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Wealthy people are renouncing American citizenship

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Re: Wealthy people are renouncing American citizenship

#571

Post by dghlsakjg »

whoomp12342 wrote: post #504
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…

its clear how your situation could be abused. i am not suggesting that you have done this, but that it creates an interesting loophole for the wealthy by harboring investements into other countries capital. Lets say you are a 0.1%er who happens to live in canada. Invest everything on canadas terms, then move to the USA. receive foodstamps, welfare checks and the likes for XX years. Go back to canadian citizenship and…

The TFSA is not something that can be abused by a high income individual.

It has a $6,000 yearly contribution limit.

Canada, if anything, has an investment tax scheme which favours middle class investors. For someone making millions of dollars Capital gains tax is tied to your income tax bracket in Canada so it is very likely that you would end up paying higher taxes.

Canada also has a tax and income information sharing with the USA, so someone making big bucks in investments in Canada could not benefit from means tested programs in the US.

The scenario you proposed is entirely impossible.

Re: Wealthy people are renouncing American citizenship

#572

Post by paxys »

SonicScrub wrote: post #547
paxys wrote: post #516

Earlier quoted context omitted.

If North Korea passes a law tomorrow saying that every person on the planet owes it $1000 in taxes, if you ignore it are you committing a crime?

Legally? You'd be breaking the law in North Korea, so technically yes, but that's not really the point here. Does North Korea have the ability to realistically threaten my assets, livelihood or freedoms? If so, then the proper legal advice here would be to pay it. We are not discussing ethics here, we're discussing whether or not following the "just ignore it" advice is a good idea or not. In the case of the US, they…

If ethics are not a concern then the right move is whatever you can get away with. As other posters pointed out, if you don't disclose your US citizenship to foreign banks then that information is not going to make its way back to the IRS. Canada is probably the only country where you wouldn't want to try this.

Re: Wealthy people are renouncing American citizenship

#574

Post by throw37388 »

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…

》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.

Some other countries do that as well. Norway for limited time period. Some others have exit fees etc.

Re: Wealthy people are renouncing American citizenship

#575

Post by randomchars »

robin_reala wrote: post #498
ElFitz wrote: post #437

Earlier quoted context omitted.

Most countries don’t tax citizens living abroad on foreign revenue, and just forget about them once they become residents elsewhere (unless they still have income from their country of origin).

And by most here, you mean every single country in the world apart from the US, Eritrea, Myanmar and Hungary.

Hungary does not tax it's citizens living abroad.

Re: Wealthy people are renouncing American citizenship

#576

Post by Klonoar »

umeshunni wrote: post #549
paulddraper wrote: post #286

Earlier quoted context omitted.

US states do the same thing. States with income tax will tax you whether you work in the state, or you are resident in the state.

Or in the case of California, up to 4 years after you leave the state.

Virginia also has some oddities here, frustratingly.

Re: Wealthy people are renouncing American citizenship

#577

Post by azinman2 »

bell-cot wrote: post #262
circular_logic wrote: post #63

Interesting facts about renouncing American citizenship: - There is renunciation fee that has to be paid and currently stands at $2,350 (the highest in the world).[1] - A final tax return will sill need to be filed. [1] - An Expatriation tax is payable if [..] Your net worth is $2 million or more on the date of your expatriation. you will be treated as having disposed of your assets the day before your expatriation a…

> ...it would seem that the IRS is trying very hard make this process unappealing IANAL, but I believe that all the unpleasantries which you note were decided by the U.S. Congress. (Most probably with the President's sign-off.) Making the IRS out to be the Real Villain(tm) here only helps a bunch of self-serving politicians to evade responsibility.

And what's wrong with this? Personally I'm very happy to see it. The idea that you make tons and tons of money by what America has worked hard to offer you and then you want to skip town because of taxes? Taxes that help pay for all the advantages that got you that wealth in the first place?

Good for Congress for trying to prevent this.

Re: Wealthy people are renouncing American citizenship

#578

Post by paxys »

AdamN wrote: post #464
vgatherps wrote: post #228

Earlier quoted context omitted.

This comment isn't about somebody living in America. This is about somebody who doesn't live in america, has never lived there, doesn't have a passport, but are considered "american" by the IRS - somebody born in the USA to non-citizen parents while traveling for example.

Not by the IRS, by the USG.

Actually it is just the IRS. The US government (by way of USCIS/DHS) has a very different definition of citizenship and residency. Most long term visa holders are considered residents by the IRS for tax purposes, for example.

Re: Wealthy people are renouncing American citizenship

#579

Post by clarkbw »

As an ex-pat what bothers me most is the lack of representation, I'd keep paying taxes if we actually had some virtual state. Citizens abroad are essentially gerrymandered by their last state of residence meaning there is no useful representation for those abroad. However with an estimated 9 million+ citizens living abroad ex-pats all together would represent the 10th or 11th most populace state. 9 million US citizens is similar to the population of New Jersey which has 2 senators and 12 representatives working for them. Where's my Cory Booker?

Re: Wealthy people are renouncing American citizenship

#580

Post by obmelvin »

dghlsakjg wrote: post #571
whoomp12342 wrote: post #504

Earlier quoted context omitted.

its clear how your situation could be abused. i am not suggesting that you have done this, but that it creates an interesting loophole for the wealthy by harboring investements into other countries capital. Lets say you are a 0.1%er who happens to live in canada. Invest everything on canadas terms, then move to the USA. receive foodstamps, welfare checks and the likes for XX years. Go back to canadian citizenship and…

The TFSA is not something that can be abused by a high income individual. It has a $6,000 yearly contribution limit. Canada, if anything, has an investment tax scheme which favours middle class investors. For someone making millions of dollars Capital gains tax is tied to your income tax bracket in Canada so it is very likely that you would end up paying higher taxes. Canada also has a tax and income information shar…

> It has a $6,000 yearly contribution limit.

I haven't looked into the exact details of Peter Thiel's IRA, but those have a contribution limit too, and look at all the press recently about him "abusing" [0] that.

[0] I can't claim to know enough of his specific situation and the exact regulations to have an opinion on whether that's a fair characterization.

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