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Thursday, September 26, 2013

The Lighter Side of Tax Law

I'm not sure that I have properly expressed my respect and admiration for Phil Hodgen and his fine international tax blog.  Today is a good day to rectify that.

Cross-border tax experts are not looked upon favorably in my world.  They are expensive.  They don't speak English.  They are lawyers.

Phil Hodgen is a lawyer but unlike many of his confrères he is clear, interesting and funny.  Reading Hodgen is almost as good as going to an AA meeting (a place that, surprisingly enough, often resembles a comedy club).  His humor can be just as dark and irreverent.

In this missive Tax Law is Considered Harmful (hat tip to Just Me),  Hodgen invites us to lighten up.  Yes, American tax law is frequently dumb and has all kinds of perverse outcomes, but it was made by fallible men and women over centuries and is a product of history and culture.  Like culture it is a conversation between the living and the dead.  (Yes, the dead speak through the law which makes lawyers a lot like necromancers.)

 "Tax law, he says, " is written by 10,000 authors of wildly varying intelligence and intention. Different pieces were written at different times — sometimes decades apart.

Hodgen compares the writing of the U.S. tax code to how the Bible was written and it's a good metaphor. (Yes, I am a Roman Catholic but I do have a sense of humor and I suspect our new pope is not lacking in that regard either.)  Let's face it, in human hands, even something as pure as the Divine Will gets muddled over the course of 2000+ years.   Though, as Christians, we do believe that God stepped in and kept his servants from doing too poor a job of it.  Pity the poor American tax lawyer who has only the IRS as his Higher Power.  

So tax law is firmly in the City of Man and we all know what Saint Augustine had to say about that place.

Hodgen's conclusion?  "In short, don’t take tax law too seriously. Gently laugh at the whole system and treat it as a game or an elaborately authored work of fiction."

Yes, Maître Hodgen, your point is well taken.  And I will take it.  Just for today.

But tomorrow is another story because Saint Augustine, while trying to pull us up toward the City of God, had this to say about the City of Man and justice:

“Justice being taken away, then, what are kingdoms but great robberies? For what are robberies themselves, but little kingdoms?”

6 comments:

Tim said...

What is most interesting about this area is the fact that some other countries like Canada(but not France) have income tax systems and tax systems that are miles and miles ahead of the US in efficiency. So it is not impossible to build a much neater and cleaner tax system.

State and local tax in the US can also be a big mess but their are some notable exceptions such as New Hampshire(a state I know well) that have fairly modern and efficient systems. New Hampshire though is a bit of a "tax haven" state which I always find amusing in my travels seeing the low cost state liquor stores built in certain strategic locations setup to cater to non NH residents looking to buy cheap booze(Such as right on I-93 and I-95 I find it funny putting liquor stores on interstate highways). They even have a "duty free" style state liquor store at the airport for travelers going to other parts of the US(they still charge Federal alcohol tax).

http://www.fosters.com/apps/pbcs.dll/article?AID=/20111024/GJBUSINESS_01/710249983/-1/FOSNEWS

Anonymous said...

I am not sure that Mr Zwerner is finding US tax law too funny...
http://www.forbes.com/sites/irswatch/2013/09/26/zwerner-answers-doj-effortsto-collect-multiple-50-percent-civil-fbar-penalties/

I really hope he wins his case.
The attitude of the US government in this case is disgraceful, shameful and other adjectives I don't feel appropriate to put in writing. I am purely disgusted to live in such a country.

Christophe said...

HI Victoria,

Yes, I like Phil Hodgen's humor, even though, I don't know if there's much to laugh about when the financial consequences can be so dire with foreign account related problems.

Slightly related, being an expat, I receive a newsletter from a French senator. The last issue contained this article which I found interesting. En Francais dans le texte:

"Les banques ont-­‐ells le droit de
refuser l’ouverture d’un compte bancaire en France ? En tout état de cause et en vertu du principe de
liberté contractuelle, une banque est libre d’accepter ou de refuser
l’ouverture d’un compte. Mais, en ce cas, l’ouverture d’un compte de depot étant un droit pour les residents et les Français non résidents, un recours peut être fait auprès de la Banque de France. À noter que la banque a le
droit de demander toutes les pieces qui lui permette de connaître le client (adresse, profession, revenus, patrimoine), surtout si celui-­‐ci ne peut se déplacer en personne. Si elle ne peut pas obtenir ces éléments, la banque n’a pas le droit d’ouvrir le compte. Réponse du Ministère de l’Économie à la question écrite n°20 de Francis NIZET, conseiller élu à Pékin, septembre 2013."

Take care

Christophe said...

I forgot: in that same newsletter, they remind about the declaration of foreign bank accounts. I guess France has their own FBAR, which I did not know:

http://rfeinfos.fr/compte-bancaire-detenu-a-letranger-par-un-resident-fiscal-en-france/

http://www.impots.gouv.fr/portal/deploiement/p1/fichedescriptiveformulaire_5517/fichedescriptiveformulaire_5517.pdf

Note that they do not ask for the amount. The fine for not declaring, in addition to the tax due, is a just slightly more reasonable than the US: 1,500 euros per account if the country has a fiscal convention with France and 10,000 euros per account if it doesn't.

"Toute omission ou inexactitude dans l’accomplissement de vos obligations vous expose à deux types de sanction :
• d’une part une amende de 1 500 € par compte non déclaré, portée à 10 000 € lorsque l’obligation déclarative concerne un
Etat ou un territoire qui n’a pas conclu avec la France une convention d’assistance administrative en vue de lutter contre la fraude et
l’évasion fiscales permettant l’accès aux renseignements bancaires ;
• d’autre part, la possibilité de taxation des sommes, titres ou valeurs transférés par l’intermédiaire de comptes non déclarés."

Christophe said...

I just saw this article on tf1.fr:
http://lci.tf1.fr/economie/consommation/declarez-votre-compte-paypal-sous-peine-d-etre-accuse-de-fraude-8283825.html

Paypal accounts were just declared "foreign", and subject to the French FBAR law.
Will France use Paypal accounts as their "FBAR fundraiser"?
If you're using it to sell stuff on ebay. You might be concerned :-)

Victoria FERAUGE said...

Thanks, Christophe. Yes, we saw it and it was THE topic of our dinner time conversation. Amazing. I think it would make a great post.