Monday, August 19, 2013

Here is the only reason why Ted Cruz's citizenship is interesting.

It is not whether he's natural born and therefore eligible for the presidency. It is that Ted Cruz has suggested that he did not even realize he might be a Canadian citizen until the Dallas Morning News suggested it to him and asked a few experts on Canadian citizenship law to confirm that Canada, like the US, like many, many countries, confers birthright citizenship on people born in the territory whether they request it, or want it, or not.

This is interesting because this is all happening during America's ongoing roundup of every person on the planet who may be a US citizen because they were born in the US or by birthright through their lineage, for the purpose of imposing draconian penalties for failure to file tax returns and asset information reports under the US citizenship-based tax regime. This is the only tax regime in the world that treats lineage alone as a justification to impose worldwide taxation. Ted Cruz's expressed thoughtlessness about his own dual citizenship, coupled with his breezy intention to simply get rid of the unwanted extra citizenship, beautifully illustrates the major problem with citizenship-based taxation and why no other country on the planet would try to enforce such a system.

The US is right now imposing enormous penalties and unleashing general chaos on people living in other countries with US citizenship, both by newly enforcing long-ignored rules and by layering on top of these rules a new and more draconian layer of enforcement. The chaos comes in the form of fear-inducing, devilishly complicated and duplicative paperwork, and penalties, most of all penalties, and it is being piled on to millions of people around the world, many of whom, like Cruz, are very possibly only beginning to understanding that citizenship status is mostly conferred upon rather than chosen by individuals.

Ted Cruz should consider himself very lucky, because the citizenship he claims he didn't realize he had doesn't carry any punishment for his failure to recognize it. Moreover renouncing, if he really intends to follow through on that promise, will be relatively simple, cheap, and painless other than the cost to his US political career, if any.

Not so if he had lived his life in Canada with his current apparent dual status. US citizens abroad now understand that discovering ties to the US means discovering a world of obligations and consequences flowing from citizenship that you were expected to know and obey. Ignorance of the law being no excuse, the punishments range from the merely ridiculous--many times any tax that would have ever been due--to the infuriating: life savings wiped out and many future tax savings sponsored by your home government, such as in education or health savings plans, treated as offshore trusts and therefore confiscated by the US. Moreover there is no ready escape hatch for the newly discovered and unwanted US citizenship: five years of full tax reporting compliance must be documented, appointments must be made with officials, fees must be remitted, interviews must be conducted, and in some cases exit taxes must be paid. If some in Congress get their way, renunciation could even mean life-time banishment from the US someday soon.

In the grand scheme of things Ted Cruz's citizenship is a non-story. But for what it illustrates about citizenship-based taxation, it could be the story of the century.


  1. Excellent post. Yes, the meeting of birthright citizenship laws and the obligations of emigrants and their children to the country of origin make for quite a mess.

    I personally think Locke was right: "It is plain then, by the practice of governments themselves, as well as by the law of right reason, that a child is born a subject of no country or government."

    No citizenship without consent!

  2. So Mr Cruz has awoken to the fact that he’s a ‘accidental Canadian’. It’s fortunate for him that Canada hasn’t subjected him to the same nightmare that ‘accidental Americans’ are waking up to.
    Mr Cruz's ignorance and presumptuousness is mind-boggling but unfortunately typical of how many Americans think. First of all he's an American "at birth" and a Canadian "by birth". Secondly he assumes that somehow his American citizenship negated his Canadian. To renounce his Canadian he can make an online payment of $100 to the Canadian government and maybe have to see a Canadian citizenship judge at his local Canadian consulate. By contrast, in order to renounce US citizenship (even if you were born outside the US) Americans throughout the world must file at least 5 years worth of US tax returns, pay all back taxes and penalties owed, make at least one visit to a US consulate where they pay a fee of $450, and in many cases pay a hefty exit tax. The US should call themselves "land of the fee" for it certainly isn't free with the walls it's erected around itself.