It's called Nothing Against the United States, Until Now and it takes the Ted Cruz story and turns it around.
Ted Cruz, a Republican senator from Texas, is an "Accidental Canadian" born in Canada to an American mother. The revelation that he is a dual seems to have been quite a shock to him and he has promised to renounce.
Lynne points out that his situation would be very different if he had been an "Accidental American."
Ted Cruz's biggest issue right now is controlling the damage to his political career. But Canadians who are claimed by the United States as U.S. citizens have much much more to worry about if they are "outed" as Cruz was. Lynne explains it very well:
These "accidental Americans" only recently learned IRS expects them to file income tax returns each year. Most owe no U.S. tax because they pay taxes to Canada, where they have lived their entire lives. Yet accounting and legal costs are prohibitive due to the complexity of the U.S. tax code, especially for non-resident aliens.
In addition to annual IRS returns, these Canadians are expected file a Foreign Bank Account Report (FBAR), outlining all "foreign" bank and credit union accounts, insurance policies, mutual funds, retirement savings and other assets and investments they have in Canada. If they don’t, they could face draconian penalties of up to 50 percent for each account or $100,000, whichever is greater.
Now, Canada doesn't do this her citizens living abroad but let's think about what would happen to Cruz if she decided to emulate her southern neighbor and passed the same sort of laws?
Just imagine Senator Cruz being forced to file 5 years of back Canadian tax returns, pay all the penalties for "failure to file" and then being subject to a hefty mark-to-market exit tax just so he can renounce his Canadian citizenship?
Americans would consider this to be absurd and rail against the temerity and overreach of the Canadian government. And they would be right. In fact I can't imagine any American defending Canada's right to do this to a U.S. citizen.
Now do you see, my dear compatriots, why America's FATCA, citizenship-based taxation, and exit taxes are so damn wrong?
2 comments:
Lynne's piece in The Hill is terrific. What I find kind of amazing is that the US government cannot seem to figure out that if the whole world adopted their citizenship based taxation policies, the ensuing chaos would be catastrophic. Enforcement and compliance costs/efforts would be beyond ridiculous to say the least. Any common person can figure that out. I wonder how many times and in how many ways the message has to be sent. I guess the mosquitoes just have to keep swarming and biting.
@P. Moore,
No kidding. I picture the USA as a child with fingers in both ears, purposely trying not to listen.
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