While waiting around for the Cavaliers Hawks game to begin I came across this!
http://www.moodystax.com/downloads/Renouncing-Part2-Appendix.pdf
From this:
http://www.moodysgartner.com/renouncing-your-us-citizenship-new-law-may-keep-you-out-forever/
RT Lawyers: 1924 @USSupremeCourt decision of #CookvTait https://t.co/Va1ITUKq8M = justification 4 "citizen tax" – What does case really say?
— U.S. Citizen Abroad (@USCitizenAbroad) May 22, 2015
Since 2013 I have been working on a series of posts about the 1924 decision of Justice McKenna (see his biography) in the 1924 decision of Cook v. Tait. As you know, Cook v. Tait is always cited as the justification for U.S. citizenship-based taxation. You will find the series of posts here. My goal has been to explore and understand what is the history, basis, and rationale for “citizenship taxation”. Even if it was justifiable in 1924, it is hard to justify it today.
The problem is that although, there is agreement that Cook v. Tait stands for the legal proposition that U.S. “citizenship-based taxation” is NOT illegal, the reasoning in the decision is (in my opinion) very unclear. I have read the decision may times and to this day and have never felt comfortable that I really understand the basis of the decision (if there is one). Of possible interest is what appear to be a summary by a law student of what Cook v. Tait is about.
Interestingly, in 1925 a law review article was written by a U.S. law professor (the Michael Kirsch of 1925) about Cook v. Tait. You will find a link to a CBC interview with Professor Kirsch (along with a large number of valuable comments) at a previous post at the Isaac Brock Society.
You will find the decision in Cook v. Tait from the link in the above tweet.
I invite readers of this post to:
1. Take the time to read the decision (more than once).
2. Try to understand what exactly is the basis for Justice McKenna’s reasoning.
What I am looking for comments are answers to the following two questions:
1. What is Justice McKenna really saying?
2. What is his specific justification for what you understand him to be saying.
Please think carefully about this.
Here is the decision in Cook v. Tait may be found here.
Thanks to the comment by @Publius, you will find the most interesting arguments advanced by the lawyers here:
COOK v. TAIT https://t.co/6It7D4B7Vh via @casetext – Here are the positions advanced by the lawyers for and against in #CookvTait
— U.S. Citizen Abroad (@USCitizenAbroad) May 23, 2015
To accompany his recent paper “Urgent Need for U.S. Citizens Residing Outside the U.S. to be Able to Obtain a Taxpayer Identification Number (‘TIN’) Other Than a Social Security Number” Patrick Martin has made several blog posts about the difficulties faced by U.S. citizen teenagers and adults attempting to obtain Social Security numbers from outside of the United States. I highly recommend the paper & posts to all readers here.
Mr. Martin also states that it is impossible for U.S. citizens to travel to the U.S. without an SSN. On its face, this looks like a reasonable conclusion from the warnings on the U.S. passport application form. State Department officials themselves do not seem to agree; in 2011, they told the Government Accountability Office that they did not believe then-current statutes allowed them to deny passports to SSN-less applicants. Nevertheless, the statutorily-authorised fine imposed in some cases for failure to provide a TIN — enacted to punish the diaspora — may deter U.S. passport applicants who lack SSNs, and a large proportion of such applicants are likely to be U.S. citizens in other countries.
A new bill may make the situation even worse, though it wouldn’t prevent travel to the U.S., “just” departure afterwards. Under Orrin Hatch’s “customs bill” (S. 1269/H.R. 644) which recently passed the Senate, not just people with significant unpaid taxes or tax-form-related fines, but also people who do not provide their SSNs, would be unable to obtain general-validity U.S. passports, only “one-way passports” limited for travel to the United States. This proposal, and others like it, directly resulted from State’s 2011 comments to the GAO. The SSN-related part of the proposal is new, and did not appear in the previous iterations of the proposal in the 2012 highway bill nor veterans’ jobs bills. It is not clear whether it would deny U.S. passports to people who never had SSNs in the first place. I will explore this in a separate post later on.
Psychologists describe 5 stages of grief based on the Kubler-Ross model introduced by Swiss psychiatrist Elisabeth Kübler-Ross in her 1969 book, ‘On Death and Dying’. Although originally ascribed to the emotional stages experienced due to death of a loved one, the model can also be useful to understand the responses to any subjective trauma that a person may go through, for example a relationship breakup, a job loss, or a ‘OMG! I am a US taxpayer’ moment.
The key here is ‘subjective trauma’. Many ‘US persons’ know what it is like to have people roll their eyes, yawn, or wonder why we are so worked up, just because we discover we are subject to FATCA (what’s the big deal? You ARE an American!), or because we discover we are US taxpayers (if you don’t like it why don’t you renounce?). Typically, we do not get the sympathy one would get if we had a serious illness, or lost our job, or divorced our spouse.
Non-US persons for the most part, just do not ‘get’ the ‘US person’ curse, because to be FATCA’d and CBT’d is not within the realm of normal human experiences. We are unique and special in the world that way – thanks to USA’s exceptional treatment of those it deems ‘US persons’. Nevertheless it IS traumatic for those of us who have lived most or all our lives in countries other than the USA, and who have never had a clue we were US taxpayers on our non-US income, to be FATCA’d and CBT’d.
The following are the 5 stages of grief as outlined in the Kubler-Ross model. Keep in mind that these stages are not necessarily linear. One day you may feel like you are angry beyond belief, and the next day you may feel that it just is what it is. Hopefully, at some point, most of your days will fall into the latter category.
Denial.
The first reaction to hearing one has a terminal illness, or their house burned down, or they are subject to the tax laws of a foreign country, is denial. This just CANNOT be for real. It makes no sense. This has got to be wrong. How could I have lived all these years and NOT known I was a US taxpayer? There must be exceptions for people like me who don’t live in the USA. They surely cannot be referring to ME.
Anger.
Once the initial shock wears off, anger follows. We want to blame someone or something. We may be angry at the doctor who gives us a bad diagnosis, at the driver who caused the accident, or at ourselves for not doing something to prevent whatever bad thing happened. We are angry at the Canadian government for not standing up for us, at our spouse who thinks we are over reacting, at our neighbour who doesn’t want to listen to our rants, at ourselves for not figuring out years ago that we were US taxpayers, or at the American government for acting like it owns us.
Bargaining.
This is the stage where we play games with ourselves, and with others, desperately trying to ‘work it out’ or ‘fix things’, so that we can go back to the way things were before. The person whose romantic relationship is at an end may promise to change their behaviour – anything to not have the relationship end. The dying patient may promise God he/she will be a better person or take better care of himself/herself – anything to not have to die. The newly aware US taxpayer searches for a way to work out their non-compliance: streamlined program? 5 years tax compliance catch-up? – just please don’t penalize me for my ignorance.
Depression.
Reality is setting in now. There is no easy way out. We are not going to bring our loved one back. Our job is gone forever. The relationship is definitely over. No matter which route we take to solving our ‘US taxpayer status’ we are going to pay – whether that be in taxes, compliance fees, penalties, loss of privacy, loss of US citizenship, or by being forced into hiding. It sucks no matter how you look at it, and this just makes us sad. 🙁
Acceptance.
Psychologists and grief counsellors say you are lucky if you get to this point. Many people get stuck in anger or depression for years or even a lifetime – the widower who becomes a recluse when his wife passes away, the mother who mourns a lifetime for the child she lost, the aspiring athlete who never made it to the big leagues and seems forever lost in his former glory years, the ‘hidden’ US person who cannot shake the mental chains of his unwanted ‘US taxpayer status’ even if he has logistically found a way to deal with it. The luckier people at some point accept the reality of what has happened and find a place to put it so that it does not interfere in their daily lives anymore. The widower finds peacefulness alone, or maybe finds new love. The mom, whose child is gone, remembers the happy times she spent with him/her and stops dwelling on what was lost. The US person, finds a way to deal with his/her own particular situation – stays hidden, or becomes tax compliant, or renounces – and moves on with his/her life.
In May 1778, a bunch of traitorous, violent, rebellious tax evaders swore an oath to give up citizenship in the greatest country on earth, instead of paying their fair share to an overseas government which was doing so much to protect them:
I do acknowledge the United States of America to be Free, Independent, and Sovereign States, and declare that the people thereof owe no allegiance or obedience to George the Third, King of Great Britain; and I renounce, refute and abjure any allegiance or obedience to him; and I do swear that I will to the utmost of my power, support, maintain, and defend the said United States, against the said King George the Third, his heirs and successors, and his and their abettors, assistants and adherents …
Background information from the U.S. National Park Service:
On May 7, Washington issued a General Order from headquarters urging that the oaths be administered promptly to officers of the 3rd and 4th New Jersey regiments. Many of these officers had now overcome their indignation and were ready to sign their allegiance to the new nation. Washington hoped others would follow the New Jersey example. The process began on May 12, 1778.
One man who swore that oath apparently was not very sincere about it:
To accomplish the work, Washington selected high-ranking generals to administer the oaths to the officer staff. Among those selected was Brigadier General Henry Knox, who would administer oaths to officers of the artillery and military stores. The site chosen to administer the oaths was the artillery park. Apparently, General Knox served as witness to many oaths taken by officers of the Continental Army. His signature appears on a similar oath of allegiance administered to Major General Benedict Arnold on May 30, 1778, also at the artillery park.
Homelanders and their enablers love to slap the label “Benedict Arnold” on ex-American renunciants, but it appears from this that the actual historical definition of “a Benedict Arnold” is a person who swears an oath of renunciation of their former country but then continues to demonstrate loyalty to that foreign former country over and above their loyalty to their new country.
Probably many at IBS have read this article [ read the text, don’t wait for the video ]. May we find a way to respond?
And the naratrice speaks as if the changes are brand new… NOT
http://money.cnn.com/2015/03/10/pf/taxes/us-expat-kids-citizenship-tax/
On Friday, the State Department released one of the remaining missing sections of the Report of the Visa Office for Fiscal Year 2014: Table X, “Immigrant and Nonimmigrant Visa Ineligibilities (by Grounds for Refusal Under the Immigration and Nationality Act)”. For our purposes, this is interesting because of its statistics on two particular grounds of ineligibility which apply to emigrants: 8 USC § 1182(a)(8)(B) (“Draft evaders”) and § 1182(a)(10)(E) (“Former citizens who renounced citizenship to avoid taxation”).
The latter ground, the infamous Reed Amendment, is not known ever to have been enforced officially, though oddly enough this year’s Table X does not give us the number of determinations of ineligibility for a non-immigrant visa under the Reed Amendment: unlike in past years, the table entry is blank. It is not listed as a dash, which is used in the report to indicate that a particular ground of ineligibility doesn’t apply to non-immigrants; there’s simply no symbol in that row & column of the table at all. (The last time the report failed to include the Reed Amendment, in 2003, there was simply no row in the table at all; this time, however, the row is present, it’s just that the non-immigrant column is blank.) I have no idea what this might mean.
One thing Table X does show is the continued decline in enforcement of the former ground: only about half a dozen to a dozen people per year are being found ineligible for visas on draft-related grounds, and in recent years nearly all of them have been able to overcome their ineligibility upon review. However, despite Jimmy Carter’s pardon back in the 1970s, the number of people unable to overcome their ineligibility is not zero.
The ban on re-entry for people who left the U.S. as draft evaders or deserters is rooted in a much older Civil War-era law which stripped such people of their citizenship and made them ineligible for naturalisation. At the time, the U.S. had very few immigration controls, but by the 1920s, new immigration laws began placing barriers in the way of entry of all aliens ineligible to citizenship, presumably including draft evaders & deserters. These banishment provisions were made explicit in the Immigration and Nationality Act of 1952, and even survived the Supreme Court cases Trop v. Dulles in 1958 and Kennedy v. Mendoza-Martinez in 1963, which declared the nationality-stripping provisions for desertion and draft evasion respectively unconstitutional.
According to a post on the Democrats’ Senate Floor Twitter feed, 78 Senators voted in favour of Orrin Hatch’s Trade Facilitation and Trade Enforcement Act (S. 1269), which includes the passport revocation provisions discussed yesterday: to revoke passports from people with US$50,000 of unpaid taxes & fines, or people who never obtained or do not provide a Social Security number.
In November 2014, American Citizens Abroad issued a position paper explaining why passport revocation is an inappropriate and dangerous means of tax enforcement. Patrick Weil, in a Yale Law Journal article, has detailed the long history of abuse of the administrative power to revoke passports. And, as stated here previously:
Due to the U.S.’ sharply harsher penalty structure on under-reporting of similar assets & items of income simply because they’re located in another country, it’s likely that a disproportionate number of victims of this bill would be U.S. citizens in other countries. Hatch is the chairman of the Senate Finance Committee and the most prominent Republican supporter of Chuck Schumer (D-NY)’s Ex-PATRIOT Act, another well-known emigrant harassment proposal.
The roll call on this “trade facilitation” bill (showing the votes of each Senator) was posted after I first wrote this; it shows that all 44 Democrats, 32 Republicans, and both the independents voted for the bill, while 20 Republicans voted against and 2 Republicans did not vote. The “yea” voters include not just traditional enemies of the diaspora like Chuck Grassley, Chuck Schumer, Jack Reed, and Harry Reid, but FATCA opponent Rand Paul as well.
Similar passport revocation provisions passed the Senate once before three years ago (in a highway funding bill) but got shot down by a competing House highway funding bill which coincidentally did not include any passport confiscation provisions. On the bright side, The Hill has predicted that this “trade facilitation” bill, too, will get nowhere in the House — though again, not due to any concern for the diaspora, but rather because of the bill’s controversial anti-currency-manipulation provisions (Title VII).
As a revenue offset to S. 1269, “An original bill to reauthorize trade facilitation and trade enforcement functions and activities, and for other purposes”, which was introduced on Monday, Orrin Hatch (R-UT) includes the following unoriginal and tired proposal:
SEC. 7345. Revocation or denial of passport in case of certain tax delinquencies.
(a) In general.—If the Secretary receives certification by the Commissioner of Internal Revenue that any individual has a seriously delinquent tax debt in an amount in excess of $50,000, the Secretary shall transmit such certification to the Secretary of State for action with respect to denial, revocation, or limitation of a passport pursuant to section 1001(d) of the Trade Facilitation and Trade Enforcement Act of 2015.
This proposal was previously discussed here in 2012, and made its most recent appearance in 2014. Due to the U.S.’ sharply harsher penalty structure on under-reporting of similar assets & items of income simply because they’re located in another country, it’s likely that a disproportionate number of victims of this bill would be U.S. citizens in other countries. Hatch is the chairman of the Senate Finance Committee and the most prominent Republican supporter of Chuck Schumer (D-NY)’s Ex-PATRIOT Act, another well-known emigrant harassment proposal.
Another section of Hatch’s bill would deny U.S. passports to people without Social Security numbers, sharpening an existing law which requires the State Department to forward passport applicants’ details to the IRS. This would effectively require that U.S. citizens born in other countries obtain SSNs prior to visiting the United States. (Under current procedures, U.S. citizen without SSNs are simply instructed to enter all zeroes in the SSN field of their passport applications.) However, unregistered children of emigrants might just ignore the law requiring U.S. citizens to use a U.S. passport to enter the U.S., and instead use their non-U.S. passport.
You Can Count on It”
