“Tax Cheats by Birth” – Submission to Global Forum


A submission to the Global Forum on Transparency and Exchange of Information for Tax has been made on behalf of The Alliance for the Defeat of Citizenship Taxation (ADCT) by Mary Blackhill.

Tax Cheats by Birth reports on CBT’s “extensive mismatch with the tax regimes practiced in the rest of the world, the impact on “U.S. Persons,” and how CBT drains money from other economies throughout the world.

The paper demonstrates how CBT is inconsistent with global norms, is inconsistent with human rights (and the United Nations Declaration of Human Rights) and why other countries should not be expected to assist the United States enforce U.S. tax demands.

The submission was forwarded to the Forum by ADCT with the following e-mail from John Richardson:
To Whom This May Concern:

The last five years have seen significant interest in taxation in general, international taxation, offshore accounts and the identification of all income that is properly subject to taxation.This interest has resulted in voluntary disclosure programs throughout the world, FATCA and the OECD Common Report Standard. The recent disclosure of the “Panama Papers” appears to have reinforced interest in collaboration in the fight against tax evasion.

All of this has resulted in a world that is working together, promoting automatic information exchange and a worldwide standard for what is “fair taxation”. A common goal presupposes agreement on the fundamentals of what is fair and just taxation.

Fair and just taxation requires that people pay taxes to the countries where they reside. This principle is reflected in the OECD common reporting standard. Fair and just taxation is undermined when the residents of a country are also required to pay taxes to other countries for reasons that are unrelated to the source of the income.

There are few countries that confer citizenship based on place of birth in that country. There are only two countries that impose taxation based on citizenship. The United States of America is the only country that does both. This means that the the United States, imposes taxation on individuals based on the immutable characteristic of a U.S. “place of birth”.

What this means is that the United States expects that every person in the world who was born in the United States (the primary way of obtaining U.S. citizenship”), is required to pay taxes to the United States on their worldwide income. The requirement to pay taxes includes the requirement to file massive information returns on their activities and income in their one’s country of residence. Furthermore, the complexity of the U.S. anti-deferral regime results in the imposition of punitive taxation and reporting on the pensions and retirement planning vehicles of other nations.

Many people who were born in the United States are citizens and residents of other nations (in many cases having no connection to the United States and not even speaking English). This is an incredibly unfair and unjust situation. Furthermore, while the United States has not signed the OECD Common Reporting Standard (which has a definition of residence for tax purposes) it is attempting to impose FATCA on the world (which allows the United States in its sole discretion to define who is a U.S. citizen).

To be clear, U.S. “place of birth taxation” impacts both individuals and the economies of sovereign nations (resulting in the extraction of capital from those nations).

Attached for your perusal is a research paper. I invite you to read this research paper which is an attempt to explain some of these issues.

We strongly urge you to consider the adoption of a standard of fairness in worldwide taxation. We urge you to clarify that this standard should be in opposition to taxation based on solely on having having U.S. citizenship conferred on somebody at birth. In other words: fairness in worldwide taxation means that individuals should be subject to taxation based on where they live and NOT where they were born.

I would welcome the opportunity to discuss these issues with you further. 

John Richardson
Toronto, Canada
The Alliance For The Defeat Of Citizenship Taxation