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Regarding Citzenbased Taxation and comments on a radio cast interview of a Professor from Notre Dame
You may find this interview by going to this link.
http://isaacbrocksociety.ca/2014/08/16/nd-law-professor-michael-kirsch-explains-the-rationale-for-u-s-taxation-of-americansabroad/#comments
Here is one of the comments on this link. BTW.. I have met Professor Kirsch.
https://twitter.com/USCitizenAbroad/status/500779752702353408 Notre Dame law professor Michael Kirsch defended citizenship-based taxation at the May 2, 2014 ACA Conference on citizenship-based taxation. Here is a very recent interview with him. Listen carefully to his rationale.
Kirsh is pretty much a fuzzy-thinking and intellectually lazy stuffed shirt. He has very broad and fuzzy ideas about “belonging to a community” justifying tax but never focuses on what tax is, what it is used for and why we have tax in the first place. In the US, despite its in extremis civil war origins, it was in fact unconstitutional and ALL taxes contemplated by the constitution of the Founders could, by their nature, only apply to residents. If, for example, tax were something inherent in citizenship, then why is taxation imposed on non-citizens resident in the US? For a country founded on the collective rejection of taxation without representation, the whole ex-post-facto justification of the system is more than a bit rich. Income tax and the 16th amendment were passed in an era of political reaction to robber barons and extreme DOMESTIC income inequality. None of this had any intellectual foundation in any of Prof. Kirsh’s fuzzy “community” ideas. I guarantee you that not a single moment of thought or debate was directed at non-resident citizens when the 16th Amendment was proposed, debated and ultimately passed by the states. CBT was a simple instance of copying from the civil war antecedent because draftsman like precedents to work from. The civil war antecedent was both unconstitutional and clearly put in place in extremis and in reaction to draft dodging (back then, you could buy your way out of military service – the tax system simply institutionalized that dubious practice).
He is also intellectually inconsistent. He seems to consider CBT to be founded in part on continuing, voluntary membership in the community and then concedes immediately that there are huge costs (“that need to be looked at”) for those trying to un-volunteer (which puts paid to the idea that membership is voluntary) and also noting that unwitting volunteers have been awarded their unwanted and un-shakeable membership in the community because the overseas advocates of inclusive citizenship laws would make it hard to exclude from citizenship those who find the tax oppressive. He favours the principle of CBT but then freely admits it is badly constructed and all kinds of unspecified changes are needed to apply it fairly to people in places like Canada that are already paying more in tax than their similarly situated domestic counterparts..
I would suggest, Prof. Kirsh, that if you constructed an “ideal” system, you would find that it would simply not apply to anyone and would raise zero to no revenue unless it were applied so cynically and capriciously to a handful of whales as to amount to little more than base extortion dressed up in the garb of principle. If your income tax system taxes citizens AND residents in your own country, then you have to admit that all others can (and arguably should) do the same. Since the tax systems of each country are differently constructed and never mesh completely, any bona fide attempt to avoid double taxation would result in either undue complexity or outright exemption to the point where the effort put into designing the system would be meaningless.
The simple and unarguable fact of the matter is that (i) overseas citizens have exactly zero effective input into the laws which affect them – this is not merely being bound by laws that one doesn’t like, this is utter and institutional powerlessness to have ANY influence over them even if 100% of overeseas citizens voted and voted as a bloc; (ii) substantially every US law applied to overseas citizens has been drafted without any material care being taken as to the impact upon them; and (c) the net result of (i) and (ii) is a system which, if applied consistently to 100% of its intended audience, would be crushingly oppressive, bankrupting or financially destroying millions to say nothing of leaving them open to penal and other sanctions despite having, by and large, borne a larger tax burden than comparable homeland Americans.
The two concepts of FBAR and PFIC’s demonstrate adequately my point (ii) above. The statute creating FBAR’s (31 USC 53) explicitly orders the Secretary of the Treasury to draft the regulations so as to avoid unduly burdening overseas Americans and to design them to acheive the anti-money laundering anti-crime objectives. Full power to exempt countries wholesale exists as does the power to exempt “same country” reporting by long-term residents. Instead we have a “form and fine” system that costs billions in compliance costs to overseas citizens, opens them to massive and arbitrary penalties and is in no way related to the objectives of the statute. call it negligence or malice- the outcome is still injustice. PFIC’s – designed to deal with a fairly obvious tax loophole in the purely DOMESTIC context were simply imposed en bloc across the globe to all “citizens”. The fact that non-resident citizens can’t buy US mutual funds (and US residents can’t buy foreign ones) should have been obvious. Ten seconds of drafting to exempt mutual funds and ETF’s registered with any of a thousand recognized securities regulators with whom the SEC does business could easily have averted a punitive train wreck of rules unleashed thoughtlessly and with massive negative impact uniquely on non-resident citizens. The list goes on.
I would suggest that overseas victims of CBT need do no more than demonstrate – as any child could do in minutes – that THIS system is so overwhelmingly unfair and negligently if not maliciously designed as to be unable to be defended by any right-minded person hailing from a country that continues to sytle itself as the land of the free. No victim bears the burden of designing a better yoke to be placed under.
Prof Kirsh can’t defend a turd on the basis that its ingredients might be assembled into a croissant in heaven. It’s still a turd.
Kirsh is pretty much a fuzzy-thinking and intellectually lazy stuffed shirt. He has very broad and fuzzy ideas about “belonging to a community” justifying tax but never focuses on what tax is, what it is used for and why we have tax in the first place. In the US, despite its in extremis civil war origins, it was in fact unconstitutional and ALL taxes contemplated by the constitution of the Founders could, by their nature, only apply to residents. If, for example, tax were something inherent in citizenship, then why is taxation imposed on non-citizens resident in the US? For a country founded on the collective rejection of taxation without representation, the whole ex-post-facto justification of the system is more than a bit rich. Income tax and the 16th amendment were passed in an era of political reaction to robber barons and extreme DOMESTIC income inequality. None of this had any intellectual foundation in any of Prof. Kirsh’s fuzzy “community” ideas. I guarantee you that not a single moment of thought or debate was directed at non-resident citizens when the 16th Amendment was proposed, debated and ultimately passed by the states. CBT was a simple instance of copying from the civil war antecedent because draftsman like precedents to work from. The civil war antecedent was both unconstitutional and clearly put in place in extremis and in reaction to draft dodging (back then, you could buy your way out of military service – the tax system simply institutionalized that dubious practice).
He is also intellectually inconsistent. He seems to consider CBT to be founded in part on continuing, voluntary membership in the community and then concedes immediately that there are huge costs (“that need to be looked at”) for those trying to un-volunteer (which puts paid to the idea that membership is voluntary) and also noting that unwitting volunteers have been awarded their unwanted and un-shakeable membership in the community because the overseas advocates of inclusive citizenship laws would make it hard to exclude from citizenship those who find the tax oppressive. He favours the principle of CBT but then freely admits it is badly constructed and all kinds of unspecified changes are needed to apply it fairly to people in places like Canada that are already paying more in tax than their similarly situated domestic counterparts..
I would suggest, Prof. Kirsh, that if you constructed an “ideal” system, you would find that it would simply not apply to anyone and would raise zero to no revenue unless it were applied so cynically and capriciously to a handful of whales as to amount to little more than base extortion dressed up in the garb of principle. If your income tax system taxes citizens AND residents in your own country, then you have to admit that all others can (and arguably should) do the same. Since the tax systems of each country are differently constructed and never mesh completely, any bona fide attempt to avoid double taxation would result in either undue complexity or outright exemption to the point where the effort put into designing the system would be meaningless.
The simple and unarguable fact of the matter is that (i) overseas citizens have exactly zero effective input into the laws which affect them – this is not merely being bound by laws that one doesn’t like, this is utter and institutional powerlessness to have ANY influence over them even if 100% of overeseas citizens voted and voted as a bloc; (ii) substantially every US law applied to overseas citizens has been drafted without any material care being taken as to the impact upon them; and (c) the net result of (i) and (ii) is a system which, if applied consistently to 100% of its intended audience, would be crushingly oppressive, bankrupting or financially destroying millions to say nothing of leaving them open to penal and other sanctions despite having, by and large, borne a larger tax burden than comparable homeland Americans.
The two concepts of FBAR and PFIC’s demonstrate adequately my point (ii) above. The statute creating FBAR’s (31 USC 53) explicitly orders the Secretary of the Treasury to draft the regulations so as to avoid unduly burdening overseas Americans and to design them to acheive the anti-money laundering anti-crime objectives. Full power to exempt countries wholesale exists as does the power to exempt “same country” reporting by long-term residents. Instead we have a “form and fine” system that costs billions in compliance costs to overseas citizens, opens them to massive and arbitrary penalties and is in no way related to the objectives of the statute. call it negligence or malice- the outcome is still injustice. PFIC’s – designed to deal with a fairly obvious tax loophole in the purely DOMESTIC context were simply imposed en bloc across the globe to all “citizens”. The fact that non-resident citizens can’t buy US mutual funds (and US residents can’t buy foreign ones) should have been obvious. Ten seconds of drafting to exempt mutual funds and ETF’s registered with any of a thousand recognized securities regulators with whom the SEC does business could easily have averted a punitive train wreck of rules unleashed thoughtlessly and with massive negative impact uniquely on non-resident citizens. The list goes on.
I would suggest that overseas victims of CBT need do no more than demonstrate – as any child could do in minutes – that THIS system is so overwhelmingly unfair and negligently if not maliciously designed as to be unable to be defended by any right-minded person hailing from a country that continues to sytle itself as the land of the free. No victim bears the burden of designing a better yoke to be placed under.
Prof Kirsh can’t defend a turd on the basis that its ingredients might be assembled into a croissant in heaven. It’s still a turd.
1 replies
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