Recently an excellent article Think you can leave the US? Think again!
appeared on the Thom Hartmann site.

Written by an expat laurainparis , it is one of the best summaries/sources of information available. This post is based on a comment to the article.
 

by John Richardson

*******
 
Laura, this is one of the very best articles I have seen about the reality of this situation.

At the outset, I would like to explain that what most people call U.S. “citizenship-based taxation” (sounds kind of patriotic) is the U.S. policy of “imposing worldwide taxtion on the “tax residents” of other countries who do NOT live in the United States” (which is what it really is). In other words, let’s call it like it really is. It is NOT restricted to “so called Americans abroad”. The vast majority of people impacted by this are the citizen/residents of other countries.

You explain what it means when the United States claims the right to impose “worldwide taxation” on the residents of other countries. This of course means (as you know first hand) that a resident of France must pay U.S. tax on his/her French income. In addition (as you point out) the penalty regime imposed on assets that are local to the resident of France but “foreign” to the USA are draconian and completely idiotic.

I would also like to point out that although this discussion is frequently framed in terms of “taxation”, what this is really about is the United States exporting the Internal Revenue Code to other countries. This exports certain U.S. cultural values, reporting requirements and penalties on those who “commit personal finance outside the United States”. In other words, this is about much more than taxation.

There was an attempt to effect change, but it failed

The previous comment above by “PetLover” outlined and reinforced many of your points. PetLover also commented on the efforts made by various groups to effect legislative change. These efforts failed.

I would like to comment on why (I believe) these efforts failed and suggest what should be done on a “going forward” basis.

Why the efforts on the part of Americans abroad failed

On an organizational level the efforts were led by “Republicans Overseas” and “Americans Citizens Abroad – ACA”.

On an “individual level”, hundreds of individuals affected by this wrote to the House Ways and Means Committee in 2013 and the Senate Finance Committee in 2015. I mean 100s!! In fact the largest number (by far) of submissions on International Tax Reform came from Americans abroad. These submissions were acknowledged but basically ignored.

Tax “reform” (if you want to call it that) came to fruition on December 22, 2017. It included benefits for corporations, a few temporary benefits for U.S. resident individuals, no effort to improve the situation for Americans abroad and a possible worsening of the situation for Americans abroad who are self-employed.

There is a suggestion that the new “transition tax” applies to the small businesses owned by indivdual Americans abroad. If this is true, the U.S government would (if you believe the compliance community) confiscate approximately 20% of the retained earnings of small businesses owned by certain Americans abroad. If this is true (and I do NOT agree with the prevailing sentiment in the tax compliance community), it would mean that NOT only did Congress NOT assist Americans abroad but they made it even worse for them! In my view, the possible applicability of the “transition tax” is the final straw and those who can afford to renounce U.S. citizenship need to renounce “quick time”. But, back to the question, why did the efforts fail?

1. It’ s about the message – After all this time, most people do NOT make the distinction between FATCA and “citizenship-based taxation” (which is the U.S. tax policiy of taxing residents of other countries). Some were urging the repeal of FATCA. Some were urging a change in U.S tax policies. FATCA and tax policies are not the same thing. In fact, if the U.S were to change its policy of imposing taxation on the “tax residents” of other countries, FATCA would be far less of a problem. This is becaue those who resided in other countries would cease to be U.S. “tax residents”.

FATCA is a law that essentially “hunts” for people who are U.S. “tax residents”. It is U.S. tax law that imposes “worldwide taxation” on the tax residents of other countries. The former is an extreme irritation. It’s the latter that makes life untenable for “tax residents” of other countries.

The focus should have been on changing the U.S. tax policies and less on the repeal of FATCA. But, this requires that people NOT treat “FATCA” and U.S. tax laws as being the same.

So, the message needed to be: Stop imposing U.S. “worldwide taxation” on the “tax residents” of other countriese who do NOT live in the United States!

2. Partisanship – The inability of Americans abroad to behave in a non-partisan way. FATCA may be a partisan issue. But, the U.S. policy of imposing “worldwide taxation” on the “tax residents” of other countries is NOT partisan at all. It’s been around since the 1800s (as the article points out).

3. If you don’t ask for what you want, you won’t get what you want: Neither of the primary organizations (Republicans Overseas nor ACA) made the simple and understandable request that:

“The United States stop imposing “worldwide taxation” on the “tax residents” of other countries who do NOT live in the United States.”

How the organizations framed the issue:

Republicans Overseas: Did not focus on the issue of “tax residency”. It did NOT ask that the United States stop imposing taxation on the residents of other countries. Rather, it asked that the United States stop imposing taxation on certain kinds of income earned regardless of residence (asking for territorial taxation for individuals). Republicans Overseas asked that income earned outside the United States be exempt from U.S. taxation. The focus was NOT on “who” was subject to U.S. taxation, but rather on “what” income was subject to U.S. taxation.

American Citizens Abroad- ACA: Did not ask that the United States stop imposing taxation on the “tax residents” of other countries. Rather it asked that certain individuals, under certain circumstances should be exempted from “worldwide taxation” imposed on “nonresidents”. (Keep “citizenship-based taxation” with a carve out for certain people.)

Don’t get me wrong. I DO applaud the efforts of both organizations. It’s just that neither organization asked specifically for the only acceptable solution. What is that solution?

“The United States MUST stop imposing “worldwide taxation” on the “tax residents” of other countries” who do NOT live in the United States!”

Going forward …

I believe that the world (organizations, individuals, foreign governments, etc.) MUST unite behind this SIMPLE principle. No “carve outs”. No exceptions. No confusing the issues. No suggestions that change is complicated. This is the only solution that makes sense. Furthermore, by framing the issue in this way, the real issue is being discussed. It’s direct. It’s clear. It’s honest. It demonstrates how outrageous the situation is. It’s non-partisan. There is NOT a single individual, organization or foreign government that would disagree with this. Because the issue becomes non-partisan, the partisan fighting should stop. There will be no “divide and conquer”. The message will be clear.
 
Individuals must commit to the overall principle even if they are not individually impacted by all of the aspects of the Internal Revenue Code

For example:

– individuals who do NOT have mutual funds should not say: I don’t have mutual funds. This does not specifically affect me, therefore it is not a problem;

– individuals who have not had to pay capital gains taxes on the sale of their homes should not say: This does not specifically affect me, therefore this is not a problem.

– individuals who do not have small business corporations, should not say: This does not specifically affect me, therefore this is not a problem.
– those individuals who identify strongly as U.S. citizens living abroad, should recognize the impact that U.S. tax policies have on their country of residence. They should not say, this doesn’t affect me, therefore this is not a problem.

– those individuals who are not impacted by the S. 877A “Exit Tax” should not say: If I renounce citizenship, I will not have to pay an “Exit Tax”. They should not say, I don’t have to pay the “Exit Tax” and because it doesn’t affect me, it is not a problem.

Until individuals impacted by outrageous and unjust U.S. policies, unite and support the principle, regardless of how these policies affect them individually, there will be no united voice (only isolated pockets of discontent).

Finally, U.S. citizens living outside the United States are going to have to do some “soul searching” and ask themselves a simple question:

Are they “free” individuals that are entitled to a level of dignity and human rights that individuals in other first world democracies are entitled to? Or are they satisfied to be Americans – essentially the property of the United States government. In other words, are they satisfied to have the lower level of human rights and dignity that are allowed to Americans. Sorry, in the 21st century, the United States is NOT a leader in human rights. Other countries have long since passed the USA in that regard.

The author of this superb article asks:

Q. Why should U.S. residents care? The answer is simple.

A. Because all U.S. residents need to understand their future is to see how the U.S. Government treats its fellow citizens abroad. Their only crime is to have pursued a life (often attempting to sell U.S. products) outside the United States!

 

 
 
 
 
Fortunately Virginia La Torre Jeker tweeted this earlier today; otherwise, I had not heard anything about this.
 


 
See below for description of meeting/testimonies. The site lists that a live video of the hearing will be available.

It states this is a “Full Committee Hearing” so it would seem fair game to contact any/all members of the SFC with your concerns/comments. We have been advised earlier than calling is more effective than emailing so telephone numbers are provided as well as Twitter handles and FB pages if available. Emailing seems to be possible only via a form on individual members’ websites however, we do have the assistants’ emails, likely more effective, from earlier campaigns(with thanks to Karen Alpert for latest version). I started by listing the two members who will present at the hearing followed by members of the relevant subcommittee – Subcommittee on Taxation and IRS Oversight. I will add the remaining members’ contact info after this post is up – there is precious little time left. I may also list contact information for the three witnesses (Bret Wells, Kimberly Clausing, Ph.D., Stephen E. Shay and Itai Grinberg).

https://www.finance.senate.gov/about/membership

Orrin Hatch

@GOPSenFinance
https://www.facebook.com/senatororrinhatch
Phone: 202-224-5251
James Williams james_williams@hatch.senate.gov

Ron Wyden
@RonWyden
Phone: (202) 224-5244
Fax: (202) 228-2717\
Victor Fleischer victor_fleischer@wyden.senate.gov


https://www.finance.senate.gov/about/subcommittees#taxation

Chairman
Rob Portman (R – OH)
@senrobportman
“https://www.facebook.com/senrobportman
Phone: 202-224-3353
Zachary Rudisill zachary_rudisill@portman.senate.gov

Ranking Member
Mark R. Warner (D – VA)
@MarkWarner
https://www.facebook.com/MarkRWarner
Phone: 202-224-2023
Maureen Downes maureen_downes@warner.senate.gov

Republicans

Mike Crapo (ID)
@MikeCrapo
https://www.facebook.com/mikecrapo
Phone: (202) 224-6142 (skype)
Fax: (202) 228-1375 (“)
Mike Quickel mike_quickel@crapo.senate.gov

Pat Roberts (KS)
@SenPatRoberts
https://www.facebook.com/SenPatRoberts
Phone: 202-224-4774
Fax: 202-224-3514
Chris Allen chris_allen@roberts.senate.gov

Michael B. Enzi (WY)https://w
@SenatorEnzi
https://www.facebook.com/mikeenzi
Phone: (202) 224-3424
Fax: (202) 228-0359
Toll-Free: (888) 250-1879
Bart Massey bart_massey@enzi.senate.gov

John Cornyn (TX)
@JohnCornyn
https://www.facebook.com/SenJohnCornyn
Phone: 202-224-2934
Andrew Siracuse andrew_siracuse@cornyn.senate.gov

John Thune (SD)
@SenJohnThune
Phone: (202) 224-2321
Fax: (202) 228-5429
Toll-Free: 1-866-850-3855
Mark Warren mark_warren@thune.senate.gov

Richard Burr (NC)
@SenatorBurr
https://www.facebook.com/SenatorRichardBurr
P: (202) 224-3154
F: (202) 228-2981
Natasha Hickman natasha_hickman@burr.senate.gov

Johnny Isakson (GA)
@SenatorIsakson
Phone: (202) 224-3643
Fax: (202) 228-0724
Monica McGuire monica_mcguire@isakson.senate.gov

Patrick J. Toomey (PA)
@SenToomey
https://https://www.facebook.com/senatortoomey
Phone: (202) 224-4254
Fax: (202) 228-0284
Richard Morgan richard_morgan@toomey.senate.gov

Tim Scott (SC)
@SenatorTimScott
https://https://www.facebook.com/SenatorTimScott
Phone: (202) 224-6121,
Toll Free: (855) 425-6324
Fax: (202) 228-5143
Spencer Pederson spencer_pederson@scott.senate.gov

DEMOCRATS

Thomas R. Carper (DE)
@SenatorCarper
https://www.facebook.com/tomcarper
Phone: (202) 224-2441
Fax: (202) 228-2190
Chris Prendergast chris_prendergast@carper.senate.gov

Benjamin L. Cardin (MD)
@SenatorCardin
https://www.facebook.com/senatorbencard
Phone: (202) 224-4524
Fax: (202) 224-1651
Beth Bell beth_bell@cardin.senate.gov

Claire McCaskill (MO)
@McCaskillOffice
https://www.facebook.com/senatormccaskill
Phone: (202) 224-6154
Fax: (202) 228-6326
Elizabeth Herman elizabeth_herman@mccaskill.senate.gov

Robert Menendez (NJ)
@SenatorMenendez
https://www.facebook.com/senatormenendez
Phone:202.224.4744
Fax: 202.228.2197
Jason Tuber jason_tuber@menendez.senate.gov

Michael F. Bennet (CO)
@SenBennetCO
https://www.facebook.com/senbennetco
Phone: 202-224-5852
Fax: 202-228-5097
Brian Appel brian_appel@bennet.senate.gov

Robert P. Casey, Jr. (PA)
@SenBobCasey
https://www.facebook.com/SenatorBobCasey
Phone: (202) 224-6324
Fax: (202) 228-0604
Livia Shmavonian livia_shmavonian@casey.senate.gov

Maria Cantwell (WA)
@SenatorCantwell
https://www.facebook.com/senatorcantwell
Phone: (202) 224-3441
Fax: (202) 228-0514
Artie Mandel artie_mandel@cantwell.senate.gov

*******

HEARINGS
Full Committee Hearing
International Tax Reform
Date: Tuesday, October 3, 2017 Add to my CalendarTime: 10:00 AM Location: 215 Dirksen Senate Office Building

Check back for live video of this hearing

Member Statements
Orrin G. Hatch (R – UT) Ron Wyden (D – OR)
Witnesses

Bret Wells
Professor Of Law And George Butler Research Professor Of Law, Law Center
University of Houston
Houston , TX

Kimberly Clausing, Ph.D.
Thormund A. Miller And Walter Mintz Professor Of Economics
Reed College
Portland , OR

Stephen E. Shay
Senior Lecturer On Law, Harvard Law School
Harvard University
Cambridge , MA

Itai Grinberg
Professor Of Law, Law Center
Georgetown University
Washington , DC

How do I submit a statement for the record?
Any individual or organization wanting to present their views for inclusion in the hearing record should submit a typewritten, single-spaced statement, not exceeding 10 pages in length. Title and date of the hearing, and the full name and address of the individual or organization must appear on the first page of the statement. Statements must be received no later than two weeks following the conclusion of the hearing.

Statements should be mailed (not faxed) to:

Senate Committee on Finance
Attn. Editorial and Document Section
Rm. SD-219
Dirksen Senate Office Bldg.
Washington, DC 20510-6200