Help, I’m on the IRS hit list
theglobeandmail.com
theglobeandmail.com
All bets are off if you have signatory authority on a $30 million dollar account in the Caymans and have forgotten to report interest for the last 10 years running.
P.S. Orthogonal to the disclosure of accounts issue but worth mentioning since folks often commingle them: If you're an American living abroad, you should file your taxes every year whether you think you need to or not. Same for Americans in the US, by the way. The statute of limitations on unfiled taxes is essentially infinite, but the window to audit a return is only six years, so if you just file a 1040 with a zero on it every year and 20 years from now the IRS decides to get frisky, you're covered for all but the last 6 years automatically.
This is not technically correct. There are three time limits that apply:
In a normal circumstances, they have 3 years to conduct an audit.
If they suspect you've under-reported your income by 25% or more they have 6 years.
If they suspect fraud, they have unlimited time to conduct an audit. (Fraud requires intent to deceive, so it's a higher bar than just making a mistake or not understanding a rule.)
It would make sense for the IRS right now to follow the RIAA's playbook -- send out a lot of letters and see who bites.
It would also be irresponsible in every way to realize that you're part of such a list and yet still ignore it because you don't expect the IRS to actually ever do anything about it. I've got extended family that uses that approach to life, and it bites them in the ass all the time.
--
On a personal level, I've noticed that you seem to be the antithesis of an alarmist, whatever that is. When another round of "PayPal screwed me!" posts and articles comes around, you seem to show up with at least one or two comments along the lines of, "Hey, I use PayPal, it's never been a problem for me, it shouldn't be a problem for you either"; shortly after the Fukushima incident, you leveraged your intimate knowledge of Japanese culture to powerfully downplay the seriousness of the matter, except that it turned out that you were wrong, and the facilities did have problems before the incident, and it did turn into a serious disaster. I didn't notice any comments from you once that news started coming 'round.
So, all this is just to say that I think you have a different approach in your thinking than a lot of people in matters like this. Whereas a lot of people try to anticipate problems and minimize their future impact, you seem comfortable with waiting to see if they actually become problems and then dealing with them at that point. And, there's nothing necessarily wrong with that, but it does mean that your opinion on things like IRS penalties may not be to everyone's benefit.
We should hope to have 100 people who share Patrick's habit of moderating HN's Internet-bred tendency towards hyperventilation.
I'd also like to point out that you focused on just one aspect of his comment, diverting attention from the actual practical information he conveyed.
I worked out of Calgary for a couple years; I just got an accountant to deal with all the tax stuff. That works too.
Look, I'm a pretty mercurial dude, and I know that, so I appreciate in general people that can take a little of the huff and puff out of situations. I appreciate patio11 specifically because he's a valuable member of HN, who contributes often, and can be considered an expert on a variety of topics.
That said, he -- like everyone here -- isn't above criticism. I wouldn't have even bothered to comment except that his comment was the top in the thread, and based on my experiences, ignoring stuff like this because it probably won't actually matter isn't a good idea -- even if it's true.
I find it distasteful that I've had to defend myself on this. This will be my last comment on this matter.
If there is not a set of future results which makes "you should be worried about this" the wrong choice, then this conversation is boring to me.
With regards to the Japanese disaster in March, if I were to point to something I said in the immediate aftermath which was subsequently disproved by events unfolding, I would have picked my guess of severity of the tsunami and adequacy of the response efforts. (Undershot by more than quite a bit, overestimated by a little.) Fukushima Daiichi turned out quite a bit worse than I thought it would, too, on the scale from "no problems" to "worst disaster we could possibly imagine." I have to mention because I'm persnickety about this one issue: it also turned out quite a bit less worse than a lot of people were betting. ( To put a fairly easily verifiable number on it, I would have at the time guessed probable deaths at "between zero and five", and there were people who made very consequential decisions based on estimates in the millions. It's kind of funny that they get to count their predictions in the win column if I can't, right?)
I've done a brief amount of Googling for more information, and I can bring to the discussion a handful of links and at least one case of "regular Americans tripped up by the law", but since it's probably just you and I in this discussion at this point, I'll leave it up to you whether or not you want to pursue this anymore.
Re: the Japanese disaster, you're right, other people were making wild fearsome predictions, like the end of support for nuclear power, and clearly that hasn't happened. And, it's not a matter of win or lose or right or wrong -- I just meant to establish that betting against bad outcomes doesn't always work out in your favor (the generic "you" here). I probably should not have used that as an example though.
You bring up the RIAA and I think that's a good choice of analogy for anti-alarmism -- when you're that unlucky individual who does get hit with a lawsuit, you're pretty screwed and the problem is pretty bad. However, I have known a lot of filesharers (I am in college after all), and not one actual lawsuit victim. It's not analogous to the scale of, say, a nuclear accident or $250,000 in tax penalties, but I think it's still reasonable to consider the odds of actually getting hit before freaking out.
But that's the problem - the worst that could possibly happen is very possible. Basically what it means is you can't go to the US, because in theory you could be met at the airport and thrown into jail. The fact that you're a little fish won't matter to the IRS. They're just filling out forms.
Of course you can take your chances, but for most people the risk of getting jailed for tax evasion outweighs any possible positive outcome from a trip to the states.
Over the last decade the US Congress turned US citizens into subjects. The only reason there isn't a great hue and cry is voters in the US don't know. The federal legal code has gotten so large and arcane even the lawyers don't know it outside their own narrow specialty.
A significant tie could be as simple as owning a motorcycle, a corporation, or still having a Canadian bank account.
- Canadian residents always pay tax to Canada on all income, no matter where it is made.
- Canadian non-residents do not pay tax on international income.
- Residency is determined by:
A) How much time you have spent outside of the country. If you have spent the majority of the year (6 months + 1 day) outside the country, you can claim non-residency. If you have spent the majority of the year in Canada, fat chance.
B) "Significant ties" to Canada. This seems draconian, but is actually not really. You can have a driver's license, space in a storage unit, or bank accounts and still easily make the claim of non-residency. Hell, I have a friend who owns a rental property in Toronto and still makes it.
- In any case, the whole process is much easier and less burdensome than the American equivalent. The first year you believe you qualify as a non-resident, you file a form with the CRA (Canadian equivalent of IRS) with your blank tax return (stating all income is international). Once you do that, you no longer have to do it ever again. I do not have to get my non-residency status constantly recertified.
It's all pretty simple. At the end of the day, if you live in Canada you pay tax on money you make - anywhere - and if you live outside of it you're basically just off the hook.
Wait.. what? Not American nor Italian here, but I've been to Italy and judging from the driving there isn't a great amount of care shown for the road rules anyway.
I can agree with that entirely.
Blindly following a rule isn't what you should strive for.
From the IRS FAQ:
Q. Who must file an FBAR?
A. Any United States person who has a financial interest in or signature authority or other authority over any financial account in a foreign country, if the aggregate value of these accounts exceeds $10,000 at any time during the calendar year.
But that's the United States. Maybe wages are awesome in Canada?
"Sources": https://secure.wikimedia.org/wikipedia/en/wiki/Household_inc... https://secure.wikimedia.org/wikipedia/en/wiki/Poverty_in_th...
Consider that this could be accumulated savings over time and various accounts. Also consider things like employer-sponsored retirement accounts that someone may have had with an American company that they have simply forgotten about. (That happens FAR more than people realize/ would expect)
The point is it's a bad rule. Making the line 10k is guaranteed to pick people soldily 'middle class' and not just "rich" people.
Yup. If one has a hundred grand or more in fairly liquid assets, yeah, I can see the argument for having them check to make sure all the Is are dotted. (Though even there, with life-long savings, inheritance, etc, it's within reach for "normal" people.) For less than a year's middle class expenses, probably not so much.
You seem to imply that a good policy would be to screw the wealthy people and let those of moderate means flout the law. I don't think it's healthy to have a different set of laws depending on a person's income.
The FBAR isn't the big deal for wage earners, the big deal is the failure to file.
The key point here is AT ANY TIME so even if the amount is just passing though (i.e to pay for uni fees) you are in breach, which I just found out a few weeks ago, and the fines for not filing a FBAR are insane.
90% of the population probably doesn't have $10k of assets. So while $10k isn't alot of money, it is out of the ordinary, especially if you are able to store it out of the country.
Many contires have reciprocal tax agreements with the US so that income taxed by your host nation isn't taxed again by the IRS. It may just be a matter of paperwork for the authors of this blog to demonstrate that they've been paying Canadian taxes.
It is very difficult to stop being an American and getting harder all the time. Its like a giant invisible curtain... (like its made of iron or something, heh) Not to keep you from leaving, but to make sure your money can't.
We could make it like Denmark does: Danish citizens born abroad have 4 years, between the age of 18 and 22, to elect to keep the Danish citizenship, which requires renouncing any other citizenships they might possess at that time (no dual citizenship). If they don't wish to be a Danish citizen, they simply don't make such an election, and it automatically expires at age 22.
That'd be reasonable to me--- let U.S. citizenship to those born abroad expire automatically at age 22 unless they actively elect to keep it, so people who've never lived in the U.S. and don't wish to have the citizenship aren't saddled with it.
But imo it should have a deadline like that, so people actually decide if they want to be a U.S. citizen or not, with the rights and responsibilities that entails, not try to play both sides until it's financially advantageous to pick one.
Is that true even if they don't have dual citizenship (i.e. are they still required in that case to explicitly elect to keep their Danish citizenship between the ages of 18 and 22)?
If I read it correctly, that's required under the Convention on the Reduction of Statelessness (http://en.wikipedia.org/wiki/1961_Convention_on_the_Reductio...), which Denmark's signed, and which commits a state to "grant its nationality to a person, not born in its territory, if either parent had that State's nationality and the person would be otherwise stateless". But in any case it's also part of Danish domestic law.
edit: Canada requires another citizenship, the US does not allowing one to be stateless.
http://travel.state.gov/law/citizenship/citizenship_776.html
fixed that for you.
(To be fair, I believe this is true in most if not all industrialized nations; I enjoy being a US citizen and while I do have problems with some of the laws, the overall package is such that I'd rather continue being a US citizen than the alternatives. Still, if you have income from anything other than a regular job, you need an accountant.)
Also, I think it is a valuable mental exercise to ask someone who in fact owns the fruits of their labor. If you spend some time thinking about the implications you may find that the possible answers are not so "simple" as you may at first think.
On the other hand, some find that the question produces a fair amount of anxiety and so they may resort to verbal devices designed to diminish the value of the question, rather than trying to answer it.
and yeah, every fetus about to be born in the us signs a licensing agreement around the third trimester. it's entirely comparable to being a licensed apple developer.
The way this story gets spun is that the law is for big tax dodgers and the IRS has better things to do than pursue the little guys. I think that's a bit of misdirection. The problem is that, as far as I can tell, every ex-pat is guilty of something and that the U.S can come take large amounts of money from them. It's just a matter of whether they want to or not. It's usually said that the amount of money is just too low and the politics of abusing so many people abroad are idiotic.
After 9-11, that doesn't wash with me any more. If citizens living in the states are subject to draconian security measures and it doesn't much seem to matter what sorts of protests there are then it's only going to be worse for people who are more out-of-sight. People in the states can easily be made to feel like every ex-pat with a dual citizenship has something to hide. If you can treat folks who live here like they do, folks living overseas are nothing but a bunch of numbers. Worse yet, we'll see monetary laws made for terrorism being brought to bear in the process.
Which leads me to my conclusion that the only thing slowing down the IRS is data processing. They're plugging more and more into the international banking community and will begin automating collection and processing on all of these opportunities. I understand my opinion is just guesswork, but there it is.
I think you have two choices. Either collection is a political activity, in which case you're saying that your wealth and freedom is basically dependent on political connections, the optics of the processing, and the mood of the IRS -- a terrible situation to be in. Or you're saying that collection is owed and it simply costs too much to pursue, which I believe to be the case. If this is true, collection is only a matter of time.
I'd love to see a U.S. politician stand up for ex-pats, but I don't think it's going to happen anytime soon.
P.S. And don't even get me started on the fact that if you're a corporation you are allowed to make money overseas and keep it overseas without paying US taxes, but if you are a regular citizen any money you make could be subject to US taxation on top of local taxation.
The IRS does this, not because these folks have appreciable tax liability, but because they want a compliance environment that exposes anyone who _might_. There is nothing really new in this, the government requires extraordinary disclosures of everyone so it can verify their tax compliance. (The health law included provisions further extending reporting to monitor compliance of those we do business with, but I think the resulting fuss got these rolled back.)
On the one hand, no one is in favor of tax evasion.
On the other, at some point we might ask whether these disclosures threaten our liberties. Even if the IRS never abuses the information, the requirements set a precedent of government review adopted by other entities large and small. For example, you simply would not believe the intrusion powers of agencies enforcing child protection laws, or the flimsiness of the basis they require to use those powers.
I expect the good sense of the electorate to protect us from real abuses, but I'm beginning to wonder where these disclosure requirements will end, and what their unintended effects might be.
You protest that no you didn't? Oh, you did. You may not know what the felony is, but I assure you that in this country there is no way you got through an entire week without being felonious, probably multiple times a day.
Sixteenth century platitudes about breaking the law and paying the price need to be updated for a 21st century reality in which a careful reading of the law reveals that there is very nearly a law against everything, and the only thing holding society together is that we don't pay the price.
What would be good is more succinct Penal Codes, and to make it much harder to add laws in response to isolated events.
A careful reading of the law will reveal that there is not, in fact, very nearly a law against everything.
Please take your trolling back to Reddit where it belongs.
The U.S., alone among the multitudinous nations of the world, asserts that people who live and work outside of the U.S. and have no financial connection to it should pay taxes to it.
These include people who have never set foot in the United States in their entire lives and have never done anything to interact with the United States in any way whatsoever.
These include people who are not allowed to vote for any U.S. office (don't correct me; you're wrong. Some of the people affected by this are allowed to vote, but not all).
It is the very definition of taxation without representation, which one might have thought would be a foundational principle of the U.S.A.
Every single other nation in the world taxes people on their income earned in that country. The U.S.'s policy is an embarrassment; a clearly unjust, illegitimate law.
There is a bright side. The happy truth is that the U.S. has zero enforcement power outside the country and that this edict can be ignored by anyone who truly does not live or work in the U.S.
Can you elaborate on that? It sounds a bit incredulous.
If you don't want the citizenship, all you have to do is renounce it.
I imagine that if you were born abroad you might not realize that you ever need to submit any tax documents to the US, and then I'm pretty sure they will want to collect money before allowing you to renounce.
I agree that the law is there for a good reason, obviously. but it can lead to people having US citizenship without even realizing they have it.
In some countries your employer is required to open and contribute to a retirement fund similar to a 401(k). In Canada, it's called an RRSP, in Australia, Superannuation. If you have such an account, it's considered a foreign account and subject to FBAR - nevermind that you can no longer contribute to it, or benefit from it until you are at retirement age. In some cases, the law in the foreign country prevents you from closing or withdrawing from this type of account until you are at retirement age.
If you forget to report one of these accounts, or had no idea that you were supposed to report it, you face a $100,000 fine, seizure of the account, and jail time. If you cooperate with the IRS you might "only" lose the account.
This law was designed to target off-shore tax shelters, but the way it was written, the definition of "account" is vague, and the threshold levels so low that it affects millions of people. There is simply no justification for a law this broad and sweeping which such harsh penalties - it's an example of legislative overreach if I ever saw one.
Similar situation now?
Roman tax collectors were private contractors who were responsible for paying Caesar his due. Upon winning the bid, the collector would pay Rome in advance, and collect the taxation over a period of time. They had broad powers to ensure that the tax was collected. At the end of the period, the collector received an interest payment from Rome, plus he got to keep anything collected over his bid.
As you can imagine, these tax collectors were rapacious, especially if collections were under quota. Bankruptcy in Rome was not pleasant.
In the modern US situation, you have circumstances where folks are choosing to live overseas as expats, often times taking advantage of dual-citizenship, which is not prohibited by US law. Other countries, like France, require you to choose one nation's citizenship at age 18. Notice the expats aren't whining about collecting both US and foreign benefit payments.
I don't think the law is necessarily aimed at criminals. The law is primarily sold as targeting people who try to avoid or evade taxation by keeping significant wealth and income overseas.
In any case, the reason for renewed vigour in enforcing the law is clear: the federal government is spending record amounts of money and needs to milk every source of income it can.
edit: fix typos
I was amazed at how far and wide that tweet was spread.
https://twitter.com/#!/davidnwelton/status/99849223884906496
Meanwhile, the doctor lobby lobbies its ass off to prevent cheaper alternatives like nurse practitioners or the reduction of importance of hospitals for anything but emergencies or weird shit.
In many systems the biggest costs are administrative overheads and payments to drug companies.
However, that's not indicative of a well functioning system. I can't find a nice pie chart for you, but it's about 20% of costs. It is the largest single cost.
And it is kept high by absurd education requirements in many cases. If you read a few healthcare books about the American system, you will probably find similar criticisms. There are so many government sanctioned monopolies in the healthcare system that it's impossible to change it.
In Canada, the healthcare system is basically a non-competitive rationed care system. If you know someone who personally knows the surgeon you need, you will get the care you need. However, if you do not good luck to you. I've had personal experience with this in my family (on the good side, prognosis was a minimum of x months to live without surgery, surgery was scheduled for x + y months(!) and we had to use our considerable network to get the surgery faster.)
But it was free, right?
Trust me when I tell you that the reason people are living longer is not because of the Canadian government's healthcare. In fact, the quality of life of many people is severely diminished because of the cost spiral.
But in general, it works very well for I-impaled-myself-in-my-crotch emergency care.
Edit: I should add that I have physicians in my family and they are very happy with the current system. In particular, compensation. I completely agree with their viewpoint: it's fair pay for the level of education they've had to receive. However, 90% of the work is routine and could be carried out by people who have less education. From my discussions with people in the healthcare system, this would reduce costs dramatically and potentially improve outcomes as well.
And a vast amount of people in countries with public health systems aren't paying a cent considering they don't pay taxes for various reasons. You can't get healthcare like this in the US you pay or get nothing.
Things certainly aren't perfect, but it irks me when everyone thinks they are an expert in US affairs. It may not be universal but there absolutely is free (or very cheap) health care available in the US. There are all kinds of programs for the old, young and poor. Otherwise, just about any job will offer health care. Sure, there are people that fall through the cracks and that's a huge problem.
Many do, but it's no longer the case that "just about any job" does. 59% of Americans have some sort of employer-based coverage, and that includes people who get it through their spouses or parents. Small businesses in particular are rapidly dropping coverage (according to this random article, only 1/3 of small businesses in Wisconsin offer any, down from 50% a decade ago: http://www.jsonline.com/business/124753109.html).
Where might I find this free/very cheap health care?
Maybe of more concern for people on HN is starting a business and having some minor medical history that is deemed a pre-existing condition and thus being rejected for insurance. In that case, go to http://www.healthcare.gov/ [1] and you'll find a very reasonably priced plan. Depending on the state, you can find premiums well under $200/month, $20 doctor visits, $10 prescriptions with the deductible waived for most services. That's nothing for most people with the earning-power of the average HN visitor.
EDIT: [1]: Just looked for Michigan and aged 25-29, with a pre-existing condition, premiums are $127.44/month.
Which is a great deal that many of us who pay for it are happy to contribute to.
And we do have production quotas for prescription drugs, issued by the FDA. Drug companies can set whatever prices they want but they can't change their production in response to market prices - producing more of drugs that have shown an unexpected demands.
In many ways the current US healthcare system is the worst of both worlds.
Most often, market intervention leads to unexpected consequences, as people have a great deal of trouble predicting the effects of market forces.
The government deciding by fiat how much something should cost is more likely to lead to removal of consumer surplus, rather than a race to the bottom, if the government maintains competition amongst its suppliers. If you know you're competing on product quality at a certain price point - rather than on price - you'll likely be motivated to produce the best product possible at a price point that maintains normal profit. That's what I think anyway, but as I've already said, it's remarkably difficult to predict how market forces will play out.
I do note, however, that most of the developed world gets significantly better health outcomes for significantly less outlay than the US. This suggests massive market failure in the US health market.
This may be because while the US market is in theory a free market, in practice, it's anything but - it's an oligopoly with absolutely massive barriers to entry and no end of government interference.
Hopefully something for you to consider!
Universal healthcare is a safety-net, to make sure everyone gets a basic standard of care.
It doesn't preclude premium offering which include "a better product".
Here (Australia) we have a public health system, but you can also buy private health insurance which gets you into things like private hospitals (nicer rooms, etc).
I would like to think we could talk about cause and effect in isolation here without making everything a grand political statement.
We're #1!
No it isn't. She still gets to vote in US elections if she wants to. That's WHY they still collect taxes.
I'm not saying it is right, but that is the explanation usually given. Because even though you don't live in the US, you still receive benefits, like protection from the military and other benefits that all US citizens get.
I actually don't think it is entirely unreasonable to tax ex-pats, especially since the first $80K is exempt.
I file tax returns with the IRS every year, but I'm not eligible to vote in any federal election, because I haven't lived in any state for more than 6 months, so there's no state's electors to assign my vote to.
For some of us, this quite literally is taxation without representation.
But are you sure you can't get a Federal only vote? I guess that would put you in the same place as DC, who also don't get representatives, which is jacked.
The should let you vote in the state closest to where you live or something. Of course, that would mostly boost the coastal states, wouldn't it. :)
I live and vote in New Jersey (not to mention pay property taxes, etc). I also own a cabin in upstate New York, on which I've got to pay property taxes as well. The thing is, since I am an NJ resident and I vote here, I'm forbidden from voting in New York.
Given the way we structure our voting, this restriction is necessary: I'd be able to get two voices in Washington, otherwise. However, the flip side of it is a situation of "taxation without representation" -- and that's not fair, as Schoolhouse Rock tells us.
In fact, I know that as a Berkeley landowner, my in-laws are allowed to vote on the local Berkeley issues, even though they vote on the state and federal stuff at home.
What do the grey nomads do? Here in Australia, you can specify an electorate where you are deemed to "live", even though you don't spend any time there. It ensures everyone can vote.
(Also as I understand it you quite literally need the state department to consent to your renouncing, and if they feel you have significant earnings potential in the future, they will refuse consent on the grounds that you are trying to avoid future taxes).
Agreed, though I think that 80k needs to be bumped up. As near as I can tell, it was made 80k in 2003, and the US dollar has changed quite a lot since then.
IANAL of course, but how is USA saying "you cannot renounce your citizenship" different from another completely unrelated country saying "according to our laws you are our citizen now"? Why is it binding if you do not have and do not want any relation to that place?
"Gogulski, 36, renounced his citizenship on 8 December 2008 at the American embassy in Bratislava, surrendering his US passport and culminating a two-week process and months of personal preparations. He currently awaits a Certificate of Loss of Nationality of the United States confirming his loss of American citizenship. As Gogulski has no other citizenship, he is now a stateless person.
'I was disgusted to be associated through citizenship with the most dangerous gang of criminals in the world, the United States government....'
Gogulski says that when he receives the Certificate of Loss of Nationality he will apply to the Slovak Interior Ministry for a Travel Document – similar to a passport – under the 1954 Convention on the Status of Stateless Persons, which Slovakia signed in 2000. He says that he has no plans to leave Bratislava until then, and that he recognizes that his life without citizenship will be more difficult, especially with respect to travel...."
[1] 1954 Convention - "(Article 29) Upon request, Contracting States shall issue travel and identity documents to stateless persons within their territory." - https://secure.wikimedia.org/wikipedia/en/wiki/Convention_Re...
[2] CLN - https://secure.wikimedia.org/wikipedia/en/wiki/Certificate_o...
[3] CLN Form - http://www.state.gov/documents/organization/81609.pdf
[4] He recieved the mentioned travel document. See http://www.nostate.com/1614/back-in-the-village-again/
As far as becoming another country's citizen, that gets to be fairly complex. Some nations recognize dual citizens, others do not. How that exactly works out depends on the particular circumstances. In any case, the U.S. generally likes to keep its citizens within its grasp.
In the US, you need to meet with the State Department (possibly through an embassy) which takes care of the legal aspects of renouncing your citizenship. The second part is filling out all of the forms and paying all of taxes required by the IRS (which is not insignificant). It is not cheap to renounce your citizenship (unless you don't really have anything).
a consumption tax, however, is the most regressive form of tax in existence. so to combat that, you do simple math. every citizen receives a something they call a prebate, a check in the mail or direct deposited for the amount in taxes up to the poverty level at the beginning of each month (about $200/month). no individual pays taxes by filling out a form, they only have a yearly form to fill out to receive the prebate. all taxes are collected at the point of sale (used goods are exempt) reducing compliance costs and the incentive to tax dodge. so illegal immigrants pay taxes without getting a prebate. corporations that manufacture within the US but export their goods do not. corporations that import goods do. tourists pay taxes. people who are crazy and live off the grid do not. SS and medicare are not collected separately. investment is not taxed. and it's price and cost neutral (that is, the myriad taxes we pay but don't realize: SS, medicare, income, payroll are already hidden in the price of everything we buy and this just makes it transparent).
as a libertarian that knows markets fail all the time, i believe the policies should be dynamic and robust. that is, use the reduction of the market to make quick and dirty decisions and heavily regulate those areas that are prone to failure (or just prone to negative externalities while promoting the positive externalities). enough with the waffling centrism—certain things need to be as libertarian as possible while others, particularly dealing with OPM (other people's money) and general welfare of individuals need to be as socialist as possible. and i am fairly confident that that will never happen. alas
Speaking as someone who has seen a pile of new taxes go by and old ones rarely leave. Here in Oregon, we finally enacted a pile of protections against the continuous ballot measures demanding new taxes, such as a cap on how much property taxes could go up per year (no more than inflation), as well as a requirement for a 50% turnout in an election to pass a tax (no more special-election surprise taxes). It also helps that Oregon requires a balanced budget, which means that when the economy goes down, the local governments have to (gasp) spend less (and plead for money, which they usually do) rather than spending more and later demanding money to pay debt.
There's a reason the Fair Tax was DOA. It's an over-engineered solution that's worse than what we have right now.
In other words, you would replace the IRS with the PRS (pre-revenue service)?
no, i would abolish the IRS and repeal the whole damned tax code and start over. if PRS is what you would call it, i am partial to http://www.prsguitars.com/
And Main Street with the Back Alley, where you pay no taxes at all?
used goods would not be taxed since they were already taxed. and back alley deals will always be there—so what. better to keep however many million companies in line than 300 million people plus however many million companies. it lowers the tax burden, which is more efficient, which swamps any extra back alley deals that may take place under a consumption tax than the current labyrinthine code.
And incentivize export businesses over domestic businesses (b/c exported goods are never taxed)?
you do understand that we are a net importer of goods (though far and away a net exporter of ideas)—this means that we consume more goods at home that are not made here than we make and send abroad. i'm no rabid proponent of balanced trade, especially since our ideas are worth far more than a million trinkets from emerging markets, but making our goods more competitive in a global market can foster actual manufacturing jobs (remember those?), especially when the cost of labor in the east starts to be less of an advantage for those countries.
nevermind that we have an economy that relies mostly on non-exportable services and manufacturing has by and large left our shores, on to the highly flawed rhetorical question to which i must respond: a hypothetical export company has to pay taxes on equipment and supplies to do business, and has to employ people who purchase goods and thus pay taxes, only those items which are non-finished goods are not taxed if exported. most primary and many secondary goods are non-finished goods (think rubber for primary and tires for secondary—the tires on the new vehicle are taxed as part of the whole vehicle, the tires you by at tirerack are taxed when you buy them).
now imagine a global brand that still has manufacturing in the US as well as in other places around the world wants to build a new factory that serves north america. it might build in mexico, where the lower cost of labor offsets the higher cost of shipping and dealing with another imperfect government, then all of the goods it sells to the US (it's biggest customer) will pay taxes to the US and all the goods it sells in mexico and to canada pay NO taxes to the US. now imagine the scenario that the company decides to build here in the US—it pays higher labor costs but can keep a closer eye on manufacturing that makes it worth it. it employs several thousand people, pumping a quarter of a million dollars into the pockets of americans that end up supporting many other ventures that have no relationship to that company. and guess what, it pays NO taxes to the stuff it sells in mexico and canada. which would you prefer? oh, that's right, option 3 where said company never bothers to consider the US because it would pay tons of taxes on those goods sold elsewhere, all the while lobbying to congress for a tax break.
And over-incentivize capital investment even more grotesquely than it is now with a mild capital gains preference?
first, why should anyone ever be taxed for investing in the future?
second, do you understand that in this model, the investment would fund the purchase of goods and services which would employ people and pay taxes—around the world, not just in the US? do you understand that the benefit to the world of more investment is greater than houses of cards sometimes built with that investment? do you know that the fruits of investment has raised the standard of living such that i can type something of a didactic diatribe via a high quality laptop to some stranger that doesn't understand economics.
third, the capital gains is a clusterfuck, like everything else dealing with taxes.
There's a reason the Fair Tax was DOA
tell that to the people who are still supporting it. and if it does eventually become DOA, it'll be because of the beloved lobbyists and special interest groups
It's an over-engineered solution that's worse than what we have right now.
to which i can only respond: http://www.fourmilab.ch/uscode/26usc/www/contents.html remember, that's just the table of contents.
It's too unfortunate that the Tea Party has become associated (rightfully) with people who have no real goal besides screaming a lot about healthcare insurance.
The original ideas, which I would credit Ron Paul with starting, are still valid.
On the fair tax though, I believe Ron Paul does not support it.
This program also covers 5471's, which hit me pretty hard. If you own even a single share in a foreign business AND your parents own shares, those shares are attributable to you in terms of determining if you have a controlling interest in that company. If you have over a certain percentage, you are required to file 5471's.
I just filed over 80 5471s for various companies for tax years since 2003. My tax accountant said that the IRS has been nothing other than 'foaming at the mouth insane' about collecting penalties, and that it is their attitude that any failure to disclose is treated as an attempt to defraud or conceal information from IRS, and that without exception, IRS always levies the maximum penalty possible. So, that would have been 800,000$ penalties for me.
Bear in mind that I already declared to IRS and paid taxed on any and all income earned from these foreign companies.
I can only hope they enjoy perusing my 400+ page filing. Apparently someone has to type it all in. Love to do my part to keep federal employees employed.
If you are an American citizen, file your tax return.
Easy as that.
If you don't want to participate in American society renounce your American citizenship to the IRS.
Took about 30 seconds to find the form. http://www.irs.gov/instructions/i8854/ch01.html (expatriation 1994 or later)
EDIT:
First, you renounced your citizenship THEN stop paying taxes, obviously. You don't get to stop paying taxes and then renounce your citizenship back in time.
Second, http://www.businessinsider.com/senior-us-marine-says-multipl...
http://www.marinecorpstimes.com/news/2011/03/ap-us-to-evacua...
The US Marines will come get you if you're stranded in a foreign country when shit goes wrong.
I used to work in the Middle East in a western compound, and this was a huge bug-bear between the US citizens and the EU/Canadian ones. Under the US's system you could leave the US as a baby, never take advantage of any of the services provided by the US, and still be expected to pay taxes on your foreign earnings in perpetuity.
Indeed the page you linked confirms this in the bottom section entitled "Expatriation After June 16, 2008" that renouncing your citizenship at the present date will make you immediately liable to pay "income tax on the net unrealized gain in your property as if the property had been sold for its fair market value" if you earn more than $145k, are worth more than $2mil, or -most importantly- you have failed to pay the IRS in any of the 5 previous years. So it's not a solution for these American-born-Canadians that were not aware until now that they were required to pay tax in the US.
They knew. I know! and I've never been out of the US for longer than two weeks! It's not some secret or trap the IRS has set. What they are complaining about now is that the IRS is finally trying to collect.
It makes absolutely no sense for the US to try to lay any claim to her earnings or expect her to file tax returns for any period of time before that.
More seriously: yes, what they are complaining about is that the IRS is finally trying to collect. So one could claim that "they are complaining because the law is finally being enforced", and be technically correct. The important point here though is that the law (as with many American laws) is somewhat nonsensical, and therefore relies on the enforcers to use their own best judgement (cringe) and not do anything brain-dead and/or clearly outside the spirit of the law (which was meant to keep then-millionairs, now-billionairs from leaving the country to escape back taxes).
Additionally. In general, you can hardly expect the finest citizen to have an understanding of the law even approaching what one might reasonably call "adequate". Aside from the bloated body of legislation passed by Congress (where previous laws are often modified by lines like "replacing the word 'as' of section 4, subparagraph 3, with the word 'of'), one must also contend with case law (i.e. precedents set by courts - harder to understand and arguably more important), regulations (have more of a direct impact on individuals, are thankfully somewhat easier to comprehend, but there are /way/ more), and the occasional executive order (500-word sentences, anybody?). And that's just at the national level - state and local governing bodies are their own legal morass. And, of course, if you leave the country, you get to deal with extradition treaties and, quite likely, whatever treaties are most relevant to your "crime" - and therefore the relevant regulations (on both sides) etc.
So, when Americans complain about enforcement of laws, it's because the laws were never actually meant to be enforced. And it's a symptom of a broken legal system, but one that is unlikely to be fixed in the near future. So we beat on, boats against the current, borne back ceaselessly into the past.
(Yes, I just stuck that last part in because I felt I needed a profound closer.)
Canada issued a travel warning. America deployed Marines. Which passport would you wave around if you were stuck in Cairo?
In general, Americans have been seen as targets for a long time (even when foreign relations were good) because they were seen as 'rich foreigners.' My grandpa would even say that when going back to Poland to visit family, there were a lot of people that were just looking for hand-outs that assumed he was rich because he was an American (he was not wealthy by any stretch of the imagination).
And even the sitation in Cairo wasn't as bad as reported in the media (at least according to what I've heard from the people who've been stuck there).
http://www.theglobeandmail.com/news/world/crisis-in-egypt/go...
And Libya:
http://www.comfec-cefcom.forces.gc.ca/pa-ap/fs-ev/2011/02/28...
And even Lebanon:
http://www.ctv.ca/CTVNews/World/20060919/evacuation_tab_0609...
The Canadian one, obviously. For the same reasons as numerous Americans sew Canadian flag patches to their backpacks when traveling in foreign countries.
If I had dual citizenship with Canada and the US? I would be waving around the Canadian passport and making sure that anyone searching me never found my US passport.
Being a US Citizen is a HUGE liability when you are in various unstable parts of the world where there is a huge hatred for the United States, right or not.
According to the article that is impossible.
Please provide definitive proof that you are not a pederast by no later than thursday of this week.
Please provide the requested material so that we can resolve this matter as quickly as possible.
Thank You.
Ima Cog, Undersecretary of Legal Enchainment.
> no doubt taking advantage of the laws and protections
> afforded by both countries as it suited them.
Also, if you lived in Canada since you were 13 and committed a crime in Canada, I doubt that you would be able to claim that you were immune due to your US citizenship.
On the same token, I've heard that the US enforces its laws overseas if your a US citizen. E.g. if you go to another country to have sex with a child prostitute, you can still be charged with a crime in the US, or so I was told on some message board (want to say slashdot.org) some years ago in a US/foreign discussion.
Now you've been told on this message board.
Mann Act http://en.wikipedia.org/wiki/Mann_Act
Protect Act of 2003 http://travel.state.gov/travel/cis_pa_tw/cis/cis_1467.html
Except when they do.
http://www.marinecorpstimes.com/news/2011/03/ap-us-to-evacua...
http://www.businessinsider.com/senior-us-marine-says-multipl...
http://en.wikipedia.org/wiki/Letters_of_last_resort
Whether you would want them is another question!