Thursday, November 9, 2017

Tax Reform is Useless to Americans Abroad

On any significant topic, every news outlet sounds more or less the same.

The headlines will be different, as will the slant of the reporting and analysis (to the extent those remain mutually exclusive nowadays), but within the body of the text, the same facts and bullet points will be repeated again and again, no matter where you get your news.

This is because, despite their towering self-regard (or perhaps because of it), journalists simply do not know very much about the world. Consequently, they copy, ape, echo, cull from wire services and one another, while almost never applying the necessary diligence to tell their audience something new.

The same is true of politicians. Members of Congress, in particular, often with limited real world experience or responsibility beyond casting one of 535 votes on issues that are largely pre-determined, have precious little understanding of what affects regular people.

Beware when you hear a politician tell you a folksy tale about someone coming up to them on the street or in the grocery store, calling them by their first name and asking them a softball, open-ended question like, “Hank, what are you going to do for me and my family?”

On an instinctual level, you know that conversation never happened – at least, not the way you are about to hear it. But, absent a genuine comprehension of what matters to normal people, politicians must conjure a composite of the average voter to make their point.

There is no better recent example of this disassociation than the noise surrounding Republicans’ recently released tax reform plan.

Regardless of how granular news outlets promise to get in their coverage of the bill, their reports will all say pretty much the same things: the corporate rate may be cut to 20 percent, deductions for mortgage interest, state and local taxes remain bones of contention, the House version must conform to the precise requirements of the Senate (here, your reporter might be slightly intrepid and insert the word “picayune”), etc., etc.

Among politicians, discussion is similarly predictable and useless. Democrats bashed the bill as being a boon for “the rich” even before it was written. Republicans are all droppin’ their g’s and sayin’ the same things about helpin’ workin’ families.

Meanwhile, literally millions of Americans around the world are looking for one, simple change in the world’s most onerous, punitive tax system. But you can read the news and listen to politicians until your eyes fall out and your ears fall off and, unless you come across this column, you will find not one word about it.

We are looking for the abolition of America’s absurd and larcenous practice of demanding taxes from its citizens living abroad.

Much is made of the reform’s repatriation of international corporate profits, and one can even hear the term “territorial tax system” uttered now and then but, on the individual side, there is no mention of liberating 7 million Americans – plus their families, business partners, various visa holders and others considered “US Persons” – from the worldwide clutches of the IRS.

If you are one of these many people and you do not live in the United States – indeed, even if you have never been to the US – the IRS requires that you nonetheless file American tax returns, along with a copy of your tax return from your country of residence, plus all your banking and investment accounts and the values thereof. Moreover, if it is deemed you would have paid more under US tax law, you are required to pay the difference, as well.

This is the very definition of taxation without representation.

To those of us affected, this outrage is nothing new. But to listen to journalists and politicians banging on about “tax reform,” it is as though we do not exist.

In a dozen years advocating on this issue, I have encountered precisely one politician who understands it: former Congressman Mick Mulvaney (R-SC), who currently serves as President Trump’s Budget Director.

Senior as Mulvaney’s position is, the OMB Director does not write legislation.

Certainly, after I explain the problem, politicians have expressed generic concern but, for all the action I have seen, I just get rolled into the amalgam of their made-up grocery store guy.

Every quarter, a new record is set for the number of Americans renouncing their citizenships. The reason we know this is the US Treasury Department publishes these people’s names in a petty attempt to shame them for opting out of an unjust system.

The institutional assumption is that these former Americans have done something ignoble that should be brought to light. In fact, the opposite is true: It is unbecoming a nation that styles itself the “land of the free” to make financial prisoners of its citizens.

Until it liberates millions of people who neither live in America nor make use of its services, and who have already paid their taxes elsewhere, this supposedly simpler, fairer tax reform is nothing of the kind.

Theo Caldwell is a dual American-Canadian citizen living in Toronto. Contact him at