The United States of America – Where citizenship and taxation become one
There are few countries which confer citizenship based on the sole fact of “being born” inside a country. There are only two countries that impose taxation based on citizenship. The United States is the ONLY country that does both. Therefore, all U.S. citizens are subject to U.S. taxation:
1. Wherever they may reside in the world; and
2. On their worldwide income.
It’s unjust, it’s inhumane, I didn’t choose where I was born
As you know, the United States is using FATCA to hunt the world for people the U.S. “deems” to be U.S. citizens. FATCA Hunt is primarily a hunt for those born in the United States.
The vast majority of people regard “citizenship taxation” as profoundly unjust. The problem is compounded by the fact that many people born in the United States do NOT consider themselves to be U.S. citizens.
To put it another way, the United States is forcibly imposing “U.S. citizenship” on people who have NO connection to the United States other than having been born there. A recent visible and public example was the situation of the “Border Town of Stanstead, Quebec“. Even President Obama’s 2016 Budget Proposal recognized the absurdity of the situation and recommended that those “accidental Americans” should be able to extricate themselves from the “U.S. Extraterritorial Tax Net” at little or no cost. In an earlier post, I suggested that:
I believe that this proposal is VERY significant. It indicates that the administration accepts that there is a difference between a “technical definition of U.S. citizenship” and U.S. citizenship in a meaningful sense. For many, the use of U.S. passport is NOT an affirmation of U.S. citizenship. It is simply regarded as a “travel document”.
Put another way, it suggests that the administration is coming around to the idea that taxation is NOT appropriate unless there is a substantive connection to the United States.
The Obama budget proposal is clearly NOT a retreat from U.S. “citizenship-based taxation”. It is simply a recognition that NOT all people born in the U.S. have ties to the U.S. that could justify taxation.
But, why should those who were NOT born dual citizens, but who ARE dual citizens be excluded? It’s quite possible that they may also have had “minimal contact with the U.S.” and have fewer ties to the U.S. than those born with dual citizenship.
I predict that this is the beginning of a dialogue that will eventually result in residence based taxation.
(An excellent discussion of this issue took place at the Isaac Brock Society.)
Setting people free from the chains of “unwanted U.S. citizenship”
Everybody acknowledges that the intersection of U.S. tax laws and U.S. citizenship laws have created a “nightmare” for millions of people (and their families) around the world. There is growing recognition of the reality and the problems of “accidental Americans” (those who have on connection to the United States except for birth). Of course they have problems with U.S. taxation. But, they they have a second problem. That problem is that they:
Do NOT consider themselves to be U.S. citizens at all. They say, “What, I’m not a U.S. citizen”. The U.S. says:
“You are our citizen”.
Surely, “citizenship” must require some degree of consent. Both the United Nations (Declaration of Human Rights) and the U.S. Supreme Court (beginning with the Afroyim decision) recognize that INDIVIDUALS have both rights OF citizenship and right to NOT be a citizen.
A recent post at the Isaac Brock Society, noted that:
1. There is a lawsuit against FATCA.
2. It is likely that there will be a lawsuit against certain aspects of “citizenship taxation”.
That post suggests that it’s time to consider a third lawsuit. This lawsuit would challenge the “forcible imposition of U.S. citizenship” on both “Accidental Americans born inside the United States” and any person who was NOT born in the United States. This idea raises the following question.
“Why should the U.S. attempt to forcibly impose U.S. citizenship on “accidental Americans”?
The following letter that has been sent to President Obama provides the answer to this question. I recommend it to all.
The world is an interesting place.