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The Law That Makes U.S. Expats Toxic

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

#141

Post by Menge »

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.

> being the world's richest country

The US is the worlds #19th richest country as far as GDP (per capita) which makes the most sense as a measure of individuals and taxes.

I don't think it makes any sense given that lower GDP nations should be doing the same thing to extract money from the US economy on any of their citizens who make more than ~$20K (if their GDP were $14K) based on the same "logic".

When The US is happily paying fairly for its brain drain, it can complain. But either way as an expat I actively boycott US services and financial relationships for my own protection.

(edit- make it clear I mean per capita, and reference: https://www.cia.gov/library/publications/the-world-factbook/... )

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

#142

Post by mikeash »

hysan wrote: post #133
Broken_Hippo wrote: post #48

Earlier quoted context omitted.

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…

Yup, came here to say the same thing. Most people who haven't lived abroad for a significant amount of time don't realize the difficulty of trying to vote. In addition to that, the effectiveness of getting your voice heard by your "representatives" (the reps from your last permanent residence in the US) is much more difficult. I used to be able to pick up my phone and get myself heard on issues that I cared about. Li…

Why can't you call your representative while living abroad?

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

#143

Post by throwaway13337 »

peripheral wrote: post #54

I have experience dealing with this. I'm not a U.S. person, but I have a company in a EU country that I co-own with a U.S. citizen (through personal holding companies). Our (EU) bank first demanded we fill in 9 ridiculously extensive forms detailing our entire business, then raised our bank fees from 5 to 105 euro per month, and then closed our account, giving us 2 weeks to send our balance elsewhere. All within a ye…

What country was this?

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

#144

Post by TazeTSchnitzel »

jmadsen wrote: post #62
mikeash wrote: post #41

Earlier quoted context omitted.

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.

sorry, but that's a silly answer: - Social Security is collected on what I paid into the system while I was living/working in the US. Not a part of this - Voting is a right - nothing to do with taxes - My "consular services"? My passport renewed? I cost me $100 or something like that to get my passport renewed, and most of us never go anywhere near our "consular services" - I'm not even sure what they offer, except t…

> - Voting is a right - nothing to do with taxes

Your rights can only be secured if the Government can pay for them.

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

#145

Post by crdb »

rwallace wrote: post #138
crdb wrote: post #72

Earlier quoted context omitted.

The key is to look at the current budget: https://en.wikipedia.org/wiki/2015_United_States_federal_bud... It can be split into three families of spending: - defense, which benefits you globally via Pax Americana, free trade routes etc. and should you require it, "Captain Phillips" style rescue. - "socialism", in the form of benefits that everybody has to pay for and that you can receive if you trigger certain situati…

- defense, which benefits you globally via Pax Americana, This is, to put it mildly, a controversial claim. - Most expatriated Americans probably already benefitted from free education which is included here. When I point out the insanity of the law that denies free choice of public schools, its defenders usually try to justify it by saying schools are funded by local property tax rather than national income tax. Is…

Pax Americana started in WWII (which killed over 55 million people) and since then, there has been no global conflict of a similar scale. Cf http://www.scaruffi.com/politics/massacre.html (top result in DDG).

Whether you consider that global relatively free trade is not beneficial to the rest of the world is up to you, but as a citizen of the rest of the world who did benefit I'm quite glad the US did not go isolationist after WWII.

Regarding schools, whether the taxpayer's money is used appropriately is another discussion, irrelevant here since Americans, through their elected representatives, chose to spent the money in this way.

Funding-wise, last year's budget spent $100bn and this year wants $117bn on the Federal end for "Education, Training, Employment and Social Services" (see link above) of which $69bn in 2015 is for Education (see: http://www.ed.gov/news/press-releases/obama-administration-2...).

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

#146

Post by gcb0 »

michaelt wrote: post #86
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 really doesn't make sense how the US is the only country which insists on taxing their citizens, no matter where they live. Brit here and I disagree - the American system seems a lot fairer. Taxing on residency rather than citizenship creates a bizarre system where if you're a millionaire you can enjoy all the benefits of being a British citizen, but you can be "domiciled abroad" in Belize, Seychelles, Monaco, or…

why that would be wrong?

you are confusing country of residency with country where you earn your income.

if a millionaire lives in Belize, earns his money by having his money invested in Belize and pay whatever taxes Belize require, that law will give zero tax to the usa. it will just force that millionaire to give up citizenship.

now if he makes his money in the usa, then your point is invalid as you clearly don't understand the issue. also this is exactly what corporations do already and this law won't change a thing.

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

#147

Post by T-hawk »

deong wrote: post #68
TimSchumann wrote: post #38

Earlier quoted context omitted.

> with $10k of financial engineering the problem goes away for forever As an American this upsets me greatly to hear. I feel it makes living abroad, especially to families of average means in this country, almost an impossible feat. I also wonder if only leaving the country for short duration vacation/business contributes to the "We're the best country ever!" mentality here and the "Wow, look at those weirdos over in…

If you're "of average means", then you can simply color within the lines, do exactly what the law tells you to do, and almost certainly have no problems at all. You only need the $10k to successfully cheat.

Figuring out "exactly what the law tells you to do" is the tricky part. The law merely prescribes the step-by-step instructions for each form. It will not explain the emergent behavior that you'll need to know to optimize your way through the system. It will not advise you ahead of time to do things like spend no more than 30 days in the US to qualify as a foreign resident. You wouldn't even know that's a relevant question to ask unless informed by a suitable expert.

This sort of thing is the financial engineering that patio11 is talking about. It's not cheating, it's doing what the system is meant to let you do, if only you understood the best paths through the system.

I have a similar situation on a smaller scale. I live in one US state and work in another. I file income tax for both, and there's a form that takes my tax liability to my state of work and backs it out of my liability to my state of residence. I wouldn't have known that form existed and would have just assumed I had to pay full tax to both states, if not for TurboTax directing me to that form.

The law will direct you how to mechanically comply, but it won't direct you against complying in ways hurtful to yourself.

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

#148

Post by ahh »

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…

You mind sharing who you moved the accounts to? I'm handling this exact case for a overseas relative and it's proving no end of hassle.

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

#149

Post by morgante »

vidarh wrote: post #134
deong wrote: post #88

Earlier quoted context omitted.

I actually talked with an accountant in the US my first tax year living year, and her advice was "don't use an accountant". I have no idea if this is true or not, but according to her, the IRS's view is basically, "we know this is complicated stuff, so do your best, and if you make a mistake, no big deal", whereas if you hire an accountant and get something wrong, the assumption is that you're trying to avoid taxes.

It seems tax authorities can be surprisingly flexible as long as they don't get a whiff of attempted tax evasion anywhere. E.g. at some point around 2000 or so, I'd just moved to the UK, and my personal finances were total chaos around the move. I'd sold quite a lot of shares in Norway, and traded quite a bit on NASDAQ via a US brokerage account (in 2000... yes, it got ugly; thankfully not that much money), and had i…

I don't know much about the UK or Norwegian tax authorities, but at least with the IRS you might have just gotten lucky. They only have sufficient manpower to go after a small percentage of questionable returns, so even if you make a lot of mistakes on yours (or evades taxes), there's still a good chance you won't get audited unless you're a big fish.

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

#150

Post by Amezarak »

gambiting wrote: post #94
Amezarak wrote: post #87

Earlier quoted context omitted.

I really find it hard to feel sympathetic about rich Americans (only applies to income of 100k+) paying no more taxes than if they lived in America (live in a country with higher income tax, pay US nothing, country with lower tax, pay US the difference.) This seems hardly worth 'denouncing' American citizenship. Can you explain? I feel like threads like these really illustrate the difference between someone on HN and…

It's not about America per se - I would feel the same way about any country. I live and work in UK while being a Polish citizen. If Poland now asked me to pay income tax in Poland based off my income in UK, I would be very very upset - I already pay income tax in the UK, so paying it twice sounds absolutely ridiculous. On the most basic level - Poland has absolutely no "right" to any of that money. I would denounce m…

> I already pay income tax in the UK, so paying it twice sounds absolutely ridiculous.

You aren't paying twice. That's the point. Assume the US has a 30% tax rate in your bracket. Poland has a 35% rate for that same bracket. Then as an American expat, you would pay 35% in taxes. If Poland had a 25% rate, you'd pay 30% (25 + 5) in taxes. You aren't paying 65% of your income in taxes. You aren't paying twice.

> On the most basic level - Poland has absolutely no "right" to any of that money.

Then Poland has the right to say you are no longer a Polish citizen that can take advantage of Polish embassies or move back to Poland at any time as a full citizen.

It seems perfectly sensible to me.

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