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U.S. Moves to Thwart Use of Foreign Acquisitions to Dodge Taxes

nytimes.com

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Re: U.S. Moves to Thwart Use of Foreign Acquisitions to Dodge Taxes

#121

Post by st3v3r »

slyall wrote: post #108
st3v3r wrote: post #93

Earlier quoted context omitted.

"And the US double taxes their citizens living abroad the same way." Except they don't. You have an exemption for foreign income. "It is even possible you have never set foot in the US yet are required to pay uncle sam's taxes." I don't believe this for a second. You would be a US Citizen, therefore you would have stepped foot in US territory.

> "And the US double taxes their citizens living abroad the same way." > Except they don't. You have an exemption for foreign income. Because all the other 20 year olds working part-time at Starbucks employee the best accountant in town for a few hours per year to do their taxes. > "It is even possible you have never set foot in the US yet are required to pay uncle sam's taxes." > I don't believe this for a second. Y…

"Because all the other 20 year olds working part-time at Starbucks employee the best accountant in town for a few hours per year to do their taxes."

Your inability to do your taxes is no one's problem but your own.

"Ever hear of a guy called Ted Cruz?"

You mean the guy who's going all over the country right now?

Re: U.S. Moves to Thwart Use of Foreign Acquisitions to Dodge Taxes

#122

Post by Area12 »

rayiner wrote: post #55
sschueller wrote: post #13

Earlier quoted context omitted.

And the US double taxes their citizens living abroad the same way. As an American making the same money as your non-american co-worker you are left with a lot less just for having a US passport. It is even possible you have never set foot in the US yet are required to pay uncle sam's taxes. Wanna get rid of your US passport? Not before you pay 10 years projected taxes and pay an abhorrent fee. You will also be listed…

> And the US double taxes their citizens living abroad the same way. The tax code has provisions to avoid "double taxes" on foreign income. You file Form 1116 to claim credit for taxes you paid to a foreign country as an offset against your U.S. tax liability.[1] That tax credit is separate from the income exclusion, which excludes the first ~$100k of foreign income from U.S. taxation. Generally, your total tax liabi…

Try putting money in a retirement fund in the country you live in. The bizarre requirements the IRS puts on reporting will see your compliance costs exceed the yearly growth of the fund. Sorry, but if your foreign investments include a retirement fund or a family trust, you may well be shafted.

Re: U.S. Moves to Thwart Use of Foreign Acquisitions to Dodge Taxes

#123

Post by jonathankoren »

burkaman wrote: post #99
awt wrote: post #75

The solution is not to force us companies to pay tax with yet another layer of positive law, but not to tax them at all, anywhere, unless they wish to voluntarily pay taxes.

How would that solve the problem?

It solves the problem of illegal tax evasion, by making it legal. See? Problem solved!

Re: U.S. Moves to Thwart Use of Foreign Acquisitions to Dodge Taxes

#124

Post by 55555 »

sremani wrote: post #23
zschallz wrote: post #19

Earlier quoted context omitted.

There's a large income exclusion that means unless you earn a really kick ass salary, you're unlikely to be double taxed.

tax is one part, but paperwork and penalties are the other scary part. I have only heard of it, how minute mistakes can end up with 50K fines etc. Probably some one who has gone through the filing taxes from overseas can give better insight.

It's true. There are two specific forms which have 10,000 USD late fees which can compound at least three times per year each. So doing your taxes late could cost dozens of thousands of dollars. These are specific to controlling CFCs, not applying for the FEIE though.

Re: U.S. Moves to Thwart Use of Foreign Acquisitions to Dodge Taxes

#125

Post by peter303 »

benjaminl wrote: post #5

This is happening because unlike almost every other developed nation the US has a worldwide tax system. Almost every other nation has a territorial tax system. The rest of the world with their territorial system taxes income earned within that country, the US rather taxes income worldwide, regardless of where it is earned. For example, if a British company earns income in Germany, its pays German taxes on its German…

This does stop making the profits appear in the lowest taxed country. Google just paid a large fine to the UK for making UK profits appear to happen in Ireland.

Re: U.S. Moves to Thwart Use of Foreign Acquisitions to Dodge Taxes

#126

Post by jessaustin »

davidw wrote: post #72
rayiner wrote: post #55

Earlier quoted context omitted.

> And the US double taxes their citizens living abroad the same way. The tax code has provisions to avoid "double taxes" on foreign income. You file Form 1116 to claim credit for taxes you paid to a foreign country as an offset against your U.S. tax liability.[1] That tax credit is separate from the income exclusion, which excludes the first ~$100k of foreign income from U.S. taxation. Generally, your total tax liabi…

It's perhaps not a big injustice as far as these things go, but it is not fair either. I easily lost out on a thousand dollars of lost wages, accounting fees, and general hassle and stress doing my US taxes in Italy last year.

When I was abroad for Lucent, they generously "did my taxes for free", leaving out the fact that they took the "first $100k" deduction for the company rather than crediting it to me. Fortunately IRS caught such shenanigans and made them send me a check.

Re: U.S. Moves to Thwart Use of Foreign Acquisitions to Dodge Taxes

#127

Post by gozur88 »

brobinson wrote: post #106
gozur88 wrote: post #101

Earlier quoted context omitted.

The problem is according to US law you still have to pay US income taxes for ten years after you renounce your citizenship. Not to mention the fact that you paid taxes for "the support of the people and infrastructure of the United States" when you lived there.

>you still have to pay US income taxes for ten years after you renounce your citizenship Do you have a source for this? I've never heard about it. All I know is they make sure your last N years of taxes are in order, charge you expatriation tax (if required), and ensure you have no unpaid federal student loans.

It's in the wiki:

https://en.wikipedia.org/wiki/Expatriation_tax#United_States

"Under the new law, any individual who had a net worth of $2 million or an average income tax liability of $139,000 for the five previous years[10] who renounces his or her citizenship is automatically assumed to have done so for tax avoidance reasons and is subject to additional taxes. Furthermore, with certain exceptions covered expatriates who spend at least 31 days in the United States in any year during the 10-year period following expatriation were subject to US taxation as if they were U.S. citizens or resident aliens."

The key there is "assumed to have done so for tax avoidance reasons". I would note this is a guideline, and the IRS can make the same determination for other reasons. Basically if you pay nontrivial amounts of taxes before you expatriate the USG assumes you should keep paying.

Re: U.S. Moves to Thwart Use of Foreign Acquisitions to Dodge Taxes

#128

Post by vinceguidry »

malchow wrote: post #114
fapjacks wrote: post #110

Earlier quoted context omitted.

Ever try to take twenty thousand in cash through airport security? Here's a secret: Those millimeter wave body scanners are only incidentally for drugs and weapons.

Yeah -- you're right. I was making a different point involving how wealth is built. It takes creative capital. It isn't just money. So stick with an uncompetitive tax system, and eventually the brightest won't end up on your shores, and they'll live, create, and bank elsewhere.

Generally when people say capital they're referring to large amounts of money, sufficient to fully-capitalize a business venture. Somewhere in the neighborhood of $10 million and up. A "capital-intensive" industry is one in which you need a lot more than this to enter the market.

Also it's not exactly easy to emigrate. People may be mobile, but they're not liquid.

Re: U.S. Moves to Thwart Use of Foreign Acquisitions to Dodge Taxes

#129

Post by [deleted] »

colechristensen wrote: post #38
lowpro wrote: post #28

Earlier quoted context omitted.

American Imperialism at its finest. "Since we're the best country in the world, you couldn't have possibly become rich without us, and therefore you must pay to leave us!"

Greatness aside, you probably couldn't have become rich without roads, national defense, clean water...

[deleted]

Re: U.S. Moves to Thwart Use of Foreign Acquisitions to Dodge Taxes

#130

Post by [deleted] »

occamrazor wrote: post #86
f3llowtraveler wrote: post #81

Earlier quoted context omitted.

I think the big injustice is that people don't have a right to a jury in tax court. Therefore judgments are enforced without the consent of the people. Therefore taxation in the USA today is extortion. All the quibbling about the ridiculous bureaucratic rules and forms just makes it even more clear just what a leviathan our tax system has become.

Many democratic countries have courts without juries. E.g. in France (and in many other countries in Continental Europe, because Napoleon) only the Cour d'assises, which has jurisdiction on serious crimes, has lay judges (not exactly the same as jurors, but close enough). All the other courts, including all the appellate courts, have professional judges only.

[deleted]
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