The Law That Makes U.S. Expats Toxic • Hacker News Board

Re: The Law That Makes U.S. Expats Toxic

#41

Post by mikeash » Tue, Oct 13, 2015, 11:09 AM UTC

matthewmacleod wrote: post #6

TazeTSchnitzel wrote: post #2

I suspect that the U.S. taxing its citizens abroad has a lot to do with it being the world's richest country and not wanting people (billionaires and such particularly) to be able to easily escape their tax burden by moving abroad.

Genuine question though – why should citizens living abroad (i.e. not using US public services) pay for those services through taxation?

They do use many US public services, though. American expats can still collect Social Security, still get to vote, still have their passport honored and renewed, are able to take advantage of US consular services, etc. They may use these services less, and certainly use a different mix than the average American living in the US, but it's not nothing.

Re: The Law That Makes U.S. Expats Toxic

#42

Post by gambiting » Tue, Oct 13, 2015, 11:09 AM UTC

TazeTSchnitzel wrote: post #2

I suspect that the U.S. taxing its citizens abroad has a lot to do with it being the world's richest country and not wanting people (billionaires and such particularly) to be able to easily escape their tax burden by moving abroad.

Simply moving abroad wouldn't let you escape paying tax in US, if you made money in the US. I make money in two EU countries, and pay income tax from the profits made in each country into that country tax system. It would be idiotic if I had to pay income tax off income in country A in country B if I actually haven't earned that money in country B. Yet this is exactly what US is doing.

Re: The Law That Makes U.S. Expats Toxic

#43

Post by deong » Tue, Oct 13, 2015, 11:12 AM UTC

patio11 wrote: post #4

Related rules have also made holding US accounts more difficult for Americans overseas. I had my retirement accounts frozen by their previous custodian: "Sorry, our regulator doesn't let us deal with Americans overseas." I'm unsure whether that was sincerely "doesn't let us" or meant "would require a paperwork burden we find unacceptable relative to the money you few guys make us" but either way I was given thirty da…

I think you've hit on the truly annoying part of the whole thing. I'm lucky enough that here in Iceland, it's caused me no problems at all.

I'm generally in favor of trying to crack down on tax avoidance, and I'm sympathetic to the cause they're trying to advance here. The "spirit" of the tax law is basically "you gotta pay someone their fair share", but everyone knows that $100,000,000 means you don't have to comply with the spirit of this law any more than you did the one before or the one before that.

Re: The Law That Makes U.S. Expats Toxic

#44

Post by gambiting » Tue, Oct 13, 2015, 11:12 AM UTC

rayiner wrote: post #40

Is taxing expats abroad really a problem? First, there is a large baseline exemption and most expats abroad don't pay U.S. taxes. Second, if you're intending to permanently leave the U.S. why should you keep U.S. Citizenship? And if you're intending to come back, is it really unfair to tax you? American citizenship has real benefits, especially if you're rich enough to pay expat taxes. The U.S. protects you and your…

Are you serious? To me, as a person from EU, it seems insane that a country where I haven't actually earned the money would want to tax it in any way or form. That's just ridiculous. You should pay income tax in the country where you made money. And why should I keep citizenship of a country that I moved out of? Because...I want to? Because I feel like a citizen of a country even if I live and make my living somewhere else? Doesn't mean that that country has any right to a part of my income.

Re: The Law That Makes U.S. Expats Toxic

#45

Post by mikeash » Tue, Oct 13, 2015, 11:13 AM UTC

amalcon wrote: post #16

rlpb wrote: post #8

"By virtue of living abroad, they are second-class citizens, paying onerous tax burdens without representation." This seems pretty ironic to me given the "no taxation without representation" principle.

There's actually a more direct case of this: Washington, DC. Yes, people who live in the capital of the United States have no representation in congress. For years, they've even advertised this: https://en.wikipedia.org/wiki/File:DC_2013.jpg edit: spelling / typo (thanks mikeash)

Nitpick: capital, not capitol. If somebody lived in the capitol they wouldn't have representation either, and that would be even more ironic, but I don't think anybody does.

Wacky question: does the President count as a DC resident and is therefore bereft of Congressional representation, or does he technically remain a resident of wherever he came from and get to vote for those members of Congress?

I really love those DC license plates. What I especially love is how Congress still has the final authority over all government matters in DC, so this is quite a snub by the local officials at their Congressional masters.

Re: The Law That Makes U.S. Expats Toxic

#46

Post by tallanvor » Tue, Oct 13, 2015, 11:13 AM UTC

mikeash wrote: post #10

dot wrote: post #7

"Unfortunately, no single member of Congress represents these American constituents who together would rank, if a state, 12th in population size after New Jersey and before Virginia. By virtue of living abroad, they are second-class citizens, paying onerous tax burdens without representation." Compare this to Switzerland that considers its citizens living abroad part of the "fifth Switzerland" (there are 4 official l…

I don't agree with what that quote is saying. Americans living abroad can still vote, and therefore are still represented. It's true that Americans living abroad don't all have the same representatives, since they're represented by the elected officials from where they're registered to vote in the US, but that's a far different thing from saying that they have no representation at all.

"Representation" and representation aren't the same thing.

Sure, we still get to vote, but when you make up less than 3% of your representative's constituency, you're even more screwed then the average person.

Re: The Law That Makes U.S. Expats Toxic

#47

Post by ptaipale » Tue, Oct 13, 2015, 11:13 AM UTC

deong wrote: post #26

morgante wrote: post #17

It really doesn't make sense how the US is the only country which insists on taxing their citizens, no matter where they live. It makes American labor less competitive and promotes the insularity of American culture. I'm living abroad and you can definitely see the impact of the US tax system in the background of expats: Americans are severely underrepresented. The same salary, when offered to a British expat and an…

I'm also an American expat (Iceland), and for a lot of people, there will be no difference except for inconvenience. If you make less than about $100,000 per year, you exclude that income from US taxes completely. You still have to file a 1040, but you just declare the income on one line and negate it five lines later. You send the IRS the completed form showing you owe $0 and you're done. And if you make more than $…

> there will be no difference except for inconvenience.

There also appears to be a factor of risk. I'm not American but have had Americans in my team. A slight procedural error, either by themselves or by the IRS, can be a huge financial and legal problem, and expose the person to litigation. It seems draconian and unfair to me.

Thus the practical consequences are more than minimal.

Re: The Law That Makes U.S. Expats Toxic

#48

Post by Broken_Hippo » Tue, Oct 13, 2015, 11:14 AM UTC

mikeash wrote: post #10

dot wrote: post #7

"Unfortunately, no single member of Congress represents these American constituents who together would rank, if a state, 12th in population size after New Jersey and before Virginia. By virtue of living abroad, they are second-class citizens, paying onerous tax burdens without representation." Compare this to Switzerland that considers its citizens living abroad part of the "fifth Switzerland" (there are 4 official l…

I don't agree with what that quote is saying. Americans living abroad can still vote, and therefore are still represented. It's true that Americans living abroad don't all have the same representatives, since they're represented by the elected officials from where they're registered to vote in the US, but that's a far different thing from saying that they have no representation at all.

I'm an american living in Norway. I can vote for president, sure. Supposedly I am allowed to vote in the district I last lived in the states, but trying to get any of this done is difficult, especially since the state I live in requires proof of address for voter registration. I understand the likelihood of the representatives there to care about any issues I have is pretty minimal. After all, americans living abroad are usually a minute slice of a representative's voter base, even if we add up to quite a number overall. I can probably get more accomplished through the embassy 10 hours travel time away. On the other hand, I can vote in local elections here in Norway simply by living legally here for 3 years:: I cannot vote in national elections until I am a citizen. I do not have to be a citizen to hold local offices either - I can be pretty active and involved if I choose. My situation comes down to having theoretical representation in the states as compared to actual representation here.

Re: The Law That Makes U.S. Expats Toxic

#49

Post by onion2k » Tue, Oct 13, 2015, 11:15 AM UTC

morgante wrote: post #17

It really doesn't make sense how the US is the only country which insists on taxing their citizens, no matter where they live. It makes American labor less competitive and promotes the insularity of American culture. I'm living abroad and you can definitely see the impact of the US tax system in the background of expats: Americans are severely underrepresented. The same salary, when offered to a British expat and an…

It makes American labor less competitive

That's the point. It means skilled American workers are less likely to work elsewhere, thus increasing the competitiveness of America by restricting the supply of skilled workers for the rest of the world. It might suck for individuals but as national policy it makes a lot of sense. Plus it raises more tax.

Re: The Law That Makes U.S. Expats Toxic

#50

Post by onli » Tue, Oct 13, 2015, 11:17 AM UTC

mikeash wrote: post #32

onli wrote: post #20

Earlier quoted context omitted.

If none of the electable choices represent you, it does not matter whether you can vote or not, you are not represented regardless.

That's a completely different issue, though. I live in the US and none of the electable choices represent me!

You have at least some which on paper are supposed to represent you and your region. Expats don't, and that was the point made in the article.

The general issue of indirect democracy not representing the will of the voters is a fundamental one and not solvable, also goes to far for a discussion like this. Side remark: JFKs Profiles in Courage is a great book on the topic.