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 actually pay in tax. I can't have a proper retirement account here since America doesn't recognize the local pension providers, so my government mandated pension is deducted from my salary here and then also taxed as income in the USA. If I ever want to leave, the IRS charges a small fortune for the privilege of not being a citizen too.
I'm sure there's a small number of rich people gaming the system, but for the vast majority of expats the citizenship-based taxation system is almost cartoonishly cruel.
> 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.
This is exactly why these people are renouncing US citizenship: They’re living overseas as citizens of another country and, like anyone rich or poor, don’t want to be paying taxes to a country they aren’t living in.
It’s not exactly unfair or nefarious. If they’re no longer living in the US and they are citizens and residents of another country, surrendering US citizenship is a logical choice.
Renouncing US citizenship is a common move for this exact reason. This article just happens to have drawn an arbitrary line in the wealth of people who renounce US citizenship and made a headline out of the wealthier subset. The wealthy are also more like to have dual-citizenship but relocate to another country, so they’d be over represented in this set.
Some are "accidental Americans" like UK Prime Minister Boris Johnson, born in the US, who discovered as a US citizen he had to pay capital gains taxes when he sold his London apartment. Australia requires its parliamentarians to have only Australian citizenship and some discovered for the same reason they were not eligible.
Furthermore, the burden of FATCA is sufficiently onerous that many banks etc. just refuse to deal with it and close the accounts of US persons. A number of long-time expat Americans, e.g. in Germany, have renounced their citizenship because they are unable to function due to this.
Alexander Boris de Pfeffel Johnson aka Boris Johnson is not as clumsy as his haircut makes him look to be. The guy keeps fit, doesn't look like Rambo but he is fit with a bit a sticky build. He is intelligent, he survived the muddy waters of politics, affairs and is prime minister.
Of course he always knew he is American dual citizen, a person like him does not handle an apartment sale himself, he has handlers and advisors. And he was in a very high income bracket for a while and it's safe to say he fell into a us taxable segment before that sale.
He is a showman and this was just the event where the tax bill was too high and he said "no more".
hah yes this. the buffoon act really makes people underestimate- and if i dare say, sympathize with him. but he's much more competent (at getting what he wants) than people give him credit for.
In the military I saw people get kicked out for being “overweight.” Interestingly, they could run circles around you for 12 miles, throw you several yards, or otherwise destroy a Physical Fitness Test.
He's also not terribly organised or rule following. He probably just thought he could ignore the US tax and no one would notice. I'm not sure if he paid in the end or got around it by renouncing his citizenship?
Yeah, it is in theory, but even small businesses incorporated abroad with US persons involved in them put huge reporting burdens on the US person. Form 5471 and friends make this stuff look straightforward. Most of the time I find my frustration isn’t about how much money I am paying in taxes, but just how much dull and confusing paperwork I have to understand. Even trained professionals who spend their whole lives doing this get confused by US tax compliance for people who have international lives. The US needs to realise how important the a positive reputation in its expat community would be for its soft power.
I've always wondered of it was possible to move to the UK by starting a business that required a UK presence and using that as a reason for an indefinate residence permit?
Nope. You cannot really sponsor yourself working for you own company, that would be such an obvious loophole.
I've been living here 3.5 years, 2 on a YM visa, 1.5 on a work visa. Unfortunately, my 2 years on YM don't even count towards the 5 required to get ILR. You can build up an entire life here & all it takes is for your work visa to be disappeared and then you have 1 month notice to gtfo the country otherwise you're "overstaying".
After 3.5 years somewhere you definitely build up "a life" there, but the UK gov offers no protections at all. Until you hit that 5 year mark they don't give a toss about you.
As long as you mean 5 years of uninterrupted work visa (YM doesn't count) where losing your visa forces to to leave w/ 1 month's notice, then sure, they have "open borders".
I assume you mean a business bank account for the banking?
Challenging, and potentially criminal.
If you have any management authority over the bank accounts owned by the business, then those accounts fall under FACTA.
Hell, if you are even just an employee, but can sign on the bank account, then you have to report it to the US authorities.
So a 'business account' doesn't get you out of the US required reporting.
Also, the implication is that you'd use this for 'day to day' banking. Using a business's funds (a business bank account) to cover personal spending is typically criminal (embezzlement).
So not a solution.
And this doesn't solve the other problems, like pension savings or other financial products.
Unfortunately if you have equity in the business, you'll get taxed. However, if you are only an employee, you get an exemption on something like $150,000 of income, housing, and other expenses. So as a US citizen, you can avoid taxes only by living outside the US, and being an employee of a non-US company. If anyone knows otherwise, please correct me as I'd greatly benefit!
nitpicking. You don't get out of taxes, you get out of paying US taxes (on earned income, you still have to pay capital gains).
But you still have to file US taxes. As an expat, you have more forms to fill out.
AND the bigger challenges are banking. You still have to find a bank willing to open an account for you, and good luck getting more complex financial services.
Well Germany also requires that you surrender other citizenships when you get a German citizenship, unless you are a German dual citizen through ancestry.
I heard rumours that this law is basically to put a thorn in the eye of Turkish immigrants minus what the EU does not allow. Is there any truth in this?
Yes, and Turkey moved to nullify this by creating a system in which if you are otherwise a valid Turkish citizen that has to give up because of a requirement from a foreign country like this, you can get on a special status in which you cannot vote, but have all the other privileges of Turkish citizenship. That status is not citizenship in theory, but practically you have everything as usual, and can participate in the Turkish social security, retirement, health system and all else. It’s called the blue card.
I think the main difference is that Turkey does not require you to relinquish your Turkish citizenship if you get another, while India does. In a way TRs system is entirely to help out with an issue a foreign country creates, while India’s is primarily an attempt to recover from an own goal — assuming you believe people having multiple citizenships is a good thing.
It got really awkward when the large minority of turkish Germans living in Germany with turkish citizenry overwhelmingly voted for Erdogan in the last elections. I'd really wish Germany was able to adopt an immigrant culture similar to the US, but the current situation is a semi-failure, but neither side of the political spectrum seems to be able to implement good policies to solve the issues.
First import uneducated Turkish workers for unskilled jobs so they will work for cheap, and then discriminate against educated workers because you think it's being Turkish (rather than education) that makes the previously-arrived workers have trouble integrating. So Germany and Europe in general keeps getting more Erdogan voters while others just don't want to deal with racism and immigrate to other places like US or Canada.
If you really want to fix this, you have change the main demographic of Turkish immigrants, probably by offering a clear immigration path to students who come to Europe for graduate programs or such.
WOuld you care to expand on that? I'm curious what in particular about the US immigrant culture you would like to see adopted, and what about the current German system prevents that culture from developing.
Sadly I can't find good polls on some of the things I want to talk about, so this has a bit of an anecdotal note. But I've been living in a majority turkish subdistrict for most of my life, and have many german-turkish friends, as well as friends and family teaching in schools with many turkish and arab descendant kids. But first some facts: "People with a migration background", which includes their children and children's children even if they were born here, make up 21% of the population. Half of these hold german citizenship. 40% of all kids have a migrant background. 12.5% of people with a migrant background are so called Spätaussiedler, ethnic germans who migrated to Germany after WWII.[1]
Attidudes of Germans at large towards immigration are very mixed: 71% think that it leads to higher strain on the welfare state, 69% think it leads to conflicts with "the natives", 63% think it leads to problems in schools. At the same time, 67% think that it makes life in Germany more interesting, and 64% think immigration is important to combat the effects of our quickly aging population.[2]
Now on to what I think is the biggest failure, which is now very hard to correct: Many second or third generation immigrants still don't feel like they are "real" germans. There's still a strong class divide, which in urban areas also leads to segregated communities. They are underrepresented in politics (except for the Spätaussiedler) and white collar jobs, and there is whitespread employment discrimination, especially against people of turkish, arab and african descent.[3] While the current government declared a "welcome culture" in 2015 during the refugee crisis, in the heads of the majority of the population, there's still a very clear picture of how a "real german" looks and acts. - While close to half of the population admits that "Islam is a part of german culture now", they will still ask Ahmed "where he is really from", and rather hire Oscar over him.
This also partially explains why Erdogan is so popular among turkish Germans: They feel disrespected here, so the vision (delusion) of Erdogan making Turkey into this powerful and strong state is very appealing to them.
I do think things are getting slightly better, but there's a long way to go, and there's also risks of things turning really sour: Anti-democratic ideology is relatively widespread among the muslim minority, in contrast to the rest of the population, their level of religiousness stays about the same, the current money policy of the ECB leads to an enormous rise in living cost in urban areas, and the divide between rich and poor in Germany is increasing.
@markdown: +9000 for this answer! I agree: It is very thoughtful.
I re-read this part a few times:
<<
Attidudes of Germans at large towards immigration are very mixed: 71% think that it leads to higher strain on the welfare state, 69% think it leads to conflicts with "the natives", 63% think it leads to problems in schools. At the same time, 67% think that it makes life in Germany more interesting, and 64% think immigration is important to combat the effects of our quickly aging population.[2]
>>
At first blush, I think "Oh come on people, pick one side or the other!" Then I think again: Each one can be independently true. Taken as a whole, these opinions appear conflicted. This is the reality of large scale immigration: It is complex is any society.
When I think about immigration, I try to separate high-income/-education/-skill from the low- counterpart. Germany should be doing everything possible to attract the high side. It's a great place to raise a family.
Thank you for taking the time to explain your point of view.
I suppose this is just the unavoidable result of too many immigrants arriving around the same time. And when they have their own communities, they have no reason to integrate into the host culture.
Has Germany done anything to reduce the number of new immigrants coming in?
Also, I assume there is a special exception for Jewish families of German descent who were unfairly stripped of their nationality during the National Socialist period (early 1940s). There is a programme to help people re-gain their citizenship. I've read a few long-form jounalism articles (in English) about people who don't speak German
and are not German residents applying under this programme.
Pretty much anyone whose citizenship was revoked by the Nazi government, or descendants of those victims who would have had citizenship today had it not been for the Nazi government, can apply to have the citizenship reinstated. Numerically it's likely mostly Jewish families in Israel and the US, but it applies to all of the Nazis' German victims.
Doesn't the Netherlands do this as well? As a Canadian I think not allowing dual citizenship might solve a lot of issues with both the very rich and the very poor.
Only because of US laws. I have two citizenships, but one residency. In most Western countries, being a resident is associated with healthcare and pension, so having one residency is logical.
> 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 if they needed to evacuate[3].
So if anything, I'd say America is worse than other countries at getting citizens out of bad situations. But there seems to be a tendency for people to not look at what other countries actually do and just assume that America is the best.
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.
> I'd say America is worse than other countries at getting citizens out of bad situations
I last saw data through the UNDP about ten years ago. It's very possible that the situation has degraded. And no country has 100% coverage, far from it. At the time, however, the U.S. government was exceedingly good at exfiltrating citizens from disaster zones. Granted, it has had more experience doing this because, well, empire.
The situation was starker for low-level assistance, in which many diplomatic missions will not get involved.
If you come across the data please share it, it would be worthwhile seeing what exactly they're talking about and if the data matches your memory of it. I didn't come across it in my (very limited) search, but I did find this analysis that suggests U.S. citizens fare worse than citizens of many other countries[1]:
> According to a database compiled by New America from public sources, since 2001, American hostages taken captive by terrorist, militant, and pirate groups have been more than twice as likely to remain in captivity, die in captivity, or be murdered by their captors as the average Western hostage. Forty-three percent of American hostages died, remain in captivity, or remain unaccounted for, compared to an average of 19 percent for all Westerners.
It's because USA has a policy of not paying any ransoms or making concessions to the hostage takers (unlike most other western countries). I'd assume this might also result in Americans being targeted less often than people from other countries (I haven't see any data on this).
The US is also very good at issuing travel warnings that are very explicit about the risks [1] I am not aware of the DoS ever going from 'its all ok' to 'see ya, y'all on your own now!' Anyone that was in Yemen prior to 2/15 had (or should have) a very good idea of where things were going.
At the early onset of the Covid-19 pandemic started, many countries sent special planes to repatriate their citizens either from the Wuhan region, or from other countries where they got stuck because of a sudden borders close. The US also organized flights, but I was personally very shocked to learn that they charged close to $1,200 for those trips, although it was clearly a case of force majeure. That was the moment I thought that Americans don't actually get their tax money worth in terms of government support, while being subject to taxation on their worldwide income even when not residing in the US.
To be clear, most if not all countries chartered special flights for free. Later on, some more flights were organized with the help of airline companies, but those were paid.
Likewise in China, I had Italian friends whose embassy helped arrange covid vaccines for Italians living there while the US embassy was no help whatsoever to their citizens. At least among expats, the US embassy has the reputation to be the least helpful embassy to their citizens.
If non-PC thoughts are against the rules, post those rules in the acceptable use policy. I don't think it's hateful to critically discuss BLM. I do think it's hateful to say "x group is bad", but that's not what I read.
I believe BLM to be led by Marxists and that is backed up by objective evidence. I'm not sure why that's controversial. It's also objectively true that George Floyd had a criminal record. Again, I'm not sure why that's controversial. One can be very socially aware and also recognize those two facts. It is indeed problematic that Floyd pointed a gun at the abdomen of a woman whom he thought was pregnant during a home invasion robbery, or that he had significant amounts of narcotics in his system when he died. That doesn't make his death justifiable, it's just the real life complications of a real life case (which tend not to be overly clean). When did we get afraid of objective facts?
EDIT: Downvoters: explain why. Simple Q. What is it about facts you don't like?
It doesn't take Einstein to understand that George Floyd could just be anyone in that scenario.
To focus on his personal history is simply irrelevant and is in disrespect of the judicial branch and the principle on the separation of powers. No one is contending the truthfulness of his criminal history, but he didn't die as a result of that, he died as a result of the disregard of human life by an officer of the executive branch.
Even if you don't like BLM, which is okay, it stretches too far to claim it a terrorist group.
Please don't just reduce it to 'facts you don't like', facts won't get you banned, but those claims the OP made are more than that.
I don't have the feature to downvote you, but it I did then I would. Here's why: what is an "objective fact"?
Are those statements you made relevant to the death of George Floyd? The answer is no.
He was a criminal who made mistakes - for which he served his time. Stating your "objective facts" appear to diverge attention elsewhere and in particular to paint George as the guilty party that warranted the police response that he received. Did he deserve that?
He begged for his life while being kneed to the throat for over 10 minutes. He then died on the floor by a police offer. There's some objective facts for you pal.
Further, there was no "real life complications of a real life case" he was literally murdered. That's the point and is why the police office is serving jail time!
Please take some time to consider what and WHY you wrote what you did. Do you think that he deserved death? Why?
> Are those statements you made relevant to the death of George Floyd? The answer is no.
They were in the judgement of a coroner. Not enough to mean murder wasn't called for, but it's obtuse to not observe that Floyd's drug load was past the lethal level for most people.
> Stating your "objective facts" appear to diverge attention elsewhere and in particular to paint George as the guilty party that warranted a cold bold death sentence. Did he that?
No, and when did I argue that? I never said he deserved to die. He should have been transported to jail and then tried for his crimes, not killed.
> He begged for his life while being kneed to the throat. There's an objective fact for you pal.
Anyone with any experience with corrections finds statements by suspects like this laughable at best. With him it was perhaps true (you physiologically can't speak if you can't breathe, but I don't deny he was killed). With someone else, it was because their wrists hurt because of those shiny bracelets they earned by committing crimes. I believe essentially nothing that a suspect says about their comfort, because the majority are accomplished liars. This is what they do. It is literally their occupation. I also believe Floyd was killed. Can you fit those two concepts in your head?
> Further, there was no "real life complications of a real life case" he was literally murdered. That's the point and is why the police office is serving jail time!
His drug consumption was absolutely a complication with his trial. Why would you think it wasn't?
> Please take some time to consider what and WHY you wrote what you did. Do you think that he deserved death? Why?
I don't think he deserved to die. I wrote what I wrote to illustrate that Real Life is hardly clean. There's nothing class-, race-, or otherwise-based in what I wrote. Objective facts.
So you agree he was killed and didn't deserve to die. You are just annoyed that such a "fuss" was made about it, and that he was black has nothing to do with it.
When did I ever say that? I am annoyed someone was blocked/banned for quoting facts. I don't think Floyd needed to die at that point in time.
Why are you so hell-bent on painting me as a racist? I've said nothing of the sort. I've never said anything apologetic towards the actors in Floyd's death. I've not even made a statement on his death at all, other than his drug use complicates things (which I think anyone would agree upon).
Sure seems like you're out to get someone. Why? What makes you so hungry for blood? I did nothing to irritate you.
The Unites States needs a dose of Marxism. Things are bad here for the working class. We have more than enough resources to do better and bring our society up to par with other developed countries.
Ha, nooooo. Your deluded worldview has been proven false. Kindly bugger off with it.
Every single developed country practices capitalism. Every one. The Scandinavians practice Democratic Socialism precisely because they have a surplus to spend on social programs (largely due to a combination of oil money and a lack of a semi-permanent underclass), none of which sounds particularly socialist to me.
>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.
how many American get into that kind of shit storm? it seem like this benefit isn't worth the taxes that you pay
How many Americans actually end up with real tax liability from a foreign country? Probably need to answer that before we determine whether it's "worth it" because my understanding is most people don't.
At least from those expats posting here, the issue isn’t the actual real tax liability, but the burden of having to show the IRS every year that you don’t think you have a tax liability.
It is awful - I'm glad you never had to deal with. It provides little revenue and causes a huge amount of hassle and makes living overseas way more difficult.
American expat here - agreed with the other expats - it’s the filing that really, really sucks. Like really. Breaking the difficulty down in terms of priority.
1 - just trying to work through what all might possibly be owed and not owed to US as well as the country(ies) one operates in.
2 - Identifying through which paperwork to declare it, while also ensuring income / business reporting is copacetic with the tax regime of the country that same is actually earned in. As a business owner, (many operating overseas are looking after a business) I have to complete corporate accounts (which costs $$$$ and takes forever) before I can file American income tax for the same accounting year.
3 - the value of the tax liability itself is a distant third in terms of hassle than any of the above. (I’ll include in this bucket the fact that Americans are taxed on income earned abroad, putting us at enormous disadvantage for work opportunities vis—a-vis peer expats who come from other countries)
And how about they make this service opt-in. I was born in the US but I have had nothing to do with the place for 95% of my life and I don't want their help. Why must I fill out their paperwork every year or pay them money to opt-out (which I can't even do anymore because of the current backlog).
Perhaps the revenue is not very great but if there were a blanket exception I think you’d suddenly find a lot more people gaming then system to not technically be US residents and thereby escape large amounts of liability.
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).
That's pretty easily dealt with through residency thresholds. We do this in the UK, counting people resident for tax purposes if they spend more than so many days in the UK in a given year. I would be very surprised if the US doesn't already do this to determine non-citizens tax status.
That's how state taxes are dealt with in the US and a number of people go to great pains to make sure they stay exactly the number of days in some high-tax state that lets them skirt liability. I'd be surprised if similar things didn't happen in Europe but I don't pretend to be as familiar with what goes on there.
If you are not allowed to open financial accounts for investments in the country you are living in because they do not want to have information sent to the IRS, you'll think differently.
I know at least one country that will not let you even open a bank account if you have a green card or US citizenship. Actually, even if you're a foreigner living in the US (student, H-1, etc), that country will not let you open a bank account - even if you are a citizen of that country. The rule is simple: If you have ties to the US that could require you reporting your bank account to the IRS, then you cannot open a bank account.
First hand experience (US citizen): When you open a bank account overseas, they ask you if you are subject to FACTA (US passport or green card). Then you are given a multi-lingual form that explains all about FACTA, and require you submit your passport (for scan/photocopy) and to sign a form acknowledging the bank will end your account details annually (at least!) to the US IRS. I confirm this is true multiple times -- different banks, different countries. Surprisingly, even ones where the service is 100% non-English (read/write/speak!), they will still bring out multi-linguage forms and do a bunch of pointing to confirm.
Funny story: Overseas, I can remember going through anti-money laundering training. The week after, I went to open a new bank account. When I told them I was a US citizen, the account rep said -- without missing a beat -- "Do you want to report?" Jeez. That question alone is probably enough to get that bank into trouble! Obviously, that person failed their own FACTA training...
> FATCA also requires such persons to report their non-U.S. financial assets annually to the Internal Revenue Service (IRS) on form 8938, which is in addition to the older and further redundant requirement to report them annually to the Financial Crimes Enforcement Network (FinCEN) on form 114 (also known as 'FBAR')
What's ridiculous is that it also "requires" foreign banks to report details of accounts by US holders - even if the bank has no relation to the US.
Find me a bank in 2021 that doesn't clear US dollars. That is the big gotcha. This is one of the ways that the long arm of the US Treasury applies force is by restricting US dollar clearing if any banks in a jurisdiction refuse to comply. Literally: They would say to a developing country: Get that local bank in order, or we will not allow any one in your country (central bank or businesses) to trade or clear any US dollar transactions. Remember: Most US dollars overseas move by SWIFT transactions.
Because they apparently require foreign banks to report it.
Now, how do they actually enforce that supposed "obligation"? I do not know.
But it doesn’t surprise me. The US has already enforced it’s laws on foreign companies' dealing abroad merely because they had used dollars in their transactions.
They haven’t enforced it yet (for the banks, for non-compliant Americans, they have). But they’ve signed treaties with many governments to allow this, and they threaten foreign banks with fines related to any US dealings.
I'm aware of restrictions in France and Pakistan from coworkers on H-1 visas from those countries. Note that both probably do provide a way to open it if you go through some lengthy "exceptions" process, but it wasn't worth the hassle.
Basically, ever since the IRS required you to report foreign accounts (2007 or 2008), some countries have made it harder for people based in the US to get accounts. They see it as an indirect means to collect intelligence by the US.
Well there are a handful right here on this comment section. I'm a Brit and have known maybe half a dozen US citizens reasonably well here in London over the years, at least two of which renounced US citizenship for tax reasons while I knew them. It's definitely a thing.
According to another post you do not owe tax on income below $108k so that’s probably not going to affect most filers, though I’m sure an anomalously high number of HN users are earning six-figure salaries.
That is only applies to so-called earned income, you still owe taxes on all of your other income. And many people earn considerably more than $108k.
Furthermore, even under tax treaties, it is not uncommon for some part of your income to be double taxed due to differences in recognition and classification of income and foreign taxes paid. Americans often have to pay more taxes than if they only had to pay taxes in either country separately.
And this is on top of the onerous reporting overhead and other difficulties.
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.
What's the embassy doing for me as an American citizen living abroad who uses none of their services (except passport renewal but that's only because of the other ridiculous rule that US citizens must travel there on a US passport). Why am I paying for it?
What if you live in another town and are paying for that fire department? Just kidding. But really if you live in a country which has a tax treaties with the US, you also can offset your taxes with taxes paid to a foreign country anyway, so even for high-earners nothing goes to the embassy. If you do use the embassy, you generally do pay them fees of course.
The embassy is for maintaining relations with foreign countries, not just passports and birth certificates (and pricey notary services). That seems like a sideshow. When it comes to services for the public, they appear to spend most of their time dealing with visa applicants, based on the crowds and lines I've seen. They also do offer assistance for missing persons abroad; if you have a relative that goes missing abroad the embassy will investigate. That seems nice of them. I assume other developed countries' embassies are basically the same though.
Sorry, maybe I wasn't clear, I don't ever use the services they provide and I won't because they are provided by the other country I am a national of. I have no links to the US. Zero.
Why not? I could just as well say that someone making $50k in Arkansas shouldn't have to subsidize consular services for someone making a quarter million a year abroad. They're not really paying "full price" either given the large exemption.
The US has an interest in maintaining embassies and consulates independent of its expat population. And we often pay for whatever services we get there, so you aren’t subsidizing us.
Additionally a government should think about practicality and fairness before it implements policy. It is impractical and excessively burdensome to try and tax residents of countries that aren’t the US. Despite your stated beliefs elsewhere, it does not take very much income or bizarre situations to wander into dicey tax situations that are frightening for the expat. A small business (which is taxable in the US if you net more than about $430) can mean difficult filing in the US. I don’t earn all that much, and I’ve spent a lot of this summer working on my US taxes for no purpose other than to have them piled up somewhere, unless some IRS agent decides to make my life much more difficult.
Well, wehther it's alright or not, whether it is accurately characterized as 'getting screwed' or not, at least it's only the ones who can most afford it.
Perhaps you are being sarcastic in the parent comment, but United States "screwing" its successful people and forcing them out means that these successful people will no longer contribute to United States, but to their new home country instead.
Without their contributions the Unites States will be less successful, thereby "screwing" everybody in it.
This trend within United States is especially ironic and alarming considering that United States gained its success specifically by giving home to persecuted people from other countries with capacity for success. Conversely, other countries, some obvious examples being Nazi Germany and USSR, were not successful specifically because they forced out their successful people.
I mean, am I supposed to feel sorry for high-income people because they have to pay tax to continue to benefit from US citizenship and US embassies? I don't really, nor do I consider it getting "screwed." I think it is only fair that well-to-do expats should pay into the system like everybody else. If they don't want to, I welcome them to take the article's lead and give up their citizenship.
If it was just getting taxed up to a point I think you'd have a reasonable argument, but looking at the torturous nonsense they have to go through to the point where even US banks think the costs of having them as clients isn't worth the hassle, it's clearly way beyond that. Also, many of these people don't actually owe any tax at all, or relatively small amounts, but it's ridiculously difficult and costly to prove it.
I mean what is the objective? Raise tax revenue from ex-pats, or drive them out of US citizenship? What's actually happening seems to be the latter, not so much the former. Surely that's a serious policy failure.
After not living in the US for a few years, your view of the US is quite disillusioned. They don’t want you to come back and live there. The need to keep everyone thinking the US is the best. /s
The thing is, many of these expats aren't even "paying into the system" anyway. I have to file US taxes but can deduct what I pay in taxes in my country of residency, which is higher than I'd pay in the US; as a result, I don't actually owe any US taxes. But, like another commenter said, I have to pay thousands to someone to figure out how to even file all this stuff. In other words, some local accountant is making bank, not the IRS.
The people who have complicated taxes also usually have complex income sources and generally higher incomes. If you just get your wage the tax forms are relatively straightforward. Being international complicates things but you'll notice people are talking about the headaches associated with running their businesses, capital gains, etc.
It doesn’t take much for an American residing abroad to have complicated taxes. I work a salaried job and am trying to save for retirement and that puts me into the complicated bracket because of the rules on pension taxation in my country of residence vs the US. Our options for investment are very limited, compared to every other resident of the country. My local brewery was doing a grassroots investment campaign and I couldn’t even buy £20 worth of shares to support them because as a US person that was forbidden.
Yeah, while you could argue that the IRS should do pre-filled electronic returns, the reality is that if you have a W2 and a couple 1099s, doing your taxes is pretty straightfoward.
As you say, it's more complex income sources and potentially deductions that lead to big accountant bills.
And you mention 1099s, i.e. self employed. Well, if you run a sole proprietorship as an expat, you still have to file US self-employment tax forms, and there are also QUARTERLY filing requirements with penalties for non-filing.
Or you need to get the paper certifying that your country has a totalization agreement with the US (not all do).
And since 1099 isn't a thing in EU, you have to file the US 'small business' tax form, which is actually 3-5 forms.
so as an expat, even what should be very straight forward turns into a massive mess.
Sure. Yes, I was assuming a US citizen/resident working for an employer who has income from a few basic sources and is taking standard deduction--which actually describes a lot of people. (And I was mentioning 1099s mostly in the context of a brokerage account.)
Most of my knowledge of it comes from all the threads about Intuit's and H&R Block's lobbying regarding what IRS could and could not do to simplify tax filling.
If you don’t me asking. If it is as straightforward, what actually is the point in said lobbying?
Many people don't realize it's straightforward to fill out a 1040 form and assume they need to buy specialty software or go to a tax preparation place like H&R Block. Naturally they're not going to tell them otherwise.
Serious question, what benefits do you think US citizenship and US embassies provide over and beyond what pretty much every other western country provides to their citizens?
As multiple people have explained, preparing the required paperwork each year is a major expense and hassle, even if you do not owe any tax.
Also, if you are technical enough to frequent this web site and you think $108K is a lot of money, you are being underpaid.
Googling, just the first one that comes up, suggests that median income for "software developer" in USA is $86,523. Meaning half make less, half make more. $100K is the 75th percentile, meaning 75% make less. (https://www.ziprecruiter.com/Salaries/Software-Developer-Sal...)
Some people that work in especially high-paid sub-industries have a mistaken idea of what typical "technical enough to frequent this web site" (?!) people make.
And even if most software developers did make over $100K, it could still be a lot of money? The median income in USA as a whole looks to be about $52K, with $100K being about 83rd percentile (83% of USA makes less than $100K).
I don’t think that zip recruiter data is accurate, apparently the average engineer salary in Sunnyvale is 100k, where I can see new grad salaries are above 120k and do that doesn’t take into account bonuses or stocks.
We can all quibble over the exact numbers but I think the point is well taken: not only does a six-figure salary place you pretty high among American workers overall, but it also puts you in a better spot than many developers. Not everybody gets to work at prestigious tech companies
> Also, if you are technical enough to frequent this web site and you think $108K is a lot of money, you are being underpaid.
Sorry, what? Exactly how much technical ability does it take to frequent a website? You have the strangest delusion I've seen on HN and that's saying something.
I just ran a search and found the median US personal income is around $35k. $108k may be low for a tech job but most people don't have high paying tech jobs.
I’m self employed, and had a green card, I paid the accountant 700€ to file the US tax form and paid a couple thousands dollars in taxes because I hit the minimum tax rate.
Which is not what happened, given that he died after he got home. Again, not seeing how this is different than blaming the ambulance because you died in the ER.
What taxes? When I lived outside the US my wife and I would have to make more than ~$300k USD per year before any US tax obligation kicked in. And that was living in a lower tax jurisdiction.
In a country with higher taxes and a tax treaty you could earn $1M per year and never pay the IRS a dime.
That’s only relevant to a tiny percentage of American immigrants who travel/work in conflict zones and unfriendly countries.
It could even be said Americans are more at risk in those countries for being American and no other reason. So for people outside of that there won’t be any benefit.
> only relevant to a tiny percentage of American immigrants who travel/work in conflict zones and unfriendly countries
I know a (thankfully small) handful of cases in which Americans' kids were arrested in a friendly country. The State Department provided invaluable support. (Recommendations on legal counsel, prudent next steps, relevant authorities' phone numbers...nothing nefarious, just context and support.)
I am under no illusion that I, with my resources, would get that sort of access. But it exists, and probably benefits U.S. international business concerns. Since this article concerns itself with rich overseas Americans, I think it's relevant.
I think you're under the impression this doesn't happen with other countries too. That's the job of embassies. Obviously the State Department has more funding and resources, but that's really only relevant to how big of a trouble you got yourself into.
One thing the US has is more bargaining power to force early release of some people accused of crimes (like Liangelo Ball in China, Anne Sacoolas in UK). That's significant leverage, but again: most people will never find themselves in that situation. But even then it's not like other countries will not imprison you if you're American.
Ok, but they're also not very sympathetic. I don't feel sorry for anybody who can afford private security that he has to pay if he wants to hang on to the benefits of US citizenship.
> 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.
Are we? I’ve been told to use my other passport if ever in a situation like that. Are there any stats that support either case?
That's nothing unique american and quite standard for western democracies. Way more important than military force is legal support and diplomatic weight, to get you extradited, if you end up in your host countries legal system for whatever reason, which is the way more likely thing to happen.
It's not unheard of, that dual citizens renounce their more or less vaguely authoritarian citizenship when it's too dangerous to live or visit there with a dual one. Since then the other state has no obligation to intervene and is even blocked from reigning into the affairs of another nation.
I needed to laugh really hard at this because it encapulates the US citizen's mind so perfectly. Partly because the US lives in my head rent free.
Is it because every single US diplomatic relation is in one way or other tied to the military?
If a jibali captures an operator then fair enough. The US is very preachy about their soldiers. But for a civilian to think about that as a benefit is just wild.
Yes, but we can actually make it happen (relatively quickly).
Last year, Navy SEALs from the Navy's Special Mission Unit parachuted in the dead of night to save a missionary. When's the last time the armed forces of Brunei did that? Or DRC? Or Azerbaijan? The answer is never. Intent != capability. I'm sure Paraguay wishes they could put commandos on the ground anywhere in the world in hours, but the fact is that they can't.
Being American is like having an American Express Card: membership has its privileges.
The Romans might not have been able to air drop centurians into battle overnight, so yeah, you might wind up a martyr for Rome, but when they eventually did get there vengance was a mofo.
> For example, we're pretty good at getting our people out of thorny situations
How thorny a situation has to be? Because I'm aware of a case when an American couldn't bring his own children to the states because his ex wife didn't consent to issue them American passports. Petitions, letters to the embassy and his congressman, nothing helped. A 3rd world country his ex wife's a citizen of had no issue with consents, it just issued passports allowing her to get the kids and leave the country they were residing in.
Most Western countries have some level of extraterritorial benefits. At least in the UK they're nominally "paid for" by the cost of the passport. If you're a dual citizen with another country you have no obligation to get a passport - but shouldn't expect help without one.
But they don't have a MEU sitting off conflict zones waiting to leap into action. The United States will literally send the Marines to save a citizen. A person from, say, Ecuador probably doesn't enjoy the same amount of risk coverage.
You've been watching too many movies, I'm afraid. The reality is (and it happened in Yemen recently) that the US will just shrug and tell you to go ask some other country for help. No MEUs set foot in Yemen when things went south there.
The last I heard, the Houthis let the Americans go.
Navy SEALs from the Navy SMU parachuted into Africa in the dead of night to save a missionary kidnapped from a known conflict zone, killing 6 of 7 combatants (one wonders if they let the last guy go to spread Fear amongst his fellows). Perhaps some of you had different experiences (and/or perhaps the State Department really, really wanted you to leave), but that doesn't erase the rescue of Americans such as this man:
We sent the best of the best in to save him. Not the JV team, the varsity. Before you whine, ask yourselves if perhaps there was some motive to telling you that nobody would help you if you didn't leave. Maybe they were trying to manage their risk.
>That could have been just Trump pandering to his base.
That's pretty weak, you have to admit. Wouldn't Obama send the same men in to save a citizen? I think he would. This is undeniably what our military is for, what those special mission units are for, and what those operators live for. They went in to do God's Work, and luckily this time it worked with no Good Guy casualties. Why would you doubt this?
> How come no SEALs have parachuted to rescue Jeffery yet, huh? Reinforces my theory that it was just election-time pandering by Trump.
Maybe because they don't have actionable intel to find and fix him? Maybe because the Bad Guys weren't so stupid as to use something that would show up on our various SIGINT collection platforms? It's not always a great big Trumpian conspiracy.
> But how did they get out? Who picked them up?
The Omani military, our allies. I suspect more than one person on that flight didn't have an Omani passport.
I remember being in Kenya before the election that followed post-election violence previously (scores dead). Ambassador said point blank, "You need to take care of yourselves. We only have a handful of marines and they'll be spending their time protecting or destroying classified documents."
No, they absolutely will not. I won't go into details but I can tell you from personal experience this is unequivocally false. The USA will in most cases do exactly nothing for their citizens in distress. Even the local US embassies will refuse to get involved in almost all cases.
You know who did get involved in our situation when I was with a group of mixed citizens from USA, UK, EU etc...? The UK and Denmark. France, the USA and Germany all did nothing at all.
This myth that the USA will save citizens from any situation needs to die. It's untrue and dangerous since it encourages Americans to do stupid things because they are convinced the Marines or Seals will come save them.
Except the Marines and/or SEALs do come to save people. Perhaps there are political complications you aren't mentioning. Perhaps you got into trouble in a nation with a halfway-functioning government (so diplomacy trumps men with rifles).
It is provably true the US does send armed forces in to save citizens, and it is obviously true that many other countries simply lack the ability to do so. That isn't a license to be stupid, but it is a differentiator between countries with true power projection capabilities and those who don't have the same.
Personal anecdote: my brother was robbed in Mexico of everything including shoes. He went to the embassy for assistance. He was give some McDonalds coupons and told to use them when he got across the border. He even asked them to check against police records, knowing that he had an outstanding misdemeanor warrant. No go. No help. At least one of the persons at the embassy was honest and told him that embassies only help government officials, rich, or public figures. Fortunately he eventually found a way to get in contact with us (much, much later). In the end the way to get back is to just try to push through a border gate so that you'll get arrested. Then they'll be forced to confirm your identity.
> U.S. citizenship carries extraterritorial benefits.
Since we are stepping out of playing world police, we have stopped doing that FYI in the past 15-20 years incrementally so. This ain't the late 20th century anymore.
The US can’t be bothered to help its citizens living abroad with vaccinations even though it has expiring doses. Other countries have done so, AND without the tax compliance demands.
So let’s drop this extraterritorial benefits stuff. No benefit the US has provided has been worth the worry, anger, and tedium of trying to be tax compliant in a situation where it’s impossible to be truly compliant (thanks to how irreconcilable foreign arrangements often are to US tax law).
What circumstances are those? There are a ton of homeless Americans where I live and the embassy doesn't do anything until they commit a crime as far as I know.
If there is an act of war or natural disaster, the U.S. is good at extracting its citizens. There is also a decent precedent of negotiating to release people taken hostage or held prisoner by unfriendly regimes. (Or causing a fuss when Americans are harmed in a friendly country.) That, in turn, has a deterrent effect.
For Americans with access to legal counsel and the State Department, the benefits expand. Rich, overseas Americans thus present a unique free-rider problem.
For example, Israel goes to extremely great lengths extracting its citizens in trouble (search Operation Entebbe), and no, they don't charge you any taxes if you reside permanently abroad.
Such a gruesome story: Kenyan sources supported Israel, and in the aftermath of the operation, Idi Amin issued orders to retaliate and slaughter several hundred Kenyans then present in Uganda. There were 245 Kenyans in Uganda killed and 3,000 fled.
Amin first escaped to Libya, where he stayed until 1980, and ultimately settled in Saudi Arabia, where the Saudi royal family allowed him sanctuary and paid him a generous subsidy in return for staying out of politics.[18] Amin lived for a number of years on the top two floors of the Novotel Hotel on Palestine Road in Jeddah.
Movie The Last King of Scotland is Based on the events of the brutal Ugandan dictator Idi Amin's regime as seen by his personal physician during the 1970s.
You don't have to go that far back. See the recent Surfside tragedy. Israel sent an elite rescue team and set up relief centers to assist displaced persons, regardless if they were Israeli or not.
> U.S. citizenship carries extraterritorial benefits.
Not sure about actual benefits. The US passports is one of the worst when it comes to travel. Many countries have stricter entry rules only for US citizen, or require at least a higher Visa fee in comparison to other Western nations or outright don't allow US citizens entry at all. I found my Austrian passport to be actually extremely beneficial. Most powerful passport is still from Singapore when it comes to extraterritorial benefits.
In terms of getting people out of thorny situations, countries which don't have citizenship based tax laws are also pretty good at that, if not even better, because the US has in fact a lot of scarred relations with other nations whereas other Western nations have it easier to get a country pull some strings in order to get their people out.
> The US passports is one of the worst when it comes to travel
100% wrong! US passport is ranked 7th best in the world. You need very few visas and get waved through customs faster than visitors from most other countries.
Mostly because the gap in international political reach and leverage, respective economic situations and means are too huge for there to be a point.
Also because I suspect the population here to likely be mostly from Western countries. Cf dang’s comment[1] stating that 50% of the userbase is from the US
Will I think it is relevant because the fact that the passport holder benefits from all that makes it one of the best by any reasonable standard, unless you arbitrarily ignore all the worse ones and then say it's the "worst of the best," so to speak.
And I would argue that it’s like comparing professional Formula 1 drivers’ performance to that of professional kart racers. Or a five stars hotel to a motel by the highway.
But I see your point, and we’ll probably have to settle on agreeing to disagree.
Residency, at least for overseas tax purposes, generally is presumed to transfer whenever (and wherever) you spend 180 days of a year somewhere, so you by definition can't have multiple residencies (unlike nationalities); you can have residency rights/permits in multiple places, but once you become resident somewhere you cease to be resident at your previous country of residence.
Can you live without residence? Say I'm sailing around the world. My home country could be thousands of miles away, pretty much unreachable in a practical way. Should that still count as my residence?
ding You've just discovered another hidden trick that the ultra-wealthy use to minimize their tax-burdens: in each year, they travel and ensure they do not reside long enough in each country to be considered resident fir tax purposes.
It's not really a trick if you don't use the services, especially healthcare or education system. I'd be all in for nomad tax at something sane like 10% or some trade pact that you can get healthcare and edu for free anywhere in the world (already the case within EU).
What do you mean? You pay in the country you live/work in. You get back your pension wherever you are, from every country you've worked for in your life. Sounds pretty fair to me
A pertinent example of the kinds of people this amendment was apparently intended to bar from entry to the US:
"One example discussed was Kenneth Dart of Dart Container, who had become a citizen of Belize and then attempted to obtain a diplomatic visa to serve as Belize's new consul in Sarasota, Florida."
> The Department of Homeland Security has stated that they cannot obtain the information required to enforce the amendment unless the former U.S. citizen "affirmatively admit[s]" his or her reasons for renouncing citizenship, and so from 2002 to 2015, only two people were denied entry to the United States on the grounds of the amendment.
"The wording of the statute is embarrassing. How can an alien renounce U.S. citizenship? In what capacity would said alien do so officially? One assumes that a court of law would find the language incoherent and unenforceable ... This is the way we legislate at 5 o'clock in the morning 4 days before adjournment."
Nice to see lawmakers falling to the specter of trying to get that commit in for the next release, along with the rest of us.
If you dig through legislation it begins to look like a Git repository, with patches adding and removing parts of the content and branches that if successful generate their own patches as well.
Legal documents aren't code, but they do share many of the same principles and constraints - GIGO applies to both programs and contracts...
> The IRS publishes a quarterly list of the names of people who have renounced their citizenship or given up their green cards, but it only includes people with global assets over $2 million
It may be an arbitrary line, but if so, it's the IRS drawing it.
It seems like no one actually knows what the list represents.
> Gibbons expected that the list would include only "a handful of the wealthiest of the wealthy" motivated solely by taxes; however, the people named in the list turned out to have a wide variety of motivations for emigrating from the U.S. and later giving up citizenship, and few were publicly known to be wealthy.[7]
> ...In contrast, Andrew Mitchel, a Connecticut tax lawyer interviewed by The Wall Street Journal for its reports on Americans giving up citizenship, states that the list is required to include all former citizens. [15]
Why does the IRS publish the list of people renouncing citizenship? And why does it filter for people with global assets over $2M? I feel like I am missing something for this to make sense.
> The IRS publishes a quarterly list of the names of people who have renounced their citizenship or given up their green cards, but it only includes people with global assets over $2 million
This claim is total crap. The list includes all US citizens who renounce their citizenship, regardless of their net worth. [1]
You also cannot renounce your citizenship for tax dodging [2]:
> Persons who wish to renounce U.S. citizenship should be aware of the fact that renunciation of U.S. citizenship may have no effect on their U.S. tax or military service obligations (contact the Internal Revenue Service or U.S. Selective Service for more information).
So plan to become rich after renouncing (and without the IRS noticing).
E. TAX & MILITARY OBLIGATIONS /NO ESCAPE FROM PROSECUTION
Persons who wish to renounce U.S. citizenship should be aware of the fact that renunciation of U.S. citizenship may have no effect on their U.S. tax or military service obligations (contact the Internal Revenue Service or U.S. Selective Service for more information). In addition, the act of renouncing U.S. citizenship does not allow persons to avoid possible prosecution for crimes which they may have committed or may commit in the future which violate United States law, or escape the repayment of financial obligations, including child support payments, previously incurred in the United States or incurred as United States citizens abroad.
I read that as saying "If you owe the IRS money already, renouncing your citizenship isn't going to get you out of paying it".
>So plan to become rich after renouncing (and without the IRS noticing).
Do you have any other sources that corroborate this? I've certainly never heard of the IRS coming after someone for money they've earned after renouncing citizenship, except perhaps in complex cases involving international companies.
> You also cannot renounce your citizenship for tax dodging
You just pay an exit tax, which is a percentage of your total wealth. The exit tax only applies if your total wealth is over 2 million (or less than that if you haven’t been filing properly).
You are mistaken about the cause of the the Boston Tea Party. It was not about taxation without representation; it was about lack of taxation on tea from the East India corporation (which the King and his friends had a financial interest in). Many of the people protesting were owners in the local tea companies who's product was suddenly undercut because the King did not want to lose money on teas that were not selling in England.
The "no taxation without representation" was a slogan applied after the fact.
Not all of them and even if you are eligible to vote, some states make it nearly impossible to request a ballot. I’ve been removed from the registry multiple times and had to fill out an emergency ballot which didn’t even get counted in the 2016 election.
> This article just happens to have drawn an arbitrary line in the wealth of people who renounce US citizenship and made a headline out of the wealthier subset. The wealthy are also more like to have dual-citizenship but relocate to another country, so they’d be over represented in this set.
As a former American who lived abroad for about 11 years before renouncing, “cartoonishly cruel” is a pretty accurate description of the system. It’s even worse an American entrepreneur abroad because that makes things even more complicated.
I gave up jumping through the hoops in 2018 and the self-torture and renounced. I shared my story in case anyone is interested: https://larrysalibra.com/goodbye-usa/
I feel for you. My grandparents were apart of the Italian diaspora too, but they ended up in Canada. I often thought how difficult it would be if I had to choose because both countries are close to my heart. I’ve seen a number of American friends that are also duel citizens have to deal with the stress and unfairness that you have. I just feel really lucky and privileged that I don’t have to be in the position to choose even though I no longer live in Canada or Italy.
This was a good read. It's interesting that you decided to stay in HK after the protests/hostile takeover in 2020. My partner and friends all left HK for the UK, Australia, and Canada.
I think it reached a point of no return. HK is still a very special place, but I see a lot of expats leaving for Singapore and Hkers leaving for overseas(BNO visa).
Singapore is more stable, but has even less freedoms than HK though.
My friend moved on that visa this week. Before Hong Kongers could get a BNO passport and it wasn’t particularly useful. The British government changed the conditions a year ago, and now it’s an open residence permit with a direct path to full citizenship.
There are at least a million people eligible for a BNO passport.
> Singapore is more stable, but has even less freedoms than HK though
And it’s getting worse every day. I.e. recently they allowed “social distance enforcement officers” to get into your house to check that you’re not breaking any rules (for instance not having a party with more people than allowed by current regulations). No warrant needed. Non-compliance penalized by up to $10000 and/or jail time.
> By funding and participating in the system, we give the system legitimacy and only make the system stronger and the problems worse. Exiting is the high leverage and most effective option.
This is a really interesting read. I'm not a US citizen (AU & NZ) and don't face the same problems when being overseas, but I definitely relate to it not really feeling like home now that I've been away for several years.
Thankfully, it's not as hard to not pay AU/NZ taxes, it's still a little bit painful to prove you're not living there, but not even in the same league as the US.
Have you ever wondered if it weren't HK - where your exit country would be? Did Italy or any other place in the EU appeal to you at all? I hold dual US-UK, which means the EU isn't really an option for me anymore.
I think about it time to time. But haven’t come to any conclusions. Some things about Italy are great - the geography and people. And compared to the USA they treat me very well as an Italian abroad - they proactively send me a ballot to vote every year and even give overseas Italians our own representatives in the legislature.
I’ve certainly liked visiting a number of places in the EU - it might be fun to try to live there.
I sort of wish I did this when I was younger. But I have kids, family, and extended family (on both sides) all in California. It makes it difficult to leave the state much less the country.
This. Living (even partially) overseas as someone who was born in the U.S. has so many disadvantages. The U.S. is the only country in the world that imposes global tax. Not only that, taxes are really complex and cost a fortune to file if you have overseas assets. Now, add to that that I cannot sign up for many bank accounts or other financial institutions because they don't accept U.S. customers - they don't want to deal with IRS filings either. It's not about tax evasion. It's just a huge pain being an American that owns property and spends a lot of time overseas.
At some point, depending on how much time you spent overseas and how many assets you own, the benefits of giving up US citizenship start to outweigh the cons. And it's better to do this soon than later because exit tax is a thing.
This was to close certain problematic tax avoidance issues. People were fleeting from the US to avoid paying taxes, but kept all the benefits, or hid the money off-shore.
The problem here is that they never raised the amount you must report, because in the past, 150k used to be a lot. Now that should be closer to 500k. But like the minimum wage and tax brackets, they haven't kept it up with inflation. Not in the way they needed to at least.
Unfortunately the main loss from US citizenship loss is voting and potentially travel to the US. But the wealthy influence politics by lobbying not voting.
Now if Citizenship was required to fund lobbying... wooh that would be a big hit for those abandoning the US.
Kept all what benefits? People who fled the US are now living under some other country's benefits, and pay taxes there instead.
Don't citizens of (almost) every other country in the world have the ability to go live abroad and keep all their benefits, whatever they are? I'm not following where Americans can actually get away with anything special.
> the main loss from US citizenship loss is voting and potentially travel to the US
There's a heavy to push to make this available to anyone regardless of citizenship, claiming that providing proof of identity will be burdensome. This is the same group that touted election fraud, russian interference and other false narratives for 4 years after the prior candidate lost.
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). However I do agree with you: sure it would be nice not to pay that fee, isn't that true of every expense in general?
It seems you either have a complicated personal situation or are in a jurisdiction that's purposefully set up to benefit/interact with the US in a tax advantagous way (aka a tax shelter, though that's going away - see general harmonization trends in EU, etc). Without delving into your personal situation, your personal tax situation should not impact your employment. Your citizenship might in certain highly regulated industries maybe. In the US you are not asked if you file joint or single on your tax return as part of the interview.
You are correct on renounciation. And worse, let's assume the renounciation fee is 1/3rd of the wealth, should your net worth be concentrated and iliquid (you own nothing but a paid off home) you now need to generate a transaction which you might not want to otherwise do (sentimental, bad timing, poor market prices for the asset or low liquidity).
If you have a complicated personal situation, you also hire professional help even if you reside purely domestically. Not fair to pin it all on the foreign taxation code.
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 typically are). My last quote to get US & domestic taxes filed here when I was a grad student was $6,000 on a total income of <$50k. My situation wasn't that complicated - I had 2 part time jobs, won a competition prize for $20,000 and sold some stock.
I just did my best to file on my own. I probably got something wrong since it's crazy confusing. Prizes are tax-free here, but taxable in the US and not typically "earned income" but are maybe covered by the foreign income exemption or a dual taxation agreement (since I did have to report it to the taxman here, the tax rate was just zero). I literally couldn't afford to figure out how much tax I owed and to who - nevermind the taxes themselves!
Hopefully the IRS doesn't care enough to seize me the next time I visit my family. I tried my best, but that doesn't necessarily mean much in court. I think a lot of the problem is with the American tax code in general, but American accountants know nothing about the tax code here so I can't just ring up H&R Block and ask them to file over zoom (I've tried). Meanwhile, the only accountants who know about American taxes over here are specialist catering to the millionaire expat market. An hour of their time costs more than I earn in a week.
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.)
I can answer for the UK - the system is designed so that most people don't explicitly interact with the tax system. The only people that need to do so is the self-employed, running a business, or very highest earners. For everybody else, they can take advantage of tax breaks without filling in any forms, just by opening the right bank accounts/pensions or getting certain services from their employer. When they qualify for benefits, like Child Benefit, it gets paid separately into their bank account.
A surprising number of tax benefits are possible this way - even the income tax deduction on charitable giving is done by getting the charity to do the paperwork instead of the individual taxpayer.
So when it comes to taxing something that isn't going to be a significant tax stream and would require people to fill in declarations, the solution is-- just don't tax it.
And the answer to your second question is, the payment would be "income" (defined as payment for completing work) and would fall under income tax. There's no exception in income tax for prizes because prizes aren't even income at all, as you don't work for them. But if you still tried it, it would fall under the General Anti-Abuse Rule.
> And the answer to your second question is, the payment would be "income" (defined as payment for completing work) and would fall under income tax. There's no exception in income tax for prizes because prizes aren't even income at all, as you don't work for them.
Is it really so clear cut? I'm thinking of things like programming competitions -- in a sense you "work" to win a prize at one of those, don't you? So then what stops my employer calling all of my work as a programmer a programming competition? You could say "the competition organizers can't profit off of the work", but is that always true? Netflix could've legally profited off of the entries in the Netflix competition (even though they didn't), right? Similar for Kaggle contests. Would prizes from those count as taxable income? And even on something like a game show, they're profiting (or hoping to) from your participation/appearance.
My company frequently has campaigns with prizes: we pay the taxes, so the prize looks "tax free" to the winners. It is just where the tax and paperwork burden is placed, on the payer or on the winner.
Is it taxed at (average?) income tax rates or VAT rates or what? Unless it's taxed at the highest marginal income tax rate, it seems like there's still at least some loophole potential.
Noob question -- what do you mean by harmonization trends in the EU? I couldn't quite understand from a google search or maybe even what exactly to search for.
Harmonisation in the EU context is the convergence of standards and legal systems, in order to increase pan-european consistency and facilitate the free movement of people, goods, and services.
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)
Calling the world's superpower and one of the wealthiest nations in the world a "failed state" is a bit ridiculous, is it not? Do words not have meaning anymore?
The US is not anywhere close to meeting any of those definitions. USA has problems, sure, but it's nowhere close to being an actual failed state. You'd have to be aggressively biased against the US to argue that it's a failed state. By the same standards, pretty much every central american, south american, eastern asian country, and most european countries would count as failed states.
We're talking about someone's use of the words "failed state" because that's how they feel about the US and it definitely fits the definition based on the position some people are in.
People also argued in January 2020 that it would be ridiculous to worry about this coronavirus it's just as deadly as the flu. Literally told to me by a democratic doctor that works at an extremely prestigious medical institution. (Different take now).
I'm not saying the US is on the precipice of failure in 1 year and 7 months, but people don't realize the stilts things are on sometimes.
I know what we're talking about and I will say (again) that using the words "failed state" for USA is objectively a bad, ignorant take based on numerous nationwide metrics and the standard of living of the rest of the world. How said person feels and their personal situation doesn't really change that. You can find people in every single nation who strongly believe their nation failed them. And even when that's true, that doesn't make a nation overall a "failed state".
Again, do words even have meaning anymore? Just because someone feels like America is a "failed state" doesn't make it so.
And finally, "failed state" is using the past tense. I can acknowledge that something is on stilts without claiming that it already fell down.
> Basically the only country in the world that charges taxes on money you make and spend somewhere else
I believe Eritrea does this, too. They don't have as much political power as the US though, so they resort to torturing your remaining family members in the country to get you to comply.
I know you're being facetious, but still, even as a joke this comparison is deeply wrong. There's nothing even remotely comparable between the two nations. You won't have your family interned in a concentration camp for moving to Italy for example.
And it's not as if Eritrean migrants or refugees are welcomed with open arms anywhere in the world, so there aren't that many in that position in the first place.
Hmm, I seem to recall hearing Australians also have complicated rules about being an "Australian resident for tax purposes" that is not the same as an Australian resident for other purposes, especially when you don't have Permanent Residence/Green Card and are on a time-limited visa (even if it's years long). So they don't technically fall into the "America and Eritrea" bad list, but still tax many Australians abroad. I forget the exact details though.
If you took out a HECS (0% interest, indexed to inflation) loan for university study you still need to file taxes when resident overseas and continue making payments if you earn over the threshold.
If you are resident in Australia more then 6mths of the year you must complete an Australian tax return, but for most people that involves logging in around september and checking that all the auto-fills match up with what they expected.
They only just changed the laws a month ago to make it so opaque and vague about who qualifies as a tax-resident or not. It's basically a "if we want we will tax you" situation. The 183 day rule means little if you have even something as innocuous as a bank account back home now. It's a ridiculously stricter change that is entirely open to interpretation by the ATO.
Sounds like they're just 'recommended' for now but won't take effect till next tax year at least.
Also sounds like its intended to catch people working 0% tax contracts in the middle east or digital nomading around east-asia till they need medical care. (still not a good reason to complicate things)
What you are describing is a pretty common requirement. Canada has a similar requirement, and while a passive bank account would in itself not be considered 'ties' to the country, an active one that sees use might.
Many countries do, and losing your tax residency in a country of which you’re a citizen and have been recently resident is a pain — check out the UK statutory residency tests for example.
That said, it _is_ possible to lose your tax residency in these countries, where American citizens are simply fucked.
This is untrue, if you're a citizen of Australia who is a non-resident you don't have to report or pay taxes on world wide income made outside of Australia.
There is an example[1] on their official site of an Australian living abroad in Japan and being a "resident for tax purposes" and thus being taxed, but not being a resident for other purposes.
As far as I know, in most countries, acquiring permanent residence requires living in the country for years first and then applying, so you will be on time-limited visas until then. That is the way it is in Japan, and it is 10 years to get PR, in the general case.
Anyway, I'm not an expert on Australian tax law by any means, I just wanted to note that it's not always so clear cut as "do other countries tax citizens living abroad".
This confusion is common amongst people who haven't lived in abroad. Visa status, work permits, future intentions, work contracts and citizenships are all separate things and most countries weigh more than one factor to determine tax-residency.
In this example, the operative bit is this:
> She has a one-year contract, after which she plans to tour China, [...]
This time-boxes her intentions for living abroad. It's distinct from having an unlimited work contract with a temporary visa that requires renewals, which indicates intent to stay abroad (and potentially a basis for the visa renewals).
Other countries use things like a point system (UK), definitions of "centre of life" (Russia, where I live atm) and so on. Either way, Australia doesn't do the thing that the US & Eritrea do (tax applicability solely based on citizenship).
> As far as I know, in most countries, acquiring permanent residence requires living in the country for years first and then applying, so you will be on time-limited visas until then.
I joined a US-based Company who organized my Green Card without me having ever been there.
As long as your intention is to migrate to a different country you're regarded as a non-resident in which case you wont have to pay taxes on worldwide income, unlike in the US.
The laws recently changed last month. If you spend more than 45 days in the country or tick two of the following dot points you are now considered a tax resident and need to pay income tax:
> If you spend more than 45 days in the country or tick two of the following dot points
The proposed secondary rules only applies after spending 45+ days in a FY, not OR. Which is important because this new criteria basically applies to most people born in Australia, so it basically reduces the 183 day test to 45.
It's also problematic in other way, my friends moved to US for a job for few years and had kids there. US gives you citizenship by place of birth so the kids have US citizenship. Now that they are back they are in a bit of a pickle not knowing what to do, the kids might be screwed and own money to the US for nothing when they grow up but renouncing it now for them also doesn't make sense (if even possible) because they might want to have it, who knows.
Look up "Accidental Americans". It's been a problem for a lot of people including, especially Canadians and Mexicans who were born on the wrong side of the border.
When I lived and worked in East Africa, I know that most, if not all of my income, was not taxed back in the US because of the Foreign Income Exclusion Act. Basically, for foreign earned income anywhere below ~$80,000 at the time, I didn't have to pay tax, which the limit is now around $108,000 or so.
However, as you point out, that doesn't seem to apply to dividends and capital gains and other types of income [1].
I wonder why it doesn't apply to those other incomes and if it did, whether that would alleviate many of the problems for most Americans overseas. In other words, why not just have a threshold below which all foreign income is not taxed and then tax above it?
I'm curious to learn more about the history of that act and why it developed as it did.
I appreciate this comment. I as well wish just "regular" taxes were more simple to file and also I can imagine how frustrating it might be to not be able to access certain services. Thank for the clarification.
The worst part for me is not the taxes themselves, but it's that I feel like I have no representation while overseas. When I was living in Australia, my representatives were for the state of Oregon. Not once did one of my assigned representatives nor senators propose legislation meant to help expats overseas, they understandably represented their voter base in Oregon.
It essentially creates a system of taxation without representation; ironically something the country has a deep history fighting against. The number of US expats is enormous, and if they were a state of their own they'd be the 11th most populated state (just ahead of New Jersey). If we're going to tax expats overseas, at the very least they should be provided with senators that are dedicated to fighting for their cause.
American here living abroad in Croatia, which does not have a tax or social security agreement with the US.
The only reason why I do not renounce my American citizenship is because the very rare disease that I have was discovered on NIH grant funds in the 2000s and ultimately saved my life.
I am not sentimental about being American, except for that.
Oh god don't get me started. I cannot have a shared account with my wife because she is american. She can only be authorized. She cannot get her own credit card but has to be an authorized card holder on my account.
If I tried to actually but her as a shared account user the bank told me they will terminate the relationship.
Couldn't agree more, sounds like you're in Australia too - I've been here 9 years and am yet to file tax... Interested how bad they will fuck me when I do...
You wrote: Thanks to IRS regulations, 90% of investment firms will just reject me outright rather than deal with the paperwork.
Sorry for your troubles. Do you know about https://www.interactivebrokers.com? They are an ultra-low cost international brokerage. It seems they specialise in handling complex regulations! They can open brokerage accounts for local residents in an incredible number of countries -- all legally. Even India, which very difficult! Normally, they have a tiny office in each location to handle local financial regulatory requires (KYC, AML). FYI: The head office is in the United States, which is great for strong securities regulations. I strongly recommend it. And they aren't some start-up. They have been around for a long time. Their product range is similar to a large investment bank. You can trade everything under the sun that is listed on an exchange.
Save the best for last: They recently scrapped their minimum monthly fees for low balance accounts.
(Re-reading this post, sorry if I sound like a 'shill'. Everything I wrote above can be independently verified with some Google searching!)
Always amused me how every financial service the world over asks if you're a US citizen and denies you if you answer YES. Nobody wants to deal with the IRS.
What's unfair isn't this practise per-say, but the fact that it's not equal.
I think keeping hold of foreign citizenship represents an unfair advantage to some degree, as a kind of "fallback" - e.g. if things go to shit you always have the option of returning home.
but other nationalities generally don't need to pay to remain citizens while they are abroad, so Americans are treated unusually.
>because natives with just one passport don't have that option.
If by natives, you mean Native Americans, they have their own sovereignties. Many have do have tribal passports in addition to US passports.
If by natives you mean, John Q Public, then that's just crab-bucket thinking. The majority of Americans have zero passports, leave alone one. By your standard, it should be wrong for people to have one at all since most Americans don't have the legal certification to travel beyond North America and seek asylum as a fall back should the US crap itself.
While not everyone has a similar option for a fallback, everyone has a choice. Nobody is prevented by the US government from attempting to a obtain a second passport. It's a matter of a person's choosing to meet the requirements to obtain one or not.
>California and Texas are in the same country.
Yes, however your argument was one escaping to another jurisdiction with the previous jurisdiction as a fallback. That isn't limited to hopping between states nor should it be. If a state or country can't compete in taxes, services, or culture, I have the right to vote with my feet and to obtain a new residence or nationality however I see fit. Mutatis mutantis, the same goes for everyone else.
I don't mean native Americans - I mean the residents of any country who also hold some other passport/citizenship.
> By your standard, it should be wrong for people to have one at all
By "having a passport" I mean eligibility for a passport aka citizenship, not literally whether you've applied for one. Equal opportunity should exist - whether it is taken advantage or not is another matter.
> It's a matter of a person's choosing to meet the requirements to obtain one or not
How does one choose hereditary requirements? Or capital requirements (aka golden pass)?
> your argument was one escaping to another jurisdiction
Maybe there are similar issues between state jurisdictions, but I talked specifically of national/country jurisdictions which aren't really similar; especially wrt tax.
In any case, I think the point is moot since all US citizens are (equally) fairly free to cross state lines. The point isn't that it's unfair to move to another jurisdiction with another as fall-back, but that not all are equally able to do this - which is true of states.
I don't want to get too political, but things were different before the 2017 tax law change. The main point, overseas Americans still have to pay US taxes, was true before then. But, pre-2017, they could deduct what they paid to the country they were residing in. This meant, in reality, the vast majority of expats did not have to pay US taxes.
It's quite possible that the Democrats will, if they modify the tax system, undo that change. That might be why investment firms hesitate to have you as a client. Although, unless you are using tax-advantaged accounts, it shouldn't be that much extra paperwork for them.
As for rich people gaming the system - I can imagine Bezos et al. would not mind living in the Caymans for a year while he sold all his stock to pay no taxes. If you can determine when you pay taxes, that's a huge benefit.
You don't have to be a US citizen to purchase property in the country. This is the same for many of the European, Central/South American and South East Asian countries. Is it as straightforward as being a citizen no, but it can usually be done without much extra effort.
My reading of the exit tax is it is merely paying all the taxes on any gains that you have made but have yet to pay. For example if you have bought stock but not sold it you would be taxed on the gains you made. This applies to real-estate and other holdings as well.
To me this makes sense it is like you paying your final taxes before leaving as such I don't see how it is anything additional but I could very well be mistaken.
The ex-pat life comes with certain costs, yes. Did that from 1998 to 2006.
My wife was brought over to Belgium by what was then a subsidiary of JP Morgan, and they paid for all the additional expenses, including the tax services of some very talented people at Earnest & Young. They also paid for all the paperwork to get her a Belgian work permit. We weren’t actually married at the time, just engaged. But JPM agreed to treat us like a married couple. The only thing they didn’t pay for was the work permit for me.
It took a lot of effort for me to find work over there, a lot more than I expected, given my career and experience. And those companies did have to deal with the hassle of getting a work permit for me, as well as complications with US taxes. I didn’t end up working at Belgacom Skynet for long, but that cratered more because the parent company wanted to re-absorb the ISP arm back in-house, and so all the technical people with a clue bailed like rats from that sinking ship, and I was just one of the last to leave.
But hoo boy, every year, that poor team of accountants at E&Y had their work cut out for them, when it came time to file our taxes.
In the end, the reason we left was that my wife’s employer (now spun off from JPM) wanted to pay her as a Belgian native, and we had been in the country long enough to get Belgian passports. But that would have been a massive pay cut for her, and did not make financial sense to us. They were very surprised when she told them that she was not going to be accepting that offer, and so they had to negotiate to pay her as an ex-pay for one more year while she worked to help find a replacement and train her office to handle that transition. Part of that negotiation involved getting them to agree to move us to whatever country we wanted — including moving back to the US.
So, yeah — I can understand why some people might choose to go the other direction, and renounce their US citizenship.
OTOH, I don’t have a lot of sympathy for the ultra-wealthy people who have all decided to set up shop in New Zealand. Yes, visiting NZ is on my bucket list. But I’m not interested in giving up my US citizenship and moving there permanently.
"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."
It is not about where you are born, it is about where you have citizenship (and possibly also residency).
As long as you maintain your US citizenship you are morally obligated to contribute to the well being of the country, the biggest and easiest to understand of course is national defense.
Likewise, if you own a property in another state that you only use a portion of the year you are not off the hook for paying taxes that contribute to, for example, road maintenance and local schools.
Where I do have sympathy is that they make it extremely difficult for expats to file as well as maintain investment accounts.
So which investment firms will work with you? Asking for a friend...
Also are you referring to FATCA when you talk about investment firms? My understanding is that FATCA doesn't really become an issue until you have more than a certain amount of assets in the country you are living in.
FBAR does have to always be reported for all accounts but is a separate issue.
EDIT: I think I misread. I was wondering if you were having problems with investment firms in the USA not wanting to work with you. Are you saying that you are trying to invest using companies located in your current country of residence?
AFAIK if you live in a country like Canada with higher taxes you still have to file to maintain citizenship but you end up paying zero since you can deduct what you paid in your home country.
This would apply to people relocating to countries with a lower tax base. In that case you have to renounce.
There isn’t always symmetry in the tax status of various elements. The US doesn’t recognize Canadian Tax Free Savings Accounts (similar to Roth IRAs) so you can’t benefit from them without being taxed in the US.
You can still get caught out. Taxes in the UK are generally higher than in the US, but Boris Johnson still got hit with a US tax bill when he inherited a flat in London.
Deductions vary greatly between jurisdictions. Capital gains taxes vary greatly, tax-sheltered savings accounts may not be recognized, certain rollovers programs probably only exist in one of the jurisdictions, etc. None of these people renouncing their citizenship just make straight employment income.
My understanding is that US-ian expats can collect Social Security while outside the country (not sure if it can be deposited, as we're not doing that). Medicare has no meaning outside the US but we're eligible. Non- (and I assuming renounced) citizens can't get Social Security unless they live in the US, I think. And don't forget there's also a foreign tax credit as well as the Earned Income exclusion.
Non-citizens are not eligible for any public benefit. As regards medicare you're probably eligible the moment you enter the country. So technically you could head back if you 're having issues - ymmv.
I used to live internationally and the taxes weren’t that much more complex. It really shouldn’t cost thousands, it’s just two extra forms if I recall correctly.
If you Are living in high tax regimes like Switzerland you don’t have double tax on the first $xx,xxx in income, it used to be close to 90k.
Most of the complaints are that being an expat US citizen is:
1. a right pain in the ass, because you have to fill US taxes even when you don't reside in the US, work with the US, and haven't set foot there in years.
2. a right pain in the ass because you have to declare local welfare as income to the US government
3. a right pain in the ass because taxes being so much simpler in most other countries means accountants is a much rarer career very much specialised for extremely high income, far beyond your means, and most of them don't know and can't help with US taxes anyway
4. a right pain in the ass because things like FATCA means most financial institution have decided it's just not worth interacting with US citizens and will refuse to deal with them — this can make it very difficult to function at any sort of level especially as countries progressively increase their cashlessness
5. a right pain in the ass because even if you decide you've had enough and decide to renounce it's expensive and complicated
I'm sure I'm missing a bunch as I'm not a US citizen let alone a US expat.
> [..] this taxation is in place effectively due to rich people in the first place hiding money in accounts overseas.[..]
I think that was the original intent but:
1. It affects everyone including many people not paying taxes in a amount where it matters.
2. I'm not sure if it works, the really rich people (i.e. the ones you would want to be "captured" by this law the most) have way to many ways to avoid paying taxes and reduce the
amount they "in person" have to pay.
It might be reasonable to have a cut blow which you you don't have to bother with this.
I also have frequently considered if it would make sense for the country I live in to have such a law.
But in the end I realized that this is probably not what I would want.
In the end the problem is much more countries which intentionally create tax gaps to benefit from it but directly hurting other countries with that and even potentially undermining their governments independence.
Through without question even if that is solved there is still the fact that even wrt. countries which do not do so their can be huge differences in taxation, but "somehow" "disabling" tax havens would be a much bigger step in the right direction then this regulation IMHO.
The US is the top place to hide your money if you are a foreigner
Yet foreign countries are not rushing to change their laws to tax their citizens living abroad. There is no urgency to tax their expats who havent worked or lived back on foreign home for years, even decades.
So if nost countries have reason to complain about us helping hide stuff, they dont seem interested in enforcing anything
Or are not able to. Weather it's because of risking more people with money fleeing before
changes take into effect, to much influence of wealthy people in politics or being forced by external forced, e.g. in context of not-so-public trade agreements.
On the other hand, is it right to be able to leave the country indefinitely, not contribute to the country at all, but still expect to have all the benefits of citizenship forever?
What benefits does one have when living in a foreign country as a US citizen? There is no legal representation. There is no access to US government services. What exactly would an overseas US citizen be paying for?
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.
I would really like us to add to that list: medicare (or similar) for all as well as some other social benefits that make sense to enable more risk free pursuit of happiness and simplify employment.
>>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 adventurism with the US government's own motives in mind. I shouldn't have to subsidize either one.
>>welfare and social security,
EBT, food stamps, COBRA, etc. aren't recognized outside of the United States. Social security is not a benefit. It's a Ponzi-scheme with a gun to your head taking money that was already earned and delaying it until you have strong chance of dying from a heart attack.
>>a stable place to return to in the case of trouble,
That's an argument that can be made for most overseas citizen of many countries. Yet these other countries have not fallen to shambles on the basis of lacking global taxation. There's no reason for me to pay for a "stability" I'm not in a longitude and latitude to benefit from.
On the contrary, there is a case to be made that United States is quite unstable itself as it has failed to contain a disease within its own borders and has also chosen to violate property rights under its unconstitutional eviction moratorium without providing just compensation. Even pre-COVID, some areas like Chicago and Los Angeles have had crime ratings high enough to compete with entire countries.
>>a country that ensures development of vaccines and provides them for it's population in the case of pandemics.
So can India, China, Britain, France, Italy, Germany, Australia, etc. Why should I pay the United States if I received my vaccine from these countries' labs and and medical resources instead?
>>medicare (or similar) for all as well as some other social benefits that make sense to enable more risk free pursuit of happiness and simplify employment.
An American citizen can't use medicare in a foreign country. Just like how a British citizen can't use NHS services in the United States.
The pursuit of happiness is a negative right, not a subsidized one.
>>>>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.
Legally: yes, federal law says that you have to be allowed to vote for the federal offices from wherever you last lived in the US (or your American parent, if you were born abroad but never lived in the US)
Reality: some states make it easy and will even let you vote in state and local elections, others make it inconvenient if you’re not with the military (have to request ballots every year, have to diligently watch for registration purges), and some make it practically impossible for non-military.
If you’re an American abroad having trouble registering and/or getting your ballots, your local Democrats Abroad chapter has someone who will help you out. Even if you’re a Republican ;)
I want as many US citizens abroad as possible to vote on a regular basis, even if they’re voting differently from me: our representatives will pay more attention to us if they see that we vote in larger numbers.
Is there a way to, even approximately, target the "social security system" issue with your vote? Or do you have to chose between 2 or 3 bundles of pre-chosen policies, the composition of which you had no say in?
I would suggest that the major benefit would be that if things go to shit wherever you are, you can flee back to the US. There are probably other countries you could choose for that instead, though.
Also, if you give up your citizenship, does that have any implications for traveling back to the US? You might very well have friends and family you would like to visit occasionally.
We are still culturally American, and we still have family in the US. And if we visit, we pay taxes on everything while we’re there. There are taxes on the flight in, on the fuel we use, on the stuff we buy. And maybe we’d like to move back.
So why conflate being American with federal taxes and bureaucracy?
Maybe America should think about the benefits we expats provide to it while living and representing our culture and values abroad. We usually make a good impression on our country’s behalf, but everyone abroad is shocked to hear about the potential draconian penalties and compliance headaches our government forces on us.
Most people don't actually owe anything so the burden is mostly administrative, and what you're going through it for is not "where you were born" but continued citizenship and attendant benefits. As the article describes, you're free to give that up if you don't think it is worth it.
> "There are probably 20,000 or 30,000 people who want to [renounce citizenship], but they can’t get the appointment," Lesperance said. "There’s not a peak demand — the system’s capacity has peaked."
Also, it seems you need to pay a non trivial sum to do it, which is a real problem for US citizens abroad who are not rich.
"Free to give that up" does not apply, unfortunately.
Not sure where you got the thing about the cost, which doesn't seem to be in the article, but it also flatly states that "The people who flee tend to be ultra-wealthy, and many of them are seeking to reduce their tax burden."
The article talks about the ultra wealthy, but they have the power, money and means to easily deal with the citizenship taxation bs. I don't care about them.
The problem is that those rules are punishing regular people.
I know one person who wasn't allowed to open bank accounts because of her citizenship. Another who yearly gets stressad out because filing US taxes is such a grueling process compared to the local process where you're done within ten minutes. Another wants to renounce citizenship because he doesn't want to deal with the bureaucracy, but he cannot afford it.
They all live in Sweden, which I doubt anyone sane would consider a tax haven.
If Eritrea is the only other country in the world that implements similar draconian tax laws, maybe there's something wrong with those laws?
These must be very small meat and potatoes investment firms then. They might not have a compliance department and might not be able to justify the salary of having someone tackle FATCA requirements. I, as an American abroad primarily used the big banks (HSBC, BNP, Barkleys) because its built in to the service.
In Israel (9m pop), non of the banks available to the general public (Poalim, Leumi, Discount, Iggud/Mizrahi) will let you do anything other than a checking account and a saving account. Perhaps a loan but definitely no holdings; and similarly no broker will either. They are not small. It just isn’t worth it to them financially so they don’t. There are est. 300k US tax payers in Israel, but while the profit is per-person, the compliance costs are huge and mostly constant.
HSBC in Israel, last I Heard, had a $2M account minimum.
Yes, but at least you can still buy US ETF's unlike in the EU. And Interactive brokers has a bank account in Israel you can wire money into, so one can get by.
I don't see how wealth has much to do with it. It's a question of citizenship and taxes.
The other extreme is what we currently have in Croatia:
A vast group of people who don't live here have citizenship and they express their patriotism by voting for the conservative right without exception for the past 30 years.
If you want to be treated as a citizen — live here and pay your taxes. If you don't, the door's that way.
If you're Italian and living abroad, you can vote to elect one of the few members of parliament which actually represent migrated Italians. This way they can still have a bit of representation, but without the same amount of influence as if they were living in the country.
Is the ratio of electors/MP different for expats vs those living in the country?
I can certainly understand the anger of the GP, apparently roughly 25% of the Croatian citizens do not live in the country. As an expat myself, having a say in how my home country is run is nice, but I feel it's a bit "easy", because I mostly do not have to live with the consequence of my choices.
For a bit of context, there is a bit of 'tension' between in-country Croatians and expats. Generally the latter left for greener pastures and the former stuck it out through communist rule and the war. There are at least as many Croatian expats as not.
The expats usually left because they didn't like the strictures or ideology of communism. Some had property confiscated and/or were harrassed by the authorities for whatever reason. Most of these people have a reflexive aversion of the left and are reliable right wing voters.
Those who stayed seem to be those that agree with communism to whatever degree, who were part of the communist regime in some way or those that did not mind or did not have the means or will to leave. Some have been indoctrinated to some extent, or maybe more correctly they have grown up in the culture of that time.
Many ordinary people suffered from a relatively poor quality of life under communism. Croatians received a relatively smaller share of resources and opportunities because of Serbian dominance of Yugoslavian government.
The differences are not all or even mostly political. Many locals just resent expats who avoided the misery and show up with money and a particular attitude, usually a critical one as to the dysfunction and corruption in Croatia, amongst other criticisms.
Full disclosure: I'm an expat (who lives in Croatia, for now), so that may colour my view.
expats the citizenship-based taxation system is almost cartoonishly cruel.
If the concept of citizenship has no meaning to you beyond personal convenience, sure. If citizenship and the responsibilities inherent in it is something you take seriously, it makes a little more sense. Why should an expat who's not interested in living in and participating in the future of their former nation even be allowed to remain a citizen at all?
I'm sure there's a small number of rich people gaming the system, but for the vast majority of expats the citizenship-based taxation system is almost cartoonishly cruel.