For the very rich, citizenship is a problem to be solved. | Hacker News Reader

For the very rich, citizenship is a problem to be solved.

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22 pointsmarkkat42 comments

Worth noting that several dual-citizenship friends have, over the last couple years, renounced US citizenship for tax reasons in each case. Very little appealing about being a US citizen for the very rich.

What this article fails to note is that the last thing the very wealthy want is a new form of citizenship or new country. Being a citizen of any given country becomes more like selecting the clubs you belong to based on the value-added services they provide. Starting a new club is a headache. There are plenty of reasonable ones out there.

And for the most part these clubs are already run by the super rich. The rest of the citizenry is just mowing the lawns as far as they are concerned.

>There are plenty of reasonable ones out there.

That may be true. I have a good middle class friend that move from the US to Norway for higher taxes but great social programs. If you can handle the winter, not a bad deal. He loves it. Interesting that the citizenship decision might be moving closer to something like the job search.

Funny, my wife, friends and I were making a short-list of some reasonable US alternatives last night (we've both lived much of our lives outside the US though are in it now) and all our top picks were cold, northern, and civilized. Norway was on it.

Singapore? It's civilized, jungle hot and crowded.

Based in HK for a long time, spent lots of time working in SG as well and have family there now. We've talked about going back there too.

I like what they've done to push cultural development (something HK never did effectively or seriously). Still a bit too fascist disney, but since we have kids it's pretty fam friendly.

I'd say it's on our list for a short term stay, a couple years maybe. Penang too, which is a slower pace, differnt vibe.

It's not entirely true that citizenship determines where you pay most of your taxes, in fact it might only be true of the US. It's certainly not been the case for any other country I've lived in. Most have a residency test, if you're in the country cumulatively for 186 days you pay tax there. If you've had tax taken out of your salary in a country where you are not a tax resident and the country has a double tax treaty with whoever you are meant to be paying tax to then you can use it as a credit against any tax liabilities you may have there.

The UK is a bit of an exception, in that foreigners in the UK can declare themselves "non-domiciled" and not declare any foreign income they did not bring into the country. A bit of a loophole if you're foreign, wealthy, and can afford to leave most of your money offshore. Probably explains why there are so many celebrities and billionaires living in London.

Hm, I'm wondering, what if you travel around and you never spend more than 186 days in any single country? Assuming you visit only the countries that use that same approach, does it mean that you never pay any taxes? Doesn't sound plausible to me...

What's not plausible about this? People are doing it. It's not even much of a "loophole" since ultimately, 90% of people prefer to settle down for residency somewhere rather than keep travelling for years. The tax man always goes after the average 90% of people first. But yeah, depending on your citizenship you can do this, known as PT: "permanent traveller", perpetual tourist, previous tax-payer etc...

Be sure to know the rules of the countries you visit and more importantly those of your citizenship country. If you're German, you cannot do this less-than-180-days-per-year operation if you hold "tangible economic interests in the country" such as: being employed there, having property interest there, or other assets such as company shares in or from within the country etc.

So again, not a workable "loophole" for the majority of people but a decent state of affairs for the vast minority of Tim Ferris-style indy web-biz travellers with no significant "financial" assets or interests inside the country of citizenship.

Yep, I know of quite a few people who are effectively doing that. If they have to have an address for anything, it's the hotel they stay in most regularly in Bangkok. Nice and central as a travel hub, and that Thai government doesn't want any money from you if you're not a resident of some sort which they aren't if they leave the country at least once every 90 days. Business is run out of one of the various offshore islands that doesn't want you're money unless you're living there, so all income if effectively tax free.

I don't see this as something just for the very rich. Citizenship is less of a big deal for Americans because they're so geographically isolated, but elsewhere, people cross national borders very often indeed. (Compare it to how often you cross state lines.)

Wealth has very little to do with it globally, at least beyond a certain value. It's to do with mobility of assets, of yourself, and of the people and things you care about.

I'm actually pretty convinced that borders and nations as we know them are another example of a bottleneck that is ripe for innovation by a new model - think of AirBNB or GetAround as tiny little proofs of concept for a much bigger possibility.

I think if the rich seceded from the other nations, they'd find they'd need national defense pretty damned quickly. Economies of scale would probably make the seceded "nations" look a whole lot like all the other nations in short order.

It's a tough choice choosing between variety of PMCs ( http://en.wikipedia.org/wiki/Private_military_company) like Xe (http://en.wikipedia.org/wiki/Xe_Services) or paying up to join an alliance (http://www.nato.int/cps/en/natolive/index.htm).

Either way, you have to spend the money. If you have to spend the money, you have to collect taxes. If you have to collect taxes, what are you gaining by sitting on a big float in the Pacific instead of living in London or Manhattan where the operas are?

I don't think it's ever about 0% taxes. It's about making governments compete for customers who have a choice of where to spend their tax dollars, and would prefer more bang for the buck.

Or, more realistically, less benefit for people they don't like.

Well, they're joining that virtual country by choice. People frequently enter partnerships where they don't like the counter-party, but they realize the partnership makes sense for both of them.

The source of my power is that I belong to no country.

-- The Count of Monte Cristo

For a citizen of a miserably poor and corrupt nation, their citizenship is also a problem to be solved. The surest way to help the poorest of the poor is not to send them food or money (that will likely be seized by their oppressors) but to give them a way out, some place they can go and live safely. All the existing nations are essentially closed to poor immigrants; if this works, it will be an escape valve for some fraction of the poor in poor countries as well as the rich in rich ones.

That is the problem Paul Romer is trying to solve with charter cities.

You can already buy a citizenship in a number of countries.

EDIT: Commonwealth of Dominica, Saint Kitts, Nevis and Austria are places that I know of.

You can buy a US green card too. Just invest $1M somewhere, and you get a green card. So in effect the money stays with you, thus you're not even "buying" the card; just flashing the dough to get the card.

You actually only need to invest 500K if you're investing in certain qualified investments or regional centers with high unemployment rates.

If you're lucky you might make a large portion of the money back or even earn money on it.

The options I'm referring to actually give you a second passport. I don't know much about green cards, but they aren't passports.

I don't think people who have a problem with high taxes list US as their dream destination.

you can buy a US green card as well, via the EB-5 visa.

> You do not use or need other characteristics of citizenship such as social services and national defense.

Yes, but they need our money to pay for their "libertarian dream." Anyone that actually does this is detestable.

They use "our" money for this, ie. yours? They robbed you? Or did you count on their income, as your income?

For a democratic nation, super-rich citizens who essentially flout the rule of law is a problem to be solved.

If a democracy establishes workplace safety and minimum wage laws and a super-rich citizen sets up an ocean-liner/sweat-shop just outside the borders of the nation, what should we do?

Super-rich individuals often already can attain citizen status which puts them further from any jurisdiction that will given them problems. That would only exacerbate the problem.

Actually, wealthy people are even better off with the current system where they can hide their wealth in a number of competing low tax regimes in the outskirts of the world. It would actually be funny to see this thing coming true, and then turning to a prime terrorist target. Where would they build their defense missiles, in the basement?

In any case, despite the ridiculousness of the idea, this shows that the current sovereign-state compartmentalization of the earth is no longer the best way to run it and we need worldwide cooperation to both fight tax evasion and allow greater mobility of people and goods. Isolating the rich from the masses is only a good idea in the sense that it ends in an explosive way, like the french and bolshevik revolution.

Exactly. If you want your wealth to be truly secure, you'd have to store it on your island, otherwise it would be accessible to the same governments you're trying to keep it away from.

Wealth doesn't defend itself though, and a bunch of rich guys might think they're slick but even a rag-tag pontoon of somali pirates is going to have more battle experience: so you'd have to hire a small mercenary force to guard the place. How much will you pay them? What's stopping them from killing you and taking the place over for themselves?

I can't see how paying taxes is the biggest driving force for this idea. I think these people want the freedom and power of an aristotelian-scale democracy without dealing with the majority of idiots that affect our lives every day.

Why not just have one extremely low tax regime? They can still keep their cash where they like, but without the effort of evading taxation. Also, why do they need to live at this place? If they had visa treaties, this citizenship could be essentially digital. Or, if there was a locale, you could just have an address there.

What makes you think that "keeping their cash there" is beneficial to any society? I am obviously getting political here, but money for its own sake should not be a goal. Money should be invested or taxed.

>Money should be invested or taxed.

Agreed. But there is what should be done, and what is done. I don't think this is anyway admirable, or of any benefit to society, (it's basically taking wealth harvested within a system out of that system) but I do see that it might be a possible solution for a perceived problem that exists for very wealthy individuals.

You're ignoring one particularly American problem, which is that Americans who harvest wealth outside the system of their country of citizenship are still required to pay taxes to it. I suspect that these sort of proposals would probably go away if rich Americans who moved to Hong Kong or Singapore were not expected to continue paying into Uncle Sam's coffers.

Why should I make any at all if at the end of a long productive life you jump out from a corner and says how these fruits should be deployed? For kicks? I might, and many more able than me do -- but there's a breaking point for everyone. And I found that the tax-man much more resembles that old cliche about the "greedy", the "rich", the capitalists -- it's the taxman that truly can never get enough, never tax enough, never borrow enough, just to keep their own fairytale reality going another day or decade.

You can use money to compensate a male or female to marry you and live with you for say 10 years. I think this would work in most nations.

With enough money, you could purchase nations and then make your own laws to your hearts content. Give me control of a nations money supply, and I care not who makes laws.

If you have money, then anything is possible. Without money, nothing is possible. That's why everyone is trying to get money. Money is life.

That's a pretty sad statement. Life is life.

why not create a virtual nation on the internet, the overhead would be very low.

I think that is actually the most likely possibility for this. Why do you need land?

Try living in the Internet.

Ray Kurzweil thinks that will be possible by 2045, crazy, but he has been right before. Hope I am around to find out :)

I'm scared enough to put an application in the cloud - by 2045 I'm going to feel comfortable putting me there? 2545, maybe. I'll get back to you then. Kurzweil's wrong on this one, and I say that as a convinced Singularitarian.

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