Taxes: Talk of Double Standard and Stunning Hypocrisy

us_IRS_shakedown
Eritrea is hounded, ostracized, and even sanctioned for collecting its relatively modest 2% expat tax while no one dares to offer even a peep of criticism when the U.S. imposed its monstrous 39.6% federal tax on expat Americans. Does the word hypocrisy ring a bell?

By MINA,

This story may unnerve you… It’s the story of how Eritrea, a small, mostly unheard-of country in East Africa, and the United States, do the same awful thing.

Nearly every country in the world bases its tax system on residency rather than citizenship. If you’re an Italian citizen, and you leave Italy to live and work in Dubai, you don’t have to pay taxes on the income you earn abroad to the Italian government.

But Eritrea levies a 2% flat tax on its citizens who live abroad. If you’re an Eritrean citizen, you have to pay taxes to the Eritrean government, no matter where you live and work.

The media has condemned this as “extortion” and a “repressive” measure by an “authoritarian” government.

The UN has even weighed in. In Resolution 2023, the UN Security Council condemned Eritrea for “using extortion, threats of violence, fraud and other illicit means to collect taxes outside of Eritrea from its nationals.”

You might be wondering, “What’s the controversy? Eritrea is getting criticized, and rightly so.”

That brings us to the only other country on the planet with a similar tax system… the United States.

The U.S. also taxes its nonresident citizens, no matter where they live or work. This is the exact same thing Eritrea does, except the U.S. does it on a much bigger scale and with absolutely draconian penalties.

Eritrea’s paltry 2% tax is a mere fraction of the top 39.6% federal tax rate that expat Americans have to pay—even if they earn that income abroad and never set foot in the U.S. (The U.S. does exempt a limited amount of foreign earned income if you meet strict requirements.)

Also, Eritrea is a poor country with a very limited ability to actually enforce its 2% expat tax. Many Eritreans who live abroad have never even heard of it. Few are frightened by it.

The U.S., on the other hand, can enforce its byzantine tax system literally anywhere in the world. When you consider its global reach and the penalties—which can only be described as cruel and unusual—it’s no surprise U.S. expats are terrified. And they should be… or they aren’t paying attention.

The U.S. government threatens American expats with prison and outlandish fines merely for not filing a litany of complex forms correctly—even if no taxes are due in the first place.

When you consider all this, it’s not actually fair to compare poor little Eritrea and its relatively modest expat tax to the monstrous U.S. system.

Eritrea is hounded, ostracized, and sanctioned for using—according to the UN—“threats, harassment and intimidation” to “extort” taxes out of its citizens living abroad. You’d think someone would offer at least a peep of criticism for the only other country doing the same thing. But, if you listen for it, you’ll only hear the crickets chirping.

Even though it’s clearly a double standard, it’s easy to understand why it exists.

As the world’s sole superpower and issuer of the premier reserve currency, the U.S. is not accountable to anyone. It’s a heck of a lot easier to push around some small, impoverished African country than it is to stand up to the U.S. juggernaut. Just ask Canada.

Canadian Confusion

A few years ago, the Canadian government took the drastic step of expelling the head of the Eritrean consulate in Toronto because he’d been involved in levying the 2% expat tax on Eritreans living in Canada.

It seems Canada doesn’t like foreign governments shaking down Canadian residents. That is, unless the foreign government is the United States.

Somehow I don’t expect the Canadian government to give any U.S. officials the boot… even though they regularly shake down far more Canadian residents for much more money.

Curiously, Canada’s reaction to the U.S. expat tax is the exact opposite of its reaction to Eritrea’s. Rather than taking action to prevent the U.S. government from harassing U.S. persons living in Canada, the Canadian government facilitates it by complying with the odious FATCA law—even though it contradicts Canadian law.

The Uncomfortable Truth

It’s always better to face reality than to ignore ugly truths. And the story of Eritrea’s expat tax highlights a big one: Americans live under one of the worst tax systems in the entire world.

The government treats its citizens like milk cows… to be milked until the last drop to pay for welfare, warfare, and other untold waste.

For Americans, there’s almost no escaping the tax farm. I call it the “new feudalism.”

It’s ironic, when you look at U.S. history. In not much time, Americans went from revolting over a comparatively small tax on tea to thoughtlessly submitting to an ever-growing tax monster.

Still, don’t hold your breath for positive change. As long as the U.S. dollar remains the world’s premier reserve currency, no other country will stand up to the U.S. forcing its abhorrent tax policies on the rest of the world.

Positive change through the U.S. political system is just as unlikely. Most Americans passively accept the current tax system as “normal.” And, insofar as they want change, many Americans want more people to “pay their fair share.”



EDITOR’S NOTE


“It seems to me that both the United States and Eritrea are following the same principal of taxing their citizens who live abroad. One we call extortion, the other we assist by handing over information. We say Eritrea uses threats, harassment and intimidation; the Americans only threaten the full sanction of U.S. law. Does the word hypocrisy ring a bell?” – Jim MacKay from Markham, Ontario

24 thoughts on “Taxes: Talk of Double Standard and Stunning Hypocrisy

  1. Mina weather a man or a woman not important. Do you know first and formost the history of Eritrea before you write this coment. I hope not first you have to read and easearch the history of Eritrea. To make my advice short without going to far. Eritrea paid blood sweat and tears to gain it’s freedom 30 years of strugle without no outside help. The country was turned into ashes it’s people was varnished its cities and village’s were destroyed by the Ethiopian napalm and cluster bombs. Were was the UNITED NATION’S at that time?were was the enter national community at that time. What did the they gave Eritrea after 1991. And you are saying 2% tax is to much for Eritreans or is obligation. This is nothing for us and we will pay it as long as our government told us to pay. We paid again blood sweat tears and sacrifice for our freedom. So before you write such comments please read first Eritrea so history.

    1. Brother. Please read the comment and article. It’s saying it’s wrong to Claim one is wrong the other is right.

        1. What representation are you talking? If the current PFDJ government doesn’t represent Eritrea, then who else? If you are not one of the haters already, as an Eritrean, you do not have any other representative government in this world than the current government under President Isaias Afwerki, fortunately.

          1. It is a constitutional term,TN….
            Let me make it simple for you:
            If no constitution or Rule of Law—-there are:
            -No Institutions
            -No checks and balances
            -No Freedom to have a say on your own nation’s business
            -No Freedom to be creative and to do business and to create jobs and to make a Living..
            -No right to defend yourself ….
            Then what?
            You get what you see.
            Mind you,we are NOT talking about the Western or African Style Elections but basic Rule of Law…

  2. Hayelom Tecklinkel · Edit

    When I pay 2% to the Eritrean govt it is minimal, versus those building and protecting the nation 24/7

    1. But only less than 20% Diaspora Eris pay this!
      The cash went down form $300 Million in 1990s to mere $50 Million max for the last 10 years.

      1. so what do you want to say. You are happy for paying and others not paying. acutally Eritrean people and the Eritrean gov never depend of this. it is just nominal. any one who does not want to pay , does not have to buy . it is only for anyone wh wanted to do it. actually now People of moral highround pay it. To tel you frankyly eri gov does not care as it does not depend on that money. it is only for people who haave love to their people or those who do business or have other ties with the country do it. and it is on their own will.all countries tried to stop it by law. But they failed. Sweden, America, UK and many others proved it legal . so it is acceped. chaper closed on this topic. It is not a topic for discusson. chaper closed.
        whether people want to pay or not upto them. I pay and it does not harm me. I have not become poorer, an those who do not have not become richer because of that. what is if you pay 500 dollars in a year. it is not big money. Who cares about that.

  3. Foreign Earned Income Exclusion

    If you meet certain requirements, you may qualify for the foreign earned income and foreign housing exclusions and the foreign housing deduction.

    If you are a U.S. citizen or a resident alien of the United States and you live abroad, you are taxed on your worldwide income. However, you may qualify to exclude from income up to an amount of your foreign earnings that is adjusted annually for inflation ($92,900 for 2011, $95,100 for 2012, $97,600 for 2013, $99,200 for 2014 and $100,800 for 2015). In addition, you can exclude or deduct certain foreign housing amounts.

    You may also be entitled to exclude from income the value of meals and lodging provided to you by your employer. Refer to Exclusion of Meals and Lodging in Publication 54, Tax Guide for U.S. Citizens and Resident Aliens Abroad, and Publication 15-B, Employer’s Tax Guide to Fringe Benefits for more information.

    1. If an Eritrean worked at my company here in Belgium, he, like me, would get his annual bonus paid in to a SICAV which means the payment gets favourable tax treatment when compared to the infamous payroll taxes. If he was unfortunate enough to be American, the SICAV option is closed to him because the SICAV company do not want to deal with Americans and FATCA, far too dangerous. So, the American gets to pay more Belgian taxes than any other nationality, with no allowances for that made by anybody.
      The list of problems that the US tax code and it’s bully boy enforcer, FATCA, are causing for Americans who don’t live in the USA is simply enormous and NO WAY does an allowance before having to pay US taxes make much of a dent in those problems at all. I swear, the only way the wrong here will become plain to homeland Americans is when they start receiving horrendous tax demands and threats of life destroying fines simply because their American mother was born in England.

  4. Does the Eritrean government recognize any such exclusions when it forces people to pay the 2%? Please stop comparing apples and oranges MINA:)

    1. You seem to be disoriented Alem, is 2% payment comparable to humans life or blood? What kind of exclusions do you expect? As an Eritrean citizen living abroad, what would be your contribution for the nation building? Just visiting home every summer and spending your dollars there, is that the contribution you share? By the way, you’re the one who compares apples with oranges. Ask yourself before being judgmental.

    2. Hey Wed General(are u the same one?)
      You are the one comparing the apples with oranges but we are not sure about your argument though even though your clarification is helpful?
      2% is nothing but few pennies compared to what the US Fed Gov taxes its Citizens.
      Do you know that more than 5000 US Citizens give up every year their Citizenship coz of the unfair taxation it charges those Citizens?
      I know you advocate for the 2% rehab Tax by Eritrea,as I do(few years behind) and make sure people here understood you correctly.

    3. Wedi general, the first opposition. Oh what is if you give 1dollar a day that does not buy you a cup of coffee. I give up on people like you. If the people like did not live on this world the world would have been the best place to live. governments do not build a country, it s people do.you are toaling %1 0r 2 Dollars. instead you have to ask the government what can I do for my country. it does not matter American government spend the money on weapons or on military invading other countries. that is what for you pay your taxes.

    4. Again, you seem to think an earnings exclusion makes what the US does sort of OK. It’s not. An Eritrean in Europe is a lucky man, mainly because he’s not an American.

  5. The article is very dishonest to compare the two but this is where I agree with shabo. The US law is mainly designed to traget wealthy people avoiding taxes. However, the IRS code 877 and 877A can be avoided by filling additional form like 8845. If you are making less than 600,000 its will write itself off with a proffesional help. But for every other African countries, it should be okay to give to your country 2% or more to build it. Every other African goes home and complain about lack of xyz but if you ask them what have you done? Nada to be exact. Credit is given in that one.

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