I received a copy of this letter, and think it is worth reproducing in full:
“Dear Mr. President,
I am writing with a heavy heart as I, my husband, and our daughter
are all seriously contemplating giving up our U.S. citizenship. We are
doing this not to avoid paying U.S. taxes but because we strongly object
to a system that is blatantly discriminatory and unfair to law-abiding
Americans living outside the country. In addition, it has become too
expensive, too difficult, and frankly, too frightening, to try to comply
with all of the tax filing requirements that now apply to citizens
living abroad.
My husband is 70 years old and I am 69. I was born in St. Louis, my
husband in Denver, and our daughter in Toronto. When my husband
graduated with a PhD in history from the University of Pennsylvania, and
I with a law degree from Villanova, both in 1971, he received a job
offer to teach U.S. history to Canadian university students. I began
teaching law at the same university. We never expected to stay in Canada
but, as you know, life is often unpredictable and we have now happily
lived here for 43 years. I retired many years ago and my husband more
recently.
Rear view of the Treasury Department
building in Washington, D.C. The building is a National Historic
Landmark. (Photo credit: Wikipedia)
In order to practice my profession I had to become a member of the
Ontario Bar, which I did in 1985 and which required me to become a
Canadian citizen. My husband did so some years later because he also
wanted the right to vote in a country where we were living and raising
our daughter. We have continued to vote in U.S. federal elections, we
hold U.S. passports as well as Canadian, and we have never failed, in 43
years, to comply with U.S. laws that require American citizens anywhere
in the world to file U.S. tax returns. Of course, that obligation does
not exempt us from also having to file
Canadian tax returns each
year, and in some instances, paying taxes to both countries. (Please
note, neither one of us receives U.S. Social Security or Medicare, so we
take nothing in return from the U.S.)
And yet, we now feel like second class citizens at best, or criminals
at worst. The FBAR forms that we must file every year, detailing the
amount in every single financial account we have, from savings to
checking to investment to retirement accounts, are filed with the Fraud
Division of the U.S. Treasury Department. The message given here, along
with the enormous fines for improper filing, make U.S. citizens feel
like they are guilty until proven innocent.
Recently I learned that, on top of all the other tax disadvantages of
being dual citizens, Americans living and working in Canada can now
hold Canadian mutual funds only at their financial peril. These funds
carry onerous, expensive tax filing requirements for every single fund
owned, as well as attracting much higher taxes than U.S. mutual funds
(which we are not allowed to hold in our Canadian investment accounts.)
What this new obstacle means for U.S. citizens in Canada is that, in
addition to being prohibited from buying U.S. mutual funds, we must now
sell the Canadian mutual funds in our investment portfolios for a reason
that has nothing to do with their inherent value or what they add to
our savings and retirement strategies.
To my knowledge the IRS does not tell U.S. citizens living in America
that they will be penalized for owning mutual funds domiciled in that
country. So why does it feel it is fair or appropriate to penalize
Americans living in Canada for simply investing in mutual funds
domiciled in Canada? Let us be clear. These are not funds that are
investing in terrorist activities in the Mideast. These are funds that
are invested heavily in U.S. bonds and U.S. companies, as well as in
Canadian bonds and companies. While the IRS looks at Canadian mutual
funds as “foreign investments“, obviously for those living in Canada
they are local investments!
Nevertheless, I must now instruct our investment advisor to sell
them. Americans living in the U.S. pay 15% in capital gains on U.S.
domiciled mutual funds. Americans living in Canada will now pay over 38%
in capital gains on Canadian domiciled mutual funds, even though both
funds might contain very similar investments. This places American
citizens living in Canada at a distinct disadvantage in planning and
saving for our retirement. What have we done to deserve this
discriminatory and second class treatment? Are we to save for our old
age by hiding our money under the mattress?
For many years we have been willing to pay the substantial expenses
involved in using tax accountants who are qualified to file our tax
returns in both countries. As you can imagine, dual citizens cannot use
just any tax accountant and still feel confident that they are complying
with the very confusing U.S. tax laws, tax treaty, and all of the
special requirements that apply only to Americans living outside the
country. This is especially true when it is the Fraud Division that
investigates even the most innocent errors in filing some of the
necessary forms.
However, now the overall burden and the unfairness have become too
heavy to reasonably bear. My earliest known American ancestor, who
sailed from Europe and settled in Kentucky 166 years ago, is probably
“rolling over in his grave” to think that I am giving up my U.S.
citizenship. However, growing up in Colorado I was raised and educated
to stand up for what is right. I have been doing that ever since.
What America is doing to its own citizens living in other countries
is not right and we have had enough. What I have outlined here is only
part of the problem. All we want in return for fulfilling our
responsibilities as Americans is to be treated fairly and equally. We
are performing our part of the bargain. America is not.
There are approximately one million Americans living and working in
Canada, and millions more in other parts of the world. I understand from
our specialized tax accountant, and our cross-border consultant, that
we are not alone in contemplating or taking this very dramatic and
previously inconceivable step of relinquishing our U.S. citizenship.
What a sad state of affairs for America and for its citizens everywhere.
Regretfully yours,
Marilyn ________
Ontario, Canada”
Ref: Forbes