Comment #2 on “Think You Can Leave the U.S. – Think Again

 

 


 

“There is something fundamentally wrong with a country where compliance with its laws
forces you to (eventually) renounce your citizenship.”

 
This post is based on a comment by John Richardson. The comment is a response to
a post by laurainparis on the Thom Hartmann blogsite.

Laura, you conclude your last comment with:

“In asking his question Thom demonstrates the importance of how the United States treates it citizens when they leave the country. He demonstrates that this is an important question not just for Americans who live outside the US, but for ALL Americans, regardless of where they live. Because anyone who thinks they can leave the country, anyone who comforts themselves with this idea – anyone who asks the question “why don’t more Americans leave?” – they are deluding themselves. There is no freedom for Americans. Americans are not free to live normal lives outside the US, unless they are financially and emotionally prepared to STOP BEING AMERICANS (that is, renounce their citizenship). The word “ironic” doesn’t begin to describe the situation. The words “impossible” and “tragic” do.”

A tragic situation indeed.

What’s most interesting and tragic is that:

The ones who try the hardest to comply with the U.S. rules are the ones who ultimately are forced to renounce. I have assisted a very large number of people in renouncing their U.S. citizenship (and thereby ending U.S. jursidction over them). A high percentage of people I have assisted are people who:

1. Have tried for years to comply with the “alphabet soup” series of laws and reguations that govern the lives of Americans abroad; and

2. Realize that compliance is no longer possible.

The only remaining Americans abroad will be “noncompliant” Americans abroad

In the long run, the only Americans abroad who will be able to retain their U.S. citizenship are those who do NOT attempt compliance with these laws. There is something fundamentally wrong with a country where compliance with its laws forces you to (eventually) renounce your citizenship. This is a problem that has escalated over time.

U.S. citizens abroad are living under siege.

A wonderful expression of the evolution of the problem comes from Jackie Bugnion in
her submission
to the House Ways and Means Committee on Tax Reform. Writing in 2013 she said:

“In 1776, the United States declared independence because the mother country on the other side of the ocean was imposing taxes on the colonies for the benefit of England. Resentment started when Britain tried to enforce the Navigation Act after 1763. Resentment increased with the Stamp Act in 1765, a way for Britain to tax the colonies. The British Tea Act of 1773 led to the Tea Party and we all know the outcome – the American Revolution and independence crying out “no taxation without representation”.

Today, the estimated 7 million Americans resident abroad, of whom the majority are long-term overseas residents in high tax OECD countries, face a comparable situation. Their representation in Congress is non-existent in reality. Americans abroad amount to only 1 to 2% of the votes in any particular state; Congressmen and Senators have ignored their tax issues. The unjustified myth that Americans abroad are wealthy and disloyal restricts a rational approach to the problems because of political image issues.

Citizenship-based taxation (CBT) has existed ever since the federal income tax was adopted. Despite CBT being an anomaly involving double taxation, taxation of phantom gains and explicit tax code discrimination, it was grudgingly tolerated by Americans abroad because it was essentially voluntary, most often involved little tax or no U.S. tax liability and basically was not enforced. In particular, the FBAR filing requirement was so obscure that even the big four accounting firms were not aware of the filing obligation dating from 1970 and failed to inform Americans abroad of the need to file the FBAR.

Since 2001, a series of legislative events have radically changed the situation:

  • In 2001, the Patriot Act made anything foreign suspect, including Americans residing overseas.
  • In 2004, Congress, under the Jobs Act, drastically increased the FBAR civil and criminal penalties to confiscatory levels, creating a disguised form of taxation on assets held overseas.
  • In 2006 administration of the FBAR reports was transferred to the IRS for enforcement.
  • In 2006 the Tax Increase Prevention and Reconciliation Act (TIPRA) extended the Bush tax cuts and included a compensatory revenue raising provision that reduced the benefit of the foreign earned income exclusion, limited the foreign housing allowance and pushed Americans overseas into higher tax brackets, thereby increasing U.S. tax liabilities for many Americans abroad.
  • In 2008 the law relating to renunciation of U.S. citizenship was revised under Section 877A and introduced an Exit Tax on wealthy individuals (defined as “covered”). The law also provided that Americans who inherit from estates of former “covered” U.S. citizens are subject to U.S.
    inheritance tax with no exclusion. This outrageous discriminatory provision aims to discourage renunciation of citizenship, but in fact penalizes children of former U.S. citizens for an act they did not commit. In practice, it encourages the children to also renounce their U.S. citizenship.
  • In 2009 the IRS launched its initiative against tax evasion linked to foreign assets through the Overseas Voluntary Disclosure Programs and a threatening public relations campaign. While it justifiably targeted U.S. resident tax evaders, it simultaneously trapped Americans abroad who necessarily have foreign assets. The IRS’s one size fits all policy and bait and switch tactics led to abuses of Americans abroad which inspired sharp criticism from the National Taxpayer Advocate.
  • In 2010 FATCA was slipped into the HIRE bill with no debate in Congress and no cost/benefit
    analysis. FATCA aims to provide the door that closes the fiscal trap by requiring foreign financial institutions to report to the IRS on assets held overseas by U.S. persons. It effectively cuts off many Americans from foreign financial institutions which find it too onerous to maintain American clients. FATCA creates a barrier to free movement of capital and people.
  • In 2012 S.3457 proposed to grant the IRS the authority to have a U.S. passport cancelled or not issued if the IRS determined that the individual owed $50,000 or more U.S. tax.
  • In 2012 the Ex-patriot Act, S.3205, proposed to deny any “covered” expatriate re-entry into the United States, with retroactive effect for ten years prior to enactment of the law. The Reed
    Amendment of the 1996 Illegal Immigration Reform and Immigrant Responsibility Act already
    allows the United States to deny entry of former citizens into the United States.
  • In 2013, S.268 was introduced; it compounds difficulties created by FATCA.
  • In 2013 the Senate Finance Committee included in its tax reform recommendations a provision which would grant the IRS authority to cancel a U.S. passport for tax collection purposes.

This stream of legislation and proposals categorizes Americans abroad as suspected criminals seeking to escape U.S. taxes. Congress has outdone George III and has turned the United States into a fiscal prison, including legislation which is deemed anti-constitutional under the Fifth Amendment1 and is contrary to Articles of the Universal Declaration of Human Rights.2
The foundation of the U.S. fiscal prison is citizenship-based taxation. Americans working and living abroad carry a ball and chain of dual taxation throughout their entire lives up to and including death.

Americans abroad already pay taxes in the country where they reside and receive governmental services.

The additional U.S. tax obligation creates inevitable incompatibilities and discrimination and even requires Americans abroad to break foreign exchange control laws to pay U.S. taxes.

A revolution among long-term overseas residents is now underway. Five years ago, Americans abroad never talked about renunciation of citizenship. Today, it is a common topic in the press and among the community abroad. For more and more individuals, renunciation is the only solution to an intolerable situation created by the U.S. imposing its laws beyond its borders. The United States is literally destroying the community of Americans abroad, which plays an essential role in representing U.S. interests and goodwill overseas. The United States is shooting itself in the foot.

While the absolute number of renunciations, currently around 2,000 a year, is insignificant compared to the average annual U.S. citizenship naturalizations of 680,000, renunciations have multiplied seven times over the last four years. So far we have seen only the tip of the iceberg if CBT remains in force.

Today’s situation leads to serious hidden prejudice for the United States. U.S. exports are far below where they should to be because citizenship-based discourages U.S. companies from deploying U.S. citizens overseas to sell U.S. products; the law makes them too expensive. U.S. tax law and FATCA create insurmountable barriers for small and medium-sized companies to establish beachheads abroad to develop exports. The loss represents millions of U.S. jobs, hundreds of billions of dollars of exports, billions of dollars of U.S. tax revenue, and an unsustainable trade and budget deficit. Americans married to a foreign spouse, who represent about a third of the Americans resident abroad, now hesitate to register their children born abroad with the U.S. Embassy. The hot thing among young adults in their twenties is to renounce U.S. citizenship; they are aware of the impossible web of U.S. regulations that restrict job opportunities and personal freedom. Pushing away the young generation of Americans abroad is an immense loss to the United States. In prior generations, many highly educated multi-lingual American children returned to the United States, founded companies and created jobs in the U.S.

Adopting RBT will stop this revolution immediately. RBT law needs to be drafted in the spirit to allow free movement of individuals to leave and return to the United States, to reinforce the competitiveness of Americans and the United States overseas, to provide a simple, non-penalizing transition to RBT for the community of Americans already overseas, to ensure that Americans abroad are not subject to FATCA and FBAR, to adapt existing bilateral tax treaties and enter into new tax treaties so that withholding tax rates on U.S. source income are reasonable and to ensure that Americans abroad who have the majority of their assets in the United States (retirement funds, pension funds, real estate) are not disadvantaged under RBT with regard to either income or estate taxes.

I thank you for the opportunity to comment and hold high hopes that your bi-partisan efforts will lead to the constructive tax reform so necessary for Americans residing abroad.

Sincerely yours,
Jacqueline Bugnion”

 

Why is the United States imposing full U.S. taxation on the Canadian incomes of Canadian citizens living in Canada?

Cross-posted from citizenshipsolutions

by John Richardson

This is post is “based on” (not identical to) one of two submissions that I submitted in response to Senator Hatch’s request for submissions regarding tax reform.

__________________________________________________________

Why is the United States imposing full U.S. taxation on the Canadian incomes of Canadian citizens living in Canada?

The Internal Revenue Code mandates that ALL “individuals” , EXCEPT “non-resident aliens”, are subject to full taxation, on their WORLDWIDE income, under the Internal Revenue Code. The word “individuals” includes U.S. citizens regardless of where they live and regardless of whether they are citizens and residents of other countries where they also pay tax. This means that, by its plain terms, the United States imposes full taxation on the citizens and residents of other nations, because they are also (according to U.S. definitions) U.S. citizens. The United States is the only country in the world that has a definition of “tax residency that mandates full taxation based ONLY on citizenship.

How “U.S. citizenship” and U.S. “taxation” interact

Principle 1: The United States is one of the few countries in the world that confers citizenship based SOLELY on birth on its soil.

Principle 2: The United States is the ONLY country in the world that imposes full taxation ON THE WORLD INCOME of its citizens, REGARDLESS OF WHERE THE U.S. CITIZEN LIVES IN THE WORLD.

Bottom line: The United States is the ONLY country in the world that imposes full taxation, on WORLDWIDE income, based ONLY on the “place of birth”!

A practical example: A person whose only connection to the United States is that he was born in the United States, who lives in Canada (and may have never lived in the United States and whose only income is earned in Canada), is required to pay U.S. tax on that income.
This resident of Canada is treated AS THOUGH HE WAS A U.S. RESIDENT.
NOTE ALSO THAT THIS INDIVIDUAL IS REQUIRED TO PAY TAX TO CANADA! He is subject to “double taxation”. (This “double taxation” is only partially mitigated through “foreign tax credits”, tax treaties and the “foreign earned income exclusion”.)

Therefore: What academics and government officials refer to as “citizenship-based taxation” (they really don’t understand its practical effects) is PRIMARILY “place of birth taxation” and therefore a convenient way to impose U.S.
taxation on the citizens and residents of other countries. As a blog devoted to “citizenship taxation” (noting the difference between the theory and reality) points out:

“A supporter of citizenship taxation is someone who THINKS about “citizenship taxation”. An opponent of citizenship taxation is anybody who has tried to LIVE under citizenship taxation.”

How did this happen? It certainly didn’t start this way!

The evolution of “U.S. citizenship”

The result of legislative change and various U.S. Supreme Court decisions (primarily Afroyim ) has meant that “U.S. citizenship” is far easier to obtain and far harder to lose.

Furthermore, as people become more and more mobile, it is not unusual for somebody to have been “Born In The USA” but live outside the USA.
Global mobility is now the rule, rather than the exception.

The evolution of U.S. taxation and the Internal Revenue Code

The Internal Revenue Code has become more and more complex and impacts more and more activities of daily life.
Because “U.S. citizens” (even though they are citizen/residents of other
countries) are subject to U.S. taxation, they have been tremendously impacted by the “creeping complexity” of the Internal Revenue Code (which applies equally to ALL Americans wherever they may live).

This “creeping complexity” has evolved slowly through the years. The problems have been exacerbated because Congress does NOT consider that when amending the Internal Revenue Code they are impacting the lives of tax paying residents of other nations (who happen to be U.S. citizens).
Congress is “indifferent” to the plight of Americans abroad (indifference being one of the worst forms of abuse).

Through the years, slowly and consistently …

The evolution of the Internal Revenue Code combined with ease of retaining U.S. citizenship has built a “fiscal prison” (legislative brick by legislative brick), in which to keep the tax paying residents of “OTHER NATIONS”, who just happen to have been born in the United States.

Tax Reform 2017

The United States is “making noises” about “tax reform”. Senator Orrin Hatch requested submissions from “steak stake holders” on what should be included in tax reform. He has clearly received (as did the Ways and Means Committee in 2013 and the Senate Finance Committee in 2015) many suggestions advocating the repeal of “citizenship-based taxation”.

As noted at a site compiling the submissions of those affected by U.S.
extra-territorial taxation
:
Continue reading Why is the United States imposing full U.S. taxation on the Canadian incomes of Canadian citizens living in Canada?

2017 Residence Based Taxation Request To Chairman Hatch

cross-posted from TaxConnections Blog

SPECIAL REQUEST – PLEASE GO TO TAX CONNECTIONS & COMMENT THERE

THE SITE IS WIDELY READ BY TAX PROFESSIONALS AND WE SHOULD LET THEM KNOW WHAT WE THINK ABOUT THIS


by John Richardson
It’s tax reform season and Senator Orrin Hatch wants to hear from you (again).

As reported on the Isaac Brock Society and other digital resources for those impacted by U.S. taxes, you have until July 17, 2017 to tell Senator Hatch what you think needs to be changed in the Internal Revenue Code. After great deliberation, it occurred to me that people who either are (or are accused of being) U.S. citizens or Green Card holders living outside the United States, might want the USA to stop taxing them. After all, they already pay taxes to the countries where they reside. This is your opportunity to “Let your voices be heard” (well maybe).

Speaking of “tax reform”: Introducing Jackie Bugion

Jackie Bugnion is a U.S. citizen who has lived in Switzerland for many years. She has been a tireless advocate for “residence based taxation”. She worked with “American Citizens Abroad” for many years and has recently retired. She was recently honoured with the Eugene Abrams award by ACA – an event that was the subject of a post at the Isaac Brock Society – that described her many achievements (over a long career).

Jackie has returned with her 2017 submission to Senator Hatch.

Jacqueline Bugnion
Submission to Chairman Hatch’s request for tax reform proposals
Adopt residence-based taxation (RBT) for Americans resident overseas
The Senate Finance Committee and the House Ways and Means Committee have both cited the need to review the way that the United States taxes its citizens and green card holders who reside overseas. The current policy known as citizenship-based taxation (CBT) is increasingly called into question as it taxes Americans on their worldwide income irrespective of their residence, domestic or overseas. I am an American citizen who has resided overseas for 52 years, as my husband is a foreigner. I have personally observed the devastating consequences of CBT on Americans abroad and strongly urge Congress to adopt residence-based taxation (RBT).

What is RBT? Under RBT, the U.S. would tax its citizens and green card holders who reside abroad the same way that the U.S. currently taxes non-resident aliens, i.e. through taxation of U.S.-source income only. FDAP (Fixed, Determinable, Annual, Periodic) income would be taxed largely through withholding at source by the paying agent. Effectively connected U.S.-source earned income would be reported on Form 1040NR and taxed under U.S. income tax rules. Foreign-source income would not be taxable.

RBT would apply to all bona-fide overseas residents. RBT would be immediate and automatic, but would not be open to residents of Puerto Rico or to military and diplomatic personnel stationed abroad. As an obvious anti-abuse measure, RBT would not be available to residents of designated tax havens. RBT would not be compulsory; Americans abroad for a short period of time, such as academics on sabbatical, may opt to stay under CBT.

The rules for RBT are already in place as they apply to foreigners with U.S.-source income. Withholding taxes on FDAP U.S.-source income would lead to automatic, efficient tax collection. In fact, withholding tax at source would in certain circumstances shift taxation from foreign countries to the U.S.

Shifting from CBT to RBT would be close to tax revenue neutral. Analysis of the IRS 2555 statistics, relating to the foreign earned income exclusion reported by overseas Americans, shows that a significant share of wages and salaries of the highest income groups is U.S.-source, and hence would continue to be taxed by the U.S. under RBT. The top 1% income group account for more than 50% of all taxes paid. In addition, the U.S. today under CBT renounces most claim on tax liability on foreign earned income, by allowing foreign tax credits and the foreign earned income exclusion. These two factors and few minor ones, lead to a neutral tax revenue situation. Any possible difference between CBT and RBT would be utterly insignificant in the U.S. budget – less than 0.001% – so small that it could swing either way.

IRS enforcement costs under the current international tax system are disproportionate to revenue. The international tax forms create burdensome filing costs for taxpayers and create heavy administrative costs for the IRS; this is terribly inefficient when the vast majority of overseas taxpayers owe no U.S. tax.

Tax collected currently under CBT, other than that linked to U.S.-source income, comes from unacceptable instances of double taxation. Incompatibilities between the U.S. tax code and foreign tax systems lead to double taxation. The outrage of Boris Johnson, at the time Mayor of London, when the U.S. taxed the capital gain on the sale of his U.K. home illustrates this issue very well. There are numerous examples of differences between U.S. and foreign tax systems which penalize Americans abroad. To cite just a few:

IRS does not recognize foreign pension funds and therefore taxes all contributions; it treats income generated over the years as coming from a PFIC fund, guaranteeing a negative return.
U.S. legislates double taxation in the cases of the NIIT and the Additional Medicare Tax since neither allow foreign tax credits. This is particularly cynical since these taxes aim to finance U.S. medical care; Americans abroad pay into their foreign health programs and are excluded from the Affordable Care Act.
Some countries have a wealth tax on all net assets instead of a capital gains tax on securities investments. The U.S. taxes the capital gains, but does not allow foreign tax credits against this income.
Definitions of what is an income tax and what is a social security tax varies enormously from country to country, with onerous tax consequences for U.S. citizens abroad.
All OECD countries, except the U.S., have replaced sales taxes by VAT, which can range up to 20% of the price of goods and services purchased. The U.S. does not recognize VAT paid as compensation for the U.S. tax liability, even though it does accept deduction of U.S. state sales tax.
Entrepreneurs in countries without a totalization agreement are subject to double contributions to social security, in the foreign country and in the U.S.
Beyond the immediate issue of taxation, moving from CBT to RBT would have major advantages for Americans abroad, at essentially no cost or lost revenue to the U.S.:

CBT tax law and related FATCA asset and revenue reporting requirements amount to a bank lockout for Americans abroad. FATCA reporting rules imposed by the U.S. on foreign financial institutions, accompanied by draconian penalties for non-compliance, strongly discourage foreign banks from accepting American citizens as clients. In addition, the U.S. Patriot Act know-your-client requirements have effectively cut off Americans abroad from access to U.S. financial institutions. It is difficult to function without a bank account in today’s world.
FBAR and Form 8938 reporting requirements shut off employment and investment opportunities for Americans abroad. The FBAR requirement to report bank accounts with only signature authority eliminates jobs in financial positions. Foreign employers refuse to have their accounts reported to the United States, and such reporting is illegal in many countries. Form 8938 requires foreign companies in which an American holds 10% ownership to report this ownership to the IRS. This measure has shut out entrepreneurial and partnership opportunities for Americans overseas.
Consequently, the number of renunciations of U.S. citizenship is skyrocketing from a few hundred in 2008 to well over 5,000 in 2016. And this is just the tip of the iceberg. The blatant discrimination and unfair treatment of Americans abroad at the hand of their own government has created massive anger and frustration in the overseas community of more than 8 million Americans. The financial burden of compliance is far in excess of reporting requirements for U.S. residents and easily runs into the thousands of dollars, which is all the more ludicrous when the vast majority have no U.S. tax liability.

Adopting RBT meets three of the four tax reform objectives cited by Senator Hatch.

First, it provides relief to middle-class individuals and corrects major unfairness.
Second, it removes impediments and disincentives for savings and investments.
Third, it makes Americans abroad and therefore the United States more competitive in the global economy while preserving the tax base.
I thank you for your attention to the above.

Sincerely yours,

Jacqueline Bugnion

July 8, 2017

JACKIE BUGNION RECEIVES AWARD FOR EXCEPTIONAL SERVICE TO AMERICANS ABROAD

ACA confers Eugene Abrams Citizenship Award for 2017 on Jackie Bugnion

THE EUGENE ABRAMS CITIZENSHIP AWARD 2017 WINNER

Jackie Bugnion

excerpts from the ACA site:

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

The CFA Society, Switzerland sponsored debates on June 25 & 26, 2012 in Geneva & Zurich. Of particular interest is listening to the architect of FATCA, J. Richard (Dick) Harvey, Jr. For a fine review of this by Wellington (a Brocker who attended the debate in Zurich) please see callousness of Mr Harvey & the U.S. government .


full debate – 2 hours

 
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.

 

5 minutes
 

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.
 

8 minutes
 

JACKIE BUGNION SUBMISSION TO INTERNATIONAL TAX REFORM WORKING GROUP (W&M) APRIL 10, 2013

Jackie Bugnion writes the best arguments against citizenship-taxation ever

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.”
 

7 minutes

 

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.
 


12 min

 
ACA’s TAXATION OF AMERICANS ABROAD IN THE 21ST CENTURY:CITIZENSHIP-BASED TAXATION VS RESIDENCE-BASED TAXATION
TORONTO ONTARIO CANADA MAY 2 2014

We were lucky to meet Jackie at ACA’s Taxation of Americans Abroad in the 21st Century:
Citizenship-Based Taxation vs. Residence-Based Taxation
held in Toronto on May 2, 2014. The Isaac Brock Society posted live comments from Brockers present during the meeting. Dr.Stephen J. Kish was academic host for the meeting and John Richardson was the moderator for the debate.
She was delightful to work with and I am glad I had the chance to meet her. A video was made of the actual debate between Prof. Michael S. Kirsch & Dr. Bernard Schneider, “Citizenship-Based Taxation vs. Residence-Based Taxation
video is 2 hours
 
TAX ANALYSTS PUBLISHES “CONCERNS ABOUT THE TAXATION OF AMERICANS RESIDENT ABROAD” by JACKIE BUGNION AUG 24, 2015

“Permission is contingent on properly crediting the article to the author and to Tax Analysts as the original publisher. Using the PDF attached above covers proper attribution.”

“Concerns About the Taxation of Americans Resident Abroad” This article is a “must-read.” You will not find a clearer or better description anywhere.
 
 
RADIO INTERVIEW WITH GOLDSTEIN ON GELT – ALL YOU NEED TO KNOW ABOUT EXPAT TAXES, WITH JACKIE BUGNION SEP 13 2015


14 minutes

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.

Jackie’s reflection:

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.

Jackie:

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.

—-John Richardson, Toronto, Canada