Watch the discussion that took place with @BruceAHeyman here. It focuses solely on how #Americansabroad can vote "Toronto Star virtual event: U.S. Election 2020: Why votes from abroad matter, and explaining the battle to overcome voter suppression" https://t.co/8yfc1ry1qM
— John Richardson – lawyer for "U.S. persons" abroad (@ExpatriationLaw) September 23, 2020
The 21st century has been notable for an evolving assault on representative democracy.
1. The rise of the head state who is to serve for life.
2. An unhealthy mass of power in the hands of political parties in general and small parts of the party in particular. Does the individual/local representative (Congressman or MP) even matter?
3. A sentiment that individual votes no longer matter or that they are no candidates worth voting for.
Variants of these themes are being played out all over the world.
In general, politicians operate on the principle that:
“The business of the public is none of the public’s business.”
The Toronto Star identifies some of the problems associated with citizenship policies that are overly generous. Interestingly (see the Appendix) in 2009 Canada attempted to address these problems through amendments to the Citizenship Act.
The 1987 Toronto Star article is very similar to a 2020 article written by Professor Ronan McCrae where he argues that (among other things) that citizens abroad should not have the right to vote.
— John Richardson – lawyer for "U.S. persons" abroad (@ExpatriationLaw) September 21, 2020
The above tweet references an article in the Globe and Mail on May 7, 2020. The article contains interesting perspectives, but much has changed since that time.
COVID-19 and the role of government assistance
Both the US $1200 payments under the CARES Act and Canada’s CERB payments were designed to fulfill the same purpose. Specifically, that purpose was to get relief money into the hands of individuals who were suffering from the the COVID-19 pandemic. It appears that payments were made generously with few qualifications for receipt of payments. The qualification appears to have been that an individual was a tax resident of the country. The $1200 CARES Act payment and the CERB payment were to fulfill the same function. Therefore, it would seem logical that both the CERB and CARES Act payment should be taxable in each country or neither payment should be taxable in the country. But, different characterizations of the payments appear to lead to different results.
Fascining discussion. In this election season the politicans are agressively courting the vote of Amerians abroad. Yet, they seem unwilling to take the time to understand the problems of Americans abroad and how FATCA has destroyed many life – resulting in many renunications of US citizenship.
As reported by American Expat Finance, which discusses an interview with Dr. Bernard Schneider of Queen Mary …
John Richardson Podcast: Dr Bernard Schneider, an expert in int'l tax law at Queen Mary U in London, says China does NOT have a US-style citizenship-based tax regime and isn't moving that that direction. (It does have somewhat "sticky" domicile regs…) https://t.co/hP4vkhaeHjpic.twitter.com/jRa1waZ1Ph
The Longer Version: “Tax Residency” Based Information Exchange In The 21st Century
The 21st Century has ushered in FATCA, CRS, voluntary disclosure programs and a general awareness of taxation. Many people have been subjected to the FATCA inquisition (“Are you or have you ever been a US citizen?) or a CRS motivated inquiry about “tax residence” (“List all countries where you are a tax resident.”)
In the 21st, the “citizenship by investment industry” is booming. There are many opportunities to acquire (through investment programs) “permanent residency” in a county. (I will refer to these programs collectively as “economic migration”). The value of these “economic migration” programs, to a specific individual, is largely determined by considerations of tax residency.
— John Richardson – lawyer for "U.S. persons" abroad (@ExpatriationLaw) June 25, 2020
Proposal of @JoeBiden to raise #GILTI tax to 21% (1) reverses the move to territorial taxation for corporations and (2) follows the ideological assumptions of Senators Wyden and Brown that #Americansabroad are presumptive tax cheats (as explained here): https://t.co/G1yrUTtwBn
— John Richardson – lawyer for "U.S. persons" abroad (@ExpatriationLaw) June 27, 2020
Taxation is what America is about and America is about taxation.
Perhaps it’s better to say that:
Politics is about taxation and taxation is about politics.
Once Upon A Time In America
The primary legislative achievement of President Trump’s first term was the 2017 TCJA. It’s important to note that the TCJA had it’s genesis in the work of Michigan Congressman Dave Camp and was the result of a long term project of reworking the US tax system. It is absolutely incorrect to suggest that the TCJA was developed by the Trump Administration. It should not be referred to as “Trump Tax Reform”. That said, because of the “politics” involved in enacting the TCJA, the Trump Administration and Republican Controlled Ways and Means Committee, did impact the legislation at the margins. (Rate of repatriation tax, etc.)
Like all tax legislation the TJCA had clear winners and clear losers.
On June 25, 2020 Dr. Karen Alpert and I did a series of podcasts where we discussed how renunication will affect your interaction with the US tax system. The key point is that you will still be taxable by the United States on US source income. What does that mean? Under what circumstances could renunication of US citizenhip actually increase your US tax liability?
On May 30, 2020 the following question appeared on Quora and prompted some interesting answers and discussion:
As a defender of American “freedom”, how do you justify the fact that US citizens have to pay taxes to the US even if they live and work abroad (even if they have never been to the US but got their citizenship through their parents)?
I along with others attempted to answer the question. Here is my answer.
If someone lives and works abroad as an American citizen, he or she must be enjoying SOME benefits or they would logically renounce their US citizenship instead of paying US taxes. That would be a good solution for anyone facing this question. Just go!
David Johnstone responds to this answer with the following comment: