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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

#71

Post by mprovost »

dmichulke wrote: post #21
venomsnake wrote: post #12

Earlier quoted context omitted.

Because the US passport is opening the whole world to its bearers, the protection US gives its citizens abroad is outstanding, and if some bad guys try to cut your head for ransom - chances of being saved or avenged are substantial. Also US is still the sole global superpower.

Interestingly, the above reasons (and that perspective in general) are also the top reasons for a selected few to want to cut your head off.

I have dual US-NZ citizenship and I can think of no circumstance where if I was in trouble I would either: tell anyone that I was an American, or try and call the US Govt for help.

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

#72

Post by crdb »

matthewmacleod wrote: post #6
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.

Genuine question though – why should citizens living abroad (i.e. not using US public services) pay for those services through taxation?

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 situations (retirement, unemployment, etc.). Most expatriated Americans probably already benefitted from free education which is included here.

- "generally making the country locally better" (justice, environment, etc.).

Of these, only the latter doesn't directly impact Americans abroad. The first benefits you wherever you are; foreign citizen somewhat benefit from Pax Americana but there is no guarantee it will continue, whilst US citizen are covered globally with much more certainty. The second is a form of compulsory insurance for life developments that will probably coincide with repatriation. But that's about 7% of the budget (rough back of the envelope).

The question is why don't other countries tax their citizen abroad? I think it is mainly because they can't afford to enforce it (good luck, Estonia, forcing JP Morgan to give you access to their New York client data). If they could, with any degree of certainty, they would in a heartbeat. France proposes to do it every 6 months.

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

#73

Post by jjoonathan »

binarray2000 wrote: post #53

You must look at it from the perspective of the Oligarchy: Wars, regime-changes, support to "moderate" forces, spying on the world just cost money. And you cannot afford all that by only taxing those at home. You need every dollar. So, you tax the expats (8.7 million of them!). They are abroad to work after all - they MUST have earnings. As an alibi for your new revenue source, you pass a new law (Fatca) while saying…

If you asked "Average Joe who is overworked, has two jobs and CC debt" how much he was concerned about the great injustice of requiring expats earning >$100k/yr in low-tax nations to make up the tax difference, you wouldn't get much sympathy. However, it wouldn't be very honest to attribute his lack of sympathy to apathy. I imagine he'd care, and that he'd find the present arrangement agreeable.

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

#74

Post by cwmma »

negrit wrote: post #24
mikeash wrote: post #10

Earlier quoted context omitted.

I don't agree with what that quote is saying. Americans living abroad can still vote, and therefore are still represented. It's true that Americans living abroad don't all have the same representatives, since they're represented by the elected officials from where they're registered to vote in the US, but that's a far different thing from saying that they have no representation at all.

In France we have deputies(Kind of like congressmen in the U.S.) for expats. Deputies cover region of the world(Deputies for french citizens abroad). http://www.ufe.org/fr/vos-interets/representation-parlementa... They 'make sure' our interests as expat are being covered.

well you can do that because you have national elections, none of those in America as even the presidential election is technically 51 simultaneous statewide elections (well 50 + D.C.)

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

#75

Post by ckozlowski »

gambiting wrote: post #44
rayiner wrote: post #40

Is taxing expats abroad really a problem? First, there is a large baseline exemption and most expats abroad don't pay U.S. taxes. Second, if you're intending to permanently leave the U.S. why should you keep U.S. Citizenship? And if you're intending to come back, is it really unfair to tax you? American citizenship has real benefits, especially if you're rich enough to pay expat taxes. The U.S. protects you and your…

Are you serious? To me, as a person from EU, it seems insane that a country where I haven't actually earned the money would want to tax it in any way or form. That's just ridiculous. You should pay income tax in the country where you made money. And why should I keep citizenship of a country that I moved out of? Because...I want to? Because I feel like a citizen of a country even if I live and make my living somewher…

A lot of what you ask seems that it could be a personal question depending on who you ask.

I certainly wouldn't presume or preach to others with regards to how they view their country, however:

1. We (I'm an expat as well) pay little taxes to the U.S. because of the foreign earned income credit. The paperwork is onerous, yes. But it's not as bad as some make it out to be, unless you're in an exceptional income bracket.

2. A U.S. passport is a powerful thing. And as the OP mentioned, the benefits are real. We look after our own. http://www.passportindex.org/byRank.php

3. Many U.S. expats wouldn't dream of renouncing their citizenship, because it simply means more to them than that.

It's more than residency, it's identity. And it's something we pay into. Many Americans will tell you...they don't like a lot of taxes...but they /will/ pay taxes, and they expect everyone to. It's a "we're all in this together" bit. Even if you're abroad, and you're paying a paltry amount, you're still chipping in.

Just something many of us do.

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

#76

Post by deong »

morgante wrote: post #55
deong wrote: post #26

Earlier quoted context omitted.

I'm also an American expat (Iceland), and for a lot of people, there will be no difference except for inconvenience. If you make less than about $100,000 per year, you exclude that income from US taxes completely. You still have to file a 1040, but you just declare the income on one line and negate it five lines later. You send the IRS the completed form showing you owe $0 and you're done. And if you make more than $…

You're right that this isn't applicable in most European countries, but it does hit Americans harder in other major world cities which have lower taxes than the US, like Hong Kong or Singapore. I'm in Abu Dhabi, where there is no income tax, so tax treaties aren't really helpful. As a result, salaries here are actually proportionally lower than they would be in a higher-tax country, which works out well for everyone…

You're right of course, but this is mostly by design. Rightly or wrongly, the US position is that you need to pay taxes to someone. I think the intent of the laws is at least arguably reasonable, but the execution isn't great.

Assuming for the moment that the US isn't going to stop taxing expats on foreign income, I do think the exclusion limit is too low by about half. Making it more like $200k would allow more highly paid "normal workers" to avoid the penalty, while still hitting the very wealthy purely looking at the tax dodge.

And the limitations on time spent in the US are absurdly low as well. I'm an academic, so if I attend a couple of conferences there, I actually have to count the days left when I book a holiday to spend with my family. I have almost as many paid vacation days in Iceland as I'm allowed to spend in the US without forfeiting my bona fide tax home status, which is ludicrous.

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

#77

Post by tallanvor »

rayiner wrote: post #40

Is taxing expats abroad really a problem? First, there is a large baseline exemption and most expats abroad don't pay U.S. taxes. Second, if you're intending to permanently leave the U.S. why should you keep U.S. Citizenship? And if you're intending to come back, is it really unfair to tax you? American citizenship has real benefits, especially if you're rich enough to pay expat taxes. The U.S. protects you and your…

While many expats don't have to pay US taxes, the reporting requirements are a substantial burden on us - we have to file tax forms in multiple countries, and we have to report on our normal bank accounts, which is pure bullshit.

We don't get any real benefits abroad, and we get charged for everything. Let's say you need something notarized - many places won't accept a foreign notarization, which means you have to go to the embassy. You know how your bank will usually notarize documents for free? The embassy charges you $50 - per signature.

Want to renounce your citizenship? That'll be $2,350.

You managed to end up in the wrong place and civil war breaks out? The US will make some effort to help you, but it wont' come free. U.S. law 22 U.S.C. 2671(b) (2) (A) requires that any departure assistance be provided "on a reimbursable basis to the maximum extent practicable.” This means that evacuation costs are ultimately your responsibility; you will be asked to sign a form promising to repay the U.S. government. (http://travel.state.gov/content/passports/en/emergencies/cri...)

And if you do renounce your citizenship, you risk not even being allowed back in the country to visit family. --People who have done so have been denied visas by the US supposedly because they aren't well enough established in their new country. And yes, this can even happen in the event of family emergencies. So giving up US citizenship could prevent you from visiting a parent or other family member on their deathbed - not something most people want to think about.

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

#78

Post by ryanackley »

rayiner wrote: post #40

Is taxing expats abroad really a problem? First, there is a large baseline exemption and most expats abroad don't pay U.S. taxes. Second, if you're intending to permanently leave the U.S. why should you keep U.S. Citizenship? And if you're intending to come back, is it really unfair to tax you? American citizenship has real benefits, especially if you're rich enough to pay expat taxes. The U.S. protects you and your…

I partially agree. I lived in Australia for 5 years making a nice salary and I was required to pay zero taxes to the US government during that time.

My biggest complaint is the paperwork. Besides FATCA, there is also the FBAR filing requirement. You need to report every foreign bank account that has more than $10,000 in it. This amount hasn't changed since the 70s.

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

#79

Post by deong »

rurban wrote: post #56
rayiner wrote: post #40

Is taxing expats abroad really a problem? First, there is a large baseline exemption and most expats abroad don't pay U.S. taxes. Second, if you're intending to permanently leave the U.S. why should you keep U.S. Citizenship? And if you're intending to come back, is it really unfair to tax you? American citizenship has real benefits, especially if you're rich enough to pay expat taxes. The U.S. protects you and your…

It is a big one. Many expats had to resign their US citizenship to avoid this silly law. Double taxation only exists in Aethopia and the US. Read this blog: http://www.overseas-exile.com/ Protection? Yes, maybe that's the reason. To support the US military efforts and budget. On a side-note: If I would applied to the US greencard, and then decided to move back to Germany, I would have to pay double income taxes. To G…

To be clear, you wouldn't actually pay double-taxes (I think -- if you make more than $100k, it depends on if the Germans and Americans have a treaty over it, but most countries do, I think). You'd have to file twice, but the US side would consist of forms that say you don't owe the US government anything because you already paid more to the Germans than the US would have charged.

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

#80

Post by jbpritts »

Major banks in the Czech Republic will not issue checking accounts to US citizens because of the costs of FACTA. This leaves expats with large, bureaucratic, formerly state-owned banks, like Ceska Sporitelna, which charge exorbitant fees and have dubious customer service. FACTA is a big problem. It is comical that major banks in Europe have a "No Americans" policy because of this stupid legislation; it needs to end.
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