Why are Americans giving up their citizenship?(bbc.co.uk)
bbc.co.uk
Why are Americans giving up their citizenship?
http://www.bbc.co.uk/news/magazine-24135021
84 comments
I live abroad, and US tax laws cause me huge problems...especially since the tax treaty with China is incompletely in a couple of places (e.g. if I go to the US on a biz trip). Let me educate you a bit:
> In some cases, compliance with US tax laws (even though not in the US) are in direct conflict with laws in jurisdictions where people actually reside.
This is why countries have tax treaties, to work these issues out (though there are some bugs, see above). If you don't earn that much, the ~$95k foreign income tax exemption is also very useful.
> In essence, a US citizen is indentured to the US state regardless of where they live.
Thankfully, I'm mostly an indentured servant to the CCP and every year I get to write a big fat +/- $0 on my US tax returns. But I'm just a worker bee.
> It is creating a growing amount of complications for US citizens that are not within US jurisdiction but which can be held criminally liable for not following US laws even when those laws are in conflict with local laws where they actually live.
What are you talking about? The only law I can think of: US citizens are not allowed to participate in corruption (by US law), while some countries require bribes to avoid sending you to jail. Very few laws affect us abroad, the only other ones I can think of relate to child rape and pornagraphy.
> In some cases, compliance with US tax laws (even though not in the US) are in direct conflict with laws in jurisdictions where people actually reside.
This is why countries have tax treaties, to work these issues out (though there are some bugs, see above). If you don't earn that much, the ~$95k foreign income tax exemption is also very useful.
> In essence, a US citizen is indentured to the US state regardless of where they live.
Thankfully, I'm mostly an indentured servant to the CCP and every year I get to write a big fat +/- $0 on my US tax returns. But I'm just a worker bee.
> It is creating a growing amount of complications for US citizens that are not within US jurisdiction but which can be held criminally liable for not following US laws even when those laws are in conflict with local laws where they actually live.
What are you talking about? The only law I can think of: US citizens are not allowed to participate in corruption (by US law), while some countries require bribes to avoid sending you to jail. Very few laws affect us abroad, the only other ones I can think of relate to child rape and pornagraphy.
Payment of one's taxes is not the same as, or equivalent to, indentured servitude. Or slavery.
Not equivalent to, but certainly shares similar characteristics through coerced surrender of the fruits of one's labor.
Living inside the state, you wouldn't have those fruits if it weren't for the state. Living outside of the state, tribute of fruits is the fee for belonging to the state. If someone were truly being forced to pay US taxes, they wouldn't be able to renounce their citizenship while living outside of the state. And inside the state, it's like complaining that your parents insist you buy your brother a present with your allowance, or better yet, the money you earned mowing the front lawn. The reason the US economy is so deep and liquid is because the US state is so powerful, and to stay powerful it needs to collect taxes.
> Living inside the state, you wouldn't have those fruits if it weren't for the state
Nice theory but it's not even like you have a remote possibility to live outside of the State. Every country require you to BELONG to a State.
You'd rather look back in History how people were actually able to survive and thrive before advanced State powers even existed. The Human Race was not born with a State and Government to direct themselves. This is all a very recent creation in History. Let's not invert the logic and pretend that without State we would have nothing. This is what Socialism wants you to believe.
Nice theory but it's not even like you have a remote possibility to live outside of the State. Every country require you to BELONG to a State.
You'd rather look back in History how people were actually able to survive and thrive before advanced State powers even existed. The Human Race was not born with a State and Government to direct themselves. This is all a very recent creation in History. Let's not invert the logic and pretend that without State we would have nothing. This is what Socialism wants you to believe.
Oh please. Spare us the shitty history lesson. The state has existed in human history for more than 10,000 years.
The survival and thriving of the human race prior to the establishment of states is incomparable to the last 10,000 years--except to say that they evolved, survived, and propagated the species. They did not thrive.
The human race was hardly shit before it began establishing states in order to organize, centralize, protect, expand, and make its way in the world. Before that? Humans were nothing.
Ten thousand years of history does not qualify as a "recent creation in history" unless you're being really particular about establishing recent on a universal and geological time scale.
Without the creation of states, humanity had and left little to nothing behind. It merely existed. You would not be here if it weren't for the creation of the state.
This is not in any way, shape, or form what socialism would have anyone believe.
The survival and thriving of the human race prior to the establishment of states is incomparable to the last 10,000 years--except to say that they evolved, survived, and propagated the species. They did not thrive.
The human race was hardly shit before it began establishing states in order to organize, centralize, protect, expand, and make its way in the world. Before that? Humans were nothing.
Ten thousand years of history does not qualify as a "recent creation in history" unless you're being really particular about establishing recent on a universal and geological time scale.
Without the creation of states, humanity had and left little to nothing behind. It merely existed. You would not be here if it weren't for the creation of the state.
This is not in any way, shape, or form what socialism would have anyone believe.
I wonder if there is a libertarian-minded ant somewhere wanting to rebel against their oppressive colony. States are not unique to human beings.
Ants are not oppressed by their colony. Read the book "Les fourmis" if you want to learn more about how the actually live.
The irony is that the rebel ant needs the colony in order to be a rebel.
Human history dates way back than 10 000 years ago. So, you are not proving anything with this kind of statement.
Duh. Never said it didn't. I'm guessing you didn't actually read anything I wrote. The choosing of 10,000 years ago was to the earliest known establishment of a state. That was pretty obvious in my comment.
Families are states. Anarchy is fascism. Violence is government. Law is force. Peace is control.
Paying one's taxes as a citizen is not "coerced surrender of the fruits of one's labor", nor does paying one's taxes as a citizen who receives the benefits of one's government in any way share similar characteristics with indentured servitude or slavery.
Slavery was so much more than the "coerced surrender of the fruits of one's labor". And indentured servitude is a far different thing--it was a practice to enslave someone for a set term after obligating them to a debt as a means to gain free labor.
Neither of these things are in any way analogous to paying taxes. You do history, and those who suffered under these systems, a great injury by misappropriating them for ridiculous political statements.
Slavery was so much more than the "coerced surrender of the fruits of one's labor". And indentured servitude is a far different thing--it was a practice to enslave someone for a set term after obligating them to a debt as a means to gain free labor.
Neither of these things are in any way analogous to paying taxes. You do history, and those who suffered under these systems, a great injury by misappropriating them for ridiculous political statements.
If you ask me, "Are you willing to pay for generational theft, subsidies for the health insurance industry, and killing brown people on the other side of the planet?" I will probably say something like "No." It looks like an agreeable meaning of "coerce" is "to make (someone) do something by using force or threats." So if someone, or some group of people, convinces me to fund the causes listed above by means of threatening to kidnap or murder me (murder being reserved for those who resist kidnapping), it seems reasonable to say that I am coerced.
You're only being coerced if you are also coerced to not commit murder, not drink and drive, not steal other people's things, not rob banks, not set fire to other people's things, etc.
Calling paying legally authorized taxes coercion is abusing language to make a stupid political point. Calling tax-paying "generational theft" is the same thing.
Besides, you're missing the point of the parent statement--comparing slavery and indentured servitude to the "coerced surrender of the fruits of one's labor". That is, plainly speaking, total bullshit, and a misappropriation of slavery & indentured servitude for a stupid political point about not liking taxes.
Calling paying legally authorized taxes coercion is abusing language to make a stupid political point. Calling tax-paying "generational theft" is the same thing.
Besides, you're missing the point of the parent statement--comparing slavery and indentured servitude to the "coerced surrender of the fruits of one's labor". That is, plainly speaking, total bullshit, and a misappropriation of slavery & indentured servitude for a stupid political point about not liking taxes.
It's a bit rude to suppose that I want to commit murder, drink and drive, steal, rob banks, and set fire to things.
Calling paying legally authorized taxes coercion is abusing language to make a stupid political point.
Sorry, could you point out in what way the situation I described is not coercion? Are we to suppose that it is not coercion because it has been happening for a while, to a variety of people, despite the definition of the word not mentioning this?
Calling tax-paying "generational theft" is the same thing.
Social Security will not exist in its current form when I am 65. A variety of solutions could cause it to continue to exist in some form, like killing people when they reach the age of 80 (this probably would not be legal), paying out less, setting the cutoff age to be later, or just arbitrarily denying payouts to people completely at random (this would be legal - see Flemming v. Nestor), but most of the likely solutions to the problem result in people my age paying in a great deal more than we will ever receive.
Calling paying legally authorized taxes coercion is abusing language to make a stupid political point.
Sorry, could you point out in what way the situation I described is not coercion? Are we to suppose that it is not coercion because it has been happening for a while, to a variety of people, despite the definition of the word not mentioning this?
Calling tax-paying "generational theft" is the same thing.
Social Security will not exist in its current form when I am 65. A variety of solutions could cause it to continue to exist in some form, like killing people when they reach the age of 80 (this probably would not be legal), paying out less, setting the cutoff age to be later, or just arbitrarily denying payouts to people completely at random (this would be legal - see Flemming v. Nestor), but most of the likely solutions to the problem result in people my age paying in a great deal more than we will ever receive.
Yeah, but failure to pay your taxes leads to servitude and slavery in prisons. It's just one step before.
No, but it is extortion
No, it is not.
It is. No matter how you'd like to see it. The State has no legitimacy over your life and your earnings. It did not do anything to deserve it.
This misconception comes from "Monarchy by Divine Right" from Old Europe, where it was your duty before God to support your King with your earnings.
It has become more and more of an extortion as the amount seized by your rulers far exceeds (in percentage) what was paid during the Middle Ages.
This misconception comes from "Monarchy by Divine Right" from Old Europe, where it was your duty before God to support your King with your earnings.
It has become more and more of an extortion as the amount seized by your rulers far exceeds (in percentage) what was paid during the Middle Ages.
Your grasp of history and political theory is lamentable. No matter how you'd like to see it.
The state has legitimacy granted to it by those who organize it and continue to live under its rule until such time as they decide to no longer recognize it, delegitimize its power, and establish a replacement state. But even when this occurs, another state is erected in its place.
Taxes have been around so much longer than Old Europe--by about 4000 years. Read some history.
The state has legitimacy granted to it by those who organize it and continue to live under its rule until such time as they decide to no longer recognize it, delegitimize its power, and establish a replacement state. But even when this occurs, another state is erected in its place.
Taxes have been around so much longer than Old Europe--by about 4000 years. Read some history.
Consider the taxes (after the very generous $90+k exemption) a fee for services offered to expatriates. You may never use such services, but your fee pays to make those services available if you ever need them.
The U.S. Embassy system offers world-class services to U.S. citizens with legal, medical, and (depending on the circumstances) financial problems in foreign countries. They will negotiate your release if you are arrested for foreign crimes. They will work with your health provider if you become gravely sick. They will help you reorder credit cards if you are robbed and even provide you with cash advances or a place to stay.
The U.S. Embassy system offers world-class services to U.S. citizens with legal, medical, and (depending on the circumstances) financial problems in foreign countries. They will negotiate your release if you are arrested for foreign crimes. They will work with your health provider if you become gravely sick. They will help you reorder credit cards if you are robbed and even provide you with cash advances or a place to stay.
> The U.S. Embassy system offers world-class services to U.S. citizens with ...
The embassy explicitly states that they do not offer these services.
> They will negotiate your release if you are arrested for foreign crimes.
Ha ha! You are joking right?
> They will help you reorder credit cards if you are robbed and even provide you with cash advances or a place to stay.
They MIGHT call home for you so you can get some cash. But otherwise, don't expect much from the US Embassy beyond expected services, unless your case is exceptional somehow (or maybe if you know Gary Locke personally).
The US does offer other services for our taxes; e.g. I got my PhD via NSF grants, basically, so I don't mind paying for that. And keeping the world safe via military (if you think that's a service), or even foreign aid. But its a myth that I pay any US taxes at all, because I don't, I just have to fill out that damn 1040 every year.
The embassy explicitly states that they do not offer these services.
> They will negotiate your release if you are arrested for foreign crimes.
Ha ha! You are joking right?
> They will help you reorder credit cards if you are robbed and even provide you with cash advances or a place to stay.
They MIGHT call home for you so you can get some cash. But otherwise, don't expect much from the US Embassy beyond expected services, unless your case is exceptional somehow (or maybe if you know Gary Locke personally).
The US does offer other services for our taxes; e.g. I got my PhD via NSF grants, basically, so I don't mind paying for that. And keeping the world safe via military (if you think that's a service), or even foreign aid. But its a myth that I pay any US taxes at all, because I don't, I just have to fill out that damn 1040 every year.
The same can be said for every western nation. They don't require taxation of non-residents though.
And hence why more people are renouncing their citizenship. The services are unwanted, the fee ridiculous.
Do you have any examples of specific laws that are in direct conflict with laws other places?
"Unlike other countries, Americans are taxed not only as residents of the US but also as citizens, wherever they live."
Huh?? Just because you are a US citizen, you have to pay taxes to the US wherever you live? Is any other country in the world having such policies?
Huh?? Just because you are a US citizen, you have to pay taxes to the US wherever you live? Is any other country in the world having such policies?
According to Wikipedia Eritrea also has a citizenship based tax system. They do however use the metric system over there.
http://en.wikipedia.org/wiki/International_taxation
http://en.wikipedia.org/wiki/International_taxation
France was also trying to do that recently, since the government there spends way more than they can hope to "steal" from their citizens. They thought it was a good idea to try to tax citizens living abroad (on top of the taxes paid abroad).
If they ever did that, I can tell you a number of French citizens living abroad would just drop their French passport without hesitation.
If they ever did that, I can tell you a number of French citizens living abroad would just drop their French passport without hesitation.
A number of French citizens, including nearly a dozen billionaires, actually did renounce their French citizenship over the proposed tax scheme. Gerarad Depardieu is the most famous of them, but not the wealthiest.
One of the Facebook founders similarly renounced his U.S. citizenship prior to its IPO.
One of the Facebook founders similarly renounced his U.S. citizenship prior to its IPO.
Taxation is not theft, it is lawful. The developed world is founded on taxes.
And war isn't murdering people?
Just because something has the backing of a government doesn't change the definition of words.
You can argue who is the owner of the money being taxed, but you can't say something is or isn't because it's lawful.
Just because something has the backing of a government doesn't change the definition of words.
You can argue who is the owner of the money being taxed, but you can't say something is or isn't because it's lawful.
My ISP insists that I must allow them to steal my money on monthly basis or they would cut my Internet!
Taxes are not theft, but a membership fee. Its perks are roads, fire department, schools, laws and law enforcement, protection from foreign armies and basically keeping the society together.
Taxes are not theft, but a membership fee. Its perks are roads, fire department, schools, laws and law enforcement, protection from foreign armies and basically keeping the society together.
Except your argument makes no sense if you DONT LIVE IN AMERICA. If you pay US Taxes but live elsewhere, you are in fact getting robbed. Your local and government services are not provided by America, you get almost no representation from America, and yet you pay full taxes.
Complete highway robbery.
Complete highway robbery.
If you felt that your ISP didn't give you the proclaimed service, you could always cancel your subscription and sign with another ISP.
I do agree that the idea of taxation is not theft, but at what point does it become so? If you look at all those aspects that you point out, would you say that the taxes are well spent? The other issue here is that the people in question don't even live in the US, and thus don't make use of those services (and probably don't want their money to be used on foreign wars, as well. Just an educated guess).
I do agree that the idea of taxation is not theft, but at what point does it become so? If you look at all those aspects that you point out, would you say that the taxes are well spent? The other issue here is that the people in question don't even live in the US, and thus don't make use of those services (and probably don't want their money to be used on foreign wars, as well. Just an educated guess).
If you don't like what the ISP charges you, you can cancel your Internet subscription. You're not allowed to say "well I don't drive, so I don't want to pay for roads".
In addition, about 50% of the federal budget these days is Social Security+Medicare+Medicaid. Most of the things you listed are paid from local/state taxes, which are much smaller. Two thirds of the federal budget goes to pensions, welfare and military expenses. Roads, laws and law enforcement aren't where the bulk of taxes goes.
In addition, about 50% of the federal budget these days is Social Security+Medicare+Medicaid. Most of the things you listed are paid from local/state taxes, which are much smaller. Two thirds of the federal budget goes to pensions, welfare and military expenses. Roads, laws and law enforcement aren't where the bulk of taxes goes.
> Just because something has the backing of a government doesn't change the definition of words.
For some words, the government defines what they mean. This includes legal terms, such as murder or rape or theft -- all or which mean what the laws (written by the government) say what they mean.
For some words, the government defines what they mean. This includes legal terms, such as murder or rape or theft -- all or which mean what the laws (written by the government) say what they mean.
How much is considered lawful? 30%? 50%? 90%?
It would be lawful if I agreed to all of it. I do agree we need taxes, but in many cases, it's excessive and against my will (you can go to jail if you don't pay it).
The other problem is that there is no accountability.
It would be lawful if I agreed to all of it. I do agree we need taxes, but in many cases, it's excessive and against my will (you can go to jail if you don't pay it).
The other problem is that there is no accountability.
If you are living in the USA, you are probably paying far fewer taxes (income and consumption) than people living anywhere else in the developed world, as well as much of the developing world.
I'm assuming you live in China though, since you said there is no accountability, and you can't vote out public officials whose tax policies you don't like.
I'm assuming you live in China though, since you said there is no accountability, and you can't vote out public officials whose tax policies you don't like.
So because other countries take an arm and a leg in taxes, but the USA only takes an arm, we should shut up and be happy?
/FlawedLogic.
/FlawedLogic.
Give me a good example of a developed country with generally happy citizens who pay less taxes than we do, then we can use that country as an example of how a low tax society could work without failing spectacularly. Barring that, it might be possible that the libercrazian no/low-tax country might still work; we just have no evidence and/or experience that it does.
Whenever I hear Americans complain about taxes, I play a sad song on a very tiny (invisible) violin in my hand.
Whenever I hear Americans complain about taxes, I play a sad song on a very tiny (invisible) violin in my hand.
Surely complexity of the tax code is important too? Anyway, Hong Kong is a very developed and modern place, and taxes are much lower here.
In practice, the US has lots of bilateral income tax treaties [1] that prevent expats' getting doubly taxed. For example, I'm an American living in London but I don't pay US taxes for work done here because the tax rate is higher here and by treaty, the UK gets first crack at me. I know a few Americans in (low-tax) Singapore who have to pay Singapore taxes, then pay the on top of that to the US government up to the level they would have been taxed if living in the US.
I get extra pain when I go on business trips to the states, which the US doesn't count as being foreign work. So every year I have to fill in a spreadsheet of all the days I worked in each country, and subtract the US days from my tax treaty credits. I have to do the same thing in reverse for the HMRC in the UK. My least favorite part of being an expat :)
[1] http://www.rumbaklaw.com/resources-and-tools/us-federal-tax-...
I get extra pain when I go on business trips to the states, which the US doesn't count as being foreign work. So every year I have to fill in a spreadsheet of all the days I worked in each country, and subtract the US days from my tax treaty credits. I have to do the same thing in reverse for the HMRC in the UK. My least favorite part of being an expat :)
[1] http://www.rumbaklaw.com/resources-and-tools/us-federal-tax-...
Yes, being a US citizen requires you to pay the US tax, even though you live in a different country, work in that country and already pay tax in that country.
It's been like that for a long time already, pretty rediculous of you ask me!
It's been like that for a long time already, pretty rediculous of you ask me!
Note that you often don't get double taxed. They just want the difference between what you would pay in the USA vs. what you actually pay in country B, after $97k that is. If you are in a country with higher taxes than the states, which is most of the world actually, you won't be paying anything more (just watch out for HK, Singapore, and Switzerland).
Having to go through the form hell of filing US taxes seems like a tax in itself.
Every year I spend a couple of hours on it, and I do my taxes by hand at that. The hardest part is figuring out where to find a post office to mail the forms out. They seem to change each year (I could also drop it off at the embassy I guess, but that would require 15 or 20 more minutes to get in the front door).
Yes, although there is a high deductible (~$80k, as I recall). It's never been something I needed to worry about, but FATCA most definitely will be. I don't know the answer to your last question, but I've never personally heard of another nation with similar policies.
Do you still have to file US taxes though? Say you make $60K in Germany, well under the deductible, and do not file US taxes for 10 years.
Is there a penalty just for not filing? penalties can cripple you.
Is there a penalty just for not filing? penalties can cripple you.
Yes, I believe you are still obligated to file. Not sure how rigidly that's policed, though.
US citizens living abroad are able to avail themselves of services through embassies and consulates for ordinary problems and call upon the USMC etc. for assistance with extraordinary ones.
Are you trying to say that US citizens abroad are paying for the services of their embassy? That's crazy. Every expat citizen from any country is offered help from their home country's embassy, and they do it without citizen-based taxation.
I could walk into the British consulate in San Francisco tomorrow and expect help, and I haven't paid taxes in the UK for 5 years now.
I could walk into the British consulate in San Francisco tomorrow and expect help, and I haven't paid taxes in the UK for 5 years now.
If that is what the embassies and consulates are for than I wouldn't have a problem with that. At the moment I have to call a number to make an appointment and get shaked down by consulate security to get in to file an announcement of birth. I also have to pay a fee for that same announcement.
I think you are under the impression US embassies are a country club that expats just go to and have a cocktail from time to time.
I think you are under the impression US embassies are a country club that expats just go to and have a cocktail from time to time.
[deleted]
There are multiple issues here, and maybe one real but complicated solution besides getting rid of US Citizenship:
US Citizens are taxed on their income by the US regardless of where it was sourced and regardless of where they live. There are exclusions for foreign earned income up $97,600 in 2013 [1], but that does not exempt you from FILING the 1040 and whatever else.
In addition the US has tax treaties [2] with various countries that dictate who gets first right to tax, based on various criteria. Remember treaties trump internal law.
None of these exempt you from filing a return, even if you owe no tax to Uncle Sam.
Then there's the FBAR[3], which is actually a US FinCen form that is administered by the IRS and must be filed by June 30 of each year. It's for people who either have or maintain "signature authority" on bank accounts with a combined value of over $10,000 in the previous year.
Finally there is now FATCA [4], which imposes new reporting requirements on both US persons and Banks. If you live overseas the amount required to report is quite high, but it's still more reporting. For banks it's a royal PIA and many banks will not turn you away if you are a US Citizen (this is anecdotal, I Don't have numbers).
The problem is that the affected parties, US Citizens living abroad, have no real franchise in congress. That's because you vote in Federal Elections based on your last state of residence, which means that your Senator could care less about you.
The solution: We need about 300,000 expats to move back to Wyoming for a while. Once they decide that they no longer like Wyoming and want to move back overseas, they will vote in Federal elections in Wyoming. The expats will then have a voice in congress and be able to have some influence..
[1].http://www.irs.gov/Individuals/International-Taxpayers/Forei... [2]http://www.irs.gov/Businesses/International-Businesses/Unite... [3]http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employ...
US Citizens are taxed on their income by the US regardless of where it was sourced and regardless of where they live. There are exclusions for foreign earned income up $97,600 in 2013 [1], but that does not exempt you from FILING the 1040 and whatever else.
In addition the US has tax treaties [2] with various countries that dictate who gets first right to tax, based on various criteria. Remember treaties trump internal law.
None of these exempt you from filing a return, even if you owe no tax to Uncle Sam.
Then there's the FBAR[3], which is actually a US FinCen form that is administered by the IRS and must be filed by June 30 of each year. It's for people who either have or maintain "signature authority" on bank accounts with a combined value of over $10,000 in the previous year.
Finally there is now FATCA [4], which imposes new reporting requirements on both US persons and Banks. If you live overseas the amount required to report is quite high, but it's still more reporting. For banks it's a royal PIA and many banks will not turn you away if you are a US Citizen (this is anecdotal, I Don't have numbers).
The problem is that the affected parties, US Citizens living abroad, have no real franchise in congress. That's because you vote in Federal Elections based on your last state of residence, which means that your Senator could care less about you.
The solution: We need about 300,000 expats to move back to Wyoming for a while. Once they decide that they no longer like Wyoming and want to move back overseas, they will vote in Federal elections in Wyoming. The expats will then have a voice in congress and be able to have some influence..
[1].http://www.irs.gov/Individuals/International-Taxpayers/Forei... [2]http://www.irs.gov/Businesses/International-Businesses/Unite... [3]http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employ...
Couldn't care less
Could care less means they care some, and theoretically could care less than they already care. Couldn't care less means they already don't care at all.
Could care less means they care some, and theoretically could care less than they already care. Couldn't care less means they already don't care at all.
One thing not mentioned in the article, "Renunciation of U.S. citizenship was free until July 2010, at which time a fee of $450 was established."
http://en.wikipedia.org/wiki/Renunciation_of_citizenship#Uni...
http://en.wikipedia.org/wiki/Renunciation_of_citizenship#Uni...
Is this effectively a fee for having a US embassy process paperwork on your behalf, or are they actually trying to charge a fee for individuals to renounce their citizenship? It seems to me that the whole idea of renouncing one's citizenship is to sever all ties previously held to the country and assume the status of a foreigner in the eyes of that country. How they would collect that $450 if that is the case is beyond me.
"1,131 cases to 189 in 2012. It's still a small proportion of the estimated six million Americans abroad"
Yes, I would say that 0.019 percent of the passport-holding population currently living abroad (presumably biased toward the more wealthy passport holders) is a small proportion indeed. What is the comparable figure for people from other countries who renounce their citizenship each year to become naturalized United States citizens? It is surely much higher.
Yes, I would say that 0.019 percent of the passport-holding population currently living abroad (presumably biased toward the more wealthy passport holders) is a small proportion indeed. What is the comparable figure for people from other countries who renounce their citizenship each year to become naturalized United States citizens? It is surely much higher.
If you want to live abroad and pay no US taxes, shouldn't one also give up rights to any entitlement services from the US government during that period? Otherwise, US tax payers are subsidizing free riders. If I'm a US citizen, but spend my whole life working in another country, should I be entitled to draw social security checks from the US? This would seem to create a moral hazard, as if you could find a tax shelter jurisdiction, you could work there, pay little to no taxes, and still cost the US government to support you.
Generally, government retirement programs aren't really tied to citizenship. You have to have contributed to social security for a number of years to receive benefits. I'm a US citizen, but my income is German, so I will ultimately receive German retirement benefits.
Living abroad, there are few benefits I'm actually entitled to. In some third world nations, if I'm arrested, then I could receive help at the embassy's expense. But I live in a first world country. I receive zero benefits from the US government. I can't think of a single service the US government provides me. In fact, they hold a monopoly on many of the services I need. If I simply want to notarize a form, I have to get to a consulate and then pay $50 (something I get for free in the US). And yet I have to file taxes and sometimes PAY taxes.
And here's an even worse bit: I get exempted from paying on the first ~$90k of foreign earned income, great. But in order to get that benefit, I'm not allowed to spend more than 30 days in any year in the US. That just means I'm not going to visit my home country at all, because if I visit family for 29 days, and later in the year I need to come back home for a funeral or other emergency, well, that would be a trip that could cost upwards of $20k in US taxes.
Living abroad, there are few benefits I'm actually entitled to. In some third world nations, if I'm arrested, then I could receive help at the embassy's expense. But I live in a first world country. I receive zero benefits from the US government. I can't think of a single service the US government provides me. In fact, they hold a monopoly on many of the services I need. If I simply want to notarize a form, I have to get to a consulate and then pay $50 (something I get for free in the US). And yet I have to file taxes and sometimes PAY taxes.
And here's an even worse bit: I get exempted from paying on the first ~$90k of foreign earned income, great. But in order to get that benefit, I'm not allowed to spend more than 30 days in any year in the US. That just means I'm not going to visit my home country at all, because if I visit family for 29 days, and later in the year I need to come back home for a funeral or other emergency, well, that would be a trip that could cost upwards of $20k in US taxes.
That seems true in the general case, but not in the specific. One can still obtain SSI if you never worked a day in your life, assuming you can shelter your income to pass the means test, and then return to live in the US. It's not a very likely scenario, because if you have the wherewithal to live abroad and shelter income, the paltry SSI isn't worth the effort.
Still, it begs the question if citizens have some obligation to pay some minimum level of taxes, albeit small, for the basic services and protections one would still expect as a citizen: the right to vote, the salaries of your representatives, courts and foreign service, etc.
Still, it begs the question if citizens have some obligation to pay some minimum level of taxes, albeit small, for the basic services and protections one would still expect as a citizen: the right to vote, the salaries of your representatives, courts and foreign service, etc.
If I'm a US citizen, but spend my whole life working in another country, should I be entitled to draw social security checks from the US?
You are NOT entitled and you will NOT draw jack from Social Security--unless you paid in for at least 10 years. Then, that is your money.
If you move to US and are dirt poor, I suppose you may get some state aid, medicaid etc but that's a basic right to anyone that lives there. It probably balances out as many will retire, say to Mexico, and not use those services.
You are NOT entitled and you will NOT draw jack from Social Security--unless you paid in for at least 10 years. Then, that is your money.
If you move to US and are dirt poor, I suppose you may get some state aid, medicaid etc but that's a basic right to anyone that lives there. It probably balances out as many will retire, say to Mexico, and not use those services.
Social Security is not a savings account. Even if you paid in for 10 years, you can easily draw more than you put in.
Social Security is not a savings account. Even if you paid in for 10 years, you can easily draw more than you put in.
Or you can die while the first check is still in the mail. That's the system the Fed set up
Or you can die while the first check is still in the mail. That's the system the Fed set up
So the US has no concept of tax residency?
It does. However, in principle all US citizens are obligated to pay US taxes no matter where their residence or tax residence may be. There are a couple ways to be credited for tax paid abroad.
Guys over the pond... time for another tea party? 'taxation without representation'? ...'taxation without services'?
Whoa, whoa, US can tell other countries' financial institutions to report to IRS "or else"?
I think the world should be shelling DC, I mean, forget Iran and Syria, right?
I think the world should be shelling DC, I mean, forget Iran and Syria, right?
It's a diplomatic issue what countries report to each other. And your suggestion is mass murder?
Well, now you agree Iraq invasion was a mass murder?
Once USA extort money going from country A to country B for failing to comply, it's no longer a diplomatic issue, that's an international crime. And it was from the day one - USA threatening financial institutions in other countries, giving orders to them directly, that's audaceous.
Once USA extort money going from country A to country B for failing to comply, it's no longer a diplomatic issue, that's an international crime. And it was from the day one - USA threatening financial institutions in other countries, giving orders to them directly, that's audaceous.
As I understand it, the only way the USG can enforce those orders is if the financial institution has a branch/subsidiary in the US. If they don't, I think they are free to ignore the requirement.
I heard it tries to go one step beyond that. If Deutsche Bank has operations in the US, it falls under FATCA. BUT it is also required to not do business with some small German bank that has no operation in the US that does not comply with FATCA; i.e. DB is used to coerce the small German bank with no US operation to report its American customers in Germany to the US.
This is really evil.
Actually, according to the article, foreign banks and financial institutions are now avoiding US citizens as customers because of the complications it introduces. So if you have a US citizenship, banks abroad won't deal with you.
This doesn't make sense to me. If you give up your citizenship, then presumably you have citizenship elsewhere, so why not just open a bank account under your foreign citizenship? How is the bank to know?
The only thing I can think of is that maybe people are avoiding taxes in the US and their adopted country as well. After all, many countries Americans move to have such high tax rates that after deductions, their US tax liability would be quite small.
The only thing I can think of is that maybe people are avoiding taxes in the US and their adopted country as well. After all, many countries Americans move to have such high tax rates that after deductions, their US tax liability would be quite small.
Replying before reading the article just wastes everyone's time.
PS - The answers to all of these questions is contained within the article.
PS - The answers to all of these questions is contained within the article.
I read the article. It talks about Facta and then tries to link it to people complaining about how expensive it is to file tax returns, but the two aren't linked unless you weren't reporting your real income. Americans have always had to file taxes while living abroad. The tax laws have been extremely complicated for decades. Facta isn't changing that.
FTA:
"Fatca provisions impose no new obligations on US citizens living abroad... US taxpayers, including US citizens living abroad, are required to comply with US tax laws," he says.
No, this sounds more like people who might have fudged some numbers now worrying that the IRS is going to find out and realizing that their citizenship isn't worth the yearly bill.
FTA:
"Fatca provisions impose no new obligations on US citizens living abroad... US taxpayers, including US citizens living abroad, are required to comply with US tax laws," he says.
No, this sounds more like people who might have fudged some numbers now worrying that the IRS is going to find out and realizing that their citizenship isn't worth the yearly bill.
It said that people were not so worried about making sure their tax return was exactly correct. Now they are, so you need to hire better tax lawyers than you did before.
I take exception to your characterization of "fudging numbers". We all fudge the numbers of our tax returns, even when filing in the US. How many people really do anything but use TurboTax and hope for the best? I know I do. I can't possibly know everything about US tax law. I hope TurboTax does, but I have no guarantee, and it's my ass on the line if it screws up. I see no difference between that and the expats mentioned in the article, except the help they have to buy in is far more expensive.
I take exception to your characterization of "fudging numbers". We all fudge the numbers of our tax returns, even when filing in the US. How many people really do anything but use TurboTax and hope for the best? I know I do. I can't possibly know everything about US tax law. I hope TurboTax does, but I have no guarantee, and it's my ass on the line if it screws up. I see no difference between that and the expats mentioned in the article, except the help they have to buy in is far more expensive.
It became so complicated to do her tax return that she turned to professionals, at an annual cost of nearly $2,000 (£1,250), with the prospect of Fatca raising the price to $5,000. Also, fewer tax lawyers were taking on American clients, she says, and some banks were even turning away American money.
I don't see any mention of tax-dodging in the paragraph above. Which part of paying $2000 (and maybe soon $5000) to file taxes, and banks turning away American customers, don't you understand?
I don't see any mention of tax-dodging in the paragraph above. Which part of paying $2000 (and maybe soon $5000) to file taxes, and banks turning away American customers, don't you understand?
See this is what I don't understand. Facta does not change tax law. It should have no bearing on the cost of having your taxes done. You already had to declare foreign bank accounts to the IRS, so really all the law is doing is getting them declared automatically. Now fewer tax lawyers certainly will raise costs, but that has nothing to do with Facta.
What it changes is that it requires (non-US) banks to keep track of which of their accounts are owned or co-owned by someone who may have a (dual) US citizenship, and may have made an error in their tax returns, or risk having some of their US assets seized. Some banks just prefer not to take the risk.
The non resident citizen tax returns can become very complicated in the situation where the non resident US citizen is married to a non resident foreigner. The tax forms don't even support this configuration - the spouse must have a social security number. The foreign spouse must then apply for a special "non resident alien" social security number, for the special purpose of being able to file taxes in a country they are not even allowed to enter without a visa.
And how exactly do you determine the value of your shared assets in dollars? Have you made capital gain every time the dollar fluctuates against the local currency? Since we bought our home, our property has dropped significantly in value in the currency we earn our wages in, but theoretically gained a bit in dollars, so how can we be sure this doesn't add up to exceed $50,000? The only way to be sure is to hire an expert figure it out for you, for several thousand $. They are now charging more for their services because of the higher risks and responsibilities involved.
The net amount we have to pay in that country one of us isn't allowed to enter without a visa has always added up to $0 because the extremely high taxes we already pay locally (50+ percent income tax, 20+ percent sales tax, 80+ percent excise tax on fuel etc) can be deducted.
The non resident citizen tax returns can become very complicated in the situation where the non resident US citizen is married to a non resident foreigner. The tax forms don't even support this configuration - the spouse must have a social security number. The foreign spouse must then apply for a special "non resident alien" social security number, for the special purpose of being able to file taxes in a country they are not even allowed to enter without a visa.
And how exactly do you determine the value of your shared assets in dollars? Have you made capital gain every time the dollar fluctuates against the local currency? Since we bought our home, our property has dropped significantly in value in the currency we earn our wages in, but theoretically gained a bit in dollars, so how can we be sure this doesn't add up to exceed $50,000? The only way to be sure is to hire an expert figure it out for you, for several thousand $. They are now charging more for their services because of the higher risks and responsibilities involved.
The net amount we have to pay in that country one of us isn't allowed to enter without a visa has always added up to $0 because the extremely high taxes we already pay locally (50+ percent income tax, 20+ percent sales tax, 80+ percent excise tax on fuel etc) can be deducted.
This doesn't make sense to me. If you give up your citizenship, then presumably you have citizenship elsewhere, so why not just open a bank account under your foreign citizenship? How is the bank to know?
Yeah, just open a secret Swiss account, who will know.
Yeah, just open a secret Swiss account, who will know.
US law should not have jurisdiction beyond the border. It is creating a growing amount of complications for US citizens that are not within US jurisdiction but which can be held criminally liable for not following US laws even when those laws are in conflict with local laws where they actually live. The indifference of the US government to the consequences to US citizens of their overreach is typical these days.