Let's start with the "self evident truth" that US citizenship - conferred mostly by birth and the US constitution - has attributes making it superior to other citizenships. What are those attributes? What obligations/rights do they imply? Voting? Taxation? Military service? ???
Recent discussions have identified voting and taxation as inseparably linked with US citizenship. Many have suggested that voting, taxation and the rights and obligations of citizenship are somehow linked. Is this true? Was it ever true? What is the source of a right/obligation?
A constitutional right is different from a right created by statute. A constitutional right exists to put the right beyond the reach of governments. In other words, the right exists, no matter what the gov of the day says. Statutory rights: created by and can be changed by gov.
In the USA citizenship (for those born in the USA) is a constitutional right - as per the 14th amendment. This is confirmed by the US Supreme Ct decision in Afroyim v. Rusk. Court told US Gov: "Stop stripping Americans of their US citizenship!" Not perfect, but a starting point.
Query: If US citizenship is a constitutional right, can US citizens be forced to pay a fee because of it? Can the payment of fees be an obligation of US citizenship? Not sure of the answer, but the question should be asked.
Voting: To be clear US citizens have NO constitutional right to vote. There is nothing in the Constitution that gives direct voting rights to US citizens. constitutioncenter.org/interactive-co…
Voting is under the control of individual states. Sometimes US citizens have a statutory right to vote and sometimes not. Some Americans abroad have the right to vote and some do not. (Yet ALL Americans abroad are required to pay tax to the USA.)
The most that could be said (I think) is that US citizenship "may" be a sufficient but not a necessary condition to vote in certain states at certain times. (Issue is not current state of law, but what law could be.)
Possible conclusion: There may not be any legal or constitutional relationship between voting and citizenship. Possible question: But, does a statutory right allowing citizens to vote in some cases provide the basis for a statutory obligation to pay taxes in ALL cases?
There is NO connection whatsoever between voting and taxation. There can easily be a right to vote but no obligation to pay taxes (example all CDN expats). There can be an obligation to pay taxes but no right to vote (some US expats). Time to stop assuming linkage of vote and tax
Remember that US citizenship is a constitutional right. Voting and taxation are creations of statute. Question: Does it make sense to discuss constitutional rights and statutory rights/obligations as presumptively linked?
Possible conclusion: Citizenship, voting and taxation have nothing to do with each other. Each is a separate topic and there is no presumptive linkage.
Possible question: Given that US citizenship is a constitutional right, can that constitutional right be used to subject #Americansabroad to the twin horrors of #FATCA and @citizenshiptax? Can @taxresidency be defined in terms of a constitutional right? Question should be asked.
#Americansabroad are being constructively forced to renounce US citizenship bc of US @taxresidency rules, coupled with separate tax system for #Americansabroad, that burden the constitutional right of citizenship. This is a fact (or should I say the #FATCA of the matter).
In summary: citizenship, voting and taxation are independent issues. They need to be considered as such. Reminder: citizenship is a constitutional right. Maybe it should be respected as such.
Important to understand Hurd bill - H.R. 4501 - is NOT restricted to a Papal exemption on foreign source income. It’s an exemption from Subtitle A of the IRC which is exemption from tax on ALL income (including US source). But this will NOT solve Pope Leo’s problem because … 1/
Hurd bill - H.R. 4501 - does not include an exemption from Subtitle F of the IRC which is where all the penalty laden foreign asset reporting requirements live. But exempting the Pope from Subtitle F would not be a complete solution bc … 2/
Hurd bill - H.R. 4501 - does not include an exemption from 31 U.S.C. 5314 AKA @InFBARWeTrust. Mr. #FBAR is a much bigger issue for the Pope and the Church than the Internal Revenue Code. … 3/
Interesting and motivating ... Frequent references to the fact that the fight to repeal WEP and GPO has been going in since 1983 (40 years). Adovacy is difficult!
Principle 7 - understanding what the #endingdoubletaxation of #Americansabroad means:
It's critical to understand how US @citizenshiptax makes it harder and more expensive for U.S. companies to hire U.S. citizen employee/managers/executives. Nobody understands this better than Jim Gosart - @jgoshksk ...
Principle 6 - understanding what the #endingdoubletaxation of #Americansabroad means:
The biggest obstacle to change to the US @citizenshiptax extra-territorial tax regime is NOT Congress or Treasury
The biggest obstacle to change is (amazingly) #Americansabroad as a group.
Because, @citizenshiptax affects different people very differently, it is hard to (1) define the problem (people understand it in how it affects them) and (2) willingness to actively campaign for change.
All #Americansabroad must come together to demand the severance of citizenship from @taxresidency.
Let's consider different groups and imagine how
@citizenshiptax affects members of those groups. Those with their financial center of gravity in the US might object to the compliance/filing requirements. But are not likely to experience the destructive affects of having a financial center of gravity outside the USA.
Least impacted: 1. Those who retired in the USA and moved abroad 2. Wealthy Americans who move abroad 3. Employed expats who are temporarily abroad.
Most impacted: 4. Emigrants living permanently abroad 5. Accidental Americans who file U.S. taxes
Could go either way: 6. Digital nomads (often use FEIE to avoid paying tax anywhere).
The key point is that because @citizenshiptax impacts people in different ways it is hard to get universal support for severing citizenship from @taxresidency.
Most people want their specific problem solved but are NOT supporters of completely ending the extra-territorial tax regime.
Principle 5 - understanding what the #endingdoubletaxation of #Americansabroad means:
Starting in "Principle 1" I explained that the problem of the #doubletaxation of #Americansabroad exists in relation to non-US income sources received by individuals who do NOT live in the USA (AKA #Americansabroad.
Key point: If @USCitizenAbroad does NOT have non-US income sources and assets, the US @citizenshiptax will be experienced mostly as filing a US tax return while living outside the USA. From that perspective it's easy to see why non-resident US citizens with US income sources and assets are not hugely impacted by US #citizenshiptaxation.
Let's be a bit more precise. Imagine you have a @USCitizenAbroad with an investment portfolio of US stocks, US Social Security or a US pension. Even if taxed by the non-US country, the US generally has first right of taxation (it's US source income). US will NOT impose punitive taxation bc it's US source income. (The other country will generally provde a credit for US tax paid.
Now let's consider a @USCitizenAbroad with a non-US investment portfolio (possibly including non-US mutual funds), non-US pension, small business corp located outside the USA the situation is the opposite of having all US based assets. The non-US country has first right of taxation. The US will then impose very punitive taxation, reporting and penalties because it is "foreign income and assets". #PFIC, #GILTI, #Form5471, #Form8938, #Form8621, etc. - denial of foreign tax credits ...
Clearly US @citizenshiptax allows those WITH US asset
Second, the lost opportunity of not being able to participate in retirement and financial planning programs created by their country of actual residence:
Third, the horrible fees to tax preparers to prepare (often incorrectly) US tax returns. It is obvious that compliance costs should be considered a separate tax on UScitizenship.
Fourth, the inability to have access to normal banking, brokerage and investment accounts. US Treasury denies this is happening. But, I have people all over the world #renounceuscitizenship in order to free them from this US @citizenshiptax imposed disability.
Fifth, who in their right mind would engage in business opportunities with a U.S. citizen partner. Would you want to have your banking info reported to the IRS