The Isaac Brock Society

I spoke with Atossa Abrahamian of Reuters regarding my case.  Her article is now available online, and I am pleased with her general tone; she treats us favorably and does not accuse us of being tax cheats, like so many other journalists have done.

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  1. @thatisme Thanks for your reply post!

    Please don’t forget that the Foreign Earned Income Exclusion (FEIE) is constantly being threatened in Congress. The most recent attempt to revoke the FEIE was apparently defeated, but it seems that even some members of the Americans Abroad Caucus voted to remove the FEIE, a voting comportment which I cannot fathom. (http://isaacbrocksociety.com/2012/04/02/foreign-earned-income-exclusion-killing-budget-for-all-defeated/) I suspect that the attempts to cancel the FEIE will continue, let alone the further persecution in the works via FBAR, FATCA, and Levin’s CUT proposals.

    From your reply, you seem to believe that with the FEIE and the FTC (Foreign Tax Credit), US Persons abroad can “legally” avoid additional US taxes on their income in their country of foreign residence, but this is not the case. Given the current foreign exchange rates (which I feel have been brought about at least partially by the Fed’s “quantitative easing”) many middle class US persons abroad find themselves pushed into higher US tax brackets that do not reflect their purchasing power in their country of residence and thus “owing” additional tax to the US (despite FEIE), especially in countries with higher costs of living, lower income tax rates, higher excise, sales and VAT consumption taxes, and other taxes and fees on things other than income.

    To my knowledge, FTC only works for foreign income taxes, not other things such as higher fees, wealth taxes, VAT and excise, mandatory health coverage and payroll taxes, etc.

    The other thing to remember is that the FEIE seems to cover only “Earned Income” and therefore retirees drawing pensions abroad and people on unemployment compensation, disability payments, or welfare abroad cannot use the FEIE. Coupled with the fact that these benefits may not be income-taxed in all countries and in all cases, and that the benefits may only provide a vital minimum standard of living, such people could find themselves with an unpayable tax burden to the US and no relief via the FTC. This sort of situation is behind many of the renunciations of US nationality I have heard about.

    It is the central thesis of this site (https://stopunconstitutionaldoubletaxation.wordpress.com) that people who earn their income and pay taxes abroad and refuse to comply with IRS tax and reporting requirements as to their foreign income are not criminals but are acting in self-defense against a set of laws that contravene the US Constitution, the constitutions of foreign countries, and principles of international law and the UDHA. The US policy is not fair, and it goes against American principles of fairness and equality of treatment and economic opportunity.

    Nonetheless, the 5-7 million US citizens abroad are not listened to and US media don’t inform homelanders enough about our plight (I hope the NYT and Reuters articles I reblogged here from Isaac Brock will only be the beginning of a change in this unfortunate deception-causing pattern of omission).

    We are not counted in the census and thus have no proportional representation in congress as the Constitution provides. Shame on the US government and congress, they are blind to their own founding American principles and they try to screw their own people. We must pay only the taxes that our neighbors pay where we live. Each country has its own tax system that is negotiated locally according to whatever democratic, social-democratic, communist, or totalitarian system is in force locally—for better or for worse. Local tax systems in foreign countries are –in theory– designed to meet the needs of the local country. Additional taxes to the US are a form of tribute (as someone on Isaac Brock stated recently) and take money out of the local foreign economies and force inequality of economic opportunity on those US persons who are compliant with IRS requirements. The US is the only country aside from Eritrea and perhaps North Korea that does this.

    The US policy especially disgusts long-term residents abroad who are integrated into their local communities and who may also hold a foreign nationality or the nationality of their country of residence. It causes divorces, loss of employment, loss of business partnerships, and many other disagreements that are not conducive to building wealth in the global economy.

    The US shoots itself in its own foot. Rather than leaving US persons abroad alone and encouraging them to build trade ties between their countries of residence and the US, it double taxes and attempts to impose reporting requirements on them that may even force the US tax compliant individual to violate local laws in their country of residence.

  2. Great article. People need to know what is goin on from our side. You know a lot of hard can be done with the best intentions. I can understand the IRS going after people who hide income and investments in foreign banks. Especially Americans living in the USA and the ones who moved out of the country with this goal. In trying to get those it is chasing everyone, the 7 million Americans (if you ad the Green Carders this number will be much more) as if they were criminals. We don´t need to hide anything because we do have (so far) an earned income exclusion and tax credits, We don´t have accounts and investments in “foreign” banks. We have those in banks that are nor foreign to us, that is, that are in the country were we are living and working. Of course we have to use these banks. If we used US banks the countries where we are residing will want to tax us for investing in foreign banks. And having tax credis we end up havinf ro pay no US taxes, or at most very little. We are more scared now of the paper work and the cost of hiring USA CPAs and Tax Lawyers and worse of all the threats of the IRS coming and taking away half of our life savings because we did not know about FBARS. The US Tax Advisor has spoken in our behalf. We don´t know what to do and we are confused and scared. It is becoming impossibe to comply with the IRS demands year in and year out. This is why so many Americans are renouncing their citizenship.

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