Man is an animal suspended in webs of significance that he himself has spun...

Saturday, February 6, 2016

The Global Tax 50: Allison Christians

The International Tax Review has included Professor Allison Christians (H. Heward Stikeman Chair in Tax Law at McGill University) in their 2015 Global Tax 50 - a list of people and organizations that they think have the most influence in the international tax world.

Professor Christians writes extensively on any number of topics related to international taxation in a globalized world, but it was her work on the tax issues of US citizens and US persons abroad  that caught my attention and made me a faithful reader of her blog Tax, Society and Culture.

If you'd like to get better acquainted with her work, she has quite a few papers up on SSRN.  Here are a few titles I encourage you to read if you are interested in a very informed and very thoughtful perspective that may have you thinking a bit differently about the American Diaspora Tax War.

Uncle Sam Wants … Who? A Global Perspective on Citizenship Taxation (2016)

Paperwork and Punishment: It's Time to Fix FBAR (2014)

Drawing the Boundaries of Tax Justice (2013)

Fair Taxation as a Basic Human Right (2009)

Wednesday, February 3, 2016

An American Abroad Looks at the US Presidential Race

Do home country national elections matter to emigrants/expatriates who live outside their countries of citizenship?

Some countries allow their diasporas to vote in national and even local elections.  The French abroad, for example, can vote in French elections from their host countries, and Article 24 of the 1958 Constitution establishes the right of the French living outside of France to have direct representatives in the French Senate.

Having the franchise, however, does not guarantee that any national community abroad will exercise it.  Mexicans abroad have had the right to vote in Mexico since 2005 and there are millions of Mexican citizens all over the world.  But as of 2012 there were only 61,000 absentee ballots requested from over 100 countries.

So it's not enough to simply have the franchise in the home country, migrants/expatriates must also have the means to exercise that right and, I argue, a good reason to do so.  Motivation really matters here.  If there are no compelling issues that stir interest in a community abroad then they won't bother to register or send in their ballots.

With that in mind, let's look at the US presidential elections.  In the latter part of the 20th century Americans abroad gained the right to vote with the Overseas Citizens Voting Rights Act of 1975 and  The Uniformed and Overseas Citizens Absentee Voting Act (UOCAVA) passed in 1986.  Since that time the two major political parties in the US have worked to encourage voter participation in the US communities living outside the United States.

But as Dr. Claire Smith showed in her 2010 article for the Overseas Vote Foundation, only 374,955 civilians requested ballots from abroad for the 2008 elections and only 59.2% of those ballots were actually submitted.  Problems with the voting process?  Absolutely.  And yet the number of overseas citizens who tried to vote was not that high to begin with given that there are, according to the US State Department, around 7 million US citizens living abroad.

Why might that change in 2016?  I would argue that Americans abroad do have a keen interest in this election - a personal dog in this fight that might encourage Americans abroad to vote in higher number than in the past.

The issues are the Foreign Account Tax Compliance Act and citizenship-based taxation - a deadly combination that is wreaking havoc in American communities all over the world.  FATCA  was passed in 2010 and requires banks in the host countries to report the accounts of US citizens and US Persons to the US government which has led banks in the host countries to close the personal accounts (checking, savings and retirement) of many Americans abroad, and declare all Americans persona non grata at their banks.

Citizenship-based taxation, US law that says that the incomes of US citizens/US Persons earned outside the United States are taxable by the United States government, has been around for many years but was not enforced until very recently (about 2008).

Americans abroad are not only furiously angry and deeply bitter about what they see as the hostile acts of their home country government, but some feel they have no choice but to renounce their US citizenship. That is the reason that renunciations of US citizenship have soared in the past few years.

For many, if not most, Americans abroad these are THE issues that trump (no pun intended) everything else.  I call it the American Diaspora Tax War because I have never seen so much resentment and, strangely enough, solidarity on the part of Americans abroad.  This situation has united angry Americans from many different countries around the world against the anti-emigrant policies of the US government.

This is the prism through which I see the upcoming US presidential elections and I don't think I'm alone here.  The question, however, is whether or not  the candidates will speak to those issues.  To motivate Americans abroad to vote I think it is not enough for these issues to be mentioned as part of an overall party platform;  they need to be addressed by the candidates directly.

So far I am not seeing that.  Ted Cruz, Marco Rubio, Hillary Clinton and Bernie Sanders have a lot to say about domestic issues - gun control, the national debt, immigration - but after parsing the Issues sections of their websites, I don't see anything that speaks even indirectly to FATCA and citizenship-based taxation, their impact on Americans abroad,  and what they plan to do about them.

The Democrats do at least nod in our direction and acknowledge our existence. Clinton has a special link for Americans abroad who want to contribute to her campaign.  Sanders talks about tax reform (the super wealthy, corporations, and the use of tax havens) but seems oblivious to the existence of middle-class Americans living abroad who might need a little tax justice, too.  (And I found that to be a real pity because I kind of like Sanders.)

Am I missing something here?  You tell me.  I invite the advocates of these candidates to come forward and direct me to whatever information is available that clarifies their position on what is happening to Americans abroad right now.

Do I and other Americans abroad care about the issues and the upcoming elections?  I can't speak for anyone but myself but my answer is:  Of course I do.  I have family in the US and things like gun control, healthcare, US immigration and the national debt impact the people I love.

That said, the only issues that have a direct impact on me are:   foreign policy (because when that goes badly, Americans abroad are on the front lines)  and US government policies toward its diaspora - the 7 million or so Americans living outside the United States.

If I believe that my issues are being ignored, or that candidates might actually make things worse for me and my compatriots abroad, not only will I not vote for those candidates, I probably won't vote at all.

Because the right to vote means nothing if you feel that the candidates aren't listening and that you don't have a voice deemed worthy of being heard.

Tuesday, February 2, 2016

Country Agnostic

Does age bring wisdom?

Not necessarily.

Sometimes age just means that you've had time to make a lot of mistakes and to your astonishment, you're still alive to make many more.

But if you're not too thick, if your learning curve is more or less on an upward trajectory, you do acquire a few tricks along with the wrinkles.

I've been struggling for years with questions like:  Which country is better (or best)?  This one is a real minefield and you tread into it at your peril.  Because they are asking you to make a comparison (our country versus yours) and comparisons are tricky.  

The people who ask this one, in my opinion, almost deserve to be lied to.  But lying (also known as deft diplomacy) makes me tired and cranky.  Yes, you can weasel out of it by saying something neutral and non-committal like, "Well, there are things I like and dislike in both countries."

But then you've practically invited them to continue the conversation (the one you don't want to have with them in the first place) and they always shoot right back with a: "So tell us what you like about living here?"  Or, "Please tell us more about what you don't like about your country."  The latter is a lot like asking someone how he or she  feels about the spouse or how both of them feel about their religion.

If you really don't want to engage in this kind of conversation, and you have no axe to grind or a need to charm, then may I humbly suggest this way to cut it off before it starts?

Smile and quietly reply, "I'm country agnostic."

What does this mean?  It means you don't know.  You're not sure.  Your feelings aren't facts and your preferences may change. Maybe country A is better than country B, but for the moment (and perhaps until the end of your days) you prefer to withhold judgement.

I've been trying this one out and it's worked pretty well so far.  People look a little startled by the reply, and then they usually chuckle and let it go.

A clever way to turn a nasty question into a nice experience for both of you?  Try it and find out.

For my part, I find that when I can poke fun at myself, decline to be the expert or the arbiter of truth, and make someone smile, I don't feel any wiser, but I do feel a whole lot happier.

Good Times in Brussels

Love where you're from;  bloom where you're planted. (Flophouse motto)

Brussels and I are only dating, but so far we're good for each other.

She dresses well and never puts on too much makeup.  But she doesn't mind if her date shows up wearing tennis shoes.  Her houses are toasty warm so you don't mind the cold weather and rain so much.  You don't need a car because the public transportation is clean, efficient and trustworthy. The trams are outstanding and run mostly above ground so you can see quite a lot of the city by taking one from the first station to the terminus.

And she has the nicest way of welcoming strangers;  sometimes she smiles at them, occasionally she chats with them, but mostly she just lets them go about their business.  An accent is unremarkable; diversity is the order of the day.

I am living with a friend of a friend in a neighborhood called Schaerbeek near Josaphat Park. It's one quartier away from school, so I take the tram and it's about a ten minute ride.  The houses in this neighborhood are lovely:  tall and skinny with little balconies on the upper floors.  The rents are, I think, quite reasonable - very reasonable compared to Paris or Tokyo.

I have my choice of churches in this district and I've settled on St. Alice.  It's not a beautiful church, but they have a small, diverse parish, a good choir, and a 10:30 Sunday Mass in French.  Not far from my school is the St. Michel Jesuit community and I think I will go to their church for Ash Wednesday (yes, Lent is near).

My school is located in Etterbeek right next to the one of the campuses of the Vrije Universiteit Brussels (VUB), a Dutch-speaking university.  With my student card (and isn't it something to have a student card at my age?) I can use the facilities and eat lunch at their cafeteria:  5 euros for a simple but hearty meal.

So far I am having a fine time.  I walk more, I eat well, and I spend most of my days doing deep reading and taking notes in this cozy apartment with zippy Internet access. Oh miracle, I can read the street signs without any effort, and all the languages I know work just about everywhere.  I like this city.

Too bad we're only having a fling.

Friday, January 29, 2016

Why are Migrants Coming to Your Country?

And we all think we know the answer to that.

It's because my country has opportunity, jobs, a good social welfare network, the best political system, the most comprehensive system of rights, the highest respect for human rights, the nicest culture, the finest cultural artifacts, the most logical language, and the best weather.  Furthermore,  migrants come from terrible places that are clearly inferior in all ways to our little paradise that we (the ethnic/civic geniuses that we are) have created right here on earth.

May I ever so gently suggest that it's just a tad bit more complicated than that?

The first two weeks of class have filled my brain to overflowing with different theories that all seek to answer this deceptively simple question:  Why do people move around?

Because most people don't.  97% of the people on this planet will never leave their countries of origin - may not, in fact, ever leave the city or region where they were born.  That right there should sober everyone up. Most of the people in the world are not going anywhere, and however lovely your country may be, they will never come knocking on your door asking to come in.  Perhaps it is because they can't, but it is just as likely that they don't want to.

The theories of international migration are concerned with that 2-3% (3.3% in 2015 says the UN) of people who do move - the people we call "migrants."  The United Nations definition of that term is as follows:  "an individual who has resided in a foreign country for more than one year irrespective of the causes, voluntary or involuntary, and the means, regular or irregular, used to migrate." (International Organization for Migration website.)

So what have some of the best and the brightest come up with to explain the phenomenon of international migration?  Here are three theories I find interesting.  Bear in mind as you read that this is my modest attempt to simplify some very complex theories and I invite you to read more about them and not just take my word for it.

Push/Pull Models:  In this model you could think of countries and people as magnets with poles that repel and attract. In these models, people feel "pushed" to leave by difficult conditions  (economic, environmental, political or demographic) in the home country, and they are "pulled" by the powerful qualities (jobs, freedom, opportunity) of the host country.

This, I think, is the model that most people have in their heads.  If a migrant is here in my country, then it must mean that things are pretty bad (or inferior in some way) where he came from, and isn't he lucky to have escaped?

It might surprise you to learn that the push/pull models can't even explain economic migration very well.  For example, most migrants do not come from the poorest countries and move to the richest countries.

Look at this Key Fact from the United Nations 2015 International Migration Report:
"Most migrants worldwide originate from middle-income countries (157 million in 2015). Between 2000 and 2015, the number of migrants originating from middle-income countries increased more rapidly than those from countries in any other income group. The majority of migrants from middle-income countries were living in a high income country."  
Oddly enough, sometimes emigration really gets going when things improve - when a country goes from a poor to a middle-income country.

Neoclassical theory:  This one says that it's all about supply and demand for labor.  Migrants go where they can find jobs and good wages.  Every migrant is a "rational actor" who looks at the costs and the benefits of leaving one country for another and makes an informed decision about where he/she will do well or better.

Sounds plausible until we start counting the ways that human beings can be very irrational.   How many of you who are migrants sat down and did a formal risk and cost/benefit analysis before buying that plane ticket?  How many of you based your decision to move on the advice of friends, a job offer, a charming lad or lass, a short stay as a tourist, a nicely written expatriate biography or social media?

And for those who think that a migrant is in your country because he/she has made a cold-blooded calculation to exploit some feature of your world (social welfare, healthcare, jobs), consider this:  the first class healthcare and fine social welfare networks in France do not trump the impression (not perfect knowledge) that France has no jobs, (something that is not true by the way) and is therefore not a choice destination for migrants (not even refugees).

Migration Network Theory:  This one says it's all about how people are connected.  A migrant network is a web of relationships between people in the home and in the host country who make it easier to migrate.   Family, friends, recruiters, clubs, professional associations and the like are all important because they create a support structure for migrants that helps them navigate the immigration bureaucracy and find jobs, schools for the kids, a doctor that speaks the home country language, and a place to live. And I note here that this is exactly how I found a place in Brussels - through a personal cross-border migrant network.

How do these networks get started in the first place?  The Age of Migration by Stephen Castles, Hein de Haas and Mark Miller have a fascinating list of obvious and no-so-obvious things that they say can kick off a migration network:
"warfare, colonialism, conquest, occupation, military service and labor recruitment, as well as shared culture, language and geographical proximity..." (Castles et al: 40)
So this theory says that very plausible reason that a migrant might be in your country is the existence of  a support structure that has made it easier for him to be where you are as opposed to somewhere else.  Which, to put it another way, means that's it's not really about you or your paradise on earth.

Three different theories and there are, I assure you, many more - World Systems Theory, Globalization Theory, Segmented Labor Market Theory and Migration Systems Theory. Each one looks at the question from a different angle and there is no one theory that explains it all, or has the definitive answer to the migration equation.

I realize that this is not terribly helpful for a voter or anyone who is being asked to make decisions about immigrants to and emigrants from his or her country.  

However, I do hope that the next time you are thinking about migration that you reflect on how very hard it is to answer the question:  Why did they move here? 

Because the theorists don't really know and neither do you.

Wednesday, January 27, 2016

Americans Abroad as Unofficial Ambassadors

When Americans abroad talk to the homeland, we often use term 'Unofficial Ambassador' to convey the idea that while we are living in foreign lands we play an informal but important role representing the United States abroad.

We claim this role repeatedly in part because it does resonate with Americans in the US.  As Amanda Klekowski von Koppenfels notes in the conclusion of her book about American in Europe, in 2008 both candidates, John McCain and Barack Obama, nodded in the direction of Americans abroad saying how important we were as the "first contact other nationalities have with our country." (McCain).

'Unofficial ambassador' is a wonderful term because it's just brimming over with goodwill. When a country wants to maintain peaceful relations and contact with another it sends an ambassador (otherwise it would send troops, right?) It's a terrible term because while it sounds so benevolent, it's precise meaning is elusive. And it might be a dangerous term because there may be a disconnect between what we, the civilian Americans abroad, mean in the context of resolving our grievances, and what the US government and the American people hear.

I raise this question because there is a very good book out there called Unofficial Ambassadors:  American Military Families Overseas and the Cold War, 1946-1965 by Donna Alvah.  In that era the US military had a very clear vision of what was meant by an 'unofficial ambassador.'  This was a role assigned primarily to the wives and children of soldiers living abroad on US bases in countries like Germany or Japan.  Alvah herself spent part of her childhood on Okinawa.

How important was this to the US military?  Very.  "As burgeoning numbers of family members joined servicemen overseas in the late 1940s and throughout the 1950s, and as the Cold War developed, official prescriptive literature encouraging wives and children to act as 'unofficial ambassadors' in their everyday activities among local people in foreign countries." (Alvah: 39)  The role, in a sense, was a military asset because the goal was to have good relations with people in the host countries so that they would have a favorable opinion of Americans, American bases and American military and foreign policy objectives.

In 1960 there were 462,000 dependents of members of the armed forced living outside the United States. That is not just a few women and children, that's a veritable army of 'unofficial ambassadors'.

What were those 'unofficial ambassadors' (mostly wives) expected to do?  Alvah says: "the demonstration of courtesy and good will to local people, respect for the customs and obedience to the laws of host nations, the promotion of 'human understanding' and the countering of bad impressions made by other Americans." (Alvah: 74)

Yes, part of the job was to counter the behaviour of  'Ugly Americans' by showing that not all Americans were flashy, crude, and loud. In the Philippines American military wives were told to dress appropriately:  "not to wear clothes that were too casual or revealing..." to "cover their heads and shoulders in church... and to "wear modest dresses..." (Alvah: 77).  In France, they were told to mimic the style and fashion sense of the local French women.  Everywhere those American women went, they were encouraged to volunteer at local organizations or to start clubs and friendship associations.  And, above all, they were asked to be respectful and learn the local language, customs and values.

And doesn't this all sounds a bit like an exercise in integration?   Yes, but Alvah points out that there was a real contradiction here:  American women were being asked to partially integrate into the host country culture with the goal of "creating international alliances that ultimately served the economic and political interests of the United States." (Alvah: 102)

I personally don't see anything nefarious about this (feel free to disagree) but I would like to point out that these 'unofficial ambassadors' worked from the late 1940s to the end of the Cold War with an objective that I doubt very much is shared by civilian Americans abroad in the late 20th/early 21st century. If that is the meaning the US government places on that term - Americans abroad as the "softer" side of foreign policy - than we are not being entirely honest when we use it.

And I note that these informal 'lady ambassadors' in the Cold War era were only very rarely recognized or compensated for their work. Certainly the US military , the US government and perhaps even the American public appreciated their contribution, but that appreciation ended with purely symbolic gestures.

When we claim this title for ourselves, we are asking for a lot more than just a gesture (something that Obama and McCain were more than happy to give us because it cost them nothing);  we are claiming that we've earned through service the right to be heard, and to have some of our grievances addressed. That, I think, is a rather unrealistic expectation.

Because, from what I can see, those 'unofficial ambassadors' in times past never got anything more than a "Thank you for your service."

And that, mes amis, would be nice but it's not nearly enough.

Tuesday, January 26, 2016

Other Ways of Looking at Integration

In a previous post I talked about migrant integration and I asked readers to help me with a thought experiment that went like this:
Think about your home country and the immigration/integration debates going on there.  Determine what you think successful integration by immigrants would look like in or back "home".  For example, you might agree with the following statements "they should learn the local language"  or "they should not have a negative impact on the natives" or "they should be respectful of the people who already live there" or "they should avoid conspicuous expressions of religiosity." 
And then turn around and apply the exact same standards to a fellow citizen from your home country who lives as part of a migrant/expat community outside that home country.  Do you find that you can apply your integration standards equally to immigrants in your home country versus emigrants from your home country living abroad?  Or do you feel that you can't because the situations are simply not the same?
A few brave folks were kind enough to comment and it made for a very interesting discussion, though I note that no one really directly answered the question.  

Back in 2013 I wrote this piece which was my take on migrant integration from the perspective of a migrant (me) in France.  I reread it this morning and, frankly, I wouldn't change a thing.  I still have the same questions - I still feel that sense of confusion.  Here it is again for your reading pleasure this morning.

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In all the countries I've lived in there is an on-going discussion about the migrants and their integration into the host country.  It's a hard discussion to have because "integration" is a very broad term and a moving target.  When a native argues that the migrants must conform (or at least give lip service to) to his values that begs the question of which ones?  All of them or just the ones that particular native at that point in time thinks are important?  People change their minds (and their values) all the time.   Societies are not static.

Saying that migrants should act like natives, talk like natives, and share their values is a nice general principle but often breaks down in practice.  When a society is at war with itself over certain issues, migrants are left not knowing which foot to dance on.

Take something like the "Mariage pour tous" in France (know as Gay Marriage in the U.S.)  So what do the natives think about this?  Well, some are saying that this is going to literally change French civilization for the worse and that nothing less than the French Family, the composition of which is a strong part of traditional French culture, is at stake here.  Talk to others and they'll tell you that this about equality, fairness and the separation of Church and State and that it is against the values of the French Republic to not allow gays full marriage rights.

However a particular migrant comes down on this issue, when talking about it with the natives one must summon all one's powers of diplomacy so as not to offend.  Why?  Well, if the native in front of you disagrees with you he's very likely to tell you, "Well you're American/Algerian/Brit/German and we don't care what you think, you immigrant.  If you don't like our values, you should go home."  Of course, there is a completely different reaction if you agree.   Then they congratulate you on how well you've integrated because you clearly understand "true" French values.  It makes for an interesting conversational dance.

So when natives talk about values, all I can say is that the day you all agree on what French values you truly share, send me the memo.

As for behavior, may I gently suggest that people need to be very careful what they ask for because they just might get it.  There are circumstances where clearly the natives do not want immigrants to act like them.  In fact the whole reason that many got in the first place is because they offer something the host society wants and needs.

A good example of this would be a highly qualified migrant from a very entrepreneurial culture with a strong work ethic and a high level of educational achievement for him or herself and high expectations for his children.

Do they really want this person to act like a native?  Let's say he decides to not start a business and be a taxi driver or a public intellectual instead.  Or he decides to go on unemployment or disability because he sees that an awful lot of the natives are on it.  If he qualifies, why shouldn't he?  He may have a STEM diploma (Science, Technology, Engineering, and Mathematics) but since the natives don't get those degrees in high numbers, he might as well go with the flow and encourage his kids to do something else.

Hard to see how anyone could complain about this since the migrant is simply conforming to the behavior he sees on the part of the natives.  He's not doing anything different.  In fact he's made a decision to be just like them.  Can we say then in that case that he is "well integrated?"  Or would everyone be much happier if he held onto the values and behavior that he brought from his native land?

Migrants can't fix what ails a society.  If a society cannot produce a sufficient number of people who know how to do X and are willing to do it, then that's not a problem with immigration, it's an internal problem.  Where natives use social welfare networks, can't balance their national budgets, and then refuse to have enough children to keep it going, that's solely within the power of the native population to change.  It's a bit cheeky to say to the recent arrivals, "Integrate or else" but "Do as we say, not as we do."  And it's a really unfair to ask immigrants to take sides in the "culture wars" and then get angry with them when they give an answer the natives don't like.

What migrants can do is to add their human talent to the pool and offer a different perspective that might further the debate.  I'd even argue that everyone has an interest in considering some of the values migrants bring from their homelands like, for example,  a strong sense of family or deep respect for elderly people.  The French might be really surprised to know that these two things are deeply held values that some North Africans and Japanese find a bit lacking here in France compared to where they came from.  Might be worth having a conversation with them to know why they feel that way and why they don't want to integrate a French interpretation of those values into their worldview.

Just a few things to think about from where I sit.