When Law Becomes a Substitute for Morality & Causes Cruel & Unneccesary Harm

 

if you cant trust

 
Another comment deserving its own post

USCitizenAbroad says
March 13, 2017 at 7:08 am
@Karen and all

Thank you for collecting and posting these stories.

Our Stories

I would like to offer some general observations (of which Shaun is one of many examples) and suggest some lessons which are largely based on Shaun’s story in particular.

Shaun’s Story

It seems to me that the lesson(s) from Shaun’s story are simple. So, let’s summarize them:

1. Those Australians who have entered the U.S. tax system need to renounce as quickly as possible (hopefully before they are “covered expatriates”) and probably even if they are “covered expatriates”.

Anybody who doesn’t get this does not understand the U.S. tax system. (Not that anybody understands the system.)

2. Because of the prevalence of Superannuation in Australian society, those who are NOT in U.S. tax compliance should not be too quick to enter the U.S. tax system (better clarification on the tax status of one’s particular Superannuation – they are NOT all the same) – is needed.

3. Under NO circumstances should anybody in Australia engage the services of a U.S. based CPA or lawyer. The simple reality is that these “specific life forms” (1) Don’t give care about you in the least (2) don’t understand your local tax system (3) subconsciously believe that you are a “tax cheat” (because all Americans are) and (4) are required to view the world entirely through the “perverted prism” of the Internal Revenue Code (which presumes that anything that is “Not U.S” (not one of “us”) exists ONLY for the purpose of defrauding the U.S. Treasury.

Remember that when it comes to the Internal Revenue Code and Americans abroad:

– Americans abroad are deemed to actually live inside the USA; and

– the assets of Americans abroad are deemed to be foreign (even though they are really local to the individual)

4. It is painfully obvious that Shaun would have been far better off if he had NEVER entered the U.S. tax system. This is hindsight. He could never have understood where this was going. Truth is that things have changed a great deal over his 30 years in Australia. But, Shaun has provided a great lesson to Australian citizens and residents who are NOT in the system.

The lesson is this:

For Americans abroad in general, but for Australians in particular (think Super), the consequences of entering the U.S. tax system lead to far worse results than the consequences of NOT entering it. It’s pretty simple. Shaun lost the following:

– his retirement
– his health
– his happiness (you can be sure that he carries with him anger and resentment)
– he has probably become a very negative person
– if he has an Australian spouse (or still has one) it is likely that this has impacted his family in a big way

Shaun is unique. Although it doesn’t specifically say that he has filed U.S. taxes for 30 years, it is clear that he has filed U.S. taxes for many many years. Poor Shaun. He filed because filing “is the law”. Yes, it’s the law. Shaun probably thought that there was some connection between law and morality or law and “doing the right thing”.

There is no connection between law and morality. Filing U.S. taxes is “obeying the law” and obeying unjust and immoral laws. A great American writer (by the name of Thoreau) wrote a book (considered to be subversive in the land of the free) on this topic. It’s called “Civil Disobedience”. Read it sometime. (He discusses the relationships among: laws, unjust laws and compliance with unjust laws.)

Clearly Shaun (and others who have exhibited this kind of “life time” compliance while living outside the USA) are “model citizens”. Yet they have been proven to have been “model fools”. Through compliance with these laws, they have destroyed their lives.

The U.S. tax system, enforced by the tax professionals (who usually don’t know what they are doing anyway) is such that:

It’s far more punitive to be in the U.S. tax system than not be in it. There are a number of reasons for this, but we see how Shaun loses his life savings by trying to comply (doing the “right thing”).

Believe, me Shaun has lost a lot more than his money. Year ago I wrote a couple of posts based on theme that:

“It’s not what they take from you, it’s what they leave you with”.

Collective psychotherapy – U.S. citizens outside U.S. – Not what they take from you, it’s what they leave you with

followed by:

The agony of U.S. citizenship for U.S. citizens living outside the U.S.

Take particular note of the comments (including one from MarkPineTree who was Dr. Marcio Pinheiro whose anxiety over Mr. FBAR made the last few years of his life a “living hell”). See a tribute to him at:

http://isaacbrocksociety.ca/2015/08/18/another-brock-warrior-down-in-memory-of-marcio-v-pinheiro/

Finally, this story is a sad, sad reminder that those who have been most hurt by the predatory and immoral practice of U.S. “place of birth taxation” are the ones who tried hardest to comply.

The Tax Compliance Industry might say:

“Resistance is futile!!!!”

Those who have tried hard to comply will say:

“Compliance is impossible”

Put it this way:

“It’s very clear that “compliance is impossible”. But, it’s not clear that “resistance is futile”. The proof is rather simple:

Seven out of eight Americans abroad recommend non-compliance and every one of them is in a better state than our friend Shaun!

Burning Down Barns is not Wrong Because it is illegal; it is illegal Because it is Wrong

 

Burning Down Barns is not Wrong Because it is illegal; it is illegal Because it is Wrong

 


 

Every #Americanabroad (along with his/her “alien” family) understands all too well the reality of the betrayal perpetrated by the U.S. government in the fight against “tax evasion.” To have it then furthered by the country of residence changing the law in order to allow it is a further betrayal. One does not feel betrayal unless one has been wronged.
 
The government would have one think that it is walking the moral high road, taking upon itself the noble fight of searching out those who rob everyone else because they are not “paying their fair share.” Isn’t it just and right to do so? On the surface it would apppear it is but the problem becomes twofold. First, it has to be devised well-enough to actually produce the results it seeks to achieve and second, while doing so, certain rules of fairness about how the attempt is applied are required. Every kid on a playground learns this and readily understands when the rules are broken.
 

It is easy enough to see that the FATCA hunt has huge “design problems.” First off, the U.S. indicia are all items that suggest one lives in the Homeland. There is nothing to “weed out” those who aren’t American but don’t have CLN’s (and that doesn’t mean you are an American). Banks turning in people below the thresholds is truly wasteful as those people are so unlikely to owe tax. The crowning glory however, is that there is no simple way for the IRS to get money from people outside the country unless they willingly send it. I cannot think of any aspect of FATCA that would suggest it is well devised.
 
kids fightingTwo groups of kids are on the playground. The more agressive kids’ part of the playground is on their side of a line dividing the space. The other kids have their space on the other side of the line. One of the bullies comes up to the edge and says somebody on the other side really is one of them and tries to forcefully pull them over. There is no reason other than the bully wants something that isn’t his. What would happen? The other side would probably try to prevent the exchange, even if they are smaller and unlikely to win the fight. But everybody knows who started it and which side of the line the kid really belongs on. Then an adult shows up and all kinds of nonsense starts being spewed to try and muddle the issue because admitting wrong is not going to happen.
 
There is no way that an Accidental American belongs on the “American” side of the line no matter how much the U.S. whines and bellows it is so.
There is no way that anyone who chose to leave for education, marriage or employment and is living in another country in tune with the laws there, can be seen to “belong” to the U.S.
 
What are they going to do? A sort of reverse of what may happen soon in the U.S.? Where they kick out “illegal” adults and purposely separate them from their (American) children? Have everybody shipped back? They probably ARE mean enough but the fact is, that costs money. Lots of it.
 
The 14th Amendment, the 16th Amendment, Cook v Tait and all of it, belongs to those people who are on the U.S. side of the line. All the “laws” and arguments about polity and old case law just muddles the real issue. The fact of life is:
 
Everybody else has a right to be on their side of the line.
 
So everytime a condor hits you with that “It’s U.S. law” or “Until it’s changed it has to be obeyed” don’t allow them to drag you into arguing. It’s just plain dumb and so are they for thinking they can fool (or shame) you with such stupid arguments.
 
*****

Brock founder Peter Dunn/Petros says it quite eloquently. Re-blogged from the Isaac Brock Society March 31, 2015

We are living a crisis of morality in which leaders have difficulty distinguishing between what is right and wrong. Today, political leaders facing a legal obstacle to their agenda believe that all they have to do is change the law. So if the government stealing from people is illegal, all that one needs to do is change the law and call it “civil forfeiture“, and suddenly it becomes morally acceptable.

I recall reading a few years back a National Post article that brought up the question of lawmaking and morality came up.  Fortunately, Mark Steyn, cites the money quote from George Jonas:

Back in the Trudeaupian golden age, you may recall, the great man’s barnstorming transformation of Canada was momentarily halted by a storm about barns. It emerged that some overzealous officers of the Royal Canadian Mounted Police had burned down barns belonging to Quebec separatists. The press was briefly exercised over this, but M. Trudeau gave one of his famous shrugs and airily remarked that, if people were so upset by the Mounties burning down barns illegally, perhaps he’d make the burning of barns by the Mounties legal. As the great George Jonas commented:

“It seemed not to occur to him that it isn’t wrong to burn down barns because it’s illegal, but it’s illegal to burn down barns because it’s wrong. Like other statist politicians, Mr. Trudeau seemed to think his ability to set out for his country what is legal and illegal also entitled him to set out for his citizens what is right and wrong. He either didn’t see, or resented, that right and wrong are only reflected by the laws, not determined by them.

The Honourable Stephen Harper, Prime Minister of Canada, is a moral embarrassment. Before he forced the FATCA IGA into law, it was illegal for the government of Canada, based on national origin discrimination, to give the financial information of Canadian citizens to a foreign government. But it is still wrong to do so, and it doesn’t matter how many laws Harper forces through Parliament, it will remain wrong.

When law becomes a substitute for morality

When law becomes a substitute for morality

reblogged from the renounceuscitizenship wordpress blog

Today I’ve decided that I would like to go back and reblog some of the best expat posts from the last five years. For lack of a better title, I am going to call it the “A Blast From the Past Series.” This week I am going to focus on the disconnect between law and morality.

Every now and then I realize that people are still coming into awareness and that they do not realize a lot of what has gone on; how long some of us have been involved in this and most importantly, why some of us are so vehemently resistant and unyielding when it comes to evaluating the U.S. government, the tax compliance industry and so on. I guess some of us are afraid that this long period of lassitude may give a false sense of “safety.”

Without resorting to outright fearmongering, there are a number of things that may not happen (tax reform) or that will change (discontinuation of the Streamlined Program) etc. Our main reason for being involved in this from the very beginning, was to get the word out, to do our own research/take responsibility for educating ourselves and others about this hideous situation. I think it is important for people to understand how this situation has played out since the beginning……..

One of the worst aspects of everything happening today is the growing lack of morality in the world. I mean this in the “big” sense of the word; something which is on the mind of every human being as we watch America turn from being an open and welcoming society into one moving toward closed borders, over-the-top surveillance, etc. Today the Secy of Homeland Security literally said he was considering separating (illegal) parents from their (American-born) children. Unbelievably cruel and totally unnecessary. And the reinstatement of the “travel ban” which has been tweaked a bit but cannot possibly be seen for anything except what is clearly is – a move to keep Muslims out of America.

What does this have to do with us? Everything. Because when you see your government behaving like this, you are forced to evaluate two things:

1) Can YOU trust them?
2) Is there any reason to reject them/protect yourself given the unusual situation expats find themselves in?

In addition to being scared out of my mind and full of doubt whether to renounce or not (late 2011), what I could not ignore was my observation of how the U.S. was behaving outside the law. Clear, undeniable abuse of the law. Invading Pakistani airspace (I don’t care what the reason, that is not supposed to be done); the horrid abuse of prisoners at Abu Ghraib ; the assassination of Americans without due process and worst of all, holding men at Guantanamo Bay for as long as 12 years without charge, torture, etc. I did not find it difficult to believe the U.S. would think nothing of destroying our retirement by forcing me to sell my home to pay FBAR fines. It was a no-brainer.

Everyone has to come around to this decision on their own terms. All the more reason however, to take a long hard look at what has gone on over the last five years (which should influence whatever decision you choose to make).

Some of the people mentioned in this post you may not be aware of:

renounceuscitizenship – in addition to his/her own blog, one of most influential authors at the Isaac Brock Society from the beginning. Has an uncanny ability to predict long in advance, how things are going to move and a piercing, unbending analytical approach to assessing the source of our issues. Originator of the Renounce & Rejoice meme.

Steven J. Mopsick – aka “30 year IRS Vet” – a former IRS attorney who took part in a lot of the early conversations at Brock. The relationship was friendly at first and eventually disintegrated due to the natural friction between someone from a compliance point-of-view and those who did not intend to buckle under. A nice gentleman of whom was said “You can take the man out of the IRS but you cannot take the IRS out of the man.”

JustMe a much-beloved expat who suffered two-plus long years having entered the 2009 OVDP program, trying to make things right. He coined many of our expat idioms: “LCUs (Life Credit Units – how much of your life lost trying to deal with this); FATCAnatics (you can guess); CC&W (Complain, Comply & Warn-his explanation of what he was doing!),DATCA, GATCA, and so on. After he requested the help of the Taxpayer Advocate, he spent quite a long time devoting himself to our cause and taught a lot of us how to do Twitter, learn html, you name it. He finally needed to put it aside (I am sure his wife was happy about this!) and is much missed……..

Former Secretary of the Treasury Timothy F. Geitner aka “Turbo Tax Timmy” – who hadn’t paid social security or self-employment taxes on income received from the International Monetary Fund from 2001 to 2004; the IRS audited Geithner for tax years 2003 and 2004, which resulted in him paying back taxes and interest–but no penalties–totaling $16,732. Geithner voluntarily amended his 2001 and 2002 returns only after Obama expressed interest in nominating him to the Treasury post. The total bill this time: $25,970. He also failed to get proper verification for three individuals who worked for his family. As a prior Treasury employee who prior to Secy position, had run the NY Federal Reserve, one has to wonder how he could fail to understand social security or SE tax. This was infuriating to expats suffering through the OVDP/OVDI penalties. As well, former Congressman Charlie Rangel (D-NY), a sponsor of FATCA, headed the powerful House Ways and Means Committee that writes the nation’s tax laws, was censured by the House of Representatives in December for ethics violations.A chief violation included his failure to pay 17 years’ worth of taxes on rental income from the Dominican Republic property. GRRRRRRR! (still burns……..)
****************

tombstones

The following tweet appeared as a post at the Isaac Brock Society and generated a collection of comments.

To provide some context:
Steven J. Mopsick wrote a post which was a report of his experience at a recent FATCA conference. He was impressed by how the attendees were exploiting the business opportunity (inadvertently referring to them as “steakholders”) that FATCA has created for the compliance industry. Interestingly, Mr. Mopsick specifically makes the point that:

The focus of the conference was strictly on FATCA from the standpoint of complying financial institutions. Most of the participants did not even know about and individual’s duty to file FBAR’s, Foreign Asset Statements (form 8938) and there was very little talk about privacy concerns, fears about the dangers of an emerging international banking data base system, or how Canadian politicians were doing in shaking their lap dog image as pawns of the US government.

In other words: the focus was on the law of FATCA with no consideration of the morality, unintended consequences or effect on society as a whole. (Most law students would kill to have a prof like this!) To put it another way, the important consideration is the law itself. The fact of the law itself is the only issue. The values that underlie the law are irrelevant.
“Just Me” in his usual “wit and wisdom” commented that:

This is the Truism I take away from Steven: “The people around the world who stand to profit from FATCA are not thinking much about government intrusions into the private lives of the world citizens.”

“Them’s the FATCAs FACTs”, as they say.

Although, they may think it is a ‘business and growth opportunity’ others see it as a pending financial disaster for the World’s economy. Who is right? I think the latter, but we shall see. I could be wrong.

FATCA and US fiscal imperialism threaten to sink global economy

In all due respect to 30 year IRS vet, I think he may have his perspectives twisted (which comes from his background?) when he thinks that profiting off the backs of the government regulatory tit is “free enterprise/free market system at work.” Rather, it represents the worst of unprincipled and amoral aspects of human nature at work. These actions are not based upon free enterprise/free markets, but on artificial markets based upon dubious legal assertions.

Free markets do not require or accept extortion as their engine of enterprise.

I can think of other examples of so called free enterprise ~70 years ago, where other“hard-working, serious, responsible business men and women who were on their way up in their companies” were probably attending conferences on how to ramp up manufacturing and supply of cattle cars for another freight train in another era that he would not be so willing to celebrate. He would not like that comparison, and maybe it is a bit hyperbolic, but the same human nature principle is at work.

More recently, there was an army of war profiteering “hard-working, serious, responsible business men and women” contractors, attending conferences in Vegas to learn how suckling off the “free enterprise” of ‘War Contracting Gone Wild’ could benefit their companies. They didn’t want to get left out of the ‘business and growth opportunity’that an amoral and unnecessary war provided. What if the government threw a contractor party to support its misguided war effort at that time, and no one came? I blame the compliant and willing contractors co-enablers as much as the government initiators for the sad legacy we left in Iraq.

Maybe in fairness to Steven, what he is saying, is yes, human nature is responding to an artificial market that would NOT exist, except for US hubris, financial imperialism and extra-territoriality. I don’t think I would be citing the FATCA Compliance Industrial Complex’s (FCIC) “hard-working, serious, responsible business men and women” as an example of ‘supply and demand’ in action that Adam Smith would identity or praise.

Although I certainly agree that “Free markets do not require or accept extortion as their engine of enterprise”, the Mopsick post raises an even larger issue. Mr. Mopsick has and continues to make an enormous contribution to the discussion of FATCA, FBAR and U.S. tax compliance in general. Some of the best thinking on these topics may be found in the “Mopsick Trilogy” – a series of posts that he wrote about the compliance problems facing US citizens abroad. His posts are a unique blend of raising questions and answering questions. In this case, his post has raised an important issue.

The issue is that, in the America of today, laws have become a substitute for morality. A society where laws have become a substitute for morality, is a society that is past the point of “no return”. This is where “Form Nation” – AKA The United States of America – finds itself today.

“Form Nation” – A country structured by laws and not by men

In the beginning we had the ten commandments which were expressions of the fundamental principles of justice. The ten commandments reflected principles which were for the common good. Gradually legislatures began to create laws. In the early stages of society, these laws were specific applications of fundamental principles of justice and for the most part these laws continued to be for the common good.

What is in the common good is not necessarily what is good for specific individuals. Those specific individuals who control the political process have strong incentives to act in their interest at the expense of the public interest.

Once legislatures saw how easy it was to create laws, they began to create laws which were NOT for the common good but were to benefit specific individuals at the expense of the common good. That’s how the Internal Revenue Code and regs grew to 17,000 pages. It’s simply incredible. Mr. Romney pays low tax on his “carried interests” and U.S. citizens abroad pay confiscatory taxes on their mutual funds “PFICs”. Not only is this unfair, but it’s a wonderful example of how laws are passed to benefit the individual at the expense of the common good.

But, it gets far worse. Who exactly are the legislatures? Democracy in the “Form Nation” of today is controlled by two private clubs. You will recognize them as the Democratic and Republican parties. Not only are they private clubs, but they have the intellectual dishonesty to rely on public funding for their existence. Their job is to campaign and to stay in power. Why? Because they will profit from being power. Those of you who have seen the Movie Chicago will remember Mama Morton singing “reciprocity“.

If you have the money you can get the ear of a Congressman. If you don’t you can’t. If you are the mutual fund industry you can lobby to get the PFIC laws passed. If you are the Romney’s of the world (and I still believe Romney would have been a better president) you can lobby to get your “carried interest” laws passed. As Fareed Zakaria has noted, the system is corrupt at it’s core. A large part of the problem is the way the political system works in the United States. There is nobody who represents the voters. The elected representatives (and they are not really elections because of a lack of choice on the ballot) are in business for themselves. Their business is in passing laws that benefit themselves or their clients. This is the only reason that the IRC and regs grew to 17,000 pages. To put it simply: elected representatives are in the business of making laws.

It’s laws, laws and more laws!

The United States of today is burdened by so many laws that:

– everybody is in violation of some law (show me the man and I will show you the crime);

– the complexity of the laws means that people cannot even understand what they are required to do (the FBAR rules are a weird combination of the enabling statute, the regs and the form itself);

there are fewer and fewer laws where “mens rea” (the intent to commit the crime) is necessary for a conviction;

– people are forced to pay lawyers for an opinion on what they may be required to do (lawyers have become the modern day “priests”);

– the sheer volume of laws means that enforcement is largely discretionary (will the IRS enforce FBAR penalties or not?);

– the focus on laws leads to a presumption of criminality (the fact that US citizens abroad are subject to so many laws means they must be guilty of something);

– the moral foundation (if any) of the law becomes irrelevant. The original purpose of the law becomes irrelevant. All that matters is the mechanical application of the law. Nobody ever imagined that PFIC rules, Foreign Trust rules or the FBAR rules would be used to unleash a “reign of terror” on US citizens abroad. On the “Homelander Front”, do you really believe that Martha Stewart deserved incarceration? Of course, the good old USA has the highest rate of incarceration in the world.

Laws have become a replacement for morality. Laws are the only standard for morality.

If you are not in violation of the law, you are not immoral.

If you are in violation of the law you are immoral.

(If the U.S. is really concerned about the “crime rate” then maybe it should reduce the number of laws.)

Conclusion: The US does not have laws that are fair.

“Form Nation” – A country governed by those who decide when to apply the laws and in relation to whom! (A government of tyrants)

In the context of the laws, the laws are not applied equally

President Obama commented that Mr. Geithner should not be punished for a mistake commonly made. It was okay for Timothy Geithner, a man with the money to get accurate tax advice, to file inaccurate tax returns. It is NOT okay for US citizens abroad to fail to file or to file inaccurate tax returns.

Conclusion: The US does NOT have fair application of the law.

1. The United States of today is country where laws are passed by members of private clubs, which have no incentive to benefit the common good and every incentive to benefit themselves at the expense of the common good.

2. The laws are so numerous that every person in the United States is in violation of something.

3. The laws that passed carry no presumption of morality and simply have no moral force.

4. The laws (regardless of content) are enforced in an unpredictable and unfair way.

The result is that people live in terror of the government.

As Jefferson said:

When people fear the government there is tyranny. When government fears the people there is liberty.

So, what’s all this got to do with #FATCA and the Mopsick post?

FATCA is the “gift that keeps on giving” (well to the compliance industry that is). As Mr. Mopsick confirms, the concern of the industry in on the fact of the law. What does it say? What does it require? As Mr. Mopsick reports:

Many readers of this blog will be disappointed to hear this report. The people around the world who stand to profit from FATCA are not thinking much about government intrusions into the private lives of the world citizens. That is the furthest thing from their minds. These folks were all good students, in effect, knowing full-well that there was a new body of rules and regulations on the table which they needed to learn and master.

The implication is that the “good students”, those “hard-working, serious, responsible business men and women who were on their way up in their companies”, the “best and the brightest” (are they really that bright?) should be concerned with embracing the new morality, getting in tune with the “new world” caring about the implications of their conduct. That’s exactly what happens when law becomes a substitute for morality. Just Me compares this mentality to another time in history when he notes that:

I can think of other examples of so called free enterprise ~70 years ago, where other“hard-working, serious, responsible business men and women who were on their way up in their companies” were probably attending conferences on how to ramp up manufacturing and supply of cattle cars for another freight train in another era that he would not be so willing to celebrate. He would not like that comparison, and maybe it is a bit hyperbolic, but the same human nature principle is at work.

Interesting analogy. What is the purpose of FATCA? What are the moral underpinnings of FATCA? Has anybody ever asked the question? Clearly nobody in the world of the FATCA compliance industry. They would be afraid of the answer!

But, that’s what happens when law becomes a substitute for morality. Many of you are concerned about what reason to give for renouncing your U.S. citizenship.

Why not just say:

I do not wish to be a citizen of a country where law has become a substitute for fairness and morality!
 

TOMORROW : Burning Barns Down is not Wrong Because it is Illegal – It is Illegal Because it is Wrong