Tag Archives: taxation

Note to Congress – Please do not force me to give up my US citizenship

by Rhodri C. Williams

Its been a year and a half since my cri-de-coeur about the double-filing (and occasional double-taxation) burden that the US – alone among all other countries in the world but Eritrea – places on its citizens abroad. At the time I wrote it, the best case scenario was for me to find a discreet way to back report some information no one had ever bothered to tell me to forward report before and then get on with it. Meaning?

Well. Continue the annual Springtime circus of spending 48 hours in a pointless and dispiriting clinch with 1040 supplements seemingly written by pedantic Klingons. Maybe hand it all over to a tax lawyer so that I could spend USD 2,000 per year for the purposes of verifying I owed nothing to the US over and over again in grammatically impeccable Klingon. Keep a weather eye on the incoherent calls for reform of this incoherence until it got to be time for the kids to make a decision. Meaning?

I’ve bent over backwards to be sure that my kids, growing up Sweden, will always have a home in the US. From day one, Dr. Seuss has been right there alongside Pippi Longstocking and transatlantic flights represent perhaps our second biggest household cost after the mortgage. But as the little guys approach the age of independent incomes, the IRS is waiting too, a lifetime of pointless Springtime anxiety clutched in its hot little hands.

So while it always seemed self-evident that I would no sooner give up my US passport than I would the nose on my face, the kids were definitely going to have the benefit of an informed choice in the matter. But that all changed with the FATCA, an astonishingly blithe raft of garbled global overreach. With banks worldwide now annually forced to disclose all information on ‘US persons’ holding accounts with them, my individual decision to stand and let the kids eventually decide on jumping became irrelevant. Meaning?

Meaning that the US decision to unleash FATCA on the world has taken the decision out of my hands. My citizenship and that of my children is literally now in the hands of the Swedish banking system, on whom the US Congress has placed the entire cost of compliance with its dogs breakfast legislation. Should the Swedish banks jointly decide that the cost of hosting US persons is too high, then they will cast us out and we will have no decision to make. We will not jump. We will be pushed.

Is this idle speculation or unconsidered hysteria? No. Axa bank in France just took this decision, derailing the lives of thousands of ‘US persons’ there, some of whom, as pointed out by the indispensible Victoria Ferauge, did not even have reason to know they were US persons. My bank here in Sweden might take a different approach. Or it might not. Other banks might take me in. Or not. If not, good luck to me and the kids. Sweden is a bureaucratic society, and loss of my bank accounts would roll out a chain reaction of inconvenience and potential disaster that I do not care to even consider.

If and when I get the letter, I do not see any other option than to apply for Swedish citizenship and renounce my US citizenship – and presumably that of my children. I can live with a little inconvenience and arbitrariness, if that is the cost of maintaining the link with my ancestral home. But I can’t live in the 21st century without bank accounts.

I don’t know if anyone in the US particularly cares about whether me and my little flock in distant Scandinavia remain part of their community or not. But does that justify allowing foreign banks to take the decision for me?

Democracy as a process

by Rhodri C. Williams

Democracy is on my mind this afternoon. For one thing, its July 4th and Philip Gourevich was kind enough to remind me that its about more than hotdogs and fireworks:

As our national day of celebrating our political system passes, I am also currently attending one of the most convincing exercises in homegrown open democracy anywhere in the world here in Sweden, while I simultaneously find myself preoccupied by the ongoing struggle to establish something tenable between the unattractive extremes of autocracy and people power in Egypt.

In Sweden, I am attending “Almedalen week“, an annual political gala in the picturesque seaside town of Visby. Sweden is a small enough polity that after a few years there, you recognize all the politicians and they are literally all here, from the xenophobes to the suecophiles, strolling around in their business casual uniforms, making speeches and gleefully networking. Coming from a country where the president has to cart around truckloads of bulletproof glass on foreign trips, it is a pleasant kind of shock to be this up close and personal with Sweden’s political elite, as well as a lot of leading journalists, diplomats and other functionaries.

There is plenty to find fault with in Almedalen, ranging from the way the week has morphed into a commercial free-for-all to the fact that Swedes of color are frequently notable by their absence. But for all that, Almedalen week is a remarkable experience, a sort of national pep rally for a democratic process that is deeply ingrained, civilly conducted, and fundamentally liberal (in the philosophical sense, Rush. Look it up.) Nothing much of import gets said or decided here, but everyone comes away with a fairly visceral sense of a system that is accessible and responsive.

Meanwhile in Egypt, we are seeing a brand new democratic process experience severe ructions. The commentators have been out in force, and there seems to be a  consensus that both sides are at fault, with the Muslim Brotherhood having vastly overplayed the hand it won in Egypt’s first free elections, and the opposition having responded by undermining the very democracy some of them had risked life and limb protesting for in 2011 (see the ICG’s statement here and Nathan J. Brown’s constitutional analysis here). For both practical reasons and more principled ones, there has been some reluctance to characterise what Egypt is currently experiencing as an unqualified coup. But it is undoubtedly a severe and early setback in a fragile process.

As I write this, a raucous group of Yanks (and their Swedish buddies) who are renting the guesthouse next door are doing a very poor rendition of ‘Star-Spangled Banner’. My own patriotism is feeling a bit less bruised now that I dumped this year’s load of IRS busywork into the mail (though Peter Spiro reminds that ever more US citizens abroad are unwilling to face a lifetime of pointless double-filing), and it is tempting to reflect on the progress of democracy. It is undeniably a pretty infectious idea that all those be-wigged gentlemen farmers invoked back in 1776. It certainly feels like the concept has found fertile ground here in Sweden, and it has made extraordinary progress in the last few years in the Middle East. But it is crucial to recall that it is a process, and never an entirely irreversible one.

PS – Anyone interested in watching my efforts to discuss the rule of law in Libya – in Swedish – here in Almedalen can tune in here: http://www.sommartorg.se/. The seminar will be carried live at noon, GMT+2 and will be available for streaming thereafter.

Annual double-taxation-without-representation time rolls around for US citizens abroad

by Rhodri C. Williams

Spare a thought this week for US citizens abroad, who will be scrambling to comply with one of those nightmarish bureaucratic systems that no rational person would ever propose if they were working from a clean slate today.

As one of those affected, what to say? Many of us will have stayed up far too late during recent nights, working out whether we are likely to fall victim to an arbitrary snap-enforcement program that has imposed massive fines on people out of compliance with a previously dormant filing requirement we had precious little reason to be aware of. Still more of us face the prospect of spending entire days working through a battery of incomprehensible forms in order to prove what should be a self-evident point – we owe nothing to the US Government because our residence is registered in foreign jurisdictions with a legal right (and often a great enthusiasm) for culling our incomes in exchange for the services they offer. Those with higher incomes will simply be taxed on them twice over, and this by the ostensibly most tax-averse country in the developed world.

As an American on the ‘liberal’ side of the political spectrum, I have never had much time for black helicopter conspiracy theories about an oppressive ‘big government’. On the other hand, my experience with the US tax authorities has sharpened my classically American concerns about unrestrained government. While I have little doubt that the US Internal Revenue Service behaves responsibly and responsively (e.g. as a ‘service’) when it comes to ‘internal revenue’, it has taken the form of an unaccountable, repressive juggernaut for those of us in the ‘external revenue’ free-fire zone (consider the terrifying recent experience of one of my fellow US citizens in Sweden). However, it is ultimately the IRS’ masters in Congress and the Executive Branch (ahem, Mr. Obama) that have given these dubious tendencies ample room to breathe.

For those of you interested (academically or personally), there is lots of good information out there on the internet. A few starting points include the Isaac Brock Society representing the enormous population of affected people in Canada, as well as the more academic Federal Tax Crimes blog. Peter Spiro also provides a helpfully contextualized running commentary on these issues on Opinio Juris. However, the most important player is American Citizens Abroad (ACA), an organization that provides updated advice on navigating the double taxation labyrinth while actively seeking to replace it with an ordinary system recognizing residence-based taxation that would let Americans abroad get on with raising families and engaging in the private diplomacy and trade promotion we provide our country with every day (at zero cost to any taxpayer!)

If you surf this topic a bit, you will probably find yourself scratching your head and wondering how this could have come to pass. Foreign banks to refuse to open accounts for US citizens as a matter of policy? Struggling US citizens abroad put to the rack for the sins of fat-cats with undeclared Swiss bank accounts who are mostly US residents anyway? (I mean, who really thinks the Swiss care where you live if the numbers add up?) US citizens lining up to renounce their citizenship because their own government is shaking them down in a desperate and legally questionable attempt to fill the deficit gap?

In the cold light of day, this stuff should not stand up for a single Congressional term, particularly in a Congress now dominated by politicians dead-set on (1) reining in out-of-control Federal agencies, and (2) cutting tax burdens on productive citizens come hell or high water. For the first time in my memory, I may actually passionately agree in principle with my conservative delegates to Congress, at least as far as this issues goes. So why does it just get worse?

My considered opinion after some self-interested research is that affected people have been kept so busy sweating over personal compliance that they have had very little energy left over to focus on political message. There are lots of complaints about how the US media seems only too happy to fall into line with the IRS’ implicit assumption that living outside the US is in itself a form of tax evasion. However, beyond the ACA’s important efforts, there doesn’t seem to be much systematic advocacy. So let me take a first stab of my own. Why should the average US citizen care about the fiscal fates of their brethren abroad?

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