Paul L. Caron
Dean




Wednesday, March 25, 2015

Kirsch, Schneider Debate Citizenship-Based Taxation v. Residence-Based Taxation

ACAThe American Citizens Abroad Global Foundation has released a new video aimed at breaking down the merits of Residence-based taxation in a clear and simple way for key decision makers and the public:  21st Century Taxation of Americans Abroad: Citizenship-based Taxation vs. Residence-based Taxation

https://taxprof.typepad.com/taxprof_blog/2015/03/kirsch-schneider-debate-.html

Scholarship, Tax, Tax Conferences | Permalink

Comments

Here is real life context missing from the debate between two academics discussing in theory what is being experienced in real life by real people - those whose voices are not being heard or acknowledged:
https://vimeo.com/citizenshiptaxation/videos

These are real people telling it like it really is.

Posted by: ExUS | Apr 14, 2015 9:58:55 PM

ExUS, any Congressman voting for relief for the people you describe would become the victim of campaign attack ads claiming he voted for tax breaks for fat cats. A similar fear explains the passage of the current law. Even though the law's defects are now apparent to all, very few in Congress have sufficient courage and honesty to vote their consciences on this issue.

Posted by: AMTbuff | Mar 26, 2015 12:28:18 AM

Thanks, ExUS, for so eloquently pointing out *what is missing from the video - and which would have provided balance and real life perspective, are the many informed and informative comments and questions from the audience who attended the day long event*. As the cost of travel to Toronto was prohibitive for me, I was unable to attend the ACA Global Foundation forum and have waited for the promised video, now disappointed that it was so edited. I know there were attendees (you?) there who asked these pertinent questions on my family's behalf. You so well explained the immoral absurd dilemma and real-life consequences for those entrapped into the costs of yearly compliance -- because without *requisite mental capacity*, they are unable to renounce the US-defined US citizenship they automatically acquired, a US citizenship never acknowledged by the parent(s) and never of any benefit to the person living and benefiting in the country of his or her residence. On top of that is the inconceivable fact that a parent, a guardian or a trustee does not have the right to act on such a person's behalf, even with a court order.

So, my and many other families will wait for the answer to the question you ask:

On what ethical, just, legitimate or logical basis then are children and disabled dependents outside the US being punitively and extraterritorially taxed by the US on their NON-US savings, benefits and grants provided by NON-US families, NON-US sources and NON-US taxpayers?

Will anyone in the US government come forward with the answer?

My deep appreciation for your comment!

Posted by: calgary411 | Mar 25, 2015 3:50:13 PM

It would be fascinating to see US tax lawyers and academics debate the ethics and rationale of the lifelong US taxation and bondage of those living outside the US (many born dual citizens of the NON-US country where they live) deemed too legally incompetent (due to mental, neurologic, developmental disabilities - whether congenital or chronic) to renounce the US citizenship they inherited at birth, yet held responsible as a 'US taxable person' forever. And paying the price lifelong through the US extraterritorial taxation on their scarce NON-US disability savings and benefits - which they must rely on for support - (support which the US does not provide to them). These are the most vulnerable in society, along with children. And yet, the US demands that they forfeit a portion of their very limited disability income to pay off the US national debt. A debt which they had no part in, and can never benefit from where they live outside the boundaries of the US.

Related to that is that the US does not allow any tax deductions in recognition of the supports and costs incurred by parents deemed 'UStaxableperson' parents for the support of their disabled or minor dependents IF they are NOT also US citizens.

So, the US tells UStaxableperson parents and guardians living outside the US that their children do NOT count and are not important unless they too are deemed US citizens. US residents in the US can enjoy deductions and benefits for their children raised inside the US even if they are not US citizens, but our children living 'abroad' don't count.

Posted by: ExUS | Mar 25, 2015 2:42:29 PM

What is missing from the video - and which would have provided balance and real life perspective, are the many informed and informative comments and questions from the audience who attended the day long event. The audience was comprised of people living outside the US - most/many of whom are Canadian citizens resident in Canada who are also deemed 'UStaxableperson/citizens' and their NON-US family members, for whom the issues under discussion are a matter of significant anxiety, depression, anger, and which carry significantly life changing repercussions.

What does it say about the US and US extraterritorial taxation that an audience full of those living entirely outside the US - many of whom may never have lived in the US, many of whom therefor cannot register to vote from 'abroad' yet are claimed by the US, have no voice at all and no true representation - and yet, only theorists and academics (one of whom is ex-IRS and has a vested interest as a US resident homelander http://law.nd.edu/directory/michael-kirsch/ ) are allowed a stage. The room in Toronto, Canada was packed all day, there was lively discussion, lively questioning, and valuable commentary - but none of that is apparent in the footage of only these two speakers.

The speakers also did not address the questions of glaring human rights violations apparent in the US practice of taxing the disability and education savings and non-US government benefits belonging to those with no US economic connection, living entirely outside the US and yet deemed 'US taxable persons' - without even the legal ability to renounce. Those deemed legally incompetent can never renounce under US law, and minors are also prevented until they can demonstrate mature understanding of renunciation. The US IRS urges US residents to save for college, for disability, and for old age, yet punitively taxes those very same equivalent NON-US government lifelines outside the US as 'taxable foreign trusts' (ex. Canadian Registered Disability Savings Plans and Registered Education Savings Plans). Minors cannot vote, and often their only US connection is an accident of where their mother gave birth, or the random accident of the citizenship held by a parent. Parentage and birthplace are not taxable events anywhere else in the world (except perhaps Eritrea).

Those deemed legally incompetent, born, and or living outside the US are doomed to be extraterritorially and punitively taxed by the US for life, without remedy or recourse, and yet have no capacity to understand citizenship, to exercise any of its 'benefits', and cost the US nothing, as their savings and grants are being provided by NON-US taxpayers in the NON-US country where they live. Minors in the US enjoy US tax breaks as part of social policy - designed to encourage education and training, but minors outside the US who the US claims as 'US taxable persons' are taxed extraterritorially on their education savings and grants, by the US - which imposes a US extraterritorial burden on any attempts to save for the very same type of education that inside the US is supported as a social good.

Neither group can vote, neither has any voice inside the US or representation. Neither group can possibly be the billionaire tax-evading US residents that the FBAR and FATCA are purported to be designed to target. If one is legally incompetent then one cannot be 'willfully' evading tax. If one is too legally incompetent or immature to understand citizenship sufficient to be allowed to renounce, then it stands to reason that they are also too incompetent to be tax evaders and criminals - yet, FINCEN (Financial Crimes Enforcement Network) instructions online are that children are to file their own FBARs (for example, on their birthday savings and educations savings accounts held legally and registered with the country where they live - outside the US).

Professor Kirsch did not explain how one could possibly 'benefit' from and participate in US citizenship/ from afar, while being unable to vote, unable to comprehend citizenship, receiving no US financial support or benefits, and with no US economic connection.

On what ethical, just, legitimate or logical basis then are children and disabled dependents outside the US being punitively and extraterritorially taxed by the US on their NON-US savings, benefits and grants provided by NON-US families, NON-US sources and NON-US taxpayers?

Posted by: ExUS | Mar 25, 2015 2:17:56 PM