Wealthy people are renouncing American citizenship • Hacker News Board

Re: Wealthy people are renouncing American citizenship

#231

Post by Chris2048 » Thu, Aug 05, 2021, 2:11 PM UTC

alephnan wrote: post #208

hnthrwy1111 wrote: post #185

I'm an "accidental American" who has navigated this issue and it's incredibly easy. Just don't file. Every professional that writes blogs about this has a professional duty to give legal advice but the practical advice is just don't file. Look into what exactly triggers data to be sent to the IRS under your tax treaty and the policies of your financial institutions. Being "accidental" is the key here. If you tell you…

> You have a duty not to comply. If you're making income in America, you owe US tax taxes. If you are a permanent resident of the United States, you owe US taxes. Whether the IRS is using mafia tactics or not, what you are describing is tax evasion. There are legal ways to minimize your tax burden, but this is horrible advise.

And if you are not a permanent resident of the United States, making no income in America?

Re: Wealthy people are renouncing American citizenship

#232

Post by yardie » Thu, Aug 05, 2021, 2:11 PM UTC

ninja3925 wrote: post #23

amcoastal wrote: post #3

Its really a great system we have here --- get insanely wealthy off the backs of Americans who pay tons more for basic services and then when it's time to pay back run off and keep your change. No wonder America is doing so well.

“Off the back” sounds like the wealthy took advantage of folks when, in fact, they entered voluntary contracts in a win-win scenario. Creating a company is not exploitative but rather collaborative and mutually beneficial (with workers).

Wage theft is the #1 fraud[0] in the US. So while the voluntary contract can be a win-win for a quite a few Americans it is still exploitative.

[0] https://www.epi.org/publication/employers-steal-billions-fro...

Re: Wealthy people are renouncing American citizenship

#233

Post by tazjin » Thu, Aug 05, 2021, 2:11 PM UTC

EE84M3i wrote: post #211

mythz wrote: post #197

Earlier quoted context omitted.

Right they're still classified as a resident since they're on a temporary contract who intended on returning after their contract has expired. If they had permanent residence in a different country they wouldn't need to.

As far as I know, in most countries, acquiring permanent residence requires living in the country for years first and then applying, so you will be on time-limited visas until then. That is the way it is in Japan, and it is 10 years to get PR, in the general case. 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 l…

This confusion is common amongst people who haven't lived in abroad. Visa status, work permits, future intentions, work contracts and citizenships are all separate things and most countries weigh more than one factor to determine tax-residency.

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).

Re: Wealthy people are renouncing American citizenship

#234

Post by uCantCauseUCant » Thu, Aug 05, 2021, 2:12 PM UTC

pwinnski wrote: post #121

rwmj wrote: post #60

Earlier quoted context omitted.

No one's moving the Europe for the lower taxes.

On the contrary! The overall tax burden of many European may be lower than that of the US when you compare like for like. That is, the cost of all taxes in Europe and the cost of all taxes and the fees paid for equivalent services in the US. For most people, that's taxes in Europe vs taxes + health insurance premiums in the US. Even if the combined totals are equivalent or higher in Europe, government-provided health…

Also, lots of us taxes are hiding in plain sight as "mandatory services". "Gated Community" is basically a different version of social transfer tax. Health system is another huge "mandatory tax". Enormous debts to complete education, whos equivalent you can get for free in europe. If you sum it all honestly up, the us is a pretty bad deal.

Re: Wealthy people are renouncing American citizenship

#235

Post by not_throw_away » Thu, Aug 05, 2021, 2:13 PM UTC

moss2 wrote: post #75

engineer_22 wrote: post #21

Earlier quoted context omitted.

Where are you now? What do taxes cost you?

Not related, but I pay about 40% income tax plus a 25% value-added tax (VAT) on every purchase. It's at a good level but my political belief is that this should be higher.

That's not an uncommon belief - feel free to write an extra check to your tax department and they will happily accept it. Normally tax departments have a whole system set up to accept voluntary additional tax payments for anyone who feels inclined to top up their contribution to the wellbeing of the state.

Re: Wealthy people are renouncing American citizenship

#236

Post by ttyprintk » Thu, Aug 05, 2021, 2:14 PM UTC

alephnan wrote: post #118

There's this idea floating around in this thread that people get rich, then get richer in and then leave to evade taxes. If optimizing for money really was people's intention, it's much more optimal to leave before you become mega rich. You can move to Singapore once you have $6 million to buy a visa-by-investment. There's no cap gains taxes there, so your money can compound unencumbered. Then again, not every ex-pat…

This —- they have the wealth to initiate the process. Citizenship by investment (CBI) is even cheaper in the Caribbean. Interestingly people from mainland China and the Middle East hit the Caribbean first for this. I don’t think it’s a stretch to say that the reasons haven’t changed.

Re: Wealthy people are renouncing American citizenship

#237

Post by DennisP » Thu, Aug 05, 2021, 2:14 PM UTC

amcoastal wrote: post #3

Its really a great system we have here --- get insanely wealthy off the backs of Americans who pay tons more for basic services and then when it's time to pay back run off and keep your change. No wonder America is doing so well.

> get insanely wealthy off the backs of Americans

I find it a bit startling to see this sentiment on HN, a site that used to be mostly full of people building startups, attempting to get wealthy by building something useful that people are happy to pay for.

Re: Wealthy people are renouncing American citizenship

#238

Post by bagacrap » Thu, Aug 05, 2021, 2:15 PM UTC

cpursley wrote: post #37

altcognito wrote: post #2

They’ve been allowed for decades to avoid paying for the infrastructure and management of the country while simultaneously holding most of the influence. “Renouncing citizenship” means they’ll give up none of the influence, lose the taxes, live how and wherever they want. The best thing to do is forbid them re-entry into the country nor to hold controlling interest in any company in the US. Faced with actual conseque…

> They’ve been allowed for decades to avoid paying for the infrastructure and management of the country while simultaneously holding most of the influence. Maybe you didn't know this but Americans living overseas still have to file and pay US taxes, often getting double-taxed buy two different countries - and often by a higher tax country than the US. In fact, the US is one of only two countries in the world with thi…

I think gp was referring to how capital gains aren't taxed until realized. Having billions in unrealized gains gives you influence, even though you didn't yet pay tax on it.

However, when you relinquish your citizenship you pay an exit tax which is more or less equivalent to what you'd pay if you sold all your assets and paid gains taxes, so I'm not sure how this move really helps billionaires, except that they don't have to pay taxes on future gains.

Re: Wealthy people are renouncing American citizenship

#239

Post by mythz » Thu, Aug 05, 2021, 2:16 PM UTC

EE84M3i wrote: post #211

mythz wrote: post #197

Earlier quoted context omitted.

Right they're still classified as a resident since they're on a temporary contract who intended on returning after their contract has expired. If they had permanent residence in a different country they wouldn't need to.

As far as I know, in most countries, acquiring permanent residence requires living in the country for years first and then applying, so you will be on time-limited visas until then. That is the way it is in Japan, and it is 10 years to get PR, in the general case. 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 l…

> As far as I know, in most countries, acquiring permanent residence requires living in the country for years first and then applying, so you will be on time-limited visas until then.

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.

Re: Wealthy people are renouncing American citizenship

#240

Post by kaboomman » Thu, Aug 05, 2021, 2:16 PM UTC

academia_hack wrote: post #42

It's so irritating to be an American that has moved overseas. Basically the only country in the world that charges taxes on money you make and spend somewhere else, just because of where you were born. Thanks to IRS regulations, 90% of investment firms will just reject me outright rather than deal with the paperwork. Getting someone to help file my inordinately complex taxes costs thousands of dollars more than I act…

This. Living (even partially) overseas as someone who was born in the U.S. has so many disadvantages. The U.S. is the only country in the world that imposes global tax. Not only that, taxes are really complex and cost a fortune to file if you have overseas assets. Now, add to that that I cannot sign up for many bank accounts or other financial institutions because they don't accept U.S. customers - they don't want to deal with IRS filings either. It's not about tax evasion. It's just a huge pain being an American that owns property and spends a lot of time overseas.

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.