#FATCA Hearings (4/26/2017) – a very brief introduction

Tags

cbt, citizen-based taxation, fatca, FBAR

The Foreign Account Tax Compliance Act (#FATCA) is a law requiring all foreign financial institutions (FFI) to provide the United States’ Internal Revenue Service (IRS) with financial account details of any American Persons who has accounts with it. If a FFI does not comply, then it is subject to a 30% withholding tax on all its American transactions.

There are arguments for and against #FATCA, and even though I am fully against it, I will try to present both arguments.

Argument For

• The United States has suffered from tax evasion where its citizens and residents park their nest eggs abroad tax free. FATCA forces other countries to report these monies to the IRS. Estimates of taxes that will be recovered vary from $250 million a year to $792 million per year. The actual amounts received in taxes to date is only about $400 million.
• Since implementation in 2010, the Treasury Department has received about $8 billion from FBAR penalties — fines for not reporting overseas accounts; which are not tax revenues but reporting violations.
• More American Persons living abroad have become tax compliant. I cannot find figures on this, but I know it is true because it is true for me and many I know (online).
• There is no cost to American taxpayers. *At least this is argued. There is an indirect cost via increased compliance costs of US banks and the associated lost tax revenue.
• FATCA adds a layer of transparency — money cannot be squirrelled away anonymously.

Summary: the positives are compelling. FATCA is bringing home lost tax dollars, is preventing at least some tax evasion, and this is the argument commonly made.

Argument Against

• FATCA infringes on the right to be free of unwarranted searches as described in the 4th Amendment of the U.S. Constitution:

  

• It imposes costs on foreign financial institutions whose only ties are American customers. #CBT
• It imposes burdens on non-American persons. #FATCA & #CBT
• It infringes on the sovereignty of foreign nations (by applying American tax law on foreign soil). #FATCA & #CBT
• It helps capital from foreign economies into the American economy. #FATCA & #CBT
• Americans are being denied basic banking services.
• American small businesses abroad are less competitive through higher taxes and compliance costs. #CBT
• Threatens $2.2 trillion in American exports.
• Increases the impetus for the world to move away from the U.S. dollar as the global reserve currency.
• American livelihoods are impacted and threatened. #CBT
• In some cases violates attorney client privilege (when an attorney living abroad has foreign clients whom he or she has authority over their financial accounts).
• Exposes personal financial information to hacking.
• American citizens are renouncing their citizenship in record numbers.
• Americans living abroad are becoming disenfranchised and may be acting as a negative force on the global opinion of the USA.
• It exacerbates the world’s existing image of America as a bully.
• The US refuses to comply with its promise of reciprocity.
• There is no tax revenue gain.

Summary:

Most of these negatives are real. Others such as loss of trade are as yet undocumented. I take the individual citizen living abroad as the canary in the coal mine. Americans have lost all financial accounts and have even had mortgages cancelled, small businesses have suffered through loss of financing, and some individuals have lost jobs (existing and potential) due to their signing authority on foreign commercial accounts. And over 4,000 of us are now renouncing annually with no signs of letup.

Discussion

Some of these negatives are inextricably linked with citizen-based taxation (CBT). CBT was not as much an issue before FATCA as most Americans ignored their American income tax obligations. Actually most did not know they had tax obligations, and many today still don’t know they do. Others simply refuse to comply, and while I don’t know the compliance rates, all discussion I’ve seen says they are still far below 50%.

Most of us who live abroad think CBT should be abolished and replaced with residence-based taxation. This is how the majority of the world taxes its citizens: you are taxed if you live in a country, but if you move away, you are not. Why the US continues with this practice boggles our minds. It is virtually the same practice King George imposed on American colonists which is commonly known as taxation without representation. We get zero American services, so why should we be taxed?

One way to look at these issues is to reverse the roles. Suppose all other countries taxed their citizens in the US. Some 40 million foreign nationals would then have to file taxes abroad, and because of all the flimsy tax treaties the US has, the estimated $400 per head would leave the US ($16 billion annually versus the $3.6 billion the US extracts from foreign lands.) Plus, every American bank would have to supply financial information on every foreign person they had as a customer; which would mean verifying each customer’s nationality. The American financial services industry would not go for it; the American people would not go for it; and the American government would not go for it (as evidenced by the existing refusal to comply with its own law).

This is a bi-partisan issue. CBT was first created by President Lincoln, a Republican, and these laws have been supported and added to by both parties. Many of the Republicans are now understanding the complete immorality of CBT and FATCA, but most Democrats are clinging to their need to control.

There are better ways to catch tax cheaters. Recruit some business schools. Consult countries like Canada who have logical processes to protect taxes. tax money as it leaves, not the people. But Americans don’t want to do things the best way; they have to do things their way; because American way is always the best.

 

 

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Citizenship-based Taxation is Absurd

Tags

@FACTCoalition, @youngturksrec ‏, @youngturksrec ‏ idiot, American Expatriates, cbt, fatca, FBAR, idiot, IRS, obama, POTUS

A Stupid Story

Larry worked for a great company, Universal Solution Associates. He worked on the highest end projects, led his industry in quality and quantity of projects completed. He was a shining star for this industry leader.

Larry was required to submit timesheets. His time was billed, and the company needed to know how many hours he worked on each project. It was a condition of employment. Larry could have refused to submit timesheets, but he would be fired. It was also a requirement to receive overtime. The company rightly paid Larry for every hour he worked, but they would not pay undocumented overtime; because they could not bill customers for it.

Larry was happy, USA was happy, and much money was made.

One day Larry met Lucy at a café. She was eating a foreign looking dish; while he munched a cheeseburger. He asked her what she was eating, and before long, he was in love with her dishes. Lucy worked for a competitor of USA, Enriched Universal.

EU successfully recruited Larry to work for them. Larry gave his two-week notice, got thoroughly drunk at his going away party, and left on friendly terms with all his coworkers. Larry loved USA but EU offered extra benefits such as wine instead of beer, food he couldn’t pronounce that tasted awesome on Friday mornings instead of donuts, and he did not have to submit timesheets, that pain-in-the-ass, no value-add inconvenience.

Life was good for Larry. He grew to love Lucy, the new foods he couldn’t pronounce, and the freedom of working on whatever he wished to work on. But there was one problem. EU would not pay him any overtime. It did not matter if he worked thirty or eighty hours a week, his pay was always the same. Before too long, his love of Lucy waned, and he began to crave cheeseburgers and beer. He decided to return to USA.

USA was grateful to have Larry back. Their business was not the same without him. They even gave him a raise. But there was one problem.

“Larry, you have not completed your timesheets for the last year.”

“I worked for EU.”

“Because you are delinquent, we will be taking the money that would have been paid to you off your future earnings.”

“I didn’t work for USA, I worked for EU.”

“Because of the administrative burden on us, we are also imposing a fine of 50% of those earnings you didn’t submit timesheets for.”

“What are you talking about? I didn’t work for you. I had no employment contract.”

“But you did, Larry. The original contract you signed was for life, and you agreed to all of these terms.”

That’s crazy. You can’t do this.”

“We can Larry. The courts have already backed us in other cases. Lew went to work for United Kickassers and he never reported his time. We just sold his house last week.”

“His house?”

“Your house too, Larry. We’ve put a lien on it, and if you do not come clean within the year, your house is ours.”

“Everything I own is in that house. I have no retirement funds. You can’t do this. This is stupid.”

“This is the way USA works, Larry”

“Well I am leaving USA!”

“You can leave, Larry, but every competitor will garnish your wages for us.”

---

Discussion

Of course this is a stupid story. Anybody reading this can plainly see the injustice of this situation. In fact, it is completely implausible. This is not a scenario any person smarter than a grapefruit would even consider as realistic.

Yet.

Yet this is how the United States treats its citizens living outside the country. Once we leave the country, we are still obliged to fill in our timesheets (taxes, FBAR reports, and loads more paperwork) or be penalized, even though we live in, physically and under the laws of, foreign nations. All I did was replace the word country with company and tax with timesheet.

Yet.

Yet because President Lincoln first created this practice in 1861, all Americans think it is legal and just. Because the Supreme Court backed these laws in 1924, our elected representatives think it is just. Modern day taxation gurus and champions go to war defending these laws and accuse those of us who don’t believe in them as tax cheaters.

What Americans cannot do with these laws is think about them logically. They cannot sit back and examine how the rest of the world taxes citizens and fights tax cheating. Americans, even though this is supposedly what makes American great, cannot find an better (at least acceptable by all) way of doing things. Americans cannot even understand that this situation is taxation without representation (we get zero American services) and is the reason colonists went to war with Britain. Only when Americans decide to move abroad — which by the way is a universal right of all people of this world — do they come to realize the absurdity of these laws.

I don’t care who you are (@POTUS, Obama, or Rand Paul) or what you believe (Left, Right, or anywhere in between, religious or secular), the bottom line is, if you think the existing citizenship taxation laws are just, then frankly, you are an idiot.

Think America. Please think!

Where are you Mainstream Media?

Tags

ban, fatca, refugees

I watched Smerconish last night on CNN. And before you label me a Libtard  or a liberal lackey, and yes, I despise Fox News and the alt right, I am quite disgusted with mainstream media’s filtering the real Obama stories. I rarely watch any news on television anymore, and when I do, it’s usually Canadian CBC, CTV, or BNN. I like my news to be about the news. Stations like Fox and CNN should have the word News stricken from their titles.

Anyway, I like Smerconish. He tends to speak his mind, and his mind is very much in line with my own leanings: centrist, questioning all, and searching for the best. I know you righties cannot comprehend these concepts, so please stop reading before your brains explode. Except I am done with left-right bullshit in this post.

At one point he interviewed Mark Wrighton, chancellor of Washington University in St. Louis. He was a spokesman for 48 university heads who oppose the seven-nation ban. When Smerconish made the following statement, my hackles raised.

Who would we rather Iranians get their news and information about the United States from, their Supreme Leader or the twelve thousand who come here to study and go home to spread the word about the United States?

It is a valid point. It is a point I can relate to; because it is a point I have been making for years. People are the front line of foreign relations. If you can sway the people, you sway the government. You cannot sway the people by swaying the government first. This ban cuts off the cultural exchanges, it is a virtual wall that ensures prejudice on both sides will fester and metastasize.  Such a ban not only shuts off all grass roots reconciling but also spurs anti-American sentiment and terrorist recruitment. That this and other bans are bad is a no-brainer to a thinker and someone who wants a peaceful world.

I have been making this point not about students or immigrants but about emigrants. The United States has some 40 million foreign nationals (people with foreign citizenships), but it also has some 9 million citizens living abroad. I am one of these people, or I was. We live in foreign countries, live foreign lives, speak foreign languages, immerse ourselves in their cultures, collaborate with them in all facets of life, and if we stay long enough, we become one of them. We are the front line of spreading the ways of America to the rest of the world. We are plenipotentiaries with boots on the ground.

We should be treasured assets of freedom, democracy, and world peace, yet we are treated as criminals and called traitors by the Treasury Department, former President Obama, the dipshit lefties (sorry, but the idiot and his ilk infuriate me) like Chuck Schumer, and we are ignored by all mainstream media, like Smerconish who can rail about 12,000 foreigners but ignore 9 million Americans.

Under this latest lashing against refugees, we the 9 million are calling ourselves refugees. Some 20,000 of us handed in our citizenships under Obama and the floodgates are still open. The GOP has an anti-FATCA and pro-RBT platform, we think, but nobody has acted yet. There are also lawsuits, but unlike foreigners, we Americans cannot yet prove irreparable harm. Apparently higher standards are at play when the American government defends its money.

Our money.

Our fight is about fair taxation. We who live abroad pay taxes abroad. We pay taxes for services we receive. We pay income taxes, value-added taxes, and a host of miscellaneous taxes, depending on where we live. Through taxes we pay for every service we receive; except when we pay US taxes, we pay for zero services, because we do not receive any services from the US. We expats receive exactly zero services for our compliance. None. Zilch. Voting is a right that nobody should have to pay for (though I am not opposed to requiring residence), armed forces protection (lefties often claim I need to help pay for aircraft carriers, an for some reason they ban me from their closed forums when I tell them they are full of shit) is a nation-protection service, not an individual one. You help protect Canada, and I pay for that through my Canadian taxes. You may not be happy with the reciprocal services, but take that up with Justin. My roads, schools, retirement, protection, social services, military, health, and whatever else our government tries to do for us is provided by my Canadian system of government. And no, if the US Army comes to rescue us, that’s a separate, very expensive charge not covered by our taxes.

Taxation of its citizens living abroad by the USA, this citizenship-based taxation now enforced by #FATCA, is taxation without representation. America, have you fallen asleep at the wheel? Please wake up and think about this. You revolted from Great Britain because it treated you as tributary slaves, and now you do worse to your own? This is why we’re upset; this is why we’re handing in our citizenships; this is why Obama’s legacy on foreign relations and world peace is a sham.

So what?

• 160,000 coerced into spending billions to comply with FATCA.
  • $2 trillion in American exports at risk because now doing any business with Americans is toxic
• Americans abroad
  • denied bank accounts and mortgages
  • cannot save for retirement
  • cannot save for child education
  • cannot invest in mutual funds abroad
  • cannot invest in anything at home
  • cannot own foreign private pension which severely limit employment opportunities
  • cannot buy an expensive private home
  • have to supply Treasury with all their (local to them) financial account details, including accounts of non-American family members, businesses, and NGOs they may have signing authority with.
  • are subject to outrageous penalties ($10k minimum) for non-compliance
  • have to pay exorbitant fees to comply with the incomprehensibly complex filing requirements (one million businesses have excessive compliance costs and makes competitiveness problematic)
  • [businesses] have to file social security taxes even though employees can never receive said benefits

Basically these 9 million, should they attempt to comply, cannot live as Americans at home and cannot live as foreigners abroad. As the US pushes harder to get the estimated 8 million to comply, this 20,000 is expected to grow exponentially.

And like most Americans,  many of us are vocal. We use our free speech to tell our neighbours how nefarious the US government is. We advise them against becoming Americans,  especially if they ever want to return home. Once you adopt the label, it becomes a ball and chain you cant easily unshackle. The US by treating us as criminals is hurting it’s own image.

So where are you Mr. Smerconish? Where are you Bill O’Reilly, Anderson Cooper, Chuck Todd, Wolf Blitzer, that mouthy woman on MSNBC, anybody at ABC, CBS, or NBC; where is mainstream media when it comes to helping this nefarious problem affecting 9 million Americans? Where are the university chancellors? Where is the GOP? Where is President Trump?

20,001 … 20,002 … 20,003 …

 

 

Liberty’s Elysium

Tags

cbt, Elysium, fatca, FBAR, Goulet Pens, liberty, Noodler's

Patrick Henry might be most responsible for today’s America. The American colonist lawyer and Politian was one of the more radically opposed to the Stamp and Townsend Acts, insistent on a Bill of Rights protecting personal freedoms, and a leader in making a clean break from England (War!). To the modern day USA, USA, USA American, he is an icon. Goulet Pens and Noodler’s Inks devised Liberty’s Elysium ink in honor of Henry. Goulet operates from Ashland PA where Henry was from.

I just purchased a bottle to honor my own newfound freedom, freedom  from America. Americans revolted from Britain largely over these taxes (Stamp and Townsend); CBT (citizen-based taxation), FBAR, and FATCA are my oppressive tax acts.

If you’ve not read my blog before and immediately see me as a hillbilly defending his still, please research the American expat plight. Please open your eyes to the loss of freedoms and liberties nearly nine million of us living outside the borders experience. Just as Americans left the British fold in 1776, I am a new breed of America leaving the American fold in the 2010’s. I have relinquished my citizenship and filed all my taxes. I am freer as a non-citizen than I was as a citizen, and by Patrick Henry’s calculation, I couldn’t be more American.

The ink is American Flag blue, more or less, and is used in Goulet’s logo. I love blue inks and have about a dozen bottles, but I don’t have any patriotic blues. I don’t have any blues that sing freedom to me when I write. I do have blues that make me smile when I write: I love my Bad Blue Heron, Eclat de Saphir, and Majestic Blue. But I wanted that perfect blue, a blue I could write a story or memo with, that would inspire me in whatever I wrote and would be agreeable to any person reading it, especially to me. I honestly don’t know if this is the blue, but I do love it.

I am not opposed to paying taxes. I want community services and protection. I believe in paying a government to serve me. But I do not believe in paying a government that does not serve me in any way, shape, or form. I live in Canada and I get zero services for my American tax dollars. The right to move there is not a service, it’s a right. Military protection is not a community service but an international one (my Canadian tax dollars go to Canada’s military which in turn help protect Americans). I get nothing from America and I ask nothing, and like every other country in the world, I should not have to pay or file taxes with a country I don’t live or work in. The USA taxing us is clearly taxation without representation (a vote is not representation; service is representation) and by giving up my rights to return, I am free of the IRS tax burdens. My pending retirement and future business ventures are safe. My foreign family is safe. At least they might be in another ten years after this Draconian statute of limitations runs out. I have nothing to hide from the IRS, but their 76,000 pages of tax law make that a moot point. One is never sure if they are completely compliant.

So I celebrate my freedom from taxation without representation with an ink representing personal Freedom. Every stroke reminds me what it means to be American (which I still am). Every stroke reminds me of my disappointment in and anger with my native land. Every stroke sing’s Patrick Henry’s words:

NaPoWriMo/PAD 2016 Day 30

Tags

8854, citizen-based taxation, fatca, IRS

For today’s prompt, write a dead end poem. Of course, I was thinking in terms of the challenge, but a dead end can literally mean the end of a person’s life, a dead end road, a dead end job, dead end mortgage, and so on. Take the phrase “dead end” and apply it to a noun, and the possibilities are nearly endless (except, well, there’s the whole “dead end” finality to it, I suppose). I hope it’s fun and that the blog is alive and well today.

Dead end. An easy prompt. A dreadfully easy prompt for someone who has spent their life running into walls. While I admit most walls were of my own construction — John builds the greatest walls! — some walls were built by others. One wall in particular, the United States citizen taxation walls of laws, has been a huge road block in my life. And there was only one way to get around it, so I took it. I left the American side of me behind that wall and moved forward. Thank you presidents Lincoln and Obama for being so un-American.

Perhaps these two gentlemen will eventually be seen as two of the greatest presidents. While I am not an Obama lover for many reasons, I am not a hater. He’s a smart, reasonable man, but maybe he’s too reasonable. I’d rather he did more his first term while he had control. I wish he have made even more changes: cut government, implement true universal healthcare, and get America on a path of world participation. Instead, he’s blocked financial growth. He’s implemented FATCA which has pissed off ever foreign financial institution, over 160,000 of them. Foreign banks if my words are too big.

Why do foreign banks matter?

Because now foreign banks do not wish to do business with America. FATCA poisons the waters. If you are a medium-sized company say in Hong Kong and you need financing (all companies use financing), then you need to give your banks certain documents: business plans, financial statements, cash flow, risk analysis, etc. It is now risky for banks to deal with the US. I can envision foreign bankers telling foreign businesses to ditch the American sourcing. Sell all you want; because we want their money, but if you buy from them, no money for you. Source your expertise from China or even the hated Japanese. Just don’t source from America.

I don’t know this is happening, but I do know banks around the world are shutting American citizens like myself from basic banking services, and millions of individuals and an estimated one million small businesses are scrambling to rid themselves of their American ties. I relinquished my citizenship and this last week signed a form with my bank confirming I was no longer a risk to them. No, I didn’t get a toaster.

Corporate inversions are another form of disloyalty — in the eyes of homelanders, but to me it’s common sense. If a large corporation has operations around the world — a common example is Ireland with its 12.5% corporate tax rate — they want to be able to compete; they need to be able to compete. America’s corporate tax rate is 39%, so if company X, American,  makes a million dollars in profits and company Y, Irish, also makes a million dollars in profits, Company X nets $610,000 while company Y nets $875,000. That’s called unfair competition, and that’s why American multinationals are inverting to foreign ownership. They want to be taxed 39% on American operations and 12.5% on Irish operations. It’s only fair, right? Obviously there is room for cheating, and that needs to be controlled, but as it stands now, the US is the biggest tax cheater of the all. These troubles are its own fault, instituted by Lincoln in 1863 and reiterated by Obama in 2010.

Taxation without representation!

Representation is not a vote. Sorry, but a American vote means nothing to me because no elected official can impact my life: I drive Canadian roads, work for Canadian employers, use Canadian schools, use Canadian health care, use Canadian retirement vehicles, and pay Canadian taxes (as I should). What possible claim does the US have on my life as a US citizen when I use zero of its services? That’s the way the rest of the world thinks, it’s the way I think, and it’s the way any common sense person thinks. Just as the US taxes foreigners living and working in its borders.

The original law was drafted to stop Confederate sympathizers expatriating to Canada to avoid the new income tax act. It was the only logical tool at the time. But this is no longer  1863. Our world is computerized. We don’t need to tax citizens abroad, we can tax them as they leave, like Canada and some other countries do. We could give citizens a choice: be taxed on everything you own (with a much lower than $2 million limit) as you leave, or keep filing with reduced foreign income exclusions until you return from your temporary stay.

This is no a hard concept. It’s called fairness. But Americans are too wrapped up in their own aggrandizement to care. America is number one, and everything outside her borders sucks and should be leached because they are subhuman civilizations.  Maybe that’s not what you as an American think, but it’s how the world sees you. The US sucks in every comparative category: healthcare, education, standard of living, satisfaction, freedom, or whatever. The only thing Americans are first in is saying they are number one.

My rant’s not over, not by a long shot, but it’s time to post a poem. Another rant about, not my dead end, but the potential dead end for America of it doesn’t get its shit together. FATCA, Corporate inversions, and more recently a ubiquitous fear of trade deals. Listen to me: if you kill all free trade deals, it will send a clear message to the world that you do not want their business. This might be an eye opener to you, but the rest of the world no longer needs American know-how. And most nations are more than willing to try and fail on their own. Obama brags of his $2 trillion trade surplus. Don’t wait until that turns into a $2 trillion trade deficit before you believe me. I might no longer be a citizen, but I care about my country.

#FATCA

Today I’m filing my 8854, what the FATCA for?
Because my fellow Americans have forgotten
life, liberty, and the illusive pursuit of happiness
were intended to be inalienable.
Taxation without representation has caused previous revolts
financial slaves of the free world
you have no right to bury your heads and hide from, the oxymoron
President Obama, the thinker
The biggest tax cheat of them all
The American People

I am angry and sad, my home nation
dying in a world of progress, more intent on building walls
than living its propaganda. Freedom.
Hate cannot defend right
A bully cannot pretend might
The myopic will never be able to write, happy endings
A blinded horse is incapable of leading the way
straight roads only with shallow ditches
a future without curves.
A nation with the least common sense and the most guns
can only lead to dead ends.

Purple Mountains – A Poem For America

Tags

America, American Revolution, citizen-based taxation, Climate Change, dollar, Evil Empire, Expat, expatriates, fatca, FBAR, healthcare, racism, Sex discrimination, tax cheat

I have thought many futures since I was hauled away
Will I return or will I stay
I saw the mountains, prairies, and seas
I learned such treasures are not all glorious,
That binding words are more likely to fill prisons than free slaves
The currency of freedom should not be a crime to possess

Living on the fringe one learns to appreciate rainbows
But some lessons take time to learn
One does not easily befriend the absence of colour,
When one has been circled by white cars with red and blue lights
You cannot protect what you don’t have by taking away what you don’t own

I rarely see the Almighty Eye of the world but I know it watches
I can feel its sticky fingers in my pockets,
And I see it handed out freely
Front desk floozies beg for it,
But you only demand more payment when they multiply

Self defence, you claim
Fighting for safety is the greatest of all evils,
But living in fear is not the same as freedom to fear
You cannot close the gate on the lady dressed in leaves
Did you know mountains only look purple in fading light?

Why Tax Citizens – America’s Obsessive-Compulsive Disorder

Tags

cbt, citizen-based taxation, fatca, FBAR, OCD, patriotism, US constitution

America has an obsessive-compulsive disorder. The rest of the world thinks so, based on America’s seemingly non-sensical, misguided, and random behavior. Examples are long and storied: the failure to adopt the metric system, the insane void of gun control, a refusal to fund the United Nations yet an expectation to run the organisation by its lonesome, a fetish for free trade yet a near communist obsession with cheap oil and food, and the list runs on. These are decisions most of the rest of the world has made; because they make sense. Such a patient cannot accurately judge their own actions and motivations, so don’t bother arguing this point if you are an American living in the 50: I won’t listen to you just as you won’t listen to me.

I am focusing on income tax. Americans believe all its citizens must pay income tax. It is a value grounded in constitution and war. Not so much constitution, really; there are no constitutional clauses stating all American citizens must pay income tax. The Sixteenth Amendment (Amendment XVI) states, The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration. And that’s about it as far as income taxes go, in the constitution.

All American citizens are required to file and pay income taxes to the United States, and when I or any other American expatriate argues that this is nonsense, most Americans simply state the obvious: “you are a citizen and it is your duty. If you don’t like it, then leave.”

Let’s take a closer look at this idea. What’s right for America should be right for the rest of the world. It’s why America fights most of its wars, to defend the American way, its values and ideals: freedom, liberty, and the pursuit of happiness. So in an ideal world, all countries would tax their citizens and only their citizens. We would all file taxes with our native lands. It’s the patriotic thing to do. The only trouble is the United States of America doesn’t practice what it preaches: the US taxes not only its citizens but also non-citizen residents. In 2012, there were an estimated 13.3 million permanent residents in the US who were not citizens and who were required to file income taxes. The US does not just tax its citizens but also its foreign residents.

“But of course,” you say. “Why wouldn’t we tax these people? They live and work in America, they receive government services, so they should pay for those services.”

I agree. It would be wrong not to tax someone living in your country. It would open the doors wide open: “come live in the greatest nation in the world and do it tax-free!” It’s a preposterous idea. People should pay taxes where they live because that’s the economy they impact and the economy that impacts them. Boris from Russia works in Silicon Valley, lives in a San Jose home, drives a car bought in California, sends his kids to a private American school, has married an American person, drives American roads, calls American police when his home is broken into, doesn’t have to worry about bombs and rockets because American warships and fighters protect his lands, and on and on. It only makes sense that Boris pay taxes to the US and not to Russia. Which is the way it works if you live in America.

Other countries tax American citizens living in their lands because these citizens live, work, and receive services in those foreign countries. Just as the US does, all countries tax their residents because it makes sense. But the US is different. Besides residents, the United States taxes citizen expatriates as well – citizens living abroad and participating in foreign economies – because somehow this makes sense to an American. The US wears patriotic blinders and can only see the world from its myopic, obsessive-compulsive, cavernous halls of righteousness that says all its citizens must pay for their liberty and freedom and services received, even though there are no documented services expatriates receive for their tax dollars. Just like the metric system, the United Nations, and gun control, the US cannot buy into a concept because it is right if it hints at being unpatriotic or freedom-limiting. Never mind that 8 million of its citizens are burdened with the onerous task of juggling two tax systems, have their financial freedoms abused (basic investment options such as private pensions and mutual funds severely are restricted), and are subjected to invasion of privacy no American living at home would stand for under threat of extreme penalty.

America is losing 15 citizens every day and the rate is growing. It is not because we are not patriotic but because we need to protect ourselves. We are being abused by our native country. Can we please sit back and think about what we are doing and why, America?

Why I Am Renouncing My American Citizenship — the taxation aspect

Tags

Anderson Cooper, Bill O'Reilly, bloomberg, cbt, citizen-based taxation, Domocrats Abroad, fatca, FBAR, Forbes Magazine, income tax, IRS, New York Times, President Barack Obama, Sasquatch, VOA

This post covers the taxation of Americans abroad and why it is forcing me to renounce my citizenship. There are other reasons I am renouncing (relinquishing) — I have lived in Canada for 45 years — but they are not as front and center as the IRS. I have been battling Americans over citizen-based taxation, mostly political Facebook groups and authors and commentators of news articles on citizen-based taxation and FATCA. I try to argue that taxing us Americans living abroad is wrong. The Democrats Abroad group – a bunch of gutless bureaucrats afraid to buck the party line – shrugs me off, vocal citizens claim I should pay for the services I receive, and retired military service personnel basically call me unpatriotic. You probably already want to leave this page because I sound like an anarchist or a communist, a revolutionary who wants to live in the woods with his gun and live off deer, rabbits, and homebrew, either that or one of the wealthy tax evaders.

I am not that person. I am not wealthy, and I am as patriotic as any American. I won’t say I love the country in the same way as homelanders. Living abroad opens your eyes to the rest of the world, and America’s sores seem more visible to us living abroad. I will continue to write about American wrongs as long as I live. I will because I still hope for an American dream. The United States is the world economic and military leader, and I write to improve America, not drive it under. I want America to succeed, for if America succeeds, the world succeeds.

I have a large American flag folded in a cedar chest. It covered my grandfather’s coffin.  My dad served in the 50’s but there was no action at the time. An ancestor fought in the Civil War for a Wisconsin outfit. The details are now lost. My uncle Cope walked into Luxembourg at age 16, out of Inchon Reservoir, earned a Silver Star, and served in the Special Forces during the Vietnam War to put my cousins through college. Cope wouldn’t talk of his experiences, but he had a way of relating the horrors he’d been through, the losses. I have thought much about America’s military engagement. I criticize it when it’s wrong, but I remember the parts that should be remembered every November 11^th.

American taxes hurts me, my family, my brothers, my American friends, all 7.6 million of us living abroad, our unnumbered extended families, our businesses, our hard-earned retirement assets. This is not inconvenience. An extra forty hours of work a year to do taxes may not seem much to you, but when the cheapest advice you can find is $400 to prepare a null return, and more like $2,000 to file a more complicated return, it starts affecting livelihood. Starts.

The next set of issues comes from FBAR compliance. This is the  list of all my financial accounts I have signing authority over, including joint accounts, children’s savings and education funding accounts, insurance cash value, retirement savings plans (RRSPs and private pensions), plus the non-profit organization I volunteer for.  Other people have signing authority in businesses where multiple people own it, and they have to submit this account information to the IRS. There are published stories of people being denied employment because they don’t want to allow them signing authorities and subject their business not only to IRS invasion but possible IRS tax hassles. I have to supply all of this account information and the highest value in each for the year.  If I omit an account or make a mistake, I am subject to a $10,000 penalty and 50% of the account’s value. The internet is full of people confused about this requirement and it is obvious people are making mistakes. I may have made mistakes. There are no guidelines. There is no assistance. It is risky for us, very risky.

I get a foreign income exclusion of $95,000. I don’t make that much, so yeah, I will never pay taxes. Except there are a few gotchas. One is the sale of a private residence. The sale of my home is not taxed in Canada, but it could be by the United States. Again, my home is not worth that much and I am not at risk. However, we are looking at buying a multi-unit building for our retirement, say a three unit building that will supplement our meagre retirement savings. Such a building increases the risk of taxation dramatically. It is viable under Canadian tax law, but not under American auspices. I cannot deduct mortgage interest from my taxes because it is not inside the United States, so while you deride me for evading the tax man, the tax man imposes impossible restrictions on me. Many Americans living in big cities around the world are facing financial ruin because of this. They are average wage earners who bought homes and watched the prices soar over the decades. They’ve lived in them all their lives and watched the values skyrocket. Stories abound of people living in million dollar or multi-million dollar homes they had bought for a hundred thousand back in the early 70’s. These are house-poor people with huge property tax bills and with no other retirement savings, yet if they sell, a big chunk will be lost to the IRS. And it won’t be at the favored American capital gains rates as those only apply to Americans living at home but at a whopping 39.9%.

I cannot easily invest in mutual funds. Foreign mutual funds are treated as passive foreign investment companies. I do not get the 15% tax rate Americans but the 39.9% rate with a gazillion forms and the likelihood of paying over 50% tax. A cannot buy American mutual funds from abroad. I am a Canadian citizen but I cannot invest in mutual funds as my neighbors can or as you can.

Canada has some investment instruments not covered by treaty. A college education savings plan and a tax-free investment account. These are fully taxed in America and my tax deductions here are not recognized by the IRS. I am a Canadian citizen but I cannot save for my children’s education nor my own retirement as other Canadians can.

The impacts on businesses abroad are more severe. A mom & pop shop might pay a couple thousand to pay an accountant at year end to do their foreign return, but stories are emerging of business owners paying an additional $10,000 to prepare their IRS returns. On top of that, they are required to pay Social Security and Obamacare taxes, even though neither they nor any of their employees will ever qualify for such services. Business is competitive. If I have an expense my competitor does not have, then I am at a serious disadvantage. Many of these estimated one million businesses are now re-organizing. They are being transferred to foreign spouses and other family members. It’s easy to do: simply fold and restart under a new name. The problem is some business owners are both American and the ones that do re-organize, the American is left with no assets.

This is a lot to ask of an American. It is too much, and this is why we are renouncing. I have never owed America taxes and I likely never will, but I cannot invest, I cannot plan my retirement as my neighbor can, as you can, because America won’t let me.

My discussion is nowhere near complete as I could easily write 400 pages on this subject. I have only scratched the surface of our troubles, my troubles, but I think I have made it clear there is cause for concern and risk to my financial well being. With the mis-strike of a pen, I could rack up a $10,000 penalty and a $50,000 fine for omitting a retirement savings account. I don’t have that kind of money, and I am very afraid of the potential consequences.

Citizenship does not come with a price tag. You cannot buy it or sell it. America is asking us to pay for our citizenship far above and beyond what Americans living at home have to pay. It is wrong to suggest I owe America my taxes. I live in Canada, and I owe the nation I live in my taxes. The constitution of the United States gives me the freedom to live abroad. The International Bill Of Rights gives me the freedom to leave a country. Double-taxing me impinges on this freedom. It is hardly patriotic to deny someone a constitutional right

Services. The United States provides me exactly zero services. SS, SSI, Medicaid, Obamacare, highways, schools, defense, evacuation services, etc. You name it, I don’t get it. I’ve been thrown the argument that I should help pay for the aircraft carriers that defend my waters. No, that is not an individual service. That is an agreement between Canada and the United States. The US patrols waters, but Canada lets them into the arctic to operate NORAD, or whatever it’s called today. And Canada capitulates. We may not have aircraft carriers, but our soldiers go places American soldiers cannot go. Kosovo. Crete. And many other United Nations operations. Places where American soldiers would be shot. Don’t give me that cute aircraft carrier argument, it doesn’t hold water. I already pay dearly for that with my astronomical Canadian taxes.

And no embassy is going to save me. Did they rescue Americans in Yemen or Nepal? No. They give warnings to leave. And if they ever did rescue someone, that person would be charged for the services. Rescue is not a gratuitous, tax-paid service. The embassy argument also holds no water.

It is obvious to me that I have to renounce my citizenship. I don’t want to but I have to. Living under these laws is neither living as a Canadian nor as an American but as a mutated hybrid with two heads, four left feet, a humped back, and no heart. My livelihood and my family’s livelihood takes precedence over any benefits I may derive from the thing. I am American whether I like it or not, and I do want to help make it a better place. But I don’t need my citizenship to do that. My pen knows no boundaries.

Dear Atlantic Lotto

Tags

abroad, ALC, American, Atlantic Lotto, Canadian Tax Policy, citizen based taxation. IRS, CRA, crazy, expatriate, fatca, lottery, sanity

Good people at Atlantic Lottery Corporation: I have a request, and it will not cost you any more than a slight administrative hassle.

I am a dual Canadian-American citizen. As such, if I ever won one of your lotteries, I would have to pay the IRS a big chunk of change. I’ll just throw out a number: 35%. So if I won a $50 million Lotto Max, I’d have to pay The United States Of America $17.5 million. America will tax me and other American citizens (over a million live in Canada) all because they say I do not pay taxes on my winnings, but of course we all know taxes are in fact paid. It is not just the big prizes but all prizes. 2.85% of Canadians are American citizens. Extrapolated, 2.85% of your prizes are taxed by America. The fix is simple — tax us visibly. The thought of paying Canadian money to America makes me upset, and it should make you upset. A Canadian citizen unable to fully participate in a Canadian financial instrument, albeit a lottery, is a problem we should rectify.

My request is simple. I want a tax receipt. Your FAQ states that 57% of money you receive is paid out. As I see it, 43% of the money you take in is tax. That is what this 43% is. You take in $100, keep $43 as tax, and pay out $57. I want you to increase all prizes by 75%. I want the maximum Lotto Max prize to be $87.7 million. And then I want you to tax me the 43% or $37.7 million. I want you to make this tax visible at the individual level.

What will it do for you and me? I will be able to claim this tax bill on my American taxes which will enable me to keep all of the targeted $50 million. All your hard-earned efforts will not go to waste paying down America’s impossible debts. Instead, the money will stay in Canada, be invested in Canada, create Canadian businesses and jobs, and put all of the money to work where it belongs: in Canada.

Yes, my request is selfish, but it is not just about me. These crazy, unfair citizen-based American income tax policies are invasive. They invade my liberty and well-being as a Canadian citizen and taxpayer, and they invade Canadian tax policy — of which lotteries are an integral part. They invade Canadian citizens’ well-being. They invade Atlantic Canadians’ well-being.

What do you say ALC? Are you game?

John

A New World Order’s Tax System

Tags

cbt, Expat, expatriate, fatca, FBAR, IRS, RBT, tax fraud

Let’s redesign world taxes.

People leave their own country and live in other countries, purely for economic gain. Lifestyles, safety, health care, opportunity, or whatever else does not count. These reasons are un-American. Who in their right mind would emigrate to some frigid Scandinavian country simply to eat cold-water fish and enjoy free healthcare and an excess of well-endowed, blonde women? And given today’s sexual leanings, I don’t think I am being sexually biased.

Money drives the American Government’s treatment of its expatriates, people like me who have lived abroad for decades. It only cares about my money, not me. But I am not going to rant about that, not today. I simply going to propose a re-designation of world taxation policies, an alignment of all countries’ tax policies with America’s policies. If it is good for one, then it must be good for all, right-winged religious fundamentalism excepted. I will not be overly specific but will make assumptions as follows

Assumptions: All country tax rates, policies, and deductions are the same unless otherwise noted, but countries do not recognize other countries deductions (And IRA is not recognized in Canada nor is an equivalent RRSP recognized in America). All countries allow a foreign tax credit (can deduct taxes paid as a deduction in another country) and a foreign income exclusion.

I want to illustrate a couple of things. First, I want to show how silly policies can be (and of course already are for me), and second, I want to then consider what might happen if rates and policies differ, which they do in the real world, how such policies could affect America’s pocket books. Remember, this is all about the almighty greenback.

The real world. I feel like I live in a bad dream. I hope you end up feeling the same as I do. This is the reality of expatriates.

Case A: Doug the Canuck moves to Texas. He and the company that imported him have filed all his paperwork and is legally entitled to work in America, despite all the nasty gun-toting looks he gets when he wears his Team Canada t-shirts. He earns a nice salary, and he pays his taxes. Three months later, he has to file another tax return with Canada. He cannot use any of his American deductions, so he is in danger of paying extra tax to Canada. But there is a salvation: his first $100,000 earned abroad in salary is considered tax free. He is saved.

Case B: Bob the Canuck has lived in California his whole life. He became a citizen in 1969, but he is still a Canadian citizen. He has done well with his business, and his portfolio currently sits at $10,000,000 American dollars held in a variety of investments, largely dividend generating shares. Canada does not recognize his charitable and political donations or a certain state investment tax credits he jumped all over (without obtaining Canadian tax advice – good luck finding south of the 49^th). He ends up paying Canada several thousand dollars of extra tax.

The issues:

1. Both people have to file two tax returns. That’s two complex sets of laws, and advice for their Canadian return is virtually unavailable in Texas or California. If they make mistakes, there are penalties they may have to pay. And if they can find a professional Canadian tax preparer, it will likely cost them many times what they normally pay for their American tax preparation.
2. While not a lot of taxes leave the country, some money does. If say it’s $1,000 a head, that’s $800,000,000 leaving the country — 800k Canadian citizens live in America and pay American taxes. That’s capital that cannot be put to work in America. If we add up all of the foreign nationals, there are over 40 million, times a $1,000 outflow equals $40,000,000,000, or forty billion dollars, of exiting capital.
3. But wait, it’s not so bad. America has seven million expatriates. That’s an estimated $1,000 inflow per head or 7,000,000,000, a seven billion dollar inflow. America will only lose $33,000,000,000, 33 billion dollars, in capital to foreign countries. That’s annually, by the way.
4. In reality, rates differ. I do not have the numbers – they usually depend on many variables. It is generally considered that foreign tax rates are higher than America’s which is one of the things political pundits brag about as a reason for America being the greatest country in the world. Higher foreign tax rates increase the money going out and decrease the money coming in. Instead of $1,000 each way, maybe it’s closer to $1,500 out and $500 in per head. That thirty three billion dollar deficit suddenly grows to fifty six and a half billion dollars leaving the country, that’s $37,500,000,000.
5. Retiring residents will be hit extra hard. America’s tax rates on investments is the best in the world. Canada would clean up on a person living off their investments, especially. Social security income does not trigger a foreign income exclusion. Many retired people live on marginal incomes. Take extra tax from them, and you have more people on food stamps and other social assistance programs.
6. Forty million Americans’ lives will be invaded by foreign countries. Some of those countries may even finance human rights abuse or other forms of global instability – read terrorism, Bubba! Your lost American capital is going to finance Jihading your ass into the back of your pickup.
7. Forty million Americans will be burdened by extra tax preparation, a need for extra tax knowledge, and face a losing game. They will live under constant stress and health care expenses will rise, drug dependency will rise. They can never minimize their tax burdens like a “normal” citizen can. How can you be a true American if you cannot minimize your taxes?
8. All countries will have to hire extra government tax workers. Goodbye low unemployment.
9. The cost of extra tax processing (for the $1,000 a head income) will likely exceed any revenues collected — a pointless exercise for all.
10. Tax preparation businesses will explode: “Your One Hundred And Fifty Country Tax Expert!”

I am just getting started with this nonsense. What country, besides Canada, would ever trust its citizens to report their foreign taxes correctly? There is no means to check on Wing Wang’s American bank transactions from Beijing, not overtly anyway. So what will foreign countries do? They will force all American financial institutions to report their citizens’ bank accounts to them, that’s any account they have signing authority on. It will include all personal, joint, volunteer, and corporate accounts with the person’s name on it. If Doug is promoted to Treasurer of his large corporation, then that corporation’s bank information becomes available to Canada. And if any expatriate from any country anywhere in the world not only lies (fraud) but makes a mistake, they will be severely fined and penalized. Their names will be plastered all over police station or border crossing walls, and will be blacklisted from flying, crossing borders, and may face prison time.

I love telling stories. This would be unbelievable fiction, yet it’s half true. It’s only half true because only America is stupid enough to do this. It will become true once the rest of the world catches on to America’s lead. Come on China, you can take even more of America’s resources. Mexico? You have eleven million legals here. Soon you may double or triple that. Start taxing them. You’ll pay off your debts in no time. And Canada? Canada bows to its knees and once again abstains from pissing off Big Brother. Come on, America says it is okay, so get on the band wagon. Start stealing what’s left of America’s capital.

Let’s make the obvious conclusions. This is a stupid system. Nobody in their right mind would even consider such a system. We don’t know the cost of implementing it, but the benefits have to be marginal at best. Yet this is how America treats its expatriates. This is why, when my Canadian friends gather at a bar, and the discussion turns to stupid Americans, I buy everybody a beer – after all, I am a billionaire tax cheat – and the conversation goes straight down hill as John spews his diatribe against stupid America.

One of John the billionaire’s cars.

Perhaps the United Nations should step in — like America would listen to them — and create a new human right, the right to file only one tax return. It’s a sad state of affairs that I would even have to suggest such a thing. America, the greatest nation on earth? The next time I hear that, I’m going to punch that person in the face. To over seven million expats, America is the stupidest nation on earth.

Is anybody listening? $$$$$