-hitting words, without history lessons, or we will never, ever stand a chance of influencing a single soul.
What are the Homelanders’ and US officials’ bullet points? Can we respond to them in less than a paragraph?
And to repeat my question above, what arguments has anyone found that are effective?
@Barbara Yes, indeed I go off into paragraph style moaning and yes indeed it gets me nowhere except the “don’t let the door hit you/just renounce” response.
There are a few statements that homelanders seem to have no rebuttal for and often go unchallenged. (Is that a good response)? When stated that those living abroad cannot save for their childrens’ education nor their disabled children or that a child born in Switzerland to an American parent cannot even open a piggy bank account they NEVER respond. I am hopeful they are ashamed…..maybe? Is that possible?
It could be a case that they think that our current blight is self inflicted but to render the sins of a parent on a child is difficult to rebut. I’d rather have them state how disgusting that is but they never do. Did I win the point/change a mind? I don’t know. They may be incapable of owning such disgusting behaviour.
They also have a weird response to; you are no longer free to leave if you cannot bank. (This is increasingly true in Europe, not so much in Canada..yet). Even if you never thought of leaving this should terrify you. This includes your exporters, students and those wishing to start/join businesses abroad. (The usual response to this is that it is hyperbole and I am lying). Then I include links to the published banking problems and again, when confronted with the data, no response.
When they use the black op helicopter argument and are then presented with the real data….again, no response.
What does it take to get THEM angry at their own policies? Does a non-response equal enlightenment?
@Barbara:
Three comments that hit the mark for a Homelander friend:
1) You live in New Jersey. You used to live in New York…should you still expect to file/pay taxes to New York for the rest of your life?
2) I am married to a Canadian. Why should his account information be accessible to the U.S.?
3) Why should the U.S. get a dime out of the sale of my personal home — in Canada — where I live with my Canadian husband and Canadian-born children?
All means are justified with the concept of the US being exceptional to all others. It is pretty much in the genetic code of those born and raised in the US. It also extends from the average Joe or Josephine to the government representatives who make the laws and policy of the country. It isolates those of us who had the audacity to leave the homeland.
(I wish I had an answer — and I realize I am the champion of excess verbosity.)
Here are my Top Ten Reasons:
1. Everyone knows there are many illegals and refugees who are trying to get a US citizenship have already sneaked into the US or are in the process of settling there out of desperation. But it’s ridiculous to compare them to the people who live in Canada but had their babies across the border because it was more accessible or to people who fell in love with a Canadian, Australian, New Zealander, European, etc. and moved there.
2. Why should anyone have to pay a $2350 US fee PLUS file 5 years of mountains of complex tax forms to expatriate? No other country in the world makes such demands. To expatriate from Canada, it will cost you only $100 and one simple form.
3. It’s not just who the US considers its citizens who must file annually and be subject to the whims of FinCEN–the Financial Crimes Enforcement Network; it’s also their spouses, children, and business partners in small businesses. And it makes no difference if you owe ZERO taxes and have ZERO assets in the U.S. and ZERO income from the U.S. FinCEN will hunt for a reason to penalize $10,000 US dollars for any mistake and win because you won’t have any to appeal and oppose them.
4. Remember all the women who adored the book, “Eat, Pray, Love” that ended with a love story? Now its author is married to the Brazilian man she fell in love with in Bali. Why should someone LIKE them (who did not become rich from writing a book) have to file taxes to Brazil every year, and face $10 K of penalties for every form they got wrong or forgot? How would the Americans like to RECIPROCATE with the countries of their foreign-born lovers? Do they realize that other countries EXPECT reciprocation? What happens when some of these countries, like China/Hong Kong, Russia, Saudi Arabia, and Iran, decide to enforce it?
5. Would you like to have to give your bank the details of where you and your parents were born and every place you have lived abroad, for reciprocation with foreign countries? Would you like to have every account worth 10 K, plus your pension and mutual funds, reported to the Financial Crimes Enforcement Network and to its equivalent of every foreign country that thinks they have a right to know?
6. The tax code is ENORMOUSLY more complex than any other country’s tax code. Guess what that means? You have a slim chance of the non-American accountant you hire locally of getting it right. But it will cost you big bucks to try. And you get to cough up that amount every year at tax time.
7. FATCA is a lose/lose situation. If you don’t play along, then your bank in the country where you live won’t let you bank with them. In some countries like Switzerland, they dump you. You won’t have any luck trying to continue living there! FATCA forces Americans to stay home, instead of representing American products and interests abroad. Tell me, how does that make sense? There are NO JOBS in many parts of the U.S. right now.
8. Dual citizens who live abroad but lack the mental competency to expatriate from the US are not allowed to expatriate, period. They are stuck with having to file with the US every stinking year, and shelling out the money from their meager bank account to pay an accountant even though NO TAXES are owed. Imagine how this weighs on their parents and loved ones who can do nothing to protect them.
9. So-called dual citizens cannot use the normal retirement vehicles that are available in their countries of residence for retirement because Uncle Sam considers all of this “foreign” investments that should largely go in his pocket. These people cannot save up for retirement through their houses or real estate, or mutual funds, etc like the other residents of their country. These elderly people find out too late they are penalized for being born (or married to someone born) in the USA several decades ago.
10. FATCA has blind-sided people with its severity. It has caused people to realize that the US is not the free country it purports to be. It treats everyone abroad like a probable tax cheat. Many people who tried to “come clean” with the IRS were severely punished. Because of this, the people who haven’t come clean are too afraid to try. It would destroy too much of the money that they’ve worked hard for. Meanwhile, the cost of implementing FATCA for the banks is not cheap. When there is a viable alternative to the US dollar, why not jump ship? Why hang on to the dollar with all its strings attached?
I’m convinced homelanders see U.S. citizenship in the same way many people see religion/faith*. In fact, most of my homelander friends who DO see our truth and who ARE are opposed to CBT/FATCA, are non-believers, skeptics and free-thinkers. I don’t think this is a coincidence.
There is a certain element of religiosity that far too many homelanders have blindly adopted with their U.S. citizenship. Part of that, I think, has been the adoption (whether on purpose or not) of U.S. law/CBT as some sort of quasi-doctrine that is to be blindly followed and unquestioned.
Here’s a quick translation guide for your next homelander conversation. Replace what they say with religious terms and see if it gives you any more insight into how they see things:
Taxes = tithing
Fines = punishment for not tithing or not knowing you had to
Relinquishment = defection (see: Defectio ab Ecclesia catholica actu formali)
Expat (non-relinquished) = Apostate
FATCA IGAs = witch hunts
U.S. Law/CBT = the Bible
United States = church
Homelander = believer/church-member
U.S. citizenship = baptism
When we suggest that, perhaps, there is something wrong with a homelander’s view of U.S. law/CBT (the Bible) and the ensuing FATCA IGAs (witch hunts) and resulting relinquishments (defections), it’s easy to see how they are so determined to defend their position.
We are apostates, defectors, and deniers. What could possibly be more offensive to a believer/homelander?
Ok, so the question was/is – “how do we address this attitude?”
On a one-to-one level – I have no clue. This is certainly not the time for silence, though. That much I know. I waste no chance telling homelanders what I think.
On a broader scale – I really think we need to get our message into bigger channels that have a mix of “believers” and “non-believers.” Posting our plight into the “echo chambers” on Twitter and Facebook is one thing, but we need a targeted plan of action to bring awareness of CBT/FATCA to those who are/may be sympathetic to us out in the general public.
*I’m not mocking religion(s) here. I’m simply drawing some parallels that might help us understand homelanders’ “zeal” a bit more. Regardless of your beliefs, or lack thereof, we are in this together.
If countries all over the world were to impose CBT on their citizens residing in the US, there will surely be a howl of protests.
@Barbara is right – we live in a tl;dr world where people want a boiled-down version of something they choose not to educate themselves about.
What do we boil down to?
Thank you, J. To me, an accurate analogy to US *Blind Patriotism* and all that encompasses.
I’m more than a little touchy today, Veterans Day in Canada. Today we remember those who gave their lives, wasted lives of continued wars, many I knew and grew up with in the US, some from my family. Are we also today justifying (even glorifying) never-ending wars in the name of *terrorism*? War is now in the financial realm and the US dictates that as well with extra-territorial US CBT, whether or not they take responsibility — and we shall damn well help fund the Military Industrial Complex, the main heartbeat of the American economy, with our fair share.
For most commenters, WE boil down to whiners. We should have known. How should we have known? I just saw on AccountingToday a piece regarding a new tax book written for young people, presumably in the US. Would it really have a chapter on US Citizenship-Based Taxation and just what that means – better never dream of leaving the USA.
@andy05.
“But, today, Congress and indeed much of the legal profession concerns itself with the top 1% or the top 10%, not the bottom 50%.”
When the taps run dry on the top 1% or 10% (they will be the first to renounce because they have the financial means) you can pretty much figure that the US will try to squeeze “blood from a stone” by financially destroying those with “limited financial means”; those of us living paycheque to paycheque.
Dear J,
Your erudite explanation of why so many Homelanders are blinded to the
tyrannical abuse of political power FATCA is an example of echoes my own thoughts
on the subject. Modern democracies find their historical signature in
18th century secular puritanism. As such they are a secular protest against Christianity
which is a mirror image of its religious philosophical structure. To expect true believers in democracy to comprehend the truth of FATCA would necessitate a traumatic loss of faith in their entire worldview and would be the equivalent of demanding a Christian denies God.
With the OECD now imposing a global FATCA this unquestioning mass religious acceptance of secular tithing by true believers in democracy will become visible worldwide. The individual’s fight for freedom from the enslaving ideologies of power-crazed fanatics and institutions did not disappear with the French Revolution it simply found a new vehicle through which to express.
The typical homelander fails to understand or recognize how and when the obligations associated with ‘duty’ become ‘punishment’.
Maybe any conversation we have with a suspected homelander should be prefaced with this question:
Should the US government punish Americans for living outside the US?
Their response will tell you how to proceed with your argument.
@USCAbroad
You may want to correct the above date of November 15 in reference to your past post 🙂
@calgary411 – Thank you. I have a dear friend whose older brother died in Vietnam. While I feel for his loss, I can’t help but notice that, on every November 11th, my friend brings up the fact that his brother did not do what other “cowards” did and flee to Canada or fake an illness. He’s someone with whom I avoid the CBT/FATCA discussions.
@Madamarcati – Thank you. Since reading your comment, I’ve started seeing FATCA as FATWA.
@J
Too funny and too true! Here are some additions:
President= Pope
Congress= Cardinals
Consulate/Embassy officers= Missionaries
US Military= Defenders of the Faith
Pledge of Allegiance= Nicene Creed
USA= Catholic Church (def of catholic is “universal”). All other western democracies are lesser Christian faiths that have strayed from the truth.
OVDP= Confession
I don’t know how to get through to the “homelanders”. An anonymous commenter read this article — http://www.onenewsnow.com/culture/2015/11/09/tax-hammer-takes-toll-on-americans-abroad — and still came up with a remark which could send you to a brick wall to bang your head. (Comments are closed so you can’t reply.) He/she definetely did not get it and definetely misunderstood.
I don’t get it. They want to be able to have the privileges of citizens (E.g., Owning real estate) without paying the taxes? Everyone pays taxes, why should they be exempt? Hopefully I misunderstood the article, ’cause otherwise it’s just sad.
BC_Doc,
Thanks for the great additions to the analogy given by J.
A comment from 2012:
… “the Pledge law” state by state. http://patriotismforall.tekcities.com/state_laws.html
My Canadian-born US-deemed US citizen son has never recited, like I did every day of my US education, the Pledge of Allegiance to the Flag of the United States of America.
Kirsch is a tunnel-visioned moron.
A read between the lines unscrupulous
snake-oil salesman.
Nobody, no one, can defend the fact that citizen taxation imposes itself into another country’s tax dynamic. It simply is not fair to tax a person
overseas for say, capital gain, when the country the person lives in may not tax capital gain but imposes higher tax in other ways.
Kirsch’s view takes on a selfish US interest only
approach and tells other countries and their expat workers to take a hike.
He ignores the comprehensive view that we all live on this planet together and are responsible as a whole. But according to Kirsch, screw the world and serve US interest first and only.
Kirsch obviously has never lived overseas, has an agenda for his fellow brethren in tax law and a desire to keep things complicated as all lawyers do so well.
The concept of simplification in American law
is a non-starter to all legal intellects. There just is no potential for business in simplifying people’s lives. A very regulated society with potential for penalty and numerous laws and stumbling blocks are the way to go according to Kirsch. How pathetic a mindset for him. Too bad he does not put his intellectual pursuits to something more meaningful than corrupting law.
Homelanders get services in exchange, US expats don’t !
We pay tax where we live for services.
Therefore citizenship taxation is robbery.
Like it or not, that’s what it is and USA is the only country doing it !
A real shame.
The common denominator to all articles written by Kirsch is how long-winded they are.
I have never read anything of length by this numbnut that could not be told in a single paragraph. Typical of his style and that of an attorney wishing to complicate an issue.
Just in their nature and own interest.
IMHO one’s personality makes a bigger difference than one’s religion. I was raised by a Christian father and am married to a Christian husband who are Myers-Briggs NT personality types (what Keirsey.com calls “Rationals”. (My dad was a science teacher; my husband is an engineer.) Because my dad taught us to kids use our minds and to think critically, even though I’m no Rational, I consider it important to think through things and differentiate between good laws and bad laws. According to Keirsey website and David Keirsey’s book “Please Understand Me”, there is a big difference between Rationals (NT) and Guardians (SJ) with their view of authorities and rules. Guardians tend to be loyal to authorities, obey the laws, do their civic duty, and uphold the status quo. Rationals question authorities and laws and chafe against them if they don’t make sense. Needless to say, many Rationals are skeptics and free-thinkers. Yet some Rationals remain Christian although they might chafe at a particular church or denomination. I believe the leading Protestant reformers were Rationals — Huldrych Zwingli, Martin Luther, and John Calvin. There were a number of things they changed. For example, Martin Luther couldn’t see any reason to forbid ministers from getting married, so he married a former nun, and to this day, all Protestant ministers can be married, unlike their Catholic counterparts.
Three things:
1) I always ask why they think it’s OK for the USA to rip off the treasuries of other nations, because that’s exactly what’s going on.
2) I always remember my in-laws (mostly the profile of our true enemy, “educated” Northeast Democrats) as not only not understanding why we would choose to live in another country but seeming to be insulted by it. The emergence of FATCA shows how right my hunches were.
3) I’m never averse to trying to knock them off their “exceptionalism” horses by insisting that they’re blindly delusional as to the desirability of living in the USA (been there, done that, left). They seem to believe lineups of uneducated economic refugees from third world countries trying to get into the USA also applies to people from modern comfortable democracies. It ain’t so!!!