Taxation Based on Residency
Citizen-Based Taxation was an effort, during the Civil War, to punish Americans for leaving the country during wartime. It continues today. Eritrea is the only other country that taxes based on citizenship. They have been condemned by the UN for human rights violations because of it. If you have US sourced income, you should pay US taxes. If your income is sourced abroad, you’re taxed under another system. Further taxation and super-imposing the US system on top of the resident country’s system for Americans abroad, independent of being covered by a US exemption or tax credit, is unjust, ethnocentric, discriminatory, and violates fundamental human rights. Furthermore, a US Government official should not decide on the tax exposure of social programs in another country. We feel that this is a violation of other countries’ sovereignty. Why should the social system of another country fund the US Government? Because of the broad definition of a “tax citizen,” our unjust citizen-based double tax exposure is spread to people who don’t even realize that they are Americans. No American should be proud of how our country handles people who are accidentally born in the US, then decades later, taxes them for a house that they sell in their home country. Taxation based on residency would also eliminate the very unfair treatment around accidental Americans who don’t even want to be Americans.
Elimination of the FBAR reporting requirement for residents abroad
If a US resident (both citizen and alien) opens a foreign bank account, it is understandable that the US Government would track that bank account. However, if the US would implement Resident Based Taxation, there would be no need for the Government to monitor the bank accounts of Americans who reside abroad. If the US Citizen foreign resident would open a cross-border bank account, the resident country will follow their bank through CRS. Despite the forced implementation of the FBAR, most hidden money found in foreign bank accounts have been from US residents. In fact, reporting the standard checking account of a US nonresident merely is bureaucracy and unjustifiably exposes ordinary citizens to fines and costly paperwork.
Repeal FATCA for residents living abroad
FATCA is a failure. The perception that FATCA would help net the US government hundreds of billions in hidden money was apparently incorrect. Since FATCA is unilateral and the US has not adopted OECD – CRS, FATCA has turned the US into a global tax haven. Although the US Government claims to have collected some revenue because of FATCA, the Government does not break down how much revenue collected was for penalties or erroneous errors or slight discrepancies of the bank reporting from ordinary middle-class citizen checking and savings accounts. It is highly likely that the US Government penalized normal nonresident middle-class citizens in order to justify the continuance of FATCA. The lack of reciprocity and the unilateral nature of FATCA has hurt our foreign relations and has caused many financial institutions to exit dealing with US citizens or dealing in the US. Although FATCA has discouraged foreign investment into the US, the cost to American citizens abroad has been even more enormous. Threatening our banks with existential fines for even the slightest mistake in finding all American “tax persons” has made us completely unwanted as customers. Because of constant threats of prosecution of bank personnel, even the most simple conversations with a bank person is a risk to them. We feel that because of the unilateral nature of FATCA, the implementation is a clear violation of 4th Amendment rights of normal citizens. Worse, the implementation has caused well-documented discrimination in banking access, financial planning, canceled mortgages, even access to jobs and putting some signatory responsible American jobs at risk. Americans abroad are now toxic, as are our families, business partners, and employers. People around us get punished for dealing with us. We feel that the US Government and those responsible for FATCA should be held liable for the “unintended consequences” that FATCA has caused. If the objective of FATCA is genuinely to battle tax evasion, then why doesn’t the US drop FATCA and join the multi-lateral CRS from the OECD or deliver on its promise of reciprocity to other countries? Is our Congress afraid of violating privacy rights of residents like they have non-residents? Is the real intention of FATCA to make the US a tax haven? Enough!