John Richardson reports on “FATCA is Not the Answer,” by SEAT (Stop Extraterritorial Taxation) co-founders John Richardson, Karen Alpert and Laura Snyder, is SEAT’s response correcting errors and misinterpretations in the article “Taxing Fat Cats Abroad” in Financial News Federal. (reprinted with permission)
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On February 26, 2024, Tax Notes Federal published an article entitled “Taxing Fat Cats Abroad.”
The article defended the Foreign Account Tax Compliance Act (FATCA) as an “automatic exchange of information used to track down and tax accounts held by wealthy U.S. citizens living abroad.”
The article contained many errors and misinterpretations.
SEAT co-founders John Richardson, Karen Alpert, and Laura Snyder submitted a response to the article, entitled “FATCA Is Not the Answer.”
Their response, published on March 18, 2024, can be accessed via SSRN at this link.
The response explains:
1. The considerable differences between FATCA and CRS. They include FATCA’s lack of reciprocity and the United States’ refusal to join CRS;
2. The inequalities inherent in the U.S. tax system with respect to Americans living outside the United States and their discriminatory treatment;
3. The irrelevance of FATCA with respect to Farhy v. Commissioner and Bittner v. United States;
4. The unjust stigmatization of Farhy, Bittner, and all Americans living outside the United States;
5. Inconsistencies between the article’s defense of citizenship-based taxation and the “single tax principle” advocated by professor Reuven Avi-Yonah;
6. The failure of the article, in its theorectical defense of citizenship-based taxation, to contend with the real system in place today and its myriad intractable problems;
7. The lack of any connection between taxation and voting rights;
8. The importance of the 14th Amendment for the equal protection of the rights of Americans living outside the United States; and
9. That the 16th Amendment is not — and it should not be used as — a license to channel violations of constitutional and human rights through the tax code.
Such a well reasoned and articulate article!
I continue to be so grateful to these authors for their dedication – in continuing to combat the nonsensical and unethical claims of the FATCAnatics and ill-informed apologists for US extraterritorial citizenship-based taxation.
This is an excellent debunking and analysis of what can only be described as FATCAnatic propaganda.
FATCAnatics and US extraterritorial CBT apologists have never let mere solid facts, logic and reason stand in the way of what by now in my opinion, after all these years, can only be characterized as an ideology – an almost religious belief system not based in fact, but fostered by continued willful blindness, and a deliberate cynical and political ploy with total disregard for the tax ‘fairness’ they claim as their aim. That we are still seeing articles like “Taxing Fat Cats Abroad” despite years of accumulated hard evidence of FATCA and extraterritorial CBT’s flaws shows me that this idea is valued and repeated for its ideological and propaganda value – and continues to serve those aims rather than being rooted in a sincere demonstration of any true deep concern for actual tax justice.
I continue to be appalled at the disingenuousness of FATCA and US extraterritorial CBT promoters in general – who never fail to let (by now well established) facts, and any concerns for achieving actual tax fairness get in the way of the skewed worldview they continue to promulgate.
Thanks to articles like this, even after all these years reading at IBS, I continue to learn important details about the CBT system from these and other contributors.
We’re going to continue to need this type of analysis to be published and part of a public conversation because;
Unfortunately, uninformed opinions about the US extraterritorial CBT system surface in other countries, from authors who are apparently blissfully unaware as to the complexities and ramifications of adopting it – but who nevertheless advocate for us outside the US to emulate it – without critical consideration from a truly informed perspective as to why it is that only the US (and to some degree Eritrea) impose this system on non-residents – solely based on non-taxable events such as a place of birth, or parentage or naturalization resulting in being in possession of a citizenship or citizen-like status.
Ex. I came across this one from here at home;
‘Canada needs to start taxing Canadians who live abroad’ by Chandra Arya ( April 20, 2020, Policy Options)
https://policyoptions.irpp.org/magazines/april-2020/canada-needs-to-start-taxing-canadians-who-live-abroad/
The author – a Canadian MP, cites for support, an *article by Michael Kirsch from 2007, yet doesn’t mention that Kirsch (a US extraterritorial CBT and FATCA advocate) later, in 2014 at least in part alludes to the US extraterritorial Citizenship-based-taxation system’s inequity in application when he states that “….a number of practical steps could be taken to ameliorate unnecessary burdens faced by overseas citizens….”(*see ‘Revisiting the Tax Treatment of Citizens Abroad: Reconciling Principle and Practice, Michael Kirsch, Notre Dame Law School, 16 Fla. Tax Rev. 117 (2014)
https://scholarship.law.nd.edu/law_faculty_scholarship/1056/ ).