It’s kind of a pain for someone living in say Kenya which doesn’t have a tax treaty with the US, but it’s not totally absurd to think you owe something to a country whose citizenship you continue to benefit from.
It’s kind of a pain for someone living in say Kenya which doesn’t have a tax treaty with the US, but it’s not totally absurd to think you owe something to a country whose citizenship you continue to benefit from.
Yes it is honestly. The US is the only G7 county (and one of the only countries worldwide) to engage in extraterritorial taxation.
It is absurd. If you are gaining from services in that country, you should pay taxes to that country. If you have moved abroad and aren't gaining from any services if that country, you should not. Because you are effectively not a member of that community anymore and should be contributing your taxes to another society. To even have to handle the double taxation accounting is ridiculous. It's that simple.
Does someone gain benefits of being an American even when not living in America? Potentially, but many of those benefits could be connected to more targeted taxes than simply worldwide income tax.
This is clearly not about justice and is instead about the long arm of the IRS seeking their pound of flesh anywhere they can get it.
I know Americans who left the US 40 years ago and have lived and become fully integrated citizens of other countries. Yet simply to retain the right to return the US at some point, they must pay taxes every year in the middle? And trying to give up their citizenship isn't that easy either.
If we want to prevent tax havens, I'm totally fine with that. Force sensible global tax regimes and prevent countries from being havens. But the solution isn't extraterritorial taxation.
People have the choice of giving up their U.S. citizenship.
> Yet simply to retain the right to return the US at some point, they must pay taxes every year in the middle?
Yes? Or do we allow everyone who isn't participating in our society as a citizen would to come and go as they please?
Sure, but if you have more than $2MM assets then you must pay an exit tax.
From: https://1040abroad.com/faq/renouncing-u-s-citizenship/
“The Exit Tax that you, as a covered expatriate, would have to pay is calculated as if you have sold all of your assets at Fair Market Value on the day prior to your relinquishment, and the associated capital gains are subject to this tax. The Internal Revenue Code provides that the first $699,000 of this capital gain will not be taxed. The tax payment is due within 90 days after giving up your U.S. citizenship. Expatriation is considered to be effective for tax purposes, even if you fail to file the Expatriation Information Statement (form 8854). The exceptions from the main rule are certain deferred compensation items, specified tax deferred accounts, and non-grantor trusts.”
“You can still become taxable in the U.S. under the normal U.S. tax rules if you continue to have U.S.-sourced income.”
Letting people take advantage of all the US offers while paying no tax on their growing wealth, and then letting them retire elsewhere without having put in their fair share makes no sense. Of course, we could stop taxing capital gains so favorably, as an alternative.
I'll agree though that the reporting and other requirements are needlessly complex.
Medicare is much trickier as every American over 65 is entitled to it, but I'm not sure how that coverage works if you live outside the US.
This is because the US makes it illegal for families to pay ransoms.
As with most things international, not being American is an asset in such a situation.
https://www.newamerica.org/international-security/policy-pap...
I never thought about my born Country is going to help with anything as i moved away and pay taxes somewhere else. I rather be rescued to “home“
https://en.m.wikisource.org/wiki/Universal_Declaration_of_Hu...
> Article 15
> 1. Everyone has the right to a nationality.
> 2. No one shall be arbitrarily deprived of his nationality nor denied the right to change his nationality.
The US is one of the few countries in the world taxjng non resident citizens.
https://www.taxesforexpats.com/expat-tax-advice/us-tax-treat...