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Wealthy people are renouncing American citizenship

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Re: Wealthy people are renouncing American citizenship

#561

Post by matttproud »

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…

In case anyone is interested, the taxation on Americans abroad isn’t new but has its roots in the 1860s with the U.S. Civil War: https://www.bloomberg.com/opinion/articles/2015-04-24/end-th....

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)

Re: Wealthy people are renouncing American citizenship

#562

Post by emodendroket »

ihattendorf wrote: post #354
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…

And then you slip up, the IRS finds out, and on a connecting flight on your way to another country you get arrested for tax evasion.

Not that I think it's good advice but it is very rare for connecting flights to go through the US, since it requires everybody to go through immigration even if they're not staying in the US.

Re: Wealthy people are renouncing American citizenship

#563

Post by mjevans »

Dracophoenix wrote: post #530
mjevans wrote: post #474

Earlier quoted context omitted.

All of the benefits that taxes provide. I don't even know them all offhand, let alone have enough space to enumerate them fully. 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.…

>>Protect by a world superpower military and diplomacy, 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 adven…

>>>>Protect by a world superpower military and diplomacy,

>>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.

Re: Wealthy people are renouncing American citizenship

#564

Post by tester756 »

KptMarchewa wrote: post #173
rwmj wrote: post #60

Earlier quoted context omitted.

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

If you're software engineer in Poland and spend some time architecting your contract, you can pay only 5% income tax (+ irrelevant amount for social security) as "R&D tax relief for commercializing IP rights". Point you're making applies to countries like Belgium or France.

If you're using IPBox as average software engineer that has nothing to do with actual R&D or innovation then you should feel ashamed cuz it's straight doubtful from ethical and moral standpoint

Re: Wealthy people are renouncing American citizenship

#565

Post by emodendroket »

bmn__ wrote: post #552
emodendroket wrote: post #506

Earlier quoted context omitted.

Many people earn a lot more than that. I agree. Where I disagree is that I don't see what's unjust about asking them to pay tax for a system they benefit from.

Faulty assumption; Americans who live abroad do not benefit from the US system: social security/disability/retirement, health programs, military, public infrastructure etc. pp. is provided by the country where they live.

Does the country where they live run the embassy too and I just never knew about it?

Re: Wealthy people are renouncing American citizenship

#566

Post by matttproud »

bnralt wrote: post #411
JumpCrisscross wrote: post #184

Earlier quoted context omitted.

> Only because of US laws. I have two citizenships, but one residency. 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.

Many Americans seem to believe that, but it doesn't actually seem to be the case. For instance, when Yemen was falling apart, countries like China, India, Pakistan, Russia, and Indonesia all worked hard to evacuate their citizens, many using their military to do so[1]. The U.S. response was to tell American citizens they were on their own[2]. The U.S. embassy even recommended that Americans seek assistance from India…

Don’t forget the poor responses at home to disasters natural and unnatural. Katrina was only 15 years ago, and that was before mainstream myths of omnipotence were broken. Such a travesty. Such a failed social contract — esp. for common security, welfare, and wellbeing.

Re: Wealthy people are renouncing American citizenship

#567

Post by throwaway287391 »

academia_hack wrote: post #509
texasbigdata wrote: post #210

Earlier quoted context omitted.

Your representation is a bit exaggerated. The law simplistically simplifies to: if your income is above $X, then if your foreign tax payment $Y is less than the theoretical amount of tax you would have paid doing the same work under American Tax laws $Z, then please remit the difference ($Z-$Y) to the American government. I've personally filled out the forms several times, for multiple periods (full and partial). How…

Some years are fine, just subtract the earned income exemption and move on. Others are nightmares. 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 typical…

> Prizes are tax-free here

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.)

Re: Wealthy people are renouncing American citizenship

#568

Post by tristor »

hermannj314 wrote: post #536
tristor wrote: post #462

I was unwilling to renounce and stay abroad, for a variety of reasons, so I returned to the US and decided to stay. But for a good while I lived and traveled outside the US as a digital nomad and the tax implications are immense, especially if you are a member of any corporation or LLC, have any retirement accounts, or own any property. It's an absolute nightmare to correctly file taxes, has an astronomically high au…

I was an American citizen living in Luxembourg for 3 years around 2015. I agree - many banks did not want to let me open an account, and when BNP Paribas said they work with Americans it was a huge ordeal to open the account. However, as a salaried employee, I did not struggle with the taxes. The IRS form was very straightforward and after deductions I didnt owe any US taxes (I made just over the equivalent of $100k…

> I can 100% understand why very wealthy people hate this system, but as a software dev making a modest living it was not onerous or unfair or difficult to manage.

Okay, now apply your experience with this system but instead of being a salaried employee you run a Anything off the path of salaried employee stationary in a foreign tax residence exponentially increases the complexity involved and therefore the expense to file. Most years, my accountancy bill was actually higher than the taxes owed, and it would have saved everyone quite a lot of trouble for little gain to just do away with this archaic and pointless rule which no other civilized nation has.

This is not just a problem for the very wealthy, it's a problem for anyone who does not fall in a very narrow bucket but happens to reside abroad while having US citizenship. Even in your case, where you found the process simple, you must admit it made it difficult to secure accounts and form business relationships abroad because of the tax implications and reporting implications for your possible business partners.

Re: Wealthy people are renouncing American citizenship

#569

Post by clarkbw »

ne0flex wrote: post #416

Being a Canadian, I started a tax-free savings account "TFSA" (similar to a US Roth IRA but with way less restrictions)when I turned 18 and was investing heavily in it. A few years later I would get a green card and move to the US and didn't touch the account afterwards except make a few rebalances here and there. My brokerage asked me to update my information and asked me if I was a "US" person to which I answered y…

Yes, most people in this situation liquidate them. Dual US / Canadian citizen here living in Canada.

While you can keep a TFSA around you'll end up paying taxes on the gains back to the states as well you need to file additional paperwork come tax time. If your TFSA gains exceed the filing requirements it might still be worth keeping. Historically you needed to file a TFSA as a foreign trust however recently the IRS has deemed them a foreign disregarded entity which reduces the filing requirements thus making it cheaper.

In your situation you could open up a US based fund with that money and Canada won't care so that's likely your best option.

Re: Wealthy people are renouncing American citizenship

#570

Post by charonn0 »

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…

It must be nice to have problems like that.
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