cross-posted from citizenship solutions
by John Richardson
The unified message from all should be that: The United States should stop imposing “worldwide taxation” on people who have “tax residency” in other countries and do NOT live in the United States! This is a message that all advocates of tax reform can support. As recently explained in a post from “ACA”, the mechanism (RBT vs TTFI) used to achieve this change is less important.
Congressman George Holding speaks on Residency Based Taxation | The American – for Americans in the UK & Europe https://t.co/KT24VsgmFv
— John Richardson – lawyer for "U.S. persons" abroad (@ExpatriationLaw) March 30, 2018
It is no secret that Congressman George Holding is working on a proposal to end the U.S. practice of imposing “worldwide taxation” on those who have “tax residency” in other countries. If successful, this would be a positive change for the United States, U.S. citizens who choose to live outside the United States and the residents of other countries. None of these should be burdened by the extra-territorial application of U.S. tax laws!
The specific content of the Holding proposal is certainly evolving. Regardless of the final content, Karen Alpert, Greg Swanson and I have proposed three core principles against which a final proposal should be measured. (We are not suggesting that these are the only principles.) These principles are found in Karen’s timely post where she discusses a “Residence Based Taxation Proposal”
What do expats want in a #RBT Proposal? answers from @FixTheTaxTreaty – with help from @PurpleExpatOrg
and @ExpatriationLawhttps://t.co/HUeTCa4dUt— Fix the Tax Treaty! (@FixTheTaxTreaty) March 30, 2018
The three proposed principle are:
1. American citizenship should not disadvantage a citizen living outside the US relative to expatriates from other nations.
2. We believe that freedom of movement is a basic human right. We also believe that freedom of movement and international trade go hand-in-hand. Governments should never impose laws, taxation, regulations, or other limitations on their citizens that hampers the freedom of movement of those citizens.
3. US citizens currently living outside the US who have arranged their financial affairs to be compliant with current US law should not be disadvantaged. Similarly, those non-residents who were unaware that they needed to arrange their financial affairs in accordance with US law should not have their savings confiscated just because they have foreign investments that are taxed punitively by the US relative to similar domestic US investments.
The practical reality of “Being American” and living in another country
Principle 1: One practical analysis – American citizenship should not disadvantage a citizen living outside the US relative to expatriates from other nations.
The principle that: "American citizenship should not disadvantage a citizen living outside the US relative to expatriates from other nations" should be a core principle in evaluating any RBT proposal: https://t.co/LpLV6rcWC2
— John Richardson – lawyer for "U.S. persons" abroad (@ExpatriationLaw) March 30, 2018
It is one thing for a country to restrict certain opportunities to citizens of that country. For example, many countries restrict voting and certain employment opportunities to citizens. But, most countries do NOT discriminate among various groups of “non-citizens”. Significantly, U.S. law has created huge incentives for Americans to be discriminated against as both matters of law and matters of practice.
Some examples:
Discrimination against Americans prescribed by law – Think FATCA:
Pursuant to FATCA and the FATCA IGAs imposed on the world, many countries have changed their laws to specifically discriminate against U.S. citizens in the area of financial services generally and banking in particular. It is well known and documented (nothwithstanding Robert Stack’s “It’s a myth claim”) that U.S. citizenship is now a reason for the denial of “banking privileges”.
Discrimination against Americans because of the dangers of business involvement with Americans – In the last year I have helped several Canadians renounce U.S. citizenship so that they were free to participate in various Canadian business opportunites
The simple FATCA of the matter is that many who understand that U.S. citizens are ruled by the Internal Revenue Code, will NOT allow U.S. citizens to become shareholders of smaller businesses. It’s quite simple really:
Sorry, but we can’t have you as a shareholder in our business if you are a U.S. citizen. Therefore, if you want to participate in this business opportunity you cannot be a U.S. citizen!
Those who will NOT allow U.S. citizens to become shareholders in their companies are absolutely right to do so. By way of example, consider the new U.S. Transition Tax. The whole point of the Sec. 965 “U.S. Transition Tax” is to confiscate part of the retained earnings of NON-U.S. companies! (Yes, you read correctly!) In a general sense, the “confiscation” reflects the percentage of U.S. ownership. The greater the percentage of U.S. ownership, the greater the confiscation. The less the U.S. ownership, the less confiscation. If ZERO U.S. ownership then ZERO confiscation! Do you get it?
If you were running a small business outside the United States, would you want a situation where the citizenship of some of your shareholders, could be used as an excuse to confiscate the retained earnings of the company?
The point is a simple one.
The way that the United States imposes taxes on residents of other countries, necessitates that “informed people” limit their interaction with Americans.
Sad but true.
Because of the “Internal Revenue Code”, Americans are just not like citizens of the rest of the world. Best, to stay away from them.
Conclusion: The current “U.S. system of imposing “worldwide taxation” on those who have “tax residency” in other countries means that Americans will be discriminated against. It’s a fact. The the discrimination is caused by the Internal Revenue Code of the United States!
Wow!
I’d not seen that bullsh*t article by Stack before…what a total lying, wanker!
Every, single thing he said is an absolute, outright LIE!
I hope karma gets him.
PS: not to be confused with the excellent actor, Robert Stack, of Airplane fame. 😉
@Jane
Carl Levin is another liar.
He said “There is no such thing as a simple swiss bank account”
There was, it was mine, to pay the utilities for my apartment while I worked in the US.
My simple account was closed and I had to rely on my sister to pay all my bills until I returned and renounced.
Dear Heidi,
I’m so sorry that happened to you. Those lying b*stards! When my then young daughter opened a savings account, the woman did so, no questions asked. She handed us an envelope of the details & waved us off. PS: my daughter has an EXTREMELY American accent.
It was only later on (maybe a couple of months) when I wanted to deposit some money into her account & needed the number. I open that envelope, & within it, there a declaration stating, “I am not a US person for tax purposes”!
No one ever asked ANYTHING of the sort! The entire process took maybe 10 mins & the only thing I made sure to ask was how much had to be deposited, and when, in order to get the bonus interest (this ditzy girl never said THAT). I also declined a debit card (on a SAVINGS account!) on her behalf.
Really, truly sorry you’re one of the minnows in the net that lets the big fish w/lawyers get through. xx
@Jane
Switzerland was a special case as they were under threat of US fines and sanctions and eventually signed a non prosecution agreement, so they really wanted nothing to do with US pesons in any shape or form.
In a way I was lucky and alerted to FATCA early and renounced bank in 2012.
The EU law has now to offer US citizen residents in their respective countries a simple account, but that is as far as it goes, it’s pretty difficult to get an account in a non resident country without a cln.
@Jane
It will surprise no one that Robert Stack now works for an international tax compliance consultancy:
https://www2.deloitte.com/us/en/pages/about-deloitte/articles/press-releases/robert-stack-joins-deloitte.html
“If ZERO U.S. ownership then ZERO confiscation! Do you get it?”
Indeed. USCs are afflicted by US law with the Midas touch: non-US-source income turns to US-source income when touched by a US citizen.
“the discrimination is caused by the Internal Revenue Code of the United States!”
With assistance from the OECD.
I wouldn’t hold my breath on that one.
I know someone who had to renounce because his partners did not want him in their new business venture. He had to do so and similar to me, he said that it hurt. And it DID hurt. But it was also a relief. Isn’t that perverse?
It’s not perverse to find out later that it’s a relief.
@Norman
Yeah but it is to feel both at the same time
The US extra-territorial tax system is the thing that is perverse. Feeling hurt that you were screwed by the US system while simultaneously feeling relief that you are finally free from its destructive effects is perfectly normal.
The hurt will eventually subside; the relief will last for the rest of your life.
Add bitterness to those emotions if CBT is replaced with TTFI soon.
@maz
Yeah- I am older now and such intense and convoluted complications make me dizzy. I am VERY relieved.
The effect on local employment opportunities isn’t restricted to being a shareholder or partner in a for profit business.
If I had known about FBAR and the US extraterritorial demands to know about even non-personal non-beneficial non-US accounts earlier in my life, I would not have been able to have worked for the community non-profit I once worked for, or taken any similar work – since I had co-signatory powers on the account of the Canadian sited local organization I worked for. I would have had to ask their board for permission to report, which I doubt they’d give me. If I had known before I was hired and let them know what FBAR reporting would be required, there is no way they would have hired me. The other dual there (who ironically handled the accounting, banking and did most of the cheque co-signing) obviously didn’t know about FBAR either, though they had lived in the US for a more substantial period (I was a toddler when we came to Canada). I would never have been able to volunteer as treasurer on any community boards or hold similar office in any professional organizations either.
“Add bitterness to those emotions if CBT is replaced with TTFI soon.”
Don’t worry, it won’t happen. It was part of the party platform of the party that controls three branches of the US government (two branches of which are elected) so there’s no way it will ever happen.
This just in from Attorney Virginia based in UAE. Now for all repairs to your house or business or any type of work done by anyone you have to get them to sign a WBEN or W9 before you pay them. Excuse me my gardener will not understand why he has to fill out these forms (costs 400$ if you hire a professional ). Next up might be they will ask you if you shop for your groceries then have WBEN or W9 sign by the store. Ok I am exaggerating a little now but it is getting crazy. Please visit Virginia’s blog for more info on getting foreigners to sign these forms in case they work for you. I can see all my help running away that this guy is simply nuts. The power of US Govt run amok. One look at the way Trump is handling the country now is a clear clue. Obama was wasn’t good either. After Bill Clinton (minus his extra marital affairs which even JFK had and Trump I don’t feel like talking about his pornstar fetishes ) everything went downhill
I think we should talk about pornstar fetishes. Stormy’s a US person so signed a W-9, right?