If all countries adopted American citizenship and tax laws, US President Barack Obama, Senator Ted Cruz and Secretary of State would finally agree on one thing. Citizenship-Based Taxation and FATCA are “Outrageous.”
Citizenship-Based Taxation: Unique or Outrageous was published in Tax-News today. This is an international tax publication based in the UK. The article by Lynne Swanson (aka Blaze) was originally published as a Letter to the Editor in Tax News International two weeks ago, but is only available to subscribers there.
The article explores how Obama, Cruz and Kerry would be affected if all countries adopted citizenship based taxation. Here’s how I predict they would react to FATCA.
Soon, Obama, Cruz and Kerry would face FATCA (Foreign Account Tax Compliance Act) demands. Their American banks would be required to report on all their accounts, transactions and other personal information or face harsh penalties. Just like United States is demanding of banks around the globe.
“That’s outrageous,” the trio would scream. They’re right.
“I’ll renounce,” each would declare. Following unique U.S. example, those countries could respond: “Not so fast.”
File five years of complex tax returns requiring hugely expensive legal and accounting help. Tell us your net worth. Give us your FBARs. Pay us massive penalties. Hand over a huge exit tax.
Then, maybe we’ll let you go. But, we will declare you “tax cheats” and “traitors.”
These scenarios are fictional, But, as we know, CBT and FATCA affect Real People and Real Lives.
So, what would happen if all countries followed the American model?
What would happen if the whole world adopted U.S. citizenship based taxation and demanded financial records of any of its citizens living outside its borders?
Would United States cooperate? Would they provide information on naturalized American citizens or U.S. Green Card holders to Kenya, Canada, Cuba, France, Mozambique, Portugal or Eritrea? Of course not.
Add about 190 other nations worldwide to those few and it’s easy to see it would create global financial chaos.
Put simply, citizenship-based taxation is “outrageous.” It’s time for U.S. to join the rest of the planet and move to residence based taxation.
Wonderful. You’ve done it again! Congrats, Lynne!
Just Me tweeted me this superb piece by Andy Sundberg (who sadly has since passed away).
I remember it from several months after I first learned about this IRS nightmare, but I had forgotten about it.
isaacbrocksociety.wordpress.com/2012/02/16/what-is-the-systemic-risk-to-the-worlds-economy/
What a Fantastic Lady you are Lynn! Thank you so much for all you do!
Exceptional Article! You did it again!
Another home run, this time a grand slam.
Thank you Blaze!
Hello Maple Sandboxers! I thought that this would be of interest to everyone. I saw on the news this evening that Alberta is now going to allow their snowbirds to stay an extended amount of time in the US and still retain their health coverage in Canada. Obviously this is a reason for the snowbirds to rejoice, right? Of course we know better. I have posted a comment on there regarding the effects of FATCA on snowbirds and a warning to them to use caution when contemplating staying down there longer (still awaiting moderation) and I urge all of you to do the same. Here is the link: http://globalnews.ca/news/1035664/alberta-health-care-coverage-extended-for-snowbirds/
I also emailed everyone who seemed to be important at the Canadian Snowbird Association and attached all our flyers to the email.
http://www.snowbirds.org/news-releases
@Gwen – thanks for sharing this important news! I’ll go over and try and get a comment in as well, to bolster the caution.
Hi Outraged et al. I have posted a comment on both the Global and CBC news pages regarding the Alberta Snowbirds. Here are the links if anyone wants to add their own comments:
http://globalnews.ca/news/1035664/alberta-health-care-coverage-extended-for-snowbirds/
http://www.cbc.ca/news/canada/calgary/albertans-get-extra-travel-month-before-health-care-expires-1.2467544
There has been no reply from the Canadian Snowbird Association to my email which had essentially the exact same content as my comments on the above links. If anyone else wants to alert the Snowbirds here is the link to their webpage contact page:
http://www.snowbirds.org/contact-csa