United States Expatriation at an All-Time High
axibase.github.io
axibase.github.io
Note it's not cheap to expatriate either. It's 2000 a family member plus possible exit tax. IRS can also pursue you for taxes afterwards if they think you did it to explicitly avoid taxes. There is no 100% escape.
And worse, while you're still entitled to vote for your representatives in the last place you lived in the US, politically, why would they even give you the time of day?
There are a lot of Americans living abroad, estimated to be 3-9 million, excluding military. Collectively more than a number of states. Yet their distribution means that Americans' voices abroad fall on deaf ears in Washington.
also, he's not saying that ppl who give up their citizenship should have fair voting representation. it's the people who are still americans who just happen to live overseas. we are still paying US taxes and therefore should have proper representation.
if i didnt have to pay US taxes, i wouldn't care.
You must ask permission to renounce your citizenship, and the government can deny your request, meaning you can't just leave. Then they charge you lots of money to leave, as you've explained.
Assuming you mean the former, I can certainly see the IRS coming after expats for evasion. And why not? But they cannot be allowed to run roughshod over just anyone they "feel" is evading.
I'm sure this image has been distorted by Hollywood et al., but I have the impression that the US is a particularly violent place, at least when compared to Western countries of similar development.
That impression is right and wrong. Violent crime is more common in Europe but murder is more common in the US
Violent crime in the US (murder included) is mostly confined to drug trafficking and the downstream crime.
Basically unless you or your neighbors associate with those kinds of people who derive their income from illegal drugs you're slightly less likely to encounter violent crime in the US.
I'm summarizing a paper I bookmarked awhile back. I'll try and find the link.
I've lived in Atlanta, Chicago, Boston, Miami, Los Angeles, even Flint, Michigan and have even been to some of the less nice parts of those areas. I've never been mugged or beat up or even threatened really. I've had my car broken into once or twice in 50 years, but I was not in or near it at the time. The image Hollywood projects is extremely distorted. I've even known lots of people who owned or really loved guns, and none of them has ever done anything violent with them as far as I know.
One thing I did notice that was interesting. If you click the 'raw data' from the Federal Register and scroll down the list of those who have given up citizenship there is one 'Steven Ballmer' listed..I had to chuckle at that one...
More precisely it is taxation by citizenship, not residence.
For example, the Netherlands will happily tax everyone on their assets worldwide, but you're not going to be paying Dutch income taxes if you're not living and working in the Netherlands.
Both. Non-citizens (inc. illegal immigrants) are required to pay US taxes just for residing in the United States. The US will actually give non-citizens a unique tax ID (TIN) for this express purpose.
So the US will tax both based on residential status AND citizenship status.
That's... Slightly insane?
They don't really deport people that way, though. It could certainly happen in the future, but currently they're focusing on criminals and suspected gang members for deportation.
Most people will keep their passports even when residing long term abroad.
Renouncing American citizenship is extremely rare, as these figures show. The taxation is a paperwork hassle, but you need a very high income to actually owe anything -- for most, the higher tax rate in the new country offsets the American tax due.
If the Department of Homeland Security determines that the renunciation is motivated by tax avoidance purposes, the individual will be found inadmissible to the United States under Section 212(a)(10)(E) of the Immigration and Nationality Act (8 U.S.C. 1182(a)(10)(E)), as amended. https://travel.state.gov/content/travel/en/legal-considerati...
You don't officially have to give a reason to renounce, but consular officials might ask you verbally for your reasons. You are not required to give one though. You have the option to include a written statement, but I'm not sure why you'd ever want to take it (unless you really want to give them additional reasons to deny you entry).
[0] https://en.wikipedia.org/wiki/Reed_Amendment_(immigration)
That's not especially common.
Further details: https://www.americansabroad.org/us-taxes-abroad-for-dummies-...
(I'm not American, but none of several close friends in Europe with dual US/something-EU citizenship have given up their American citizenship.)
This is a big misunderstanding of US taxation. Every US citizen must file their taxes on income earned anywhere in the world, even if not earned in the US.
However, for most people, it is very unlikely to actually pay any additional tax to the US government.
https://www.irs.gov/individuals/international-taxpayers/u-s-...
"Your worldwide income is subject to U.S. income tax, regardless of where you reside."
But there's the foreign earned income exclusion:
https://www.irs.gov/individuals/international-taxpayers/fore...
If you live somewhere with higher taxes, you owe the US nothing. If you live somewhere with lower taxes, you owe only the difference.
US is also really fun for girls/partying if you have money.
30%+ of your income down the drain sucks a lot, but past a certain point in net worth it becomes somewhat attractive. Same reason people live in California even with the insane tax burden--it's really really freaking nice.
You have got to be visiting the wrong countries (North Korea?)
Literally anywhere I've been outside the US is a hell of a lot more fun for girls/partying than the US. And that's an understatement.
In the hypothetical scenario where an emigrant from the US is 100% determined to never return, and who also is confident in the long term stability of their new host nation - then the inconveniences of yearly tax paperwork might outweigh the benefits. However, I think that's more of a corner case than not as evidenced by the fact that the vast majority of emigrants choose to retain their US passport.
So yes, I understand filling a tax return is a chore, but you'll only pay taxes if the amount you paid in your residence country is lower that what you would have paid in federal taxes alone.
Considering how low US income tax is, in most countries you won't have to pay anything.
Compared to what? The maximum federal rate is nearly 40%. Yes, there are many many countries with maximum rates in the 50-60% range. But 40%, even marginal, is not low.
https://en.wikipedia.org/wiki/List_of_countries_by_tax_rates
Sort by max individual rate, it's 8th from the top in a list 221 countries long.
At the Federal level personal taxation is not terrible but it's not low, either. The US has the second higher corporate income tax in the world according to that same chart, and the highest depending on your state of incorporation/operation (if you include state/local).
> Considering how low US income tax is
Now I do understand what you mean when you make the distinction that for expatriate taxation based on citizenship, only the federal taxes are considered, but that is not what the original language actually said in the context of the statement regarding how low US income tax is, and weasel language to push a political agenda is annoying at the best of times.
To be scrupulously fair and expose my biases though, frankly even federal taxes alone are high as far as I'm concerned. Any amount is high when you're forced by threats of violence to pay it. The appropriate amount gathered by that method ought to be zero percent.
Not to mentions that banks and brokers refuse to take you as a customer if you are a US taxpayer.
In other words being a US citizen is no upside and all downside.
Furthermore, good luck finding a place to invest in the first place. If looking for a US company, the likes of Vanguard and Charles Stanley will freeze your account if they find you reside outside the US. In the UK, I've gotten very used to seeing the text 'we are unable to open accounts for US, Cuban, Iran, Sudan, Syria, and North Korea persons'.
I make well below the standard deduction and just want to save a bit for my future. The US laws as they stand make this very difficult.
When I called to change my address for an old work Fidelity IRA years back, the panic in the advisors voice, as he informed me I'd no longer be able to contribute to the fund, was kinda funny. Considering I'd never personally contributed to the account in the first place.
Interactive brokers are the only broker I've found to actually advertise as for expats, but the 10k min is a bit much for me.
Not the cheapest though, but I think they may actually be cheaper than my work place pension! I need to sit down and work it out.
I started with a £20 deposit, and just set up a monthly transfer.
Ugh, this is maddening. I had a Kafka-esque conversation with a Charles Schwab dude whose scripted answers almost comically changed when he learned that I lived in the Netherlands. It was fine at first, even with the understanding I lived abroad. But their deceptively advertized "expat services" only apply to Americans living in HK and UK.
It wasn't as bad when I called Vanguard, aside from the non-answers they kept giving me at first (they kept saying it was against US regulations and illegal, which I know to be false; when I pressed, they admitted it was purely their own company policy). At least she wasn't literally reading from a script and took the time to check with some supervisors.
Even in countries like the UK where there is a tax treaty in place, it can be difficult because the UK offers a wide variety of tax wrappers to encourage people to save money. But those tax wrappers can count as PFICs for US taxes and you won't be getting the paperwork you need to do a QEF, so you have to Mark To Market
I farked up on an ISA because I never knew about any of this and ended up owing over $1000 in back taxes. If I had known enough to declare the PFIC correctly from the date I started it, I wouldn't have owed any where near that amount of tax on it :(
I'd like to hear more about this. I'm a Canadian, and our conservative politicians are always saying that WE are the most wealthy-unfriendly tax regime in the world, and that it is stifling investment.
And I keep reading about how in Scandanavian countries, the rich have to give nearly all of their income back to the state, but they are impossibly nice people, so they don't mind. Are Sweden, Norway, Finland, and Denmark friendlier to the wealthy AND providing Universal Health Care to their citizens?
High-income tax rates are high, but not that high.
The income tax is progressive and hits the ceiling of 60% pretty fast. I don't remember exactly but I think it does if your salary is more than 60000 Swedish kronas (around 6000 euros). Universal Health Care is available to everyone who has Swedish ID (I do) and includes higher cost protection for dental services.
Without diving in I can tell Sweden is definitely not friendly to the wealthy but it's very friendly to a lot of people with everyday common jobs with lower and middle level salaries.
Thanks for the info.
[citation needed]
The US has no wealth taxes like some European countries, and long-term capital gains tax is 15%.
Just to pick a few counterexamples:
Denmark has 42% capital gains tax on gains over ~$7600.
Netherlands has a 1.2% asset tax on assets held worldwide over something like $20k.
>I have friends who have never lived or worked in the US amd yet are asked to pay high US taxes.
Asked to pay or just to file?
US taxes are absurdly complex and expensive. The upside is that the system can be fairly easy to game / optimize.
So i travel between different countries without living much in any particular one and i pay zero tax. And if i ever want to live somewhere fulltime, i can defer income into trusts and collect it in future years when i happen to not be domiciled anywhere.
Options available to everyone except US citizens.
Or for example my friends in Russia who are US citizens have to pay a crazy US rate instead of the far more reasonable 13% in russia.
All the comments about scandi countries assume people actually declare income without using many more legal strategies available there compared with the US. The effective tax situation for wealthy US citizens is actually much worse, it is just obfuscated by the headline number.
Technically no, so does Eritrea tax non-resident citizens on their worldwide income.
And it's frankly hard to make sense of the rest of your comment.
It's difficult (or impossible?) as you say for an American citizen to basically be a perpetual tourist, not actually residing anywhere?
>to pay a crazy US rate instead of the far more reasonable 13% in russia.
>All the comments about scandi countries assume people actually declare income without using many more legal strategies available there compared with the US.
Well, yes, I am assuming that people generally don't try to live as a perpetual tourist and skirt tax burdens by not actually living anywhere.
>The effective tax situation for wealthy US citizens is actually much worse, it is just obfuscated by the headline number.
Still eager to see this proved.
as a non-US citizen i can live in the US for many years and keep accruing income/assets into a trust + take loans against said income/assets to fund expenses. then one year when i happen to be a perpetual tourist i distribute all of that from the trust to myself. zero taxes.
I'm not sure what exactly it is my income taxes pay for, but about anything I might want from a government is already paid for by direct billing or by some other type of tax. Maybe I'm paying for a seat cover of an F-35. Maybe I'm paying for a bridge repair that has been overdue for 30 years. I lack the attention span to follow the money that far.
That guy still pays sales taxes, and any taxes that may be indirectly passed on to him through business dealings. It isn't zero; it's just less than you, at the price of being a technically domicile-less nomad. The lifestyle is a bit more stressful, as you have to schedule mandatory events around several sets of local laws.
How is the Danish stock market doing these days?
Spoken as a true first-world citizen.
I'd hazard that most of the repatriations/expatriations are from people living abroad and sick of the burdens of US tax/financial compliance
I would not call this an example of Western Exceptionalism. It is rather a phenomenon known as "othering" meaning to portray someone or something as different to emphasize that he/she/it is the other and not us/this. Note you won't find this term in Webster. They were apparently too busy adding "bling" and "ginormous".
These misconceptions will change once the solipsistic cloud over the western world clears out.
emigrant: a person who leaves their own country in order to settle permanently in another.
Also, one does not necessarily give up their citizenship to become an expat somewhere else.
This exactly the kind of solid out-reach that gets me to click through and take a look at the axibase product.
By Lincoln's second term, the American Civil War was already underway.
A common misconception. If you have given up your US citizenship, you are an immigrant. Not an expat.
Also, i dont think it's a term reserved for westerners. What do you call a rich saudi who currently lives in miami, an immigrant?
no, that one replaces the low-level anxiety of getting shot.
In the real world, this is, of course, laughable. Even people with guns don't fight back against armed gunmen, for two reasons.
1. Most of the time, you have no idea who the armed gunman is.
2. You are very likely to be mistaken for the gunman, and shot and killed by the police.
I'll take never being shot over being shot while carrying a gun and maybe shooting them back, anyday
I assume you were referring to terrorist attacks, but a stupid, inattentive, or drunk driver will kill you just as dead.
Of course we are still accepting traffic deaths at some level, but there is a lot of effort and resources devoted to reducing them over time. It's just expensive and disruptive.
Try again.