Transcript for Our Webinar on Tax Residency & Human Rights Now Available
We're excited to announce that the full transcript for our webinar titled The Impact of Tax Residency on Human Rights is now available for your perusal.
A special thank you to our three panelists, John Richardson, Dr. Karen Alpert and Dr. Laura Snyder, for sharing their insight into this niche issue that is of great relevance to Accidental Americans and other US citizens living outside of their country.
Feel free to download the transcript below and share with your network.
If you have any follow up questions for our panelists, make sure to submit them on the pertinent Taxlinked forum thread linked to here.
For now, here are some of the event's main highlights!
Would it be fair to say that if you're a tax resident of more than one country, in all probabilities, one tax system is likely to knock out tax benefits and preferences in the other tax system?
Dr. Karen Alpert: "Yeah, definitely, especially when it comes to things like retirement savings and tax incentives that countries may put in place for people for health insurance, investment credits, things like that. If you're tax resident in two different countries, one country will give it to you but the other country will take it away… And it becomes even more of a problem, and more and more countries do this, when they have xenophobic tax rules. Essentially, they look at anything that's foreign and treat it differently or punitively… For example, if you invest in a non-US mutual fund, then that could be treated as a Passive Foreign Investment Company (PFIC), which basically takes away your ability to defer capital gains until realized or punitively taxes you so that you might as well not have been able to defer the capital gains until realized."
Do you think tax residency and human rights as topics belong in the same webinar?
Dr. Laura Snyder: "To me it's obvious that they do. I can rattle off a list of human rights violations that you have just talked about…So I'll just say the sources of the human rights that I'm going to talk about are basically in five different documents. There's the Universal Declaration of Human Rights, there's the International Covenant on Civil and Political Rights, there's the International Convention on the Elimination of All Forms of Racial Discrimination, there's the International Convention on the Protection of the Rights of All Migrant Workers and their Families, and there's the International Covenant on Economic, Social and Cultural Rights, so a lot of those documents are post-World War II documents and are the sources of these rights."
John Richardson: "Not only has there been this focus in international human rights documents but when we're talking about US citizenship domestically, the US has evolved quite a bit since about 1967 in terms of reinforcing the rights of the individual to citizenship. So in 1967 the Supreme Court of the US handed down a decision in a case called Afroyim that over the years came to be understood as an example of a very important principle, that US citizenship belongs to the individual and that Congress cannot forcibly basically steal somebody's citizenship, which they were doing up until 1967. So even domestically I think this is important in the US, under US constitutional law, there is now a strong tradition that American citizens cannot be forcibly deprived of their citizenship."
Do you think US citizens abroad are being forced to renounce US citizenship because of the unbelievable regulatory environment?
Dr. Laura Snyder: "I think the answer to that is clearly yes, and I would even say that there are agencies of the federal government who have acknowledged that indirectly. There is a September 2019 joint document posted online by the Department of the Treasury, Department of State, the IRS and the Social Security Administration and it's got a very long title, Joint Frequently Asked Questions (FAQ) from the Department of the Treasury, the Department of State, the Internal Revenue Service, and the Social Security Administration on Obtaining Social Security Numbers, Expatriation, and Tax Implications. I think if you look at just that title and certainly if you open up that page and you see how the US government expressly links the problems with taxation, the problems with banking and the problems with taxation, citizenship and banking all together, and how they understand and they acknowledge in that document that this leads to the people renouncing their citizenship, I think you see it's clear, it's undeniable that there is a direct link."
"And I would go further than that; last year I did a survey of Americans living overseas on the topic of the taxation and banking issues that they face and so the survey included people who had renounced the citizenship and then asked them to discuss the experience and how they felt about it, and I think that some of the comments that they made are really revelatory and you can't help but remember them, they sit with you. So you have people saying things like US citizenship means being unable to live without severe restrictions on my life and with the ever-present threat of financial ruin. Another said citizenship-based taxation is ruining our lives, is unfair and I can't take the stress and anxiety it gives me anymore. And then people who renounced, when they talked about how they felt on the day they renounced, they used words like angry, sad, torn up, grief, sick in my stomach, heavy heart, devastated, fraught, holding back tears, one burst into tears and another vomited. One person said renunciation is not one of those things you get over, I didn't feel I had any choice, and if I had a choice I'd still be American. Another said I feel betrayed by the US and will never in capital letters forgive them for forcing me to renounce my citizenship; it is part of who I am."
Is it your view that US tax rules and the whole US regulatory regime, which really I think can be fairly stated as US citizens are property of the US government and any country where they live, foreign governments must understand that it's US property living in that country?
Dr. Karen Alpert: "Not sure I'd put it quite that strongly, John. But I think that the US laws are attacking immigrants in other countries and they're attacking the rights of those immigrants in the other countries, and those other countries really need to stand up a bit more for the rights of their immigrants, who are dual citizens often. They're attacking the rights of Accidental Americans, they are one place where this is really quite clear, someone who was born in the US to someone that was temporarily there from Australia, moved back to Australia and then 60 years later finds out, oh no, the US thinks that they have the right to tax me but I've lived my whole life as an Australian under Australian tax laws and that person is being attacked by US tax laws and the Australian government. Other governments should be standing up for their own citizens and not allowing the US to define someone as a US tax resident just because of some prior connection to the US that's no longer current."