Leaving aside the specifics, the ACA proposal reflects:
A commitment to taxation-based citizenship; and
A commitment to FATCA.
Like the SCE (“Same Country Exemption”) proposal before, it is a proposing a “carve/buy out” for a select group of U.S. citizens who have demonstrated their loyalty to the Homeland by paying taxes and filing forms. For those, and those alone, they will be offered the privilege of “buying their freedom” in the same way that some slaves in another century were offered that privilege.
The ACA proposal is extremely vicious, very honest in one respect and very dishonest in another respect.
The Viciousness Of The ACA Proposal:
The sole beneficiaries are those who are U.S. tax compliant. For the vast majority of these deemed to be “U.S. Property/Slaves” it is too late for them to enter into the U.S. tax system. I have seen it said that:
“Seven out of eight Americans recommend noncompliance!”
This means that the maximum percentage of people this could benefit (if they can afford the financial cost) would be 1/8 or 12.5%. In other words, the proposal is of very limited value to “American Citizens Abroad”.
The Honesty Of The ACA Proposal:
In at least one respect, the ACA proposal is the most honest proposal out there. It is the only proposal that is predicated on the correct assumption that U.S. citizenship is a modern day form of slavery. And why not? Slavery has played an important role the whole history of America. Some will scoff at the assumption that U.S. citizenship is a form of slavery. But, hey if it’s not a form of slavery, then why are people not free to leave it?
The Dishonesty Of The ACA Proposal:
Once again, ACA considers U.S. citizens to be ONLY Homelanders and what I would refer to as “Homelanders Abroad”. It does not acknowledge the existence of “accidental Americans”, and long term dual citizens who are permanent residents of other nations and do NOT consider themselves to be Americans in any relevant sense.
In any case, the proposal is so complicated that I doubt it will go anywhere.
Just in case, anybody has missed the main point of this:
Renounce and Rejoice! – It’s the only option CURRENTLY available to you.
American Citizens Abroad, Inc. (ACA, Inc.) is proud to confer its Eugene Abrams Award for 2017 on Jackie Bugnion.
The Abrams Award, named for Eugene B. Abrams, ACA Executive Director from 1992-1994, honors Americans abroad who have contributed outstanding volunteer service to their community. This year, it is being presented to an American abroad who has been of invaluable service to the overseas American community around the world.
Mrs. Bugnion served on the ACA Board and Executive Committee for 12 years, from 2003 to 2015, and she was the driving force behind the development of Residency-Based Taxation (RBT), writing detailed RBT proposals, visiting lawmakers and giving speeches on several different continents. She was instrumental in creating relationships with key legislators and the tax writing committees on Capitol Hill, and she wrote policy papers which helped establish ACA as the premier thought-leader on issues affecting the community of Americans living and working overseas.
…….ACA and ACAGF owe a great debt of gratitude to Mrs. Bugnion for her years of service to the organization. She always had excellent insight into the problems facing Americans overseas and worked tirelessly to find practical solutions to these problems. Jackie’s dedication and commitment to the cause of Americans overseas and her committed focus to the issues of overseas taxation and compliancy issues helped bring RBT to the forefront of discussions in Washington.
The following are a set of videos, interviews and reports that demonstrate how clearly Jackie understands the problems of Americans abroad and her no-nonsense approach to fixing them.
CFA SOCIETY SWITZERLAND SPONSORS DEBATE – FATCA, THE WORLDWIDE END OF BANK SECRECY? JUNE 25-26, 2012 GENEVA & ZURICH
ACA DIRECTOR JACKIE BUGNION TALKS ABOUT #FATCA WITH JENNIFER CORDINGLEY OF DUKASCOPY TV – NOVEMBER 15, 2012
This short interview with Jennifer Cordingley of Dukascopy is very concise and you won’t find a better one anywhere. This is the one to convince your family and friends-no hysterics or complaining, just, “this is what it is” (and “oh by the way, its terrible“).
There is no direct representation in Congress or in the Administration for Americans residing overseas in Washington D.C., yet U.S. law seriously impacts the lives of Americans overseas through rules related to transmission of citizenship to children born overseas, through specific penalizing measures related to Social Security payments, and, in particular, through its unique citizenship-based taxation whereby the United States continues to impose its tax regime on Americans living outside of the country, even though they pay taxes where they reside. Most recently, in 2010, Congress passed the FATCA legislation (Foreign Account Tax Compliance Act), which makes it very difficult for Americans abroad to maintain bank accounts in the country where they live.
ACA DIRECTOR JACKIE BUGNION TALKS ABOUT OVERSEAS AMERICAN WEEK ON DUKASCOPY TV – MARCH 6, 2013
Jackie is in the studio with Dukascopy TV journalist Natalie MacDonald to discuss Overseas American Week (OAW). In addition to describing the purpose of OAW, she outlines major issues for expats; tax, banking-(specifically, inability to obtain U.S. accounts while having a foreign address due to the Patriot Act), citizenship and voting. She also delves into the lack of representation due to low percentages of concentration in districts, with the only additional support of the Americans Abroad Caucus headed by Rep. Christine Maloney. The attempt (HR 597) to set up a presidential, bi-partisan committee to address all of these issues is mentioned. As well as the fact that as of the video (March 2013), there has not been a study done concerning overseas issues, in over 35 years. In that time-frame, the issues have become far more complex. She also points out problems with Social Security & WEP and Medicare; as well as the fact that if arrested overseas, Americans do not have the protections of the Vienna Convention; no right to legal counsel, etc, in spite of the fact that the U.S. signed the Convention.
JACKIE BUGNION SUBMISSION TO INTERNATIONAL TAX REFORM WORKING GROUP (W&M) APRIL 10, 2013
ACA DIRECTOR JACKIE BUGNION TALKS ABOUT UPDATES ON RESIDENCE-BASED TAXATION (RBT) ON DUKASCOPY TV (JULY 2013)
This interview with Monica Gibson (Dukascoy) focuses on RBT highlights; if adopted, RBT would produce more revenue than the current CBT system; it would reduce costs to the IRS and would be better for US business by increasing competitiveness abroad. The fact that a US employee costs two times the cost of hiring a foreigner hurts the U.S. in this global economy and she asks “who better is there to represent the interests of American than Americans themselves”?
The possibility of tax reform is mentioned due to the Ways and Means request for submissions. ACA’s report as well as a very supportive report from JCT as well as the SFC paper,
INTERNATIONAL COMPETITIVENESS -Senate Finance Committee Staff Tax Reform Options for Discussion all point to a strong case for RBT.
In this video Jackie speaks passionately about the fact that lives are being destroyed; that “destroyed” is not too strong a word to use. She in fact claims that the situation is “very dramatic.” It is amazing that persons like herself, Nina Olson etc are incredibly clear about this and someone like Mr. Stack claims that such aspects/effects of FATCA are “myths.”
JACKIE BUGNION SPEAKS ABOUT THE FOREIGN EARNED INCOME EXCLUSION WITH BENJAMIN JONES ON DUKASCOPY TV JAN 9 2014
Here Jackie discusses what the FEIE really is (a “fix” for CBT) and tries to clear up common, stubborn misconceptions (i.e., that Americans abroad get a “tax break”). The FEIE is “low-hanging fruit” and always in jeopardy. Making the case for FEIE is simple; without it, anyone in a low tax country will be severely affected and those in high-tax countries (where 80-90% of Americans abroad live) will simply switch to the FTC. She discusses what happened when the FEIE was repealed due to The Tax Reform Act of 1976. Tens of thousands of Americans in the Middle East, particularly in engineering and the oil fields, received tax bills that were higher than the income they made. Consequently they came home, businesses were lost and the export markets were lost. Though the legislation was repealed retroactively, the damage had been done. This was discussed often by Roger Conklin most effectively in his submission to the Ways & Means Committee .For the first time in nearly 100 years, the trade balance turned negative. The reality is that the low-tax people would leave and enter the unemployment rolls in the U.S. and the U.S. would not receive an extra penny from the high-tax people. Jackie mentions an ACA paper The 911 Mirage .
Another complication has developed due to the Net Investment Income Tax (funds for the Affordable Care Act aka “Obamacare”). Here one has to ask whether this was a deliberate act of Congress to punish Americans abroad. This 3.8% tax on passive income is a Chapter 2 tax (from the Internal Revenue Code) rather than a Chapter 1 tax. Chapter 2 taxes are ineligible for the FTC. This is clearly sheer discrimination that Homelanders do not face. Also, those who are self-employed are required to remit 0.9% of their income for Social Security; may sound minuscule but represents an actual 6% rise in social security taxes. There is a reference made to the new expansion of ACA into the United States as the ACA Global Foundation.
ACA’s TAXATION OF AMERICANS ABROAD IN THE 21ST CENTURY:CITIZENSHIP-BASED TAXATION VS RESIDENCE-BASED TAXATION
TORONTO ONTARIO CANADA MAY 2 2014
RADIO INTERVIEW WITH GOLDSTEIN ON GELT – ALL YOU NEED TO KNOW ABOUT EXPAT TAXES, WITH JACKIE BUGNION SEP 13 2015
JACKIE BUGNION RETIRES FROM ACA – SPRING 2015
John Richardson comments on his reaction to the news that Jackie was retiring:
On May 7, 2015 I received notification that Jackie Bugnion had submitted her resignation to the Board of ACA “American Citizens Abroad“. I read the notification with a combination of sadness and total appreciation for the incredible efforts that Jackie has made in advocating for the rights of Americans Abroad. Jackie was largely responsible for organizing the “Citizenship Taxation Conference” (featuring the debate between Michael Kirsch and Bernard Schneider) that took place in Toronto on May 2, 2014. Some of you may have had the privilege of meeting her there. It’s unlikely that she could be replaced by any one individual.
In my humble opinion Jackie has done more than any single individual in both:
Helping Americans Abroad in day-to-day practical ways; and
Leading the broader educational initiative which I believe will lead to the United States transitioning from CBT to RBT.
While the task is far from over, I am pleased to know that ACA has managed to get RBT on the table of tax reform. As you know the Senate Finance Committee has taken a positive stand on this. The number of public submissions on tax reform to the Senate Finance Committee in April 2015 showed significant input from Americans abroad. There were 350 submissions to the “international” group compared to 450 for the “personal” group. When related to the interested populations – 7 million vs 250 million, this demonstrates a major input from overseas. Congress is sensitive to this level of participation.
Last but not least, some quotes from those who have worked with Jackie, all appreciative of her long service to Americans abroad via ACA. Some of us perhaps, have not really been around long enough (i.e., we were just Americans living in our new countries, completely oblivious to all this…….) to truly appreciate all that people such as Andy Sundberg, (boy, was he ever handsome), Roger Conklin (a very kind soul) and now Jackie have done for us. The best thing we can do is learn from their examples; of putting our all into getting this situation reconciled so our kids and grandkids will not have to deal with this………..
“Jackie is a real worker. There are projects that require a big effort and a great deal of attention to detail, and Jackie would commit big blocks of time to working on something and making it a success. This was true of the Residency-Based Taxation project and the Canadian conference a few years ago. Things don’t happen by themselves. Jackie made things happen, and I was always amazed and appreciative.”
— Charles Bruce, Chairman, American Citizens Abroad Global Foundation
“Jackie has a brilliant mind and an incredible command of detail, and I’ve been present in meetings where she blew away legislators with her detailed knowledge of the issues. Her proposals were always incredibly well researched and totally pragmatic. ACA would not be where we are today without Jackie’s expertise.”
— Anne Hornung-Soukup, Director, American Citizens Abroad Global Foundation
“Jackie selflessly invested in developing the deep subject knowledge needed to propose improvements that now benefit millions of people she will never meet. She embodies the altruism upon which the United States was founded.”
— Roland Crim, Director, American Citizens Abroad, Inc.
Your work for “American Citizens Abroad”, as an organization, has been tireless, relentless, purposeful and generous. Your contribution to ACA’s many achievements has been extraordinary. Your influence will continue long after your retirement. But, that’s on the ACA organizational level.
For individual Americans abroad, your contributions have far exceeded your many accomplishments on the ACA level. Your greatest contributions have not been what you have done. Rather your greatest contribution has been who you are as in individual.
As an individual you have represented the finest of American values: a generosity of spirit, a beacon of hope and a consistent and stable compassion.
To put it simply, you have cared. It’s who you are.
On behalf of all American citizens living outside the United States, I thank you.
This post is based upon a comment made at the Isaac Brock Society concerning American Citizens Abroad’s new (Febrary 2017) proposal on replacing citizenship-based taxation with residency-based taxation.
See the bottom of the post for information on how you can join the discussion.
The ACA proposal is painful to read. But, it is an opportunity to dialogue with ACA and others who are engaged in the process of tax reform and its application to Americans abroad. I wonder if a separate site/Facebook group or something could be dedicated to the specific issue of “Tax Reform and Americans Abroad”. But, anyway …
The specifics of the proposal are a diversion from what I believe is the real issue. The real issue is the assumptions that ACA (and to be fair) the vast majority of Americans abroad bring to the table.
ACA proceeds from the operating assumption that American citizens are nothing but slaves to the U.S. Government and the IRS. ACA has absolutely bowed down to the United States of America and acknowledged the absolute servitude of Americans to Congress and the IRS. ACA has done this NOTWITHSTANDING THE FACT that most Americans abroad do not (and apparently will not) file U.S. taxes, FBAR and the other components that have stripped Americans of their liberties. (Donald Trump would probably say that those who do not file are “smart”. Why? Because the rules of U.S. style CBT are so punitive that in most cases it is safer to not file at all. Well, assuming you can even understand what is asked of you.)
Because ACA begins by accepting the principle of slavery, they then begin by asking for a “carve out” for certain slaves. These are slaves who have been particularly good and compliant slaves. The principle of “carve out for exceptional slaves” was last seen in the FATCA same country exemption proposal.
Understand the following two points:
1. FATCA SCE was a proposal that was absolutely in support of FATCA, but asked for an exemption for ONLY those Americans abroad who could demonstrate compliance with their tax slavery.
2. The current proposal (RBT not) ABSOLUTELY ACCEPTS CBT AS THE OPERATING PRINCIPLE, but asks for an exemption for those who have been particularly compliant with CBT. Because of the emphasis on “compliance, compliance, compliance” there is NO relief for Accidental Americans (and similarly situated people). The proposal makes NO mention of dual citizens and to what extent dual citizenship should play a role. As the Titanic is going down, ACA is proposes to save “tax compliant” (the good slaves) Americans from going down.
To be clear (as the “Change you can believe in” guy used to say):
This is NOT a proposal for residence-based taxation. This is a proposal for “taxation-based citizenship” with an exemption for certain groups of people. Therefore, under NO CIRCUMSTANCES should this be referred to as an RBT proposal. This is a proposal to worship at the altar of taxation-based citizenship, but exempt the “high priests” from the burdens.
That said, as a practical matter, if you can fit yourself into the one of “taxation-based citizenship” exemptions, it does provide benefits. But, as @Eric notes, this proposal will institutionalize “taxation-based citizenship”.
More, on the specifics later.
FURTHER INFORMATION ON THE ACA PROPOSAL AND DISCUSSION:
WASHINGTON — President-elect Donald J. Trump on Sunday chose Reince Priebus, the chairman of the Republican National Committee and a loyal campaign adviser, to be his White House chief of staff, turning to a Washington insider whose friendship with the House speaker, Paul D. Ryan, could help secure early legislative victories.
But as chief of staff, Mr. Priebus will be the one who has several hundred White House staff members reporting to him. He will be the primary gatekeeper for Mr. Trump and the person most responsible for steering the president’s agenda through Congress. That role will be especially critical for Mr. Trump, who has never served in government and has few connections to important political figures.
As Mr. Trump denounced the Republican primary process as rigged and, on occasion, threatened to quit the party and run on his own, Mr. Priebus remained neutral. And when Mr. Trump secured the nomination, Mr. Priebus stood by his side.
Mr. Priebus worked with Mr. Trump on the nuts and bolts of presidential politics, trying to smooth his rough edges and staying in close contact as a bare-bones campaign prepared to go up against the Clinton machine.
I found myself wondering just what it is expats will want to focus on now, that the Republicans have the Presidency, and control of the House and the Senate. As Stephen Kish pointed out, this could change in two years (well, really just a bit more than a year as once the campaiging for the interim elections in 2018 start, we will likely have lost our chance to get this done quickly. What we do in the next year is critical to dumping FATCA and CBT.
I started thinking about what they promised and have gone through the Platform. I am going to list the main things I found that relate to our issues; if anyone finds more, please post. I also have two documents that focus specifically on FATCA and RBT as well as the link to Republicans Overseas Resolutions posted long ago on their FB site. It would be helpful if others want to isolate points and phrases to focus on in communications to the Republicans.
People may. may not want to coordinate efforts but I assume there will be letters written, emails sent and so on. You may remember that Congressman Mark Meadows (R NC) introduced H.R. 5935 seeking to have an oversight hearing on FATCA repeal. Once we know the date of the hearings and who will sit on the committee, we would start there I presume. And then follow the movement of what occurs……Calls for witnesses were posted on the Isaac Brock Society indicating interested parties should contact Keith Redmond by email at FATCA_Testimonials@outlook.com
The current tax code is rightly the object of both anger and mockery. Its length is exceeded only by its complexity. We must start anew. That will be an enormous undertaking and, if it is to succeed, it must command the attention and approval of the American people………….. We will welcome all to this enterprise — to discuss, debate, challenge, and amend — so that together we can restore economic growth for the American people and, even more important, renew their faith in the future
NB:This is their promise to listen.
Our Tax Principles p 2 To ensure that past abuses will not be repeated, we assert these fundamental principles. We oppose retroactive taxation. We condemn attempts by activist judges at any level of government to seize the power of the purse from the people’s elected representatives by ordering higher taxes. We oppose tax policies that deliberately divide Americans or promote class warfare.
NB:This would deal with the bizarre idea that 877A is retroactive.
To guard against hypertaxation of the American people in any restructuring of the federal tax system, any value added tax or national sales tax must be tied to the simultaneous repeal of the Sixteenth Amendment, which established the federal income tax.
NB:This would eliminate the whole need for filing in terms of taxes as value added or national sales tax will not affect Americans abroad in any significant way.
A Competitive America p 2 American businesses now face the world’s highest corporate tax rates. That’s like putting lead shoes on your cross-country team. It reduces companies’ ability to compete overseas, encourages them to move abroad, lessens their investment, cripples job creation here at home, lowers American wages, and fosters the avoidance of tax liability — without actually increasing tax revenues. A more damaging policy is hard to imagine.
NB:Please see an excellent paper by Roger Conklin which outlines how CBT directly affects Trade.(via The Revenue Act of 1962 & The Tax Reform Act of 1976; the U.S. has never recorded a trade surplus since 1975).
We endorse the recommendation of the National Commission on Fiscal Responsibility and Reform, as well as the current Administration’s Export Council, to switch to a territorial system of taxation so that profits earned and taxed abroad may be repatriated for job-creating investment here at home. We believe American companies should be headquartered in America. We should reduce barriers to accomplishing that goal. A Winning Trade Policy International trade is crucial for all sectors of America’s economy. Massive trade deficits are not. We envision a worldwide multilateral agreement among nations committed to the principles of open markets, what has been called a “Reagan Economic Zone,” in which free trade will truly be fair trade for all concerned.
NB:Trade is important to Trump. He needs to know how CBT affects it. If they offer territorial taxation to corporations,they can offer RBT to Americans abroad.
A REBIRTH OF CONSTITUTIONAL GOVERNMENT
The Fourth Amendment: Liberty and Privacy p 13
The Foreign Account Tax Compliance Act (FATCA) and the Foreign Bank and Asset Reporting Requirements result in government’s warrantless seizure of personal financial information without reasonable suspicion or probable cause. Americans overseas should enjoy the same rights as Americans residing in the United States, whose private financial information is not subject to disclosure to the government except as to interest earned. The requirement for all banks around the world to provide detailed information to the IRS about American account holders outside the United States has resulted in banks refusing service to them. Thus, FATCA not only allows “unreasonable search and seizures” but also threatens the ability of overseas Americans to lead normal lives. We call for its repeal and for a change to residency-based taxation for U.S. citizens overseas.
NB: This needs no comment. Other than it might be pointed out that many of the accounts reported on FBAR and 8938, are registered government plans. Some even include government grants which are taxed. The idea that these can be used for money laundering or terrorism is simply absurd.
Reforming the Treaty System p 26
We intend to restore the treaty system specified by the Constitution: The president negotiates agreements, submits them to the Senate, with ratification requiring two-thirds of the senators present and voting. This was good enough for George Washington but is too restrictive for the current chief executive, who presumes to bind this country to bilateral and multilateral agreements of his devising. His media admirers portray his personal commitments — whether on climate change, Iranian weapons, or other matters — as done deals. They are not, and a new Republican executive will work with the Congress to re-establish constitutional order in America’s foreign relations. All international executive agreements and political arrangements entered into by the current Administration must be deemed null and void as mere expressions of the current president’s preferences. Those which are in the national interest but would traditionally have been made by treaty must be abrogated, renegotiated as treaties, and transmitted to the Senate for its advice and consent as required by the Constitution. The United States will withdraw from all agreements and arrangements failing those standards.