Before moving to the post, if you believe that Americans abroad are being treated unjustly by the United States Government: Join me on May 17, 2019 for a discussion of U.S. “citizenship-based taxation” as follows:
"What Is The Future Of Citizenship-Based Taxation?" Prof. William Byrnes (Texas A&M Law), Prof. Edward Zelinsky (Cardozo Law), John Richardson (Canadian attorney who represents US-Canada dual nationals), Kat Jennings (CEO Tax Connections) https://t.co/LP63MHEFYS
— William Byrnes (Tax Monk) (@williambyrnes) May 5, 2019
You are invited to submit your questions in advance. In fact, PLEASE submit questions. This is an opportunity to engage with Homelanders in general and the U.S. tax compliance community in particular.
Thanks to Professor Zelinsky for his willingness to engage in this discussion. Thanks to Kat Jennings of Tax Connections for hosting this discussion. Thanks to Professor William Byrnes for his willingness to moderate this discussion.
Tax Connections has published a large number of posts that I have written over the years (yes, hard to believe it has been years). As you may know I oppose FATCA, U.S. citizenship-based taxation and the use of FATCA to impose U.S. taxation on tax residents of other countries.
Tax Connections has also published a number of posts written by Professor Zelinsky (who apparently takes a contrary view).
You will find Part 1 to Part 11 of this series of posts here.
Laura Snyder discusses the “emotional toll of U.S. non-resident taxation and banking policies
Laura Snyder has written (in addition to her original four posts) a series of five posts describing and exploring “The Emotional Toll of US Non-Resident Taxation and Banking Policies“. Part 10 of this series (comments of Nando Breiter) was a prologue to Ms. Snyder’s five posts.
Now over to Laura …
“I Love the US but Feel Betrayed*:”
The Emotional Toll of US Non-Resident Taxation and Banking Policies
Post 2 of 5
This is the second of a series of five posts relating to US taxation and banking policies as they relate to persons who do not live in the United States.
As John Richardson has reflected in prior posts, it is important to hear from people who are actually impacted by those policies and who have the courage to speak about their experiences. As John also observed, their experiences bear little if any relation to the theory. Further, their experiences belie the prejudices commonly held against them.
The bulk of each of the five posts of this series consists of comments that current and former US citizens and green card holders living outside the United States submitted in response to a recent survey. The comments are organized by prevailing theme. More specifically, each post focuses upon a particular emotion and/or dilemma that Americans commonly experience as result of US non-resident and banking policies. The comments presented in that post exemplify the experience of that emotion and/or dilemma.
Each post first presents the comments. As you read through them, the emotion and/or dilemma that is common to them should become obvious. However, in case it isn’t, each post finishes with a brief explanation both of the commonality and of its significance for any defense of US non-resident taxation and banking policies.
The comments have been edited in part to protect anonymity and in part to facilitate analysis.
“I feel handicapped in my life due to US taxation matters. Every financial or business move I make is hindered by the issue of US taxation…I feel as if I am a hunted criminal, the way the US treats its citizens living abroad, receiving no benefits, no representation, no one in government caring about the consequences of their laws on myself and my fellow expatriates, while at the same time treated with contempt and suspicion by the US government…When I first went abroad, I was surprised at how intensely patriotic I felt toward the USA. But over the past ten years, these feelings have reversed. I am angry, resentful, and ashamed to be an American. The USA has lost a formerly strident unofficial ambassador, at no gain to the US treasury.”
“I would like to open a small business but am avoiding doing so due to the current tax issues other US citizens running businesses abroad are facing. I cannot make investments that are tax-friendly in my country of residence, because of the US tax reporting requirements. I am at a distinct disadvantage when planning for my future compared to my friends and neighbors, solely because of my US citizenship. When I tell friends and colleagues about what I go through each year, they are shocked that the US government would do this to its own people.”
“US taxation and FATCA disadvantages me in my resident country. I feel like a second class citizen. I can’t invest in certain products. My husband doesn’t want me on the bank accounts which is understandable but makes me feel vulnerable. It is difficult to plan for retirement. Different countries have different tax advantageous products which are not recognized the same in the US. I am very worried about the possibility of inheriting in the US and not being able to open a bank account or investments there. I am very worried about my financial future and I do not know who to trust for advice. I feel persecuted by my birth country (USA) and betrayed by my adopted country because of FATCA.”
“I find it incredibly abusive and entitled that the US gov’t would tax a US citizen who makes NO income from the US or on US soil.”
“We feel abused by our country AND we feel discriminated against where we live. We have also become second class citizens in the eyes of financial institutions – they see us as a PROBLEM, rather than as a client!”
“After 36 years in the U.K., realized last year that I needed to file, so did streamlined at huge cost. Learned that all my UK investments are PFICs and am furious. How are you meant to save for retirement? Not allowed to save in USA, but virtually all the profit from my ISAs will be wiped out. I just can’t believe our government treats us so very poorly. Feels like I’m being punished for marrying a foreigner and living abroad.”
“I have been complaining to my representations in Congress since 2013 about this situation. The answers (if they do answer) are apathetic. The final straw was the GILTI tax. This extraterritorial interference by the US government without any taxable event or direct jurisdiction was last insult …Considering that I am a veteran, the treatment that I have received from the US government is lamentable and hypocritical.”
“I quit filing US taxes a few years ago because I did not want to be untruthful and yet at the same time did not want to jeopardize my [non-US citizen] wife’s business income. I give the maximum allowed by Social Security back – to pass on to the IRS as tax payment so it cannot be said I do not pay any tax. I assume that amount more than covers anything I might owe. (I hope.) I love the US but feel betrayed by the complex requirements they keep me unsure of where I stand or what I can do.”
“I have spent much time on the phone and on email with my representatives in the US, one of which was mostly responsible for the tax bill that brought in the repatriation tax and the GILTI tax. The level of dis-interest and lack of care that I have experienced from the representatives is shocking and depressing. I have also spent much time trying to get interest in the issue from the ‘softer’ side of the US media (e.g., non-news), and there has been no interest in anything that happens to American citizens overseas.”
“I have provided a great level of detail [about my situation] in the many letters I have sent over the years to my congressional representatives, to members of the House Ways & Means Committee and the Senate Finance Committee, and to administration officials, but Congress continues to ignore the real harm its taxation policies cause overseas Americans… Congress simply does not care about Americans who live abroad.
Why does the US penalize its expats with this draconian tax policy?…I am angry that normal, middle class US citizens have had their lives ruined by these policies or been forced to make the painful decision of giving up their US citizenship only because the tax situation made their lives unbearable. I don’t understand why the US does this…it’s simply flat out wrong for a country to treat its own citizens like tax cheats…just because they live outside of the country. I sincerely hope this changes and I try to actively participate by signing petitions, sharing my story, etc. so that homelanders become aware of our situation.
I can’t begin to express the anger I feel at the US for its bullying of other countries with FATCA.
What is the emotion common to all these experiences with US non-resident taxation and banking policies? It is feelings of punishment, persecution, betrayal and abandonment. Look at the operative words: “persecuted,” “betrayed,” “hunted criminal,” “no one cares,” “angry,” “resentful,” “furious,” “ashamed,” “vulnerable,” “shocked,” “second class citizen,” “abusive,” “[treated] poorly,” “insult,” “punished,” “draconian,” “apathetic,” “dis-interest,” “no interest,” “lack of care,” “unbearable,” “penalized,” “lives ruined,” “wrong,” “bullying.”
Again, these are not the words of people who are merely inconvenienced by the preparation of their annual tax returns. These are not the words of people who are shirking their tax obligations in the countries where they live. These are not the words of wealthy people who moved overseas for the purpose of avoiding US taxation.
These are the words of ordinary Americans seeking nothing more than to live ordinary lives in the places where they live. But US non-resident taxation and banking policies make it impossible.
Any credible defense of current US non-resident taxation and banking policies must take these words into account. It must acknowledge the experiences that are behind these words. It must either propose realistic means to end the anguish such policies cause or, if not, then it must own this anguish and make clear in what manner it is acceptable and justified.
Further reading …
*About the theme of “betrayal”: See the following which video which demenstrates that after 43 years of being a loyal American (including filing U.S. taxes from Canada) that she was ultimately forced into renunication of her U.S. citizenship. For more individual stories see here.
John Richardson – Follow me on Twitter @ExpatriationLaw