I have read so much lately in the Peruvian media about dual citizenship of Mr. Pedro Pablo Kuczynski, candidate for Peruvian presidency. He is a Peruvian born and naturalized US citizen.
I have even read that when at the moment of the Pledge of Allegiance in the US Naturalization process, the immediate effect is the loss of Peruvian citizenship because of a mandatory clause contained in the said oath.
About this topic, I will not comment on Peruvian laws since the official agency in charge of deciding if Mr. Kuczynski’s candidacy proceeds already made a decision and issue an official statement about this issue. There is no conflict between his candidacy and the requirements expressed in Peru’s Constitution and there is no evidence of his renunciation for the Peruvian citizenship.
About the US legislation is that I would like to make some comments:
Is that true that the Oath for Pledge of Allegiance at the moment of naturalization formally mandates the renunciation of the previous citizenship?
Back in the XIX century when this oath was first introduced, which its current wording is contained in the section 337(a) INA Immigration and Naturalization Act, estimated it was enough to include this phrase without including any material measures to ensure that the individual had to consequently renounce to his previous citizenship, it was assumed that it corresponded to the other countries to respect that clause. Recently, the Department of State had taken a more pragmatic and realistic approach to this circumstance.
But, how did the Department of State had taken this stand about this topic?
The judicial history of the United States had played a significant role in the changes that had been incorporated in their positive law through their Case Law. The most significant case is Afroyim v. Rusk (1967).
Beys Afroyim, born in Poland and naturalized US Citizen, immigrated to Israel by befitting from the Law of Return and participated in the Knesset or Israeli Parliament Elections. When he requested the renewal of his US passport it was denied on the grounds of loss of citizenship for his participation in foreign elections. Afroyim sued the Department of State and the Supreme Court decided in his favour.
The key point in this decision was that of assigning citizenship to the category of “Constitutional Protected Right” and to determine changes in the section of the INA that regulates the loss of citizenship on the grounds of: “(i) participate in foreign elections, (ii) serve in a foreign army, (iii) pledge allegiance to a foreign country”; by introducing the key element that will determine the loss of citizenship being that the clear and manifest intention of renouncing to thee.
In 1991, in Deltamar v. Rich the Court of Appeals of the Second District, Marc Rich defendant in a multimillion dollar sue tried to evade the jurisdiction of the Court by appealing to his condition of Spanish national by naturalization, affirming that he renounced to his US citizenship when acquiring the Spanish nationality. Nevertheless, he was consistent in his behaviour of acting like a US citizen by using his US passport. The Court decided that the act of renunciation not only has to be of clear and manifest intention but also the consequent acts must comply with this intention.
However, there is a clue point upon which certain level of speculation would be worth making. Is clear that a Peruvian born, who did not renounce to his Peruvian nationality, and then acquires the US citizenship and becomes a dual citizen can run for Peru’s presidency according to the Political Constitution of Peru, what would happen if this same person is effectively elected President?
Pursuant to Section 349 (a) (4), “...accepting, serving in or performing duties in a foreign government is a potentially expatriating act if the person is a national of that country or takes an oath of allegiance in connection with the position.”
The Department of State had taken the stand of assuming the presumption in favour of maintaining the US citizenship when such position does not involve policy making and when such country does not hold hostile relations with USA; nevertheless, this presumption does not necessarily apply when the national is elected for a position where policy making powers are involved.
In this particular case, the Department of State will analyze in a case-by-case basis the intention of the individual, if it is clear and manifest his intention to renounce to his citizenship, since, the simple fact of serving in a foreign country does not configure per se the loss of US citizenship if the individual is acting in a manner that is interpreted otherwise.
Therefore, we should wait until April 10th and most probably until the second round or even more, until July 28th when the next president will be sworn in office. To find out, in case Mr. Kuczynski is elected, to see if the Department of State will expatriate him on grounds of Section 349 (a) (4) or not, if no renunciation request comes straight from him before that. But, I must say, that is customary that the Department of State, when there is insufficient evidence of the intention to renounce that it will decide not to expatriate and not configure such loss of citizenship.
And finally, in terms of democracy and civil liberties, as well as in pursuant of what both legislations say about this topic, is not fair to conclude that this candidate must renounce in advance to his citizenship since there is no law or statute that mandates it so, being that the situation, no other candidate should request this otherwise, doing so would be considered like acting over the power of the law, and that my friends, is something that I am really scared about in a leader.
Wednesday, March 30, 2011
Wednesday, March 23, 2011
Precisiones sobre las Obligaciones Tributarias como Consecuencia del Acto de Renuncia a la Ciudadania Estadounidense.
Estoy un poco desvinculada y, quizás, hasta desinformada de los pormenores de la política peruana. Sé que estamos en plena efervescencia de un proceso electoral, a punto de elegir a la persona que nos gobernará los próximos cinco años. Sin embargo, viviendo en el extranjero desde el 2001, no tengo todavía muy claro a cuál candidato presidencial confiar mi voto.
En busca de información, el Internet se convierte para nosotros los que estamos fuera, en una fuente importante y, de hecho, en mi caso así lo es. De esta manera pude ver la entrevista on-line que le hizo la abogada y también periodista Rosa María Palacios al congresista peruano Carlos Bruce Montes de Oca.
http://www.americatv.com.pe/portal/noticias/voto2011/carlos-bruce-pidi-kuczynski-mostrar-renuncia-su-nacionalidad-norteamericana
Como peruana que soy y, próxima a nacionalizarme canadiense, no pude más que sentirme afectada por las declaraciones del Sr. Bruce Montes de Oca. Entiendo que se fundamentan en el temor ante el crecimiento inesperado y veloz del candidato presidencial Sr. Pedro Pablo Kuczynski, pero de allí a descalificarlo por el hecho de ostentar la doble nacionalidad, creo que es un exceso.
Tomando como ciertas las palabras del Sr. Bruce, todos los peruanos que viven en el extranjero y, quienes durante ese tiempo adoptaron la nacionalidad del país en el que vivieron, están inmediatamente, “moral y éticamente” descalificados para incorporarse en la vida política del Perú, y, por lo tanto, no aplicar una experiencia valiosa en favor de nuestro país. Con esto, el Sr. Bruce, está segregando a los peruanos que cuentan con otra nacionalidad, además de la peruana.
La doble nacionalidad, cuando una no excluye a la otra y, no media impedimento constitucional a efectos de ser candidato para un cargo público, no debe convertirse en un obstáculo para la activa participación política de un ciudadano que mantiene su condición de peruano y que lo faculta a elegir y ser elegido.
Por otro lado, quisiera hacer algunas precisiones sobre Legislación Migratoria de los Estados Unidos (EE:UU) y sus inmediatos efectos tributarios para el particular caso de la renuncia a la nacionalidad estadounidense.
El punto de discusión central en esta entrevista es la renuncia del candidato presidencial Kuczynski a su nacionalidad estadounidense. Según el Sr. Bruce, cualquier ciudadano que renuncie a la nacionalidad estadounidense, está en la obligación de pagar u impuesto de salida equivalente al 30% de los ingresos obtenidos en los Estados Unidos, mientras se mantuvo dicha nacionalidad.
Sobre este punto, el 17 de junio de 2008 el Congreso de los Estados Unidos y, con la autógrafa del Presidente de los Estados Unidos, George W. Bush, puso en vigencia la ley “Heroes Earnings Assistance and Relief Tax Act” (HEART) . Esta contiene los requisitos tributarios para los renunciantes a la ciudadanía estadounidense que se encuentren dentro de uno de los siguientes supuestos: a) cuenten con un patrimonio mayor a los 2 millones de dólares, b) tengan un promedio de impuesto a la renta anual de 140 mil dólares en los últimos cinco años -esta cifra varia de año a año – o, c) que no puedan demostrar cumplimiento con sus obligaciones tributarias en el periodo previo de cinco años.
Ésta, en sus secciones 877 A y 2801, establece 3 elementos claves como consecuencia del acto de renuncia a la ciudadanía estadounidense:
1. La imposición de un impuesto a la utilidad por venta ficticia del patrimonio (a nivel mundial) del renunciante valorizado a precio de mercado al dia previo de hacerse efectiva su renuncia y con un descuento a la ganancia de los primeros $600,000, el exceso es imponible. Este impuesto se aplica por una sola vez y se exceptúan los beneficios obtenidos de forma diferida o producto de rentas fiduciarias que el renunciante no haya constituido para sí los cuales mantienen una retencion del 30% igual como si no hubiese mediado renuncia.
2. Los regalos o donaciones en exceso de US$12,000 hechos por el renunciante a cualquier ciudadano de los Estados Unidos estan sujetos a impuestos, a excepcion del conyuge y entidades caritativas.
3. Deja de ser efectiva la obligación de presentar (y pagar según sea aplicable) el impuesto a la renta por los diez años consecutivos a la fecha efectiva de la renuncia .
Es mi intención establecer una respuesta clara ante la aberrante opinión “no experta” e irresponsable, por su calidad de personaje público, de alguien, que a mi entender, quiso descalificar a un candidato por el pecado de ostentar doble nacionalidad y exigirle que renuncie a una para postularse a la presidencia, cuando la Constitución peruana no lo obliga a ello.
En consecuencia, la Constitución del Perú no obliga a renunciar a una nacionalidad que no sea la peruana, por no considerar esta condición como incompatible con el cargo de Presidente de la República quien basta sea peruano de nacimiento.
El Estatuto de Inmigracion y Naturalizacion de los Estados Unidos, si bien requiere de la renuncia a la ciudadanía anterior a la naturalización como estadounidense, la Corte Suprema de los Estados Unidos, en el caso Afroyim v. Rusk , estableció un criterio importante sobre la doble nacionalidad al admitir que esta no se pierde por el hecho de participar en elecciones del pais del cual el ciudadano estadounidense sea un natural siempre que ello no exija su renuncia a su ciudadania. Esta importante decision de la Corte Suprema determino un cambio en las politicas del Departamento de Estado a partir de 1990 al facilitar el provecho de multiples ciudadanias en favor de muchos estadounidenses. Le recuerdo al lector que el sistema legal del Common-law se rige tanto, por Normas Estaturias, como por Case Law o Sistema de Precedentes Judiciales, ambos con igual peso y obligatoriedad de cumplimiento.
En todos los casos antes expuestos, cabe anotar, que el único caso de excepción, creado por la Ley HEART, es el “Mark-to-Market Tax” y, de manera relativa, porque atribuye el impuesto a las utilidades por la venta ficticia de los activos patrimoniales del renunciante menos los primeros $600,000 y no como erroneamente afirmo el Sr. Bruce, el 30% de todos los ingresos obtenidos por el renunciante en territorio de los Estados Unidos durante el periodo que el renunciante ostento la nacionalidad estadounidense, lo cual no solo sería en exceso oneroso a comparación del primero, sino ilegal puesto que caeria dentro del supuesto de doble tributacion al configurarse en una imposicion sobre un impuesto que ha sido calculado, cancelado y pagado cada año.
Pese a los esfuerzos de esta ley de frenar el éxodo de ciudadanos estadounidenses acaudalados, en los últimos tres años, el número de ciudadanos estadounidenses millonarios renunciantes de su nacionalidad se ha venido incrementando dramáticamente. A consideracion de muchos resulta más conveniente pagar los impuestos antes citados que seguir sujetos a la Legislación Tributaria de los Estados Unidos, que junto con Eritrea, son los únicos dos países en el mundo que basan su imposición tributaria en el concepto de nacionalidad, antes que en el de residencia.
Es mi deseo que los candidatos y sus representantes por respeto a la inteligencia de los electores, se expresen con correccion y ajustandose a la verdad y no manipulando la informacion en beneficio personal o de su grupo y no alentar nacionalismos exacerbados y separatistas que no solo no nos benefician, sino resultan anacronicos.
En busca de información, el Internet se convierte para nosotros los que estamos fuera, en una fuente importante y, de hecho, en mi caso así lo es. De esta manera pude ver la entrevista on-line que le hizo la abogada y también periodista Rosa María Palacios al congresista peruano Carlos Bruce Montes de Oca.
http://www.americatv.com.pe/portal/noticias/voto2011/carlos-bruce-pidi-kuczynski-mostrar-renuncia-su-nacionalidad-norteamericana
Como peruana que soy y, próxima a nacionalizarme canadiense, no pude más que sentirme afectada por las declaraciones del Sr. Bruce Montes de Oca. Entiendo que se fundamentan en el temor ante el crecimiento inesperado y veloz del candidato presidencial Sr. Pedro Pablo Kuczynski, pero de allí a descalificarlo por el hecho de ostentar la doble nacionalidad, creo que es un exceso.
Tomando como ciertas las palabras del Sr. Bruce, todos los peruanos que viven en el extranjero y, quienes durante ese tiempo adoptaron la nacionalidad del país en el que vivieron, están inmediatamente, “moral y éticamente” descalificados para incorporarse en la vida política del Perú, y, por lo tanto, no aplicar una experiencia valiosa en favor de nuestro país. Con esto, el Sr. Bruce, está segregando a los peruanos que cuentan con otra nacionalidad, además de la peruana.
La doble nacionalidad, cuando una no excluye a la otra y, no media impedimento constitucional a efectos de ser candidato para un cargo público, no debe convertirse en un obstáculo para la activa participación política de un ciudadano que mantiene su condición de peruano y que lo faculta a elegir y ser elegido.
Por otro lado, quisiera hacer algunas precisiones sobre Legislación Migratoria de los Estados Unidos (EE:UU) y sus inmediatos efectos tributarios para el particular caso de la renuncia a la nacionalidad estadounidense.
El punto de discusión central en esta entrevista es la renuncia del candidato presidencial Kuczynski a su nacionalidad estadounidense. Según el Sr. Bruce, cualquier ciudadano que renuncie a la nacionalidad estadounidense, está en la obligación de pagar u impuesto de salida equivalente al 30% de los ingresos obtenidos en los Estados Unidos, mientras se mantuvo dicha nacionalidad.
Sobre este punto, el 17 de junio de 2008 el Congreso de los Estados Unidos y, con la autógrafa del Presidente de los Estados Unidos, George W. Bush, puso en vigencia la ley “Heroes Earnings Assistance and Relief Tax Act” (HEART) . Esta contiene los requisitos tributarios para los renunciantes a la ciudadanía estadounidense que se encuentren dentro de uno de los siguientes supuestos: a) cuenten con un patrimonio mayor a los 2 millones de dólares, b) tengan un promedio de impuesto a la renta anual de 140 mil dólares en los últimos cinco años -esta cifra varia de año a año – o, c) que no puedan demostrar cumplimiento con sus obligaciones tributarias en el periodo previo de cinco años.
Ésta, en sus secciones 877 A y 2801, establece 3 elementos claves como consecuencia del acto de renuncia a la ciudadanía estadounidense:
1. La imposición de un impuesto a la utilidad por venta ficticia del patrimonio (a nivel mundial) del renunciante valorizado a precio de mercado al dia previo de hacerse efectiva su renuncia y con un descuento a la ganancia de los primeros $600,000, el exceso es imponible. Este impuesto se aplica por una sola vez y se exceptúan los beneficios obtenidos de forma diferida o producto de rentas fiduciarias que el renunciante no haya constituido para sí los cuales mantienen una retencion del 30% igual como si no hubiese mediado renuncia.
2. Los regalos o donaciones en exceso de US$12,000 hechos por el renunciante a cualquier ciudadano de los Estados Unidos estan sujetos a impuestos, a excepcion del conyuge y entidades caritativas.
3. Deja de ser efectiva la obligación de presentar (y pagar según sea aplicable) el impuesto a la renta por los diez años consecutivos a la fecha efectiva de la renuncia .
Es mi intención establecer una respuesta clara ante la aberrante opinión “no experta” e irresponsable, por su calidad de personaje público, de alguien, que a mi entender, quiso descalificar a un candidato por el pecado de ostentar doble nacionalidad y exigirle que renuncie a una para postularse a la presidencia, cuando la Constitución peruana no lo obliga a ello.
En consecuencia, la Constitución del Perú no obliga a renunciar a una nacionalidad que no sea la peruana, por no considerar esta condición como incompatible con el cargo de Presidente de la República quien basta sea peruano de nacimiento.
El Estatuto de Inmigracion y Naturalizacion de los Estados Unidos, si bien requiere de la renuncia a la ciudadanía anterior a la naturalización como estadounidense, la Corte Suprema de los Estados Unidos, en el caso Afroyim v. Rusk , estableció un criterio importante sobre la doble nacionalidad al admitir que esta no se pierde por el hecho de participar en elecciones del pais del cual el ciudadano estadounidense sea un natural siempre que ello no exija su renuncia a su ciudadania. Esta importante decision de la Corte Suprema determino un cambio en las politicas del Departamento de Estado a partir de 1990 al facilitar el provecho de multiples ciudadanias en favor de muchos estadounidenses. Le recuerdo al lector que el sistema legal del Common-law se rige tanto, por Normas Estaturias, como por Case Law o Sistema de Precedentes Judiciales, ambos con igual peso y obligatoriedad de cumplimiento.
En todos los casos antes expuestos, cabe anotar, que el único caso de excepción, creado por la Ley HEART, es el “Mark-to-Market Tax” y, de manera relativa, porque atribuye el impuesto a las utilidades por la venta ficticia de los activos patrimoniales del renunciante menos los primeros $600,000 y no como erroneamente afirmo el Sr. Bruce, el 30% de todos los ingresos obtenidos por el renunciante en territorio de los Estados Unidos durante el periodo que el renunciante ostento la nacionalidad estadounidense, lo cual no solo sería en exceso oneroso a comparación del primero, sino ilegal puesto que caeria dentro del supuesto de doble tributacion al configurarse en una imposicion sobre un impuesto que ha sido calculado, cancelado y pagado cada año.
Pese a los esfuerzos de esta ley de frenar el éxodo de ciudadanos estadounidenses acaudalados, en los últimos tres años, el número de ciudadanos estadounidenses millonarios renunciantes de su nacionalidad se ha venido incrementando dramáticamente. A consideracion de muchos resulta más conveniente pagar los impuestos antes citados que seguir sujetos a la Legislación Tributaria de los Estados Unidos, que junto con Eritrea, son los únicos dos países en el mundo que basan su imposición tributaria en el concepto de nacionalidad, antes que en el de residencia.
Es mi deseo que los candidatos y sus representantes por respeto a la inteligencia de los electores, se expresen con correccion y ajustandose a la verdad y no manipulando la informacion en beneficio personal o de su grupo y no alentar nacionalismos exacerbados y separatistas que no solo no nos benefician, sino resultan anacronicos.
Monday, March 21, 2011
Notes on Dual Citizenship in Peru's Presidential Race.
I have been a little disconnected from the news and details concerning Peruvian politics. I know that we are in the middle of a presidential election and, as a Peruvian living abroad since 2001; I decided to begin my quest for information about the candidates and their proposals.
The internet turns out to become the number one source of information, especially for expats like me, therefore, while accessing Peruvian media I had the chance to watch the National TV interview to Mr. Carlos Bruce Montes de Oca, Spokesperson of Candidate Mr. Alejandro Toledo, by Rosa Maria Palacios, journalist and lawyer. http://www.americatv.com.pe/portal/noticias/voto2011/carlos-bruce-pidi-kuczynski-mostrar-renuncia-su-nacionalidad-norteamericana
As a Peruvian next to become a Canadian citizen, I couldn’t feel more affected by the opinions expressed by Mr. Bruce during such interview. I understand his concern due to the sudden increase in popularity of Candidate Mr. Pedro Pablo Kuczynski, but to disqualify his candidacy on grounds of dual citizenship is definitely an excess.
Assuming that the opinions expressed by Mr. Bruce are true, all Peruvians living abroad who adopted the citizenship of the country they are living in, are immediately disqualified to actively participate in further elections as candidates for office on grounds of “morality and ethics” and, therefore refrained to apply valuable experience acquired abroad that could be of major advantage for our country.
Dual citizenship when one does not exclude the other and no statutory prohibition emerges in this sense, should not become an obstacle for that Peruvian national to pursue an active participation in his country’s political life, especially when the Constitution allows him/her to elect and being elected with no other condition that being a national by birth.
However, the purpose of this open letter lies in the second part of this interview and relates to Immigration and Naturalization Law of the United States of America and its immediate effects in taxation on US expatriates, considering first and foremost Mr. Bruce’s appearance in national TV as an expert in the topic.
The central discussion was Mr. Bruce’s request to Mr. Kuczynski to renounce his US citizenship; something the first alleges the second will not do considering the latter will be mandated to pay an exit tax equal to 30% of every penny earned in the USA while being a US citizen.
In June 17, 2008, the United States Congress passed the Bill H.R. 6081, later enacted by President George W. Bush as Heroes Earnings Assistance and Relief Tax Act “HEART” This Act contains a section with the applicable tax regime for certain individuals who relinquish their US citizenship (hereafter referred as expatriates) if that individual (i) has a net worth of US$2 million or more, (ii) has an average net income tax liability of greater than US$139,000 for the five year period prior to expropriation, or (iii) fails to certify that he/she has complied with all US federal tax obligations for the precedent five years.
The Act consists of three key elements:
1. The so-called “mark-to-market”
tax that will apply to the net unrealized gain on the expatriate’s worldwide
assets as if such property were sold (the “deemed sale”) for its fair market
value on the day before of the expatriation date. Any net gain on this deemed
sale in excess of US$600,000 will be taxable. Trustees of non-grantor trusts
must withhold and pay over to the IRS 30% of the portion of any distribution
that would have been taxable to the expatriate had he not expatriated.
2. A tax on certain gifts and bequests over US$12,000 made by the covered expatriate
to any US national except an spouse and/or charities, and,
3. A repeal of the current so-called ten year shadow period for covered expatriates for income tax filling.
In: Withers Worldwide "Exit Tax for US Expatriates to Become Law", London May 2008.
My humble intention is to provide a clear scenario in reply to an opinion
expressed with evident lack of knowledge and expertise, furthermore coming from
a public figure like the Spokesperson of one of the candidates who happens to be
a former president of Peru.
In consequence, the Political Constitution of Peru does not mandate the relinquishment of a citizenship on grounds of incompatibility with the exercise of Office of President of Peru.
The Immigration and Naturalization Act of the United States mandates that the applicant to the US citizenship renounces to his prior citizenship before his pledge of allegiance, however, the Supreme Court of the United States in the case Afroyim v. Rusk (1967) established the concept of dual citizenship and the State Department policy since 1990 has gone beyond the requirements of the Afroyim Decision in allowing freedom to US citizens to take advantage of multiple citizenships. It is appropriate to remind the non-common law readers that this System of Law is informed not only by Statutes but also by equally enforceable Case Law.
Therefore being the “mark-to-market” applicable way to enforce this kind of exit tax for US expatriates rather than the so-called, as per Mr. Bruce’s opinion, 30% tax of all income earned by the expatriate for his/her time being a citizen, is evident to infer that not only the first method is less punitive but that the latter is illegal considering that it will impose double taxation assuming the income was taxed and paid every due year.
Besides the efforts of this Act of regulate and maybe even refrain certain US nationals of renouncing their citizenships, in the past three years following its
enactment the number of wealthy US nationals that became expatriates had dramatically increased. This shows us clearly that this exit tax is still for
some, preferable than to remain in tax system that with Eritrea makes the USA
the only two countries in the world that base their tax system in nationality
rather than residency.
Is my wish that all candidates and their spokespersons respect their constituents’ right to be well informed and refrain to manipulate the data and information in their own benefit. We need to know that whatever they say is adjust to the truth and that those nationalisms which rather than uniting they divide are nowadays outdated.
Maria Elisa Rodriguez
The internet turns out to become the number one source of information, especially for expats like me, therefore, while accessing Peruvian media I had the chance to watch the National TV interview to Mr. Carlos Bruce Montes de Oca, Spokesperson of Candidate Mr. Alejandro Toledo, by Rosa Maria Palacios, journalist and lawyer. http://www.americatv.com.pe/portal/noticias/voto2011/carlos-bruce-pidi-kuczynski-mostrar-renuncia-su-nacionalidad-norteamericana
As a Peruvian next to become a Canadian citizen, I couldn’t feel more affected by the opinions expressed by Mr. Bruce during such interview. I understand his concern due to the sudden increase in popularity of Candidate Mr. Pedro Pablo Kuczynski, but to disqualify his candidacy on grounds of dual citizenship is definitely an excess.
Assuming that the opinions expressed by Mr. Bruce are true, all Peruvians living abroad who adopted the citizenship of the country they are living in, are immediately disqualified to actively participate in further elections as candidates for office on grounds of “morality and ethics” and, therefore refrained to apply valuable experience acquired abroad that could be of major advantage for our country.
Dual citizenship when one does not exclude the other and no statutory prohibition emerges in this sense, should not become an obstacle for that Peruvian national to pursue an active participation in his country’s political life, especially when the Constitution allows him/her to elect and being elected with no other condition that being a national by birth.
However, the purpose of this open letter lies in the second part of this interview and relates to Immigration and Naturalization Law of the United States of America and its immediate effects in taxation on US expatriates, considering first and foremost Mr. Bruce’s appearance in national TV as an expert in the topic.
The central discussion was Mr. Bruce’s request to Mr. Kuczynski to renounce his US citizenship; something the first alleges the second will not do considering the latter will be mandated to pay an exit tax equal to 30% of every penny earned in the USA while being a US citizen.
In June 17, 2008, the United States Congress passed the Bill H.R. 6081, later enacted by President George W. Bush as Heroes Earnings Assistance and Relief Tax Act “HEART” This Act contains a section with the applicable tax regime for certain individuals who relinquish their US citizenship (hereafter referred as expatriates) if that individual (i) has a net worth of US$2 million or more, (ii) has an average net income tax liability of greater than US$139,000 for the five year period prior to expropriation, or (iii) fails to certify that he/she has complied with all US federal tax obligations for the precedent five years.
The Act consists of three key elements:
1. The so-called “mark-to-market”
tax that will apply to the net unrealized gain on the expatriate’s worldwide
assets as if such property were sold (the “deemed sale”) for its fair market
value on the day before of the expatriation date. Any net gain on this deemed
sale in excess of US$600,000 will be taxable. Trustees of non-grantor trusts
must withhold and pay over to the IRS 30% of the portion of any distribution
that would have been taxable to the expatriate had he not expatriated.
2. A tax on certain gifts and bequests over US$12,000 made by the covered expatriate
to any US national except an spouse and/or charities, and,
3. A repeal of the current so-called ten year shadow period for covered expatriates for income tax filling.
In: Withers Worldwide "Exit Tax for US Expatriates to Become Law", London May 2008.
My humble intention is to provide a clear scenario in reply to an opinion
expressed with evident lack of knowledge and expertise, furthermore coming from
a public figure like the Spokesperson of one of the candidates who happens to be
a former president of Peru.
In consequence, the Political Constitution of Peru does not mandate the relinquishment of a citizenship on grounds of incompatibility with the exercise of Office of President of Peru.
The Immigration and Naturalization Act of the United States mandates that the applicant to the US citizenship renounces to his prior citizenship before his pledge of allegiance, however, the Supreme Court of the United States in the case Afroyim v. Rusk (1967) established the concept of dual citizenship and the State Department policy since 1990 has gone beyond the requirements of the Afroyim Decision in allowing freedom to US citizens to take advantage of multiple citizenships. It is appropriate to remind the non-common law readers that this System of Law is informed not only by Statutes but also by equally enforceable Case Law.
Therefore being the “mark-to-market” applicable way to enforce this kind of exit tax for US expatriates rather than the so-called, as per Mr. Bruce’s opinion, 30% tax of all income earned by the expatriate for his/her time being a citizen, is evident to infer that not only the first method is less punitive but that the latter is illegal considering that it will impose double taxation assuming the income was taxed and paid every due year.
Besides the efforts of this Act of regulate and maybe even refrain certain US nationals of renouncing their citizenships, in the past three years following its
enactment the number of wealthy US nationals that became expatriates had dramatically increased. This shows us clearly that this exit tax is still for
some, preferable than to remain in tax system that with Eritrea makes the USA
the only two countries in the world that base their tax system in nationality
rather than residency.
Is my wish that all candidates and their spokespersons respect their constituents’ right to be well informed and refrain to manipulate the data and information in their own benefit. We need to know that whatever they say is adjust to the truth and that those nationalisms which rather than uniting they divide are nowadays outdated.
Maria Elisa Rodriguez
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