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Comment by dragonwriter | Hacker News Reader

> There is no way to dodge taxes as a US citizen by moving abroad

Well, no way to "legally avoid"; "dodge" is broader, and there are probably many ways of dodging taxes that are easier if the institutions you deal with in your daily life aren't subject to US jurisdiction and regulations designed to expose tax evasion to US authorities.

Also, typically you want to have at least one national citizenship, so if you are planning to legally avoid US taxes by renouncing US citizenship, getting some other citizenship is usually step one.

Of course, there are other reasons it is convenient to have citizenship in an EU member state, even if you are a US citizen, so its not necessarily step 1 of a tax dodge.

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> aren't subject to US jurisdiction

Every single financial institution that transacts in US dollars (so, all of them) is subject to the power of the US Treasury.

So many people want to believe all the rich are hiding their money abroad.

For American citizens, this simply isn't true and hasn't been for a decade or more. It's not feasible. Also, American capital gains taxes (the ones rich people mostly pay) are extremely low compared to most places in the EU anyways. Its not worth the risk even if you can find a nefarious organization to help you do it.

Did you somehow miss the whole Panama papers shebang? Yeah, the rich do hide their money abroad.

There was a surprising low number of Americans in those documents, which date back into the 1970s. In 2010 there were significant changes in US law which effectively removed places like Panama papers from happening again moving forward.

These are the reasons the poster above you stated the decade limitation. He is correct.

Renouncing US citizenship makes you pay taxes as if you sold everything you owned on that day and then died (or something close to that) - it doesn’t help you with any past profits (n fact, likely to harm) though it might help with future profits if you moved to a lower/different tax jurisdiction.

It used to be possible. Ted Arison renounced his US citizenship when the end of his life was visible, thus avoiding estate taxes. This prompted an immediate change (you are a US tax payer for 10 more years after renouncing) and later redone with the current “you are dead to us” treatment.

Eduardo Saverin took a bet with FB: he renounced, which set his tax obligation at X. Then FB went down, which meant he had to pay a larger percentage of his wealth. But then FB shot up significantly, so he ended up saving much on taxes (as to whether he did this to avoid taxation is not settled - he naturalized in Singapore which does not allow dual passports. Arison moved to Israel which does, so it was clearly a taxation avoidance plan)

you still have to pay exit taxes on renouncing, so not clear this is a good way of avoiding tax.

Exactly, he couldn't avoid expatriation taxes on anything he currently owns.

(https://www.irs.gov/individuals/international-taxpayers/expa...).

Also... if the renunciation is motivated by avoiding taxes, the person is banned from re-entering the USA.

excerpt[1]: 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.

EDIT REPLY to : "Would they have to prove intent?"

Probably not because granting admission into the USA of a non-citizen (ex-citizen) is at the discretion of the Executive Branch of government and doesn't go through "due process" of any court system. So no "burden of proof" required.

[1] https://travel.state.gov/content/travel/en/legal/travel-lega...

Would they have to prove intent?

Then COVID is the perfect cover for shifting citizenship. It gives a plausible non-tax reason for making the change.

Someone who is worth $15B would be very well-advised, and if he's been thinking about doing this in the past, his advisors may have decided that now is the right time to pull the trigger. Also helps to have plenty in the news these days, to avoid becoming 'the story' on a slow news day/week.

Why would COVID be perfect cover for giving up your US citizenship? It might be good cover for getting another, sure.

You got it — the timing is good for this step, which is adding a new citizenship. Then he can drop his US citizenship in the future, after his new one is established.

But why would the timing of this step matter?

USA expatriation taxes are quite steep. I'm not a lawyer, but I believe that all unrealized gains of all assets are taxed upon exit as if the assets were being sold. Further, I think that income generated by through US companies (like investments) are taxed as US income for ten years after renouncing citizenship.

Also, forget about coming back (say for a friend's wedding or an important medical procedure), the laws assume that high net worth individuals are leaving to avoid future taxes.

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