I'm sure there's a small number of rich people gaming the system, but for the vast majority of expats the citizenship-based taxation system is almost cartoonishly cruel.
I'm sure there's a small number of rich people gaming the system, but for the vast majority of expats the citizenship-based taxation system is almost cartoonishly cruel.
This is exactly why these people are renouncing US citizenship: They’re living overseas as citizens of another country and, like anyone rich or poor, don’t want to be paying taxes to a country they aren’t living in.
It’s not exactly unfair or nefarious. If they’re no longer living in the US and they are citizens and residents of another country, surrendering US citizenship is a logical choice.
Renouncing US citizenship is a common move for this exact reason. This article just happens to have drawn an arbitrary line in the wealth of people who renounce US citizenship and made a headline out of the wealthier subset. The wealthy are also more like to have dual-citizenship but relocate to another country, so they’d be over represented in this set.
Furthermore, the burden of FATCA is sufficiently onerous that many banks etc. just refuse to deal with it and close the accounts of US persons. A number of long-time expat Americans, e.g. in Germany, have renounced their citizenship because they are unable to function due to this.
Good read: Kim Philby as a Real Case of Indeterminacy of Radical Interpretation:
http://polatulet.narod.ru/dvc/ddbs/dennett_breaking.html#ch_...
I've been living here 3.5 years, 2 on a YM visa, 1.5 on a work visa. Unfortunately, my 2 years on YM don't even count towards the 5 required to get ILR. You can build up an entire life here & all it takes is for your work visa to be disappeared and then you have 1 month notice to gtfo the country otherwise you're "overstaying".
After 3.5 years somewhere you definitely build up "a life" there, but the UK gov offers no protections at all. Until you hit that 5 year mark they don't give a toss about you.
Challenging, and potentially criminal.
If you have any management authority over the bank accounts owned by the business, then those accounts fall under FACTA.
Hell, if you are even just an employee, but can sign on the bank account, then you have to report it to the US authorities.
So a 'business account' doesn't get you out of the US required reporting.
Also, the implication is that you'd use this for 'day to day' banking. Using a business's funds (a business bank account) to cover personal spending is typically criminal (embezzlement).
So not a solution.
And this doesn't solve the other problems, like pension savings or other financial products.
But you still have to file US taxes. As an expat, you have more forms to fill out.
AND the bigger challenges are banking. You still have to find a bank willing to open an account for you, and good luck getting more complex financial services.
[0] https://en.wikipedia.org/wiki/Foreign_earned_income_exclusio...
If you really want to fix this, you have change the main demographic of Turkish immigrants, probably by offering a clear immigration path to students who come to Europe for graduate programs or such.
WOuld you care to expand on that? I'm curious what in particular about the US immigrant culture you would like to see adopted, and what about the current German system prevents that culture from developing.
https://en.wikipedia.org/wiki/German_nationality_law#Victims...
Only because of US laws. I have two citizenships, but one residency. In most Western countries, being a resident is associated with healthcare and pension, so having one residency is logical.
U.S. citizenship carries extraterritorial benefits. For example, we're pretty good at getting our people out of thorny situations, even at great national expense. If someone isn't paying to support that, it makes sense to force a revocation decision.
So if anything, I'd say America is worse than other countries at getting citizens out of bad situations. But there seems to be a tendency for people to not look at what other countries actually do and just assume that America is the best.
[1] https://www.bbc.com/news/world-middle-east-32162364 [2] https://foreignpolicy.com/2015/04/21/washington-to-americans... [3] https://twitter.com/SMedia4/status/585286801968893954
I last saw data through the UNDP about ten years ago. It's very possible that the situation has degraded. And no country has 100% coverage, far from it. At the time, however, the U.S. government was exceedingly good at exfiltrating citizens from disaster zones. Granted, it has had more experience doing this because, well, empire.
The situation was starker for low-level assistance, in which many diplomatic missions will not get involved.
> According to a database compiled by New America from public sources, since 2001, American hostages taken captive by terrorist, militant, and pirate groups have been more than twice as likely to remain in captivity, die in captivity, or be murdered by their captors as the average Western hostage. Forty-three percent of American hostages died, remain in captivity, or remain unaccounted for, compared to an average of 19 percent for all Westerners.
[1] https://www.newamerica.org/international-security/policy-pap...
[1] https://travel.state.gov/content/travel/en/traveladvisories/...
To be clear, most if not all countries chartered special flights for free. Later on, some more flights were organized with the help of airline companies, but those were paid.
Apparently they charge the price of a one way Economy ticket. The difference in cost was paid by the Government. Seems quite reasonable to me.
how many American get into that kind of shit storm? it seem like this benefit isn't worth the taxes that you pay
https://www.washingtonpost.com/world/asia_pacific/north-kore...
In a country with higher taxes and a tax treaty you could earn $1M per year and never pay the IRS a dime.
It could even be said Americans are more at risk in those countries for being American and no other reason. So for people outside of that there won’t be any benefit.
I know a (thankfully small) handful of cases in which Americans' kids were arrested in a friendly country. The State Department provided invaluable support. (Recommendations on legal counsel, prudent next steps, relevant authorities' phone numbers...nothing nefarious, just context and support.)
I am under no illusion that I, with my resources, would get that sort of access. But it exists, and probably benefits U.S. international business concerns. Since this article concerns itself with rich overseas Americans, I think it's relevant.
One thing the US has is more bargaining power to force early release of some people accused of crimes (like Liangelo Ball in China, Anne Sacoolas in UK). That's significant leverage, but again: most people will never find themselves in that situation. But even then it's not like other countries will not imprison you if you're American.
Not many millionaires are getting arrested in general, due to the availability of lawyers and so on.
The US support might be very relevant for a war reported captured by ISIS.
But most millionaires are not going to be in those locations and/or able to afford good private security.
Are we? I’ve been told to use my other passport if ever in a situation like that. Are there any stats that support either case?
It's not unheard of, that dual citizens renounce their more or less vaguely authoritarian citizenship when it's too dangerous to live or visit there with a dual one. Since then the other state has no obligation to intervene and is even blocked from reigning into the affairs of another nation.
Is it because every single US diplomatic relation is in one way or other tied to the military?
If a jibali captures an operator then fair enough. The US is very preachy about their soldiers. But for a civilian to think about that as a benefit is just wild.
It's not like the US made this up. The Roman citizens had this protection too as they wandered the globe.
Last year, Navy SEALs from the Navy's Special Mission Unit parachuted in the dead of night to save a missionary. When's the last time the armed forces of Brunei did that? Or DRC? Or Azerbaijan? The answer is never. Intent != capability. I'm sure Paraguay wishes they could put commandos on the ground anywhere in the world in hours, but the fact is that they can't.
Being American is like having an American Express Card: membership has its privileges.
How thorny a situation has to be? Because I'm aware of a case when an American couldn't bring his own children to the states because his ex wife didn't consent to issue them American passports. Petitions, letters to the embassy and his congressman, nothing helped. A 3rd world country his ex wife's a citizen of had no issue with consents, it just issued passports allowing her to get the kids and leave the country they were residing in.
This is also how it works with other countries (e.g., Russia). They'll help if they get something out of it, or won't give a damn otherwise.
Navy SEALs from the Navy SMU parachuted into Africa in the dead of night to save a missionary kidnapped from a known conflict zone, killing 6 of 7 combatants (one wonders if they let the last guy go to spread Fear amongst his fellows). Perhaps some of you had different experiences (and/or perhaps the State Department really, really wanted you to leave), but that doesn't erase the rescue of Americans such as this man:
https://en.wikipedia.org/wiki/2020_Nigeria_hostage_rescue
We sent the best of the best in to save him. Not the JV team, the varsity. Before you whine, ask yourselves if perhaps there was some motive to telling you that nobody would help you if you didn't leave. Maybe they were trying to manage their risk.
You know who did get involved in our situation when I was with a group of mixed citizens from USA, UK, EU etc...? The UK and Denmark. France, the USA and Germany all did nothing at all.
This myth that the USA will save citizens from any situation needs to die. It's untrue and dangerous since it encourages Americans to do stupid things because they are convinced the Marines or Seals will come save them.
It is provably true the US does send armed forces in to save citizens, and it is obviously true that many other countries simply lack the ability to do so. That isn't a license to be stupid, but it is a differentiator between countries with true power projection capabilities and those who don't have the same.
Many citizenship's include extraterritorial benefits, but few of them are as aggressive with foreign income.
It's a fair question which countries approaches are the most effective, but this is hardly unique.
If there is an act of war or natural disaster, the U.S. is good at extracting its citizens. There is also a decent precedent of negotiating to release people taken hostage or held prisoner by unfriendly regimes. (Or causing a fuss when Americans are harmed in a friendly country.) That, in turn, has a deterrent effect.
For Americans with access to legal counsel and the State Department, the benefits expand. Rich, overseas Americans thus present a unique free-rider problem.
Such a gruesome story: Kenyan sources supported Israel, and in the aftermath of the operation, Idi Amin issued orders to retaliate and slaughter several hundred Kenyans then present in Uganda. There were 245 Kenyans in Uganda killed and 3,000 fled.
https://en.wikipedia.org/wiki/Idi_Amin
Amin first escaped to Libya, where he stayed until 1980, and ultimately settled in Saudi Arabia, where the Saudi royal family allowed him sanctuary and paid him a generous subsidy in return for staying out of politics.[18] Amin lived for a number of years on the top two floors of the Novotel Hotel on Palestine Road in Jeddah.
https://www.imdb.com/title/tt0455590/
Movie The Last King of Scotland is Based on the events of the brutal Ugandan dictator Idi Amin's regime as seen by his personal physician during the 1970s.
Since we are stepping out of playing world police, we have stopped doing that FYI in the past 15-20 years incrementally so. This ain't the late 20th century anymore.
So let’s drop this extraterritorial benefits stuff. No benefit the US has provided has been worth the worry, anger, and tedium of trying to be tax compliant in a situation where it’s impossible to be truly compliant (thanks to how irreconcilable foreign arrangements often are to US tax law).
https://americanexpatfinance.com/news/item/782-state-dept-re...
Not sure about actual benefits. The US passports is one of the worst when it comes to travel. Many countries have stricter entry rules only for US citizen, or require at least a higher Visa fee in comparison to other Western nations or outright don't allow US citizens entry at all. I found my Austrian passport to be actually extremely beneficial. Most powerful passport is still from Singapore when it comes to extraterritorial benefits.
In terms of getting people out of thorny situations, countries which don't have citizenship based tax laws are also pretty good at that, if not even better, because the US has in fact a lot of scarred relations with other nations whereas other Western nations have it easier to get a country pull some strings in order to get their people out.
100% wrong! US passport is ranked 7th best in the world. You need very few visas and get waved through customs faster than visitors from most other countries.
* https://www.usatoday.com/story/travel/2021/07/07/where-does-...
* https://www.thenationalnews.com/business/2021/07/07/the-worl...
Definitely. But comparing the benefits of US citizenship to that of, say, Venezuela or Tchad would be pointless, now, wouldn’t it?
ding You've just discovered another hidden trick that the ultra-wealthy use to minimize their tax-burdens: in each year, they travel and ensure they do not reside long enough in each country to be considered resident fir tax purposes.
India is the opposite. You can work on a boat get paid in India and owe no taxes.
Then that's the difference.
American citizens can collect Social Security while residing in foreign countries. Same with VA benefits.
It is the 'putting in' part which depends on residency.
That would seem.....unfair.
"One example discussed was Kenneth Dart of Dart Container, who had become a citizen of Belize and then attempted to obtain a diplomatic visa to serve as Belize's new consul in Sarasota, Florida."
> The Department of Homeland Security has stated that they cannot obtain the information required to enforce the amendment unless the former U.S. citizen "affirmatively admit[s]" his or her reasons for renouncing citizenship, and so from 2002 to 2015, only two people were denied entry to the United States on the grounds of the amendment.
"The wording of the statute is embarrassing. How can an alien renounce U.S. citizenship? In what capacity would said alien do so officially? One assumes that a court of law would find the language incoherent and unenforceable ... This is the way we legislate at 5 o'clock in the morning 4 days before adjournment."
Nice to see lawmakers falling to the specter of trying to get that commit in for the next release, along with the rest of us.
Legal documents aren't code, but they do share many of the same principles and constraints - GIGO applies to both programs and contracts...
> The IRS publishes a quarterly list of the names of people who have renounced their citizenship or given up their green cards, but it only includes people with global assets over $2 million
It may be an arbitrary line, but if so, it's the IRS drawing it.
> Gibbons expected that the list would include only "a handful of the wealthiest of the wealthy" motivated solely by taxes; however, the people named in the list turned out to have a wide variety of motivations for emigrating from the U.S. and later giving up citizenship, and few were publicly known to be wealthy.[7]
> ...In contrast, Andrew Mitchel, a Connecticut tax lawyer interviewed by The Wall Street Journal for its reports on Americans giving up citizenship, states that the list is required to include all former citizens. [15]
https://en.wikipedia.org/wiki/Quarterly_Publication_of_Indiv...
This claim is total crap. The list includes all US citizens who renounce their citizenship, regardless of their net worth. [1]
You also cannot renounce your citizenship for tax dodging [2]:
> Persons who wish to renounce U.S. citizenship should be aware of the fact that renunciation of U.S. citizenship may have no effect on their U.S. tax or military service obligations (contact the Internal Revenue Service or U.S. Selective Service for more information).
So plan to become rich after renouncing (and without the IRS noticing).
[1] https://www.federalregister.gov/quarterly-publication-of-ind...
[2] https://travel.state.gov/content/travel/en/legal/travel-lega...
E. TAX & MILITARY OBLIGATIONS /NO ESCAPE FROM PROSECUTION
Persons who wish to renounce U.S. citizenship should be aware of the fact that renunciation of U.S. citizenship may have no effect on their U.S. tax or military service obligations (contact the Internal Revenue Service or U.S. Selective Service for more information). In addition, the act of renouncing U.S. citizenship does not allow persons to avoid possible prosecution for crimes which they may have committed or may commit in the future which violate United States law, or escape the repayment of financial obligations, including child support payments, previously incurred in the United States or incurred as United States citizens abroad.
I read that as saying "If you owe the IRS money already, renouncing your citizenship isn't going to get you out of paying it".
>So plan to become rich after renouncing (and without the IRS noticing).
Do you have any other sources that corroborate this? I've certainly never heard of the IRS coming after someone for money they've earned after renouncing citizenship, except perhaps in complex cases involving international companies.
You just pay an exit tax, which is a percentage of your total wealth. The exit tax only applies if your total wealth is over 2 million (or less than that if you haven’t been filing properly).
https://americansoverseas.org/en/knowledge-centre/us-taxes-a...
You are correct in that the IRS chose this number.
No taxation without representation.
The "no taxation without representation" was a slogan applied after the fact.
Do you have any evidence of this?
I gave up jumping through the hoops in 2018 and the self-torture and renounced. I shared my story in case anyone is interested: https://larrysalibra.com/goodbye-usa/
The stay versus go debate in HK is always very interesting and one that has been going on for decades and will no doubt continue for many people.
Singapore is more stable, but has even less freedoms than HK though.
Similar how a lot of Asians living in Africa (Uganda Kenya etc.) did in the 1970's, Without the ethnic cleansing aspect.
My friend moved on that visa this week. Before Hong Kongers could get a BNO passport and it wasn’t particularly useful. The British government changed the conditions a year ago, and now it’s an open residence permit with a direct path to full citizenship.
There are at least a million people eligible for a BNO passport.
And it’s getting worse every day. I.e. recently they allowed “social distance enforcement officers” to get into your house to check that you’re not breaking any rules (for instance not having a party with more people than allowed by current regulations). No warrant needed. Non-compliance penalized by up to $10000 and/or jail time.
Very interesting indeed.
Thankfully, it's not as hard to not pay AU/NZ taxes, it's still a little bit painful to prove you're not living there, but not even in the same league as the US.
I’ve certainly liked visiting a number of places in the EU - it might be fun to try to live there.
At some point, depending on how much time you spent overseas and how many assets you own, the benefits of giving up US citizenship start to outweigh the cons. And it's better to do this soon than later because exit tax is a thing.
The problem here is that they never raised the amount you must report, because in the past, 150k used to be a lot. Now that should be closer to 500k. But like the minimum wage and tax brackets, they haven't kept it up with inflation. Not in the way they needed to at least.
Unfortunately the main loss from US citizenship loss is voting and potentially travel to the US. But the wealthy influence politics by lobbying not voting.
Now if Citizenship was required to fund lobbying... wooh that would be a big hit for those abandoning the US.
Don't citizens of (almost) every other country in the world have the ability to go live abroad and keep all their benefits, whatever they are? I'm not following where Americans can actually get away with anything special.
aren’t those benefits just the travel-ability of their passport and the right to return?
I can only guess the US is such a great country you need to pay fir the right to return?
There's a heavy to push to make this available to anyone regardless of citizenship, claiming that providing proof of identity will be burdensome. This is the same group that touted election fraud, russian interference and other false narratives for 4 years after the prior candidate lost.
I've personally filled out the forms several times, for multiple periods (full and partial). However I do agree with you: sure it would be nice not to pay that fee, isn't that true of every expense in general?
It seems you either have a complicated personal situation or are in a jurisdiction that's purposefully set up to benefit/interact with the US in a tax advantagous way (aka a tax shelter, though that's going away - see general harmonization trends in EU, etc). Without delving into your personal situation, your personal tax situation should not impact your employment. Your citizenship might in certain highly regulated industries maybe. In the US you are not asked if you file joint or single on your tax return as part of the interview.
You are correct on renounciation. And worse, let's assume the renounciation fee is 1/3rd of the wealth, should your net worth be concentrated and iliquid (you own nothing but a paid off home) you now need to generate a transaction which you might not want to otherwise do (sentimental, bad timing, poor market prices for the asset or low liquidity).
If you have a complicated personal situation, you also hire professional help even if you reside purely domestically. Not fair to pin it all on the foreign taxation code.
Unlike in America, where there are accountants lurking around every corner, the tax code here is very "simple" (the vast majority of people probably never fill out a tax return in their lives). This means accountants charge like you're some sort of multi-millionaire business owner (since that's who their clients typically are). My last quote to get US & domestic taxes filed here when I was a grad student was $6,000 on a total income of <$50k. My situation wasn't that complicated - I had 2 part time jobs, won a competition prize for $20,000 and sold some stock.
I just did my best to file on my own. I probably got something wrong since it's crazy confusing. Prizes are tax-free here, but taxable in the US and not typically "earned income" but are maybe covered by the foreign income exemption or a dual taxation agreement (since I did have to report it to the taxman here, the tax rate was just zero). I literally couldn't afford to figure out how much tax I owed and to who - nevermind the taxes themselves!
Hopefully the IRS doesn't care enough to seize me the next time I visit my family. I tried my best, but that doesn't necessarily mean much in court. I think a lot of the problem is with the American tax code in general, but American accountants know nothing about the tax code here so I can't just ring up H&R Block and ask them to file over zoom (I've tried). Meanwhile, the only accountants who know about American taxes over here are specialist catering to the millionaire expat market. An hour of their time costs more than I earn in a week.
Off-topic but: this always seemed like the most bizarre thing to me. What's the rationale? Why do governments want to incentivize people winning "prizes" over "honest work"?
(My HN engineer brain also wants to know what the distinction is that prevents companies from calling any payment for a one-time contract a "prize" for completing the work, but I'm sure there's some unsatisfying "you know it when you see it" or "laws are people not code" type answer.)
A surprising number of tax benefits are possible this way - even the income tax deduction on charitable giving is done by getting the charity to do the paperwork instead of the individual taxpayer.
So when it comes to taxing something that isn't going to be a significant tax stream and would require people to fill in declarations, the solution is-- just don't tax it.
And the answer to your second question is, the payment would be "income" (defined as payment for completing work) and would fall under income tax. There's no exception in income tax for prizes because prizes aren't even income at all, as you don't work for them. But if you still tried it, it would fall under the General Anti-Abuse Rule.
> And the answer to your second question is, the payment would be "income" (defined as payment for completing work) and would fall under income tax. There's no exception in income tax for prizes because prizes aren't even income at all, as you don't work for them.
Is it really so clear cut? I'm thinking of things like programming competitions -- in a sense you "work" to win a prize at one of those, don't you? So then what stops my employer calling all of my work as a programmer a programming competition? You could say "the competition organizers can't profit off of the work", but is that always true? Netflix could've legally profited off of the entries in the Netflix competition (even though they didn't), right? Similar for Kaggle contests. Would prizes from those count as taxable income? And even on something like a game show, they're profiting (or hoping to) from your participation/appearance.
See « harmonisation of law » on the wiki.
For example
Control/Command + F = "Ireland"
FATCA is annoying. I don’t mind taxes. I want the process to be fair, predictable, and not exceptional. It’s a travesty the United States has been most of my adult life a failed state, which makes the tax treatment insult to injury.
- American Abroad (on the pathway to naturalization in a new home)
I would say it has 3 of those 4 bullet points.
> Likewise, when a nation weakens and its standard of living declines, it introduces the possibility of total governmental collapse.
Standard of living
https://usafacts.org/state-of-the-union/standard-living/
So yeah, I personally don't call it a failed state, but I don't blame others that do if they're in those categories.
People also argued in January 2020 that it would be ridiculous to worry about this coronavirus it's just as deadly as the flu. Literally told to me by a democratic doctor that works at an extremely prestigious medical institution. (Different take now).
I'm not saying the US is on the precipice of failure in 1 year and 7 months, but people don't realize the stilts things are on sometimes.
Again, do words even have meaning anymore? Just because someone feels like America is a "failed state" doesn't make it so.
And finally, "failed state" is using the past tense. I can acknowledge that something is on stilts without claiming that it already fell down.
I believe Eritrea does this, too. They don't have as much political power as the US though, so they resort to torturing your remaining family members in the country to get you to comply.
They're basically the North Korea of Africa. This is a massive understatement.
If you took out a HECS (0% interest, indexed to inflation) loan for university study you still need to file taxes when resident overseas and continue making payments if you earn over the threshold.
If you are resident in Australia more then 6mths of the year you must complete an Australian tax return, but for most people that involves logging in around september and checking that all the auto-fills match up with what they expected.
It's more complicated for digital nomads that don't really have a permanent place overseas.
Other than that though, agreed. AU taxation filing is not complicated.
https://www.mondaq.com/australia/income-tax/1070880/tax-resi...
Sounds like they're just 'recommended' for now but won't take effect till next tax year at least.
Also sounds like its intended to catch people working 0% tax contracts in the middle east or digital nomading around east-asia till they need medical care. (still not a good reason to complicate things)
That said, it _is_ possible to lose your tax residency in these countries, where American citizens are simply fucked.
[1]: https://www.ato.gov.au/Individuals/coming-to-australia-or-go...
If they had permanent residence in a different country they wouldn't need to.
Anyway, I'm not an expert on Australian tax law by any means, I just wanted to note that it's not always so clear cut as "do other countries tax citizens living abroad".
In this example, the operative bit is this:
> She has a one-year contract, after which she plans to tour China, [...]
This time-boxes her intentions for living abroad. It's distinct from having an unlimited work contract with a temporary visa that requires renewals, which indicates intent to stay abroad (and potentially a basis for the visa renewals).
Other countries use things like a point system (UK), definitions of "centre of life" (Russia, where I live atm) and so on. Either way, Australia doesn't do the thing that the US & Eritrea do (tax applicability solely based on citizenship).
I joined a US-based Company who organized my Green Card without me having ever been there.
As long as your intention is to migrate to a different country you're regarded as a non-resident in which case you wont have to pay taxes on worldwide income, unlike in the US.
* the right to reside permanently in Australia
* Australian accommodation
* Australian family
* Australian economic interests.
https://www.lexology.com/library/detail.aspx?g=a9c5000f-bde6...
https://www.ato.gov.au/Individuals/coming-to-australia-or-go...
This suggests it wont come into effect until 2022:
> Since draft legislation is not yet available, the rules likely will not apply before 1 July 2022.
https://www.taxathand.com/article/17653/Australia/2021/New-t...
> If you spend more than 45 days in the country or tick two of the following dot points
The proposed secondary rules only applies after spending 45+ days in a FY, not OR. Which is important because this new criteria basically applies to most people born in Australia, so it basically reduces the 183 day test to 45.
However, as you point out, that doesn't seem to apply to dividends and capital gains and other types of income [1].
I wonder why it doesn't apply to those other incomes and if it did, whether that would alleviate many of the problems for most Americans overseas. In other words, why not just have a threshold below which all foreign income is not taxed and then tax above it?
I'm curious to learn more about the history of that act and why it developed as it did.
[1]: https://www.irs.gov/individuals/international-taxpayers/fore...
1) filing, which is enormously complicated, and 2) severe restrictions on what financial services you can access.
It essentially creates a system of taxation without representation; ironically something the country has a deep history fighting against. The number of US expats is enormous, and if they were a state of their own they'd be the 11th most populated state (just ahead of New Jersey). If we're going to tax expats overseas, at the very least they should be provided with senators that are dedicated to fighting for their cause.
The only reason why I do not renounce my American citizenship is because the very rare disease that I have was discovered on NIH grant funds in the 2000s and ultimately saved my life.
I am not sentimental about being American, except for that.
It's immune-mediated autonomic neuropathy and causes autonomic nervous system failure. I am in pharmaceutical remission now.
If I tried to actually but her as a shared account user the bank told me they will terminate the relationship.
Sorry for your troubles. Do you know about https://www.interactivebrokers.com? They are an ultra-low cost international brokerage. It seems they specialise in handling complex regulations! They can open brokerage accounts for local residents in an incredible number of countries -- all legally. Even India, which very difficult! Normally, they have a tiny office in each location to handle local financial regulatory requires (KYC, AML). FYI: The head office is in the United States, which is great for strong securities regulations. I strongly recommend it. And they aren't some start-up. They have been around for a long time. Their product range is similar to a large investment bank. You can trade everything under the sun that is listed on an exchange.
Save the best for last: They recently scrapped their minimum monthly fees for low balance accounts.
(Re-reading this post, sorry if I sound like a 'shill'. Everything I wrote above can be independently verified with some Google searching!)
I think keeping hold of foreign citizenship represents an unfair advantage to some degree, as a kind of "fallback" - e.g. if things go to shit you always have the option of returning home.
but other nationalities generally don't need to pay to remain citizens while they are abroad, so Americans are treated unusually.
because natives with just one passport don't have that option.
> Is it unfair to California..
California and Texas are in the same country
If by natives, you mean Native Americans, they have their own sovereignties. Many have do have tribal passports in addition to US passports.
If by natives you mean, John Q Public, then that's just crab-bucket thinking. The majority of Americans have zero passports, leave alone one. By your standard, it should be wrong for people to have one at all since most Americans don't have the legal certification to travel beyond North America and seek asylum as a fall back should the US crap itself.
While not everyone has a similar option for a fallback, everyone has a choice. Nobody is prevented by the US government from attempting to a obtain a second passport. It's a matter of a person's choosing to meet the requirements to obtain one or not.
>California and Texas are in the same country.
Yes, however your argument was one escaping to another jurisdiction with the previous jurisdiction as a fallback. That isn't limited to hopping between states nor should it be. If a state or country can't compete in taxes, services, or culture, I have the right to vote with my feet and to obtain a new residence or nationality however I see fit. Mutatis mutantis, the same goes for everyone else.
> By your standard, it should be wrong for people to have one at all
By "having a passport" I mean eligibility for a passport aka citizenship, not literally whether you've applied for one. Equal opportunity should exist - whether it is taken advantage or not is another matter.
> It's a matter of a person's choosing to meet the requirements to obtain one or not
How does one choose hereditary requirements? Or capital requirements (aka golden pass)?
> your argument was one escaping to another jurisdiction
Maybe there are similar issues between state jurisdictions, but I talked specifically of national/country jurisdictions which aren't really similar; especially wrt tax.
In any case, I think the point is moot since all US citizens are (equally) fairly free to cross state lines. The point isn't that it's unfair to move to another jurisdiction with another as fall-back, but that not all are equally able to do this - which is true of states.
It's quite possible that the Democrats will, if they modify the tax system, undo that change. That might be why investment firms hesitate to have you as a client. Although, unless you are using tax-advantaged accounts, it shouldn't be that much extra paperwork for them.
As for rich people gaming the system - I can imagine Bezos et al. would not mind living in the Caymans for a year while he sold all his stock to pay no taxes. If you can determine when you pay taxes, that's a huge benefit.
States with income tax will tax you whether you work in the state, or you are resident in the state.
To me this makes sense it is like you paying your final taxes before leaving as such I don't see how it is anything additional but I could very well be mistaken.
My wife was brought over to Belgium by what was then a subsidiary of JP Morgan, and they paid for all the additional expenses, including the tax services of some very talented people at Earnest & Young. They also paid for all the paperwork to get her a Belgian work permit. We weren’t actually married at the time, just engaged. But JPM agreed to treat us like a married couple. The only thing they didn’t pay for was the work permit for me.
It took a lot of effort for me to find work over there, a lot more than I expected, given my career and experience. And those companies did have to deal with the hassle of getting a work permit for me, as well as complications with US taxes. I didn’t end up working at Belgacom Skynet for long, but that cratered more because the parent company wanted to re-absorb the ISP arm back in-house, and so all the technical people with a clue bailed like rats from that sinking ship, and I was just one of the last to leave.
But hoo boy, every year, that poor team of accountants at E&Y had their work cut out for them, when it came time to file our taxes.
In the end, the reason we left was that my wife’s employer (now spun off from JPM) wanted to pay her as a Belgian native, and we had been in the country long enough to get Belgian passports. But that would have been a massive pay cut for her, and did not make financial sense to us. They were very surprised when she told them that she was not going to be accepting that offer, and so they had to negotiate to pay her as an ex-pay for one more year while she worked to help find a replacement and train her office to handle that transition. Part of that negotiation involved getting them to agree to move us to whatever country we wanted — including moving back to the US.
So, yeah — I can understand why some people might choose to go the other direction, and renounce their US citizenship.
OTOH, I don’t have a lot of sympathy for the ultra-wealthy people who have all decided to set up shop in New Zealand. Yes, visiting NZ is on my bucket list. But I’m not interested in giving up my US citizenship and moving there permanently.
It is not about where you are born, it is about where you have citizenship (and possibly also residency).
As long as you maintain your US citizenship you are morally obligated to contribute to the well being of the country, the biggest and easiest to understand of course is national defense.
Likewise, if you own a property in another state that you only use a portion of the year you are not off the hook for paying taxes that contribute to, for example, road maintenance and local schools.
Where I do have sympathy is that they make it extremely difficult for expats to file as well as maintain investment accounts.
Not that is the issue. Residency is the norm, the US is both residency and citizenship.
Also are you referring to FATCA when you talk about investment firms? My understanding is that FATCA doesn't really become an issue until you have more than a certain amount of assets in the country you are living in.
FBAR does have to always be reported for all accounts but is a separate issue.
EDIT: I think I misread. I was wondering if you were having problems with investment firms in the USA not wanting to work with you. Are you saying that you are trying to invest using companies located in your current country of residence?
Only country in the world that charges taxes on money that they have no business over.
This would apply to people relocating to countries with a lower tax base. In that case you have to renounce.
Some other countries do that as well. Norway for limited time period. Some others have exit fees etc.
If you Are living in high tax regimes like Switzerland you don’t have double tax on the first $xx,xxx in income, it used to be close to 90k.
1. a right pain in the ass, because you have to fill US taxes even when you don't reside in the US, work with the US, and haven't set foot there in years.
2. a right pain in the ass because you have to declare local welfare as income to the US government
3. a right pain in the ass because taxes being so much simpler in most other countries means accountants is a much rarer career very much specialised for extremely high income, far beyond your means, and most of them don't know and can't help with US taxes anyway
4. a right pain in the ass because things like FATCA means most financial institution have decided it's just not worth interacting with US citizens and will refuse to deal with them — this can make it very difficult to function at any sort of level especially as countries progressively increase their cashlessness
5. a right pain in the ass because even if you decide you've had enough and decide to renounce it's expensive and complicated
I'm sure I'm missing a bunch as I'm not a US citizen let alone a US expat.
I think that was the original intent but:
1. It affects everyone including many people not paying taxes in a amount where it matters.
2. I'm not sure if it works, the really rich people (i.e. the ones you would want to be "captured" by this law the most) have way to many ways to avoid paying taxes and reduce the amount they "in person" have to pay.
It might be reasonable to have a cut blow which you you don't have to bother with this.
I also have frequently considered if it would make sense for the country I live in to have such a law.
But in the end I realized that this is probably not what I would want.
In the end the problem is much more countries which intentionally create tax gaps to benefit from it but directly hurting other countries with that and even potentially undermining their governments independence.
Through without question even if that is solved there is still the fact that even wrt. countries which do not do so their can be huge differences in taxation, but "somehow" "disabling" tax havens would be a much bigger step in the right direction then this regulation IMHO.
You read that right.
The US is the top place to hide your money if you are a foreigner
Yet foreign countries are not rushing to change their laws to tax their citizens living abroad. There is no urgency to tax their expats who havent worked or lived back on foreign home for years, even decades.
So if nost countries have reason to complain about us helping hide stuff, they dont seem interested in enforcing anything
Or are not able to. Weather it's because of risking more people with money fleeing before changes take into effect, to much influence of wealthy people in politics or being forced by external forced, e.g. in context of not-so-public trade agreements.
Some of the major benefits that come to mind: Protect by a world superpower military and diplomacy, welfare and social security, a stable place to return to in the case of trouble, a country that ensures development of vaccines and provides them for it's population in the case of pandemics.
I would really like us to add to that list: medicare (or similar) for all as well as some other social benefits that make sense to enable more risk free pursuit of happiness and simplify employment.
That's the argument the British crown once made for taxation without representation. It wasn't very well-received.
A country is obligated to protect its own borders and demand commensurate payment. I don't see a reason to pay for American military expansionism if I'm kept safe enough by my country of residence. Anything beyond that is wasted tax dollars or adventurism with the US government's own motives in mind. I shouldn't have to subsidize either one.
>>welfare and social security,
EBT, food stamps, COBRA, etc. aren't recognized outside of the United States. Social security is not a benefit. It's a Ponzi-scheme with a gun to your head taking money that was already earned and delaying it until you have strong chance of dying from a heart attack.
>>a stable place to return to in the case of trouble,
That's an argument that can be made for most overseas citizen of many countries. Yet these other countries have not fallen to shambles on the basis of lacking global taxation. There's no reason for me to pay for a "stability" I'm not in a longitude and latitude to benefit from.
On the contrary, there is a case to be made that United States is quite unstable itself as it has failed to contain a disease within its own borders and has also chosen to violate property rights under its unconstitutional eviction moratorium without providing just compensation. Even pre-COVID, some areas like Chicago and Los Angeles have had crime ratings high enough to compete with entire countries.
>>a country that ensures development of vaccines and provides them for it's population in the case of pandemics.
So can India, China, Britain, France, Italy, Germany, Australia, etc. Why should I pay the United States if I received my vaccine from these countries' labs and and medical resources instead?
>>medicare (or similar) for all as well as some other social benefits that make sense to enable more risk free pursuit of happiness and simplify employment.
An American citizen can't use medicare in a foreign country. Just like how a British citizen can't use NHS services in the United States. The pursuit of happiness is a negative right, not a subsidized one.
>>That's the argument the British crown once made for taxation without representation. ...
IIRC Those living outside of the US still have the right to cast votes for President, and are not compelled to pay non-federal taxes. An argument might be made for non-state citizens to at least have a single representative and senator they can vote for.
>>>> (social programs)
>> ... Ponzi-scheme ...
I agree about the problems with the funding and fulfillment structure. However the reality still exists even if the current implementation is unfair for those of us not yet seeing the benefits. If you're also a US citizen, please vote to get this fixed.
-- The next set of points contradict my historically long viewed claim of stability. Generally both viewpoints are correct; though I would like to compare the current issues with the virus and unrest in the US to the latest 6 WEEKS lockdown in portions of Australia. Stability is __relative__.
-- The last point was my hopeful view for benefits I'd prefer all US taxpayers to receive in the future. If your opinion differs from mine, you could share what other befits you'd like to see instead.
Where/how can US citizens vote to modify the social security system?
Why do they want to maintain their citizenship if it doesn’t give them anything?
Also, if you give up your citizenship, does that have any implications for traveling back to the US? You might very well have friends and family you would like to visit occasionally.
So why conflate being American with federal taxes and bureaucracy?
Maybe America should think about the benefits we expats provide to it while living and representing our culture and values abroad. We usually make a good impression on our country’s behalf, but everyone abroad is shocked to hear about the potential draconian penalties and compliance headaches our government forces on us.
> "There are probably 20,000 or 30,000 people who want to [renounce citizenship], but they can’t get the appointment," Lesperance said. "There’s not a peak demand — the system’s capacity has peaked."
Also, it seems you need to pay a non trivial sum to do it, which is a real problem for US citizens abroad who are not rich.
"Free to give that up" does not apply, unfortunately.
The problem is that those rules are punishing regular people.
I know one person who wasn't allowed to open bank accounts because of her citizenship. Another who yearly gets stressad out because filing US taxes is such a grueling process compared to the local process where you're done within ten minutes. Another wants to renounce citizenship because he doesn't want to deal with the bureaucracy, but he cannot afford it.
They all live in Sweden, which I doubt anyone sane would consider a tax haven.
If Eritrea is the only other country in the world that implements similar draconian tax laws, maybe there's something wrong with those laws?
These must be very small meat and potatoes investment firms then. They might not have a compliance department and might not be able to justify the salary of having someone tackle FATCA requirements. I, as an American abroad primarily used the big banks (HSBC, BNP, Barkleys) because its built in to the service.
HSBC in Israel, last I Heard, had a $2M account minimum.
The other extreme is what we currently have in Croatia:
A vast group of people who don't live here have citizenship and they express their patriotism by voting for the conservative right without exception for the past 30 years.
If you want to be treated as a citizen — live here and pay your taxes. If you don't, the door's that way.
I can certainly understand the anger of the GP, apparently roughly 25% of the Croatian citizens do not live in the country. As an expat myself, having a say in how my home country is run is nice, but I feel it's a bit "easy", because I mostly do not have to live with the consequence of my choices.
Lol, that's considered "conservative right" ideology in the USA.
The expats usually left because they didn't like the strictures or ideology of communism. Some had property confiscated and/or were harrassed by the authorities for whatever reason. Most of these people have a reflexive aversion of the left and are reliable right wing voters.
Those who stayed seem to be those that agree with communism to whatever degree, who were part of the communist regime in some way or those that did not mind or did not have the means or will to leave. Some have been indoctrinated to some extent, or maybe more correctly they have grown up in the culture of that time.
Many ordinary people suffered from a relatively poor quality of life under communism. Croatians received a relatively smaller share of resources and opportunities because of Serbian dominance of Yugoslavian government.
The differences are not all or even mostly political. Many locals just resent expats who avoided the misery and show up with money and a particular attitude, usually a critical one as to the dysfunction and corruption in Croatia, amongst other criticisms.
Full disclosure: I'm an expat (who lives in Croatia, for now), so that may colour my view.
If the concept of citizenship has no meaning to you beyond personal convenience, sure. If citizenship and the responsibilities inherent in it is something you take seriously, it makes a little more sense. Why should an expat who's not interested in living in and participating in the future of their former nation even be allowed to remain a citizen at all?