Liberty and justice for all United States persons abroad

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Category Archives: Issues regarding US persons abroad

Citizenship and the rights of individuals in International Law: The Universal Declaration of Human Rights

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Introduction – What about the rights of individuals in International Law?

I have recently written two posts here and here discussing how countries interact and respect the sovereignty of other countries. Specifically those posts have discussed how countries respect each others sovereignty in the areas or citizenship and taxation. Neither of these posts considered the rights of individuals (do they matter at all?). This omission was reflected in (at least) the following two comments:

Where in this subject comes the human rights issue, the freedom to choose one’s citizenship? Has the EU Court of Human Rights ever issued a statement on this question?

Okay, then, what about all those defectors from the USSR and other East Bloc countries? How come their obligations to Moscow, etc. weren’t respected? Did these countries not possess sovereignty? Does being a refugee or asylum seeker trump the obligations of citizenship in the state from which one has fled?

The purpose of this post is to outline (in a very basic way) the development of international agreements (perhaps not treaties) and protocols, where nations agreed that individuals should have rights (sounds radical doesn’t it). Note that the focus in this post will be on agreements among countries that recognize individual rights associated with citizenship (and other kinds of rights).

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Sovereignty and International Law 2: The right to define taxation as an attribute of a nation’s sovereignty under international law – Understanding Cook v. Tait

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Introduction

This is the second post discussing aspects of Sovereignty and International Law. The first post identified the right of a country to determine who its citizens are, as one aspect of the sovereignty of a country. This principle has been been assumed by EC Gentiloni as his justification for allowing the United States to claim European citizens (living in Europe) as U.S. citizens. But, Mr. Gentiloni also assumes that the sovereign right of the United States to define European citizens as U.S. citizens, includes the U.S. right of taxation over those “captured” citizens.

In other words (under the Gentiloni Doctrine), U.S. Sovereignty includes:

1. The right to define anybody in the world as a citizen of the United States

2. The right to impose worldwide taxation on United States citizens without regard to where they live in the world.

How cool is that!!!!!!!

Well, if the USA can do this, then Canada can too!

A recent post at Brock discussed Canadian MP Chandra Ayra’s proposal that Canada follow the United States and impose worldwide taxation on Canada’s expat community. He references the 1924 U.S. Supreme Court decision of Cook v. Tait, which upheld the right of the United States to impose taxation on one of its citizens living in Mexico. What is of interest is how Mr. Ayra describes Cook v. Tait:

The United States is the only developed country that taxes its citizens on their global income irrespective of where they live or how long they have lived outside of the US. The constitutional validity of CBT has not been tested in Canada, but the 1924 US Supreme Court decision in the case of Cook v. Tait offers cogent reasoning about CBT that shows its validity under the US constitution. The decision relied on the inherent benefits received by US citizens and their property from the US government, regardless of where the citizens made their home or where their property was located.

Mr. Ayra appears to describe Cook v. Tait as a decision based on the U.S. Constitution. This is probably NOT correct. Cook v. Tait should be described as a decision which recognizes and reinforces the sovereign right of a country to determine its own tax policies. (Cook v. Tait has been the subject of many posts on Brock.)

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Nepean MP @ChandraNepean makes the case for @citizenshiptax for Canadians living abroad

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Yes. It’s true. While Americans abroad (the world over) contemplate how to get their $1200 Corona Virus related payment from the U.S. Government, Nepean MP Chandra Arya has publicly made the case for citizenship-based taxation in Canada. His article reflects an admiration for the “1924 US Supreme Court decision in the case of Cook v. Tait“. His proposal is bolstered by his reliance on the thinking of Notre Dame Law Professor Michael Kirsch. Generally Professor Kirsch’s arguments for CBT are based on the assumption that there is really no such as an Accidental American and that all Americans are members of the polity (as he calls it). (You may be able to take a Homelander out of America, but you can’t the Homeland out of an American.) These arguments were on full display in May of 2014, when ACA hosted a “Citizenship-Based Taxation Debate” between Professor Kirsch and Queen Mary Law Professor Bernard Schneider.

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Interesting tweet from @Scaramucci provides opportunity for public discussion about #FATCA and @CitizenshipTax

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To see the replies click on the part at the bottom that includes “are talking about this”.

Professor Sandel’s @JusticeHarvard course: The shaping of the mind of a prosecutor of offshore crimes

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Former US Attorney Preet Bharara was an apparent crusader in the war against all things foreign. His office participated in the well publicized nine billion dollar fine against the French Bank BNP Paribas. In simple terms, the U.S. Department of Justice imposed a fine on BNP Paribas for: “Conspiring To Process Transactions Through The U.S. Financial System For Sudanese, Iranian, And Cuban Entities Subject To U.S. Economic Sanctions”. In other words, the United States claimed jurisdiction over BNP Paribas because it used the U.S. dollar.

Interestingly the the fine was based NOT on a violation of a U.S. law passed by Congress, but rather on the basis of a breach of an Executive Order signed by President Obama. (This reminds me of the Trump administration of today sanctioning companies that do business with Iran in violation of U.S. sanctions against Iran.)

The Economist in an article titled “No way to treat a criminal – The French bank deserved a clobbering, but America’s legal system looks like an extortion racket“, commenting on the process concluded that:

So even if BNP fully deserves its punishment, the legal system that meted it out is closer to an extortion racket than justice. France’s economy minister, Arnaud Montebourg, has compared America’s pursuit of BNP to “economic warfare”. In other words, a bank that catered to mass murderers has had some success in portraying itself as a victim. Any process that can make BNP’s dealings with Sudan look anything less than shameful must be very flawed indeed.

From Mr. Bharara’s perspective (from the June 30, 2014 Department Of Justice media release):
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Sovereignty and International Law 1: The right to define citizenship as an attribute of a nation’s sovereignty under international law

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Commenting on the last post “Although citizenship matters, not all citizenships are the same. Americans are just different …“, Tim Smyth writes:

I am usually not one for optimism but I think Sophie In’t Veld latest response back to the Commissioner which literally came after one day from the Commission’s original response is very much on target and has dramatically reduced the Commission’s room for maneuver. To give some background I am a huge fan of Sophie’s and acknowledge she has been involved in this issues for a better part of 10 years(almost as long as me personally) however, she is not directly related to these issues on a personal level like we are and it has taken some time up until recently for her and her staff to understand this stuff the way “we” understand it. Thus I feel her latest response is an important sign that there is at least someone in elective office somewhere that truly understands these issues the way “we” understand it. (To give some background much of Sophie’s early work on these issues was passed on privacy law and data protection which is her bailiwick more than taxation or nationality which is not. You can see however she has become much more educated on taxation and nationality in recent years).

In terms of what comes next I think there are a couple possibilities. At this point the Commission has some real decisions to make with real political consequences.

1. The Commission can simply decide to respond back to Sophie and blow her off. This might be the “Safest” option but they have not taken this option to date in previous rounds of questioning and institutionally they might feel that pure insubordination is non viable.

2. Say the US can impose CBT but no other “third” country can. Again I am not sure how successfully this can be spun without looking like complete stooges of the US. Also there is not any legal justification I can think as to why the US can impose CBT but no “other” state can under international.

3. Say everyone can impose CBT and define “their” citizens however they wish under international law. This is the logical followup to Commissioner Gentiloni previous response and one that has the most sound basis under international law if you believe the US is entitled to impose CBT under IL however, it would obviously be a practical, political, and logistical nightmare. I will discuss later what are some of these implications

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The purpose of this post is to explore various aspects of the concept of citizenship seen through the lens of international law. This is an interesting topic in it’s own right. (It is particularly important in the context of Cook v. Tait.) A basic assumption of the Harter and Gentiloni letters is that the it is the sovereign right of the United States to define who its citizens are. The problem becomes when the United States defines European citizens as US citizens, when those US citizens are residing as European citizens in Europe.

The following questions come to mind:

1. Under what circumstances can the United States expand it’s definition of a U.S. citizen in an extra-territorial manner?

2. Under what circumstances can the United States apply its laws to European citizens living in Europe?

3. How does the assumption that countries are fee to define its citizens operate in a world of dual citizenship?

4. Under what circumstances does the sovereign right of the United States to define who its citizens are encroach on the right of European countries to define its citizenry?

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Although citizenship matters, not all citizenships are the same. Americans are just different …

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Introduction

This is the fourth post in which I have discussed the plight of Accidental Americans in Europe. In my first post I discussed the message from the Homeland, delivered by Chip Harter to the European Union. The message was that Accidentals should Either file U.S. taxes or renounce U.S. citizenship. In my second post I discussed the message from the Home country, by Mr. Gentiloni – the European Parliament’s message to Accidentals. This message was: Nationality ties come with obligations including paying taxes to America. These messages came only days apart. (To say that European Accidentals are having a bad month would be an understatement.) The third post discussed the fact that European Accidentals are under attack from both sides of the Atlantic.

The fourth post – Identifying the component parts of the message …

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European Accidental Americans under attack from both the Homeland and from their Home Country

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Updated April 11, 2020 to include the information in the following tweet:

Back to the original post of April 10, 2020

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This is the third post in which I have discussed the plight of Accidental Americans in Europe. In my first post I discussed the message from the Homeland, delivered by Chip Harter to the European Union. The message was that Accidentals should Either file U.S. taxes or renounce U.S. citizenship. In my second post I discussed the message from the Home country, by Mr. Gentiloni – the European Parliament’s message to Accidentals. This message was: Nationality ties come with obligations including paying taxes to America. These messages came only days apart. To say that European Accidentals are having a bad month would be an understatement.

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EU to #AccidentalAmericans: Nationality ties come with obligations including paying taxes to America

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In a previous post I described America’s direct message to European Governments and to European residents who were born in America.

The message was simple, clear and unambiguous:

You either comply with the American extraterritorial taxation (and reporting) regime or you renounce!

Understandably, European citizens have looked to their Governments to protect them. As a case in point:

On February 11, 2020 Mr. Bellamy of the European Parliament posed the following question for answer, (pursuant to Rule 138), to the European Commission:

‘Accidental Americans’ is the term used to describe 300 000 Europeans who, while born in the United States, only lived there for a very short while or not at all.

Ever since the vote on the Foreign Account Tax Compliance Act (FATCA) in 2014, they have been targeted by the US Government, which is demanding they pay US taxes on income that is paid to them outside of America. ‘Accidental Americans’ who declare their income in the countries of which they are citizens and where they reside have even had to face the prospect of having their bank accounts closed. Banks have been threatened with having to pay almost 30 % in taxes on all their financial flows transiting through the United States. This state of affairs was placed on hold by an 18-month moratorium.

Will the Commission take action to defend its fellow citizens by guaranteeing them access to a bank account and fair treatment on tax, in order to protect them from the arbitrary extraterritorial application of this law? Are there plans to renegotiate the agreement on implementation of FATCA on an EU-wide basis, with identical reciprocal sharing obligations for both sides of the Atlantic?

https://www.europarl.europa.eu/doceo/document/E-9-2020-000816_EN.html

At its core, the question is asking whether the European Parliament would take action to defend European citizens, from the extra-territorial application of US law, to European residents who, the United States claims to be U.S. citizens. (Note that the FATCA IGAs allow the United States to define and redefine who is a U.S. citizen). Paolo Gentiloni replied as follows:

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United States Of America To Accidental Americans: Either file US taxes or renounce

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Part A: Background

On March 3, 2020 I wrote a post on Brock, which was based on the problem of FATCA IGAs requiring banks to include US Social Security numbers, in their FATCA reporting.

Basically there is a tension between:

On the one hand the banks are required to include the Social Security Numbers of their US clients. On the other hand, many people who are “technically” US citizens don’t have Social Security numbers.

This is a problem that has long been in the making. My March 3, 2020 post described the problem and referenced the work of CBC reporter Elizabeth Thompson’s reporting on this problem. The post also included a background/summary of the events leading to the problem (which has been included in this post as an Appendix*).

US Treasury has said very little about this issue.

Described by Helen Burggraf as …

The U.S. Treasury is continuing to maintain its silence with respect to the issues European banks have been struggling with for months over their perceived need to report to the U.S. – under the tax evasion law known as FATCA – government tax information details on certain of their American account-holders that they don’t have, European banking sources, expat groups and others report…

This is in spite of the fact that so-called “accidental Americans” in Europe are continuing to have their non-U.S. bank accounts frozen in cases where their banks say they have failed to provide “Tax Information Numbers” (TINs, typically Social Security numbers) as the banks say FATCA requires them to have as of the end of last year, according to sources in the accidental American community.

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