Our big news broke yesterday and in spite of the fact it is not actually confirmed, many are
counting on this to become reality. Discussions are covering quite a range of issues/reactions;
2 comments from the Isaac Brock Society deserve a post of their own.
On October 26, 2017 at 6:25 am USCitizenAbroad says
The title of the article (presumably) comes from the Financial Times authors and NOT from Rep Brady. It’s very important to stay supportive of the main message and not be distracted by small aspects that one doesn’t like.
The White House does not write the legislation. Unless the White House actively opposes changes for the taxation of Americans abroad, it’s response is not as important as the response of Congressional tax writing committees.
When you read the complete article you will see it has been reported that a change in tax policy for Americans Abroad appears to be supported (or at least not opposed by):
1. Mark Mazur of Obama Treasury fame
2. American Chamber of Commerce
3. It appears that Brady is saying that the lawmakers supporting that area of the tax code have also made the change for RBT (which suggests that the 2013 and 2015 submissions have done their work).
4. The White House sees no problem with it (maybe)
5. RO is mentioned as having brought the signatures to the White House
Appears that the collective work of a lot of people/groups, over a period of years, may be paying off. I think that the most significant support (from the perspective of change) may be from Homelanders: the American Chamber of Commerce and perhaps Mark Mazur.
Assuming the truth of this article, the biggest hurdle has been crossed. Congress is acknowledging and considering the issue (I suspect that this may already have been written into the draft legislation).
Considering that the effects of CBT cannot be understood by those who have never lived it, this is a tremendous achievement – which reflects the work of large numbers of people (and organizations) since 2011.
It’s vitally important that those large number of people and organizations, come together in support of change.
What unites all people affected by this issue (the end of “place of birth” taxation) is far more important than the specific aspects of what divides them (RBT vs. Territorial, etc.).
On October 26, 2017 at 7:39 am USCitizenAbroad says
My worry is that any advantageous changes made to the tax code now could just as easily be undone when the next tax reform comes along. It is nerve-wracking not knowing where you stand and what to expect in respect to year-to-year filing obligations. What US person can possibly live a normal life abroad with that uncertainty hanging over them? I just reliquished my citizenship in August this year and the feeling of relief is enormous. Even if these tax reforms pass, I’m glad I’ll never have to waste another thought on whether I am compliant with the US/IRS in every conceivable way.
Those who have lived with the US/Obama/FATCA/FBAR/ Condor enforced assault on Americans abroad since 2009 (this is when the rollout began) would agree with you. Interestingly, this experience has put people to some hard thinking of what U.S. citizenship is really worth. For those who have another “First World Passport”, U.S. citizenship is clearly more of a liability than a benefit.
Yes, I think it makes a lot of sense for those who can easily renounce to renounce. Good decision.
From a practical perspective, the people most affected by this are those who have been U.S. tax compliant. What has become clear is that the only Americans who can live outside the United States are those who do NOT file U.S. taxes. Filing U.S. taxes is (whether known at the time or not) always the first step toward renunciation. It’s not the taxes, it’s not even the reporting. It’s that U.S. tax compliance means that one cannot integrate into the retirement and financial planning programs of other countries. And then (as you point out) there is the constant fear and anxiety.
Actually, U.S. citizenship-based taxation is okay, except for the following four points:
1. Totally Unjust: It’s extremely unjust. Why should people be taxed just based on “place of birth”:?
2. Completely incomprehensible: It’s so complicated that Americans abroad can’t understand what is required of them. For example, when it comes to the forms, there is a lack of agreement in the tax compliance community.
3. Compliance is impossible: Even it U.S. tax compliance for Americans abroad could be understood, it is basically impossible to comply with.
4. Escape is impossible: And finally: Even though it’s unjust, incomprehensible and impossible to comply with, there is no way to to escape without paying lots of fees and in the case of many a a Nazi and Soviet style “Exit Tax”. (The U.S. “Exit Taxes” are far more comprehensive than any Exit Tax imposed by any other country.)
But, other than those four things, U.S. “citizenship-based taxation” really isn’t so bad!