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The Law That Makes U.S. Expats Toxic
- TazeTSchnitzel 11y agoI suspect that the U.S. taxing its citizens abroad has a lot to do with it being the world's richest country and not wanting people (billionaires and such particularly) to be able to easily escape their tax burden by moving abroad.
- matthewmacleod 11y agoGenuine question though – why should citizens living abroad (i.e. not using US public services) pay for those services through taxation?
- venomsnake 11y agoBecause the US passport is opening the whole world to its bearers, the protection US gives its citizens abroad is outstanding, and if some bad guys try to cut your head for ransom - chances of being saved or avenged are substantial. Also US is still the sole global superpower.
- dmichulke 11y agoInterestingly, the above reasons (and that perspective in general) are also the top reasons for a selected few to want to cut your head off.
- mprovost 11y agoI have dual US-NZ citizenship and I can think of no circumstance where if I was in trouble I would either: tell anyone that I was an American, or try and call the US Govt for help.
- mikeash 11y agoThey do use many US public services, though. American expats can still collect Social Security, still get to vote, still have their passport honored and renewed, are able to take advantage of US consular services, etc. They may use these services less, and certainly use a different mix than the average American living in the US, but it's not nothing.
- LunaSea 11y agoVoting is not a service but a right and you'll have to pay for your passport renewal anyways [1]. What consular services did you have in mind that would justify this cost ? [1] http://travel.state.gov/content/passports/en/passports/information/fees.html http://travel.state.gov/content/passports/en/passports/infor...
- jmadsen 11y agosorry, but that's a silly answer: - Social Security is collected on what I paid into the system while I was living/working in the US. Not a part of this - Voting is a right - nothing to do with taxes - My "consular services"? My passport renewed? I cost me $100 or something like that to get my passport renewed, and most of us never go anywhere near our "consular services" - I'm not even sure what they offer, except to business people over here via the Amer. Chamber of Commerce (which they pay an arm & a leg to join)
- mikeash 11y agoJust because voting is a right doesn't mean it just happens by magic. Elections are expensive and that money doesn't come from trees.
- TazeTSchnitzel 11y ago> - Voting is a right - nothing to do with taxes Your rights can only be secured if the Government can pay for them.
- Amezarak 11y ago> - Social Security is collected on what I paid into the system while I was living/working in the US. Not a part of this Wrong. Your Social Security benefits are proportional to what you put in (usually), but you will receive more money than you put in and more money than you money earned over that time period, assuming a normal life expectancy. The trope that you only get what you put in with SS and Medicare is false.
- crdb 11y agoThe key is to look at the current budget: https://en.wikipedia.org/wiki/2015_United_States_federal_budget#Outlays_by_budget_function https://en.wikipedia.org/wiki/2015_United_States_federal_bud... It can be split into three families of spending: - defense, which benefits you globally via Pax Americana, free trade routes etc. and should you require it, "Captain Phillips" style rescue. - "socialism", in the form of benefits that everybody has to pay for and that you can receive if you trigger certain situations (retirement, unemployment, etc.). Most expatriated Americans probably already benefitted from free education which is included here. - "generally making the country locally better" (justice, environment, etc.). Of these, only the latter doesn't directly impact Americans abroad. The first benefits you wherever you are; foreign citizen somewhat benefit from Pax Americana but there is no guarantee it will continue, whilst US citizen are covered globally with much more certainty. The second is a form of compulsory insurance for life developments that will probably coincide with repatriation. But that's about 7% of the budget (rough back of the envelope). The question is why don't other countries tax their citizen abroad? I think it is mainly because they can't afford to enforce it (good luck, Estonia, forcing JP Morgan to give you access to their New York client data). If they could, with any degree of certainty, they would in a heartbeat. France proposes to do it every 6 months.
- deleted 11y ago[deleted]
- nico_h 11y ago>foreign citizen somewhat benefit from Pax Americana but there is no guarantee it will continue, whilst US citizen are covered globally with much more certainty Tell that to the lybian, syrian, iraki, Salvadoran, etc... that have "benefited" from the "Pax" Americana
- matthewmacleod 11y agoAh, education is an interesting point. The question is why don't other countries tax their citizen abroad? I assumed that the general consensus was that it all balances out at the end of the day – countries don't tax their citizens abroad, but do tax noncitizen residents who have income in the country. Either approach isn't all that bad, but it's interesting to think about how it can realistically be handled where individuals can hold multiple citizenships. My partner is dual US/UK, and completing a US tax return when you haven't lived in the country in decades is expensive and time-consuming.
- AlisdairO 11y agoThere's probably a legitimate point to be made that countries typically spend a large amount of money during an individual's formative years that they don't pay back until they've spent a significant length of time working, so they have in essence pre-used a lot of those services. I wouldn't personally advocate that stance - I think it's problematic with respect to consent - but I can see that in the case of extremely high emigration rate the viewpoint might be very tempting.
- gambiting 11y agoSimply moving abroad wouldn't let you escape paying tax in US, if you made money in the US. I make money in two EU countries, and pay income tax from the profits made in each country into that country tax system. It would be idiotic if I had to pay income tax off income in country A in country B if I actually haven't earned that money in country B. Yet this is exactly what US is doing.
- privong 11y ago> I suspect that the U.S. taxing its citizens abroad has a lot to do with it being the world's richest country and not wanting people (billionaires and such particularly) to be able to easily escape their tax burden by moving abroad. Interestingly, the US relatively high tax compliance rates, compared to other large/industrialized countries [0]. Presuambly the wealth you refer to is what results in the absolute dollar amount of evasion being higher, despite the relatively low rate of evasion. [0] http://blogs.reuters.com/david-cay-johnston/files/2011/12/GLB_TAXEVASION1211_SC.jpg http://blogs.reuters.com/david-cay-johnston/files/2011/12/GL...
- Menge 11y ago> being the world's richest country The US is the worlds #19th richest country as far as GDP (per capita) which makes the most sense as a measure of individuals and taxes. I don't think it makes any sense given that lower GDP nations should be doing the same thing to extract money from the US economy on any of their citizens who make more than ~$20K (if their GDP were $14K) based on the same "logic". When The US is happily paying fairly for its brain drain, it can complain. But either way as an expat I actively boycott US services and financial relationships for my own protection. (edit- make it clear I mean per capita, and reference: https://www.cia.gov/library/publications/the-world-factbook/rankorder/2004rank.html https://www.cia.gov/library/publications/the-world-factbook/... )
- TillE 11y agoThe government's actual "solution" to this problem has been to raise the fee of renouncing citizenship, from $450 to $2,350. No problem for wealthy people who want to avoid tax, but quite a large burden on everyone else. I plan to become a German citizen eventually, because I'm probably going to retire here. But thanks to Germany's disallowance of naturalized dual citizenship and America's tax complexities, that requires weighing a huge number of problems. At least my German bank (DKB) didn't kick me out.
- brobinson 11y agoThere's also an expatriation tax if your net worth is greater than a certain amount ($2,000,000) or you've averaged over a certain tax liability for the last five years ($139,000). The tax also applies to pensions, stocks, etc. based on their market value on the day you renounce.
- pyvpx 11y agoI keep seeing people repeat this, yet I can't find any information to confirm it. you can become a German citizen and still retain your US citizenship, from everything I've read and everyone I've asked on the matter.
- onli 11y agoSee http://www.einbuergerungstest.biz/einbuergerung-allgemein/doppelte-staatsbuergerschaft http://www.einbuergerungstest.biz/einbuergerung-allgemein/do.... Germany does allow that only in special cases.
- junto 11y agoIf renouncing is not allowed by the other country (i.e. Brazil), or if the renunciation is too expensive or difficult. I.e. you wouldn't want to go to Mogadishu to renounce your Somali nationality.
- morsch 11y agoWhat have you read and who did you ask? The general rule [0][1] is that you cannot keep your existing citizenship, with certain exceptions to that rule specified by law [2]. I don't see any that apply to the US, though, most of them deal with situations where you want to, but for various reasons can't, give up your previous citizenship. It's possible that there's a separate treaty with the US (as permitted in § 12 (3)), but I couldn't find any. IANAL. [0] http://www.gesetze-im-internet.de/rustag/__10.html http://www.gesetze-im-internet.de/rustag/__10.html [1] https://en.wikipedia.org/wiki/German_nationality_law#Naturalisation_as_a_German_citizen https://en.wikipedia.org/wiki/German_nationality_law#Natural... [2] http://www.gesetze-im-internet.de/rustag/__12.html http://www.gesetze-im-internet.de/rustag/__12.html
- patio11 11y agoRelated rules have also made holding US accounts more difficult for Americans overseas. I had my retirement accounts frozen by their previous custodian: "Sorry, our regulator doesn't let us deal with Americans overseas." I'm unsure whether that was sincerely "doesn't let us" or meant "would require a paperwork burden we find unacceptable relative to the money you few guys make us" but either way I was given thirty days to move very-much-on-the-books money to another US financial firm. It's annoying as heck, particularly as the burden falls mostly on folks who are coloring squarely within the lines. I pay enough for an accountant that I know with $10k of financial engineering the problem goes away for forever, which makes me think the guys with $30 million in untaxed capital gains that they're really worried about are probably not getting meaningfully inconvenienced by this policy.
- TimSchumann 11y ago> with $10k of financial engineering the problem goes away for forever As an American this upsets me greatly to hear. I feel it makes living abroad, especially to families of average means in this country, almost an impossible feat. I also wonder if only leaving the country for short duration vacation/business contributes to the "We're the best country ever!" mentality here and the "Wow, look at those weirdos over in America" mentality abroad. Or maybe that's just me paying too much attention to the news lately.
- patio11 11y agoalmost an impossible feat. FWIW: this is clearly not the case. It's just a paperwork burden with occasional inconveniences, some bigger than others. Millions of Americans, most of whom have more modest means than the typical software engineer on HN, make it work.
- stalcottsmith 11y agoAgreed. People make more of a deal about this than it is. If you are actually doing business overseas or own an actual operating business corporation overseas employing people (depending on the country), US paperwork looks relatively benign. The real harm for business people overseas is that opportunities may be closed for you to invest in other businesses or to join a board or something because your status as a US Person causes a burden for others. At the 100 million dollar level I imagine this is not a big deal but at the startup and smaller growth company level it seems problematic. This reduces the opportunity for soft diplomacy and representing the brand of America to foreign people of means and substance. I would be curious to know if you have experienced or anticipate experiencing this. Perhaps where you are is more closed to foreigners but there are countries where foreigners do lots of business. Have you been invited to invest or participate in boards?
- pibefision 11y agoMaybe I'm wrong, but america is not the only country who taxes globally. Spain is taxing globally also.
- brobinson 11y agoOnly two countries tax non-resident citizens on foreign-earned income: the United States and Eritrea. I'm assuming this is what you meant (non-resident foreign income). https://en.wikipedia.org/wiki/International_taxation https://en.wikipedia.org/wiki/International_taxation You can sort by what you want to see: http://i.imgur.com/hSsVmwd.png http://i.imgur.com/hSsVmwd.png
- pibefision 11y agothanks for clarifying this.
- worldadventurer 11y agoIt looks like China also has this on the books - to tax all globally earned income, but is starting to enforce it now: http://www.nytimes.com/2015/01/08/business/international/china-starts-enforcing-tax-law-for-citizens-working-abroad.html http://www.nytimes.com/2015/01/08/business/international/chi...
- dot 11y ago"Unfortunately, no single member of Congress represents these American constituents who together would rank, if a state, 12th in population size after New Jersey and before Virginia. By virtue of living abroad, they are second-class citizens, paying onerous tax burdens without representation." Compare this to Switzerland that considers its citizens living abroad part of the "fifth Switzerland" (there are 4 official language regions in Switzerland). They can vote online (in some Kantons/States) and participate in government programs to keep in touch with or learn about their roots. All without taxation. Of course, people here complain about citizens living abroad voting in local elections... Representation without taxation!
- mikeash 11y agoI don't agree with what that quote is saying. Americans living abroad can still vote, and therefore are still represented. It's true that Americans living abroad don't all have the same representatives, since they're represented by the elected officials from where they're registered to vote in the US, but that's a far different thing from saying that they have no representation at all.
- onli 11y agoIf none of the electable choices represent you, it does not matter whether you can vote or not, you are not represented regardless.
- mikeash 11y agoThat's a completely different issue, though. I live in the US and none of the electable choices represent me!
- onli 11y agoYou have at least some which on paper are supposed to represent you and your region. Expats don't, and that was the point made in the article. The general issue of indirect democracy not representing the will of the voters is a fundamental one and not solvable, also goes to far for a discussion like this. Side remark: JFKs Profiles in Courage is a great book on the topic.
- rlpb 11y ago"By virtue of living abroad, they are second-class citizens, paying onerous tax burdens without representation." This seems pretty ironic to me given the "no taxation without representation" principle.
- amalcon 11y agoThere's actually a more direct case of this: Washington, DC. Yes, people who live in the capital of the United States have no representation in congress. For years, they've even advertised this: https://en.wikipedia.org/wiki/File:DC_2013.jpg https://en.wikipedia.org/wiki/File:DC_2013.jpg edit: spelling / typo (thanks mikeash)
- ckozlowski 11y agoMmmhmm. Observer status only. You can vote for president, but you have no voting congressman. Cultural tidbit: If you're a resident of the D.C. area, and you live in Southern Maryland or Northern Virginia, be careful not to call yourself a Washingtonian. Residents will kinda frown at that. There's a perception that sometimes residents from the neighboring states will make it seem (unintentionally or not) that they're part of the city itself, without paying the cost of being an actual resident: No representation. Consider that as you will. I always thought it was yet another little quirk of what is a pretty unique city. (I'm from Northern Virginia. ;)
- mikeash 11y agoNitpick: capital, not capitol. If somebody lived in the capitol they wouldn't have representation either, and that would be even more ironic, but I don't think anybody does. Wacky question: does the President count as a DC resident and is therefore bereft of Congressional representation, or does he technically remain a resident of wherever he came from and get to vote for those members of Congress? I really love those DC license plates. What I especially love is how Congress still has the final authority over all government matters in DC, so this is quite a snub by the local officials at their Congressional masters.
- deong 11y agoI'm an expat, and the quoted statement is nonsense. I'm eligible to vote in the US with an absentee ballot, and I have a congressional district based on my last address in the US. Certainly my representative doesn't particularly care, because there aren't that many of us living abroad, but to say I'm therefore without representation is no different than saying I'm without representation as an Atheist (my voting district is in the deep south).
- morgante 11y agoIt really doesn't make sense how the US is the only country which insists on taxing their citizens, no matter where they live. It makes American labor less competitive and promotes the insularity of American culture. I'm living abroad and you can definitely see the impact of the US tax system in the background of expats: Americans are severely underrepresented. The same salary, when offered to a British expat and an American, is much less attractive to the American because of the 30+% tax burden imposed.
- negrit 11y agoIIRC some countries have treaties with the U.S. and tax American citizens less.
- patio11 11y agoThe specifics of the tax treaties depend on the country, but in general it works out to avoid double taxation. If you live in a part of the world where income taxes are generally at higher rates than the US, such as most first-world countries, you get a dollar-for-dollar tax credit against your US taxes for foreign taxes paid, which generally extinguishes your US liability. (There exist other options, notably the Foreign Earned Income Exemption, for folks earning below ~$100k a year.) The folks with a trickier situation are the ones who either a) are getting subpar tax advice (really, really easy, since few accountants are qualified to talk about multinational taxation and those that are generally charge a bundle) or b) folks who live/work in a low-taxes-low-services nation but end up getting a mid-taxes-no-services bill tacked on due to their US citizenship. Representative examples of the two regimes: I have lived and worked in Japan for the last ten years. Japanese tax rates are generally on par with or slightly above US tax rates. (There exist important qualifiers on this for practical tax planning for small businesses here.) This results in me every year shipping my accountant a lot of numbers after which he comes up with a calculation which says something like: "Taxes owed to US: $20k; taxes accrued in Japan: $22k; take Japan/US tax treaty credit; net tax owed to US $0." On the other hand, consider a high-salary employee of a bank's Hong Kong office. The HK top tax rate is 15%. The US top tax rate is 39.6%. Uncle Sam will happily advise you that you have to pay the 24.6% difference (on your last marginal dollar, naturally). All of the above assumes one is doing one's level best to pay the lowest tax bill consistent with the clear intent and established practice of the enforcement divisions of the laws of the United States. This, regretfully, does not describe all taxpayers.
- deleted 11y ago[deleted]
- gambiting 11y agoI said this before, but I will say it again - as a child, I dreamed of emigrating to the US and getting a US citizenship. Nowadays, I would reject one if anybody offered, and if I had one I would denounce it. Like the article states - being American abroad is now seen as liability, and I am not surprised Americans living abroad give up their citizenship just to stop dealing with this nonsense.
- Amezarak 11y agoI really find it hard to feel sympathetic about rich Americans (only applies to income of 100k+) paying no more taxes than if they lived in America (live in a country with higher income tax, pay US nothing, country with lower tax, pay US the difference.) This seems hardly worth 'denouncing' American citizenship. Can you explain? I feel like threads like these really illustrate the difference between someone on HN and the average person.
- gambiting 11y agoIt's not about America per se - I would feel the same way about any country. I live and work in UK while being a Polish citizen. If Poland now asked me to pay income tax in Poland based off my income in UK, I would be very very upset - I already pay income tax in the UK, so paying it twice sounds absolutely ridiculous. On the most basic level - Poland has absolutely no "right" to any of that money. I would denounce my Polish citizenship over this if that was the case. And US feels like they do have the right to the money of their citizens, even if they made it abroad. Every single person I spoke to about this said the exact same thing - the US tax system is stupid, and it's the example of US behaving like it owns the world and its own citizens. Just because it only targets "rich" people doesn't make it any less stupid.
- Amezarak 11y ago> I already pay income tax in the UK, so paying it twice sounds absolutely ridiculous. You aren't paying twice. That's the point. Assume the US has a 30% tax rate in your bracket. Poland has a 35% rate for that same bracket. Then as an American expat, you would pay 35% in taxes. If Poland had a 25% rate, you'd pay 30% (25 + 5) in taxes. You aren't paying 65% of your income in taxes. You aren't paying twice. > On the most basic level - Poland has absolutely no "right" to any of that money. Then Poland has the right to say you are no longer a Polish citizen that can take advantage of Polish embassies or move back to Poland at any time as a full citizen. It seems perfectly sensible to me.
- ucaetano 11y agoFunny thing is that this affects not only American citizens, but also anyone who studied, lived or worked in the US, regardless of citizenship, since unless you prove otherwise, that could be taken as evidence that you are a "US person".
- bby 11y agothis is why I renounced my citizenship when I moved to an african nation
- dmotto 11y agoThey mention at the end of the article the "same country exemption" which is a realistic solution. If you are an American, you can contact your representative and ask them to support it. Here you can find more info from the ACA about FACTA and how it is harmful to Americans abroad: https://americansabroad.org/issues/fatca https://americansabroad.org/issues/fatca
- rayiner 11y agoIs taxing expats abroad really a problem? First, there is a large baseline exemption and most expats abroad don't pay U.S. taxes. Second, if you're intending to permanently leave the U.S. why should you keep U.S. Citizenship? And if you're intending to come back, is it really unfair to tax you? American citizenship has real benefits, especially if you're rich enough to pay expat taxes. The U.S. protects you and your property everywhere in the world. My dad was stuck in Yemen when the civil war there broke out. His hotel was shelled. That blue passport was his ticket out on a C-130.
- gambiting 11y agoAre you serious? To me, as a person from EU, it seems insane that a country where I haven't actually earned the money would want to tax it in any way or form. That's just ridiculous. You should pay income tax in the country where you made money. And why should I keep citizenship of a country that I moved out of? Because...I want to? Because I feel like a citizen of a country even if I live and make my living somewhere else? Doesn't mean that that country has any right to a part of my income.
- ckozlowski 11y agoA lot of what you ask seems that it could be a personal question depending on who you ask. I certainly wouldn't presume or preach to others with regards to how they view their country, however: 1. We (I'm an expat as well) pay little taxes to the U.S. because of the foreign earned income credit. The paperwork is onerous, yes. But it's not as bad as some make it out to be, unless you're in an exceptional income bracket. 2. A U.S. passport is a powerful thing. And as the OP mentioned, the benefits are real. We look after our own. http://www.passportindex.org/byRank.php http://www.passportindex.org/byRank.php 3. Many U.S. expats wouldn't dream of renouncing their citizenship, because it simply means more to them than that. It's more than residency, it's identity. And it's something we pay into. Many Americans will tell you...they don't like a lot of taxes...but they /will/ pay taxes, and they expect everyone to. It's a "we're all in this together" bit. Even if you're abroad, and you're paying a paltry amount, you're still chipping in. Just something many of us do.
- binarray2000 11y agoYou must look at it from the perspective of the Oligarchy: Wars, regime-changes, support to "moderate" forces, spying on the world just cost money. And you cannot afford all that by only taxing those at home. You need every dollar. So, you tax the expats (8.7 million of them!). They are abroad to work after all - they MUST have earnings. As an alibi for your new revenue source, you pass a new law (Fatca) while saying that you fight "terrorism, tax evasion and organised crime". Again! The game you have played so well (and so often) in the past still works. This time it's even easier: Expat "elitists" have no representation, and the Average Joe cannot think about Fatca when he comes back home - tired and overworked - after two jobs, worrying about his CC debt and plethora of other issues.
- jjoonathan 11y agoIf you asked "Average Joe who is overworked, has two jobs and CC debt" how much he was concerned about the great injustice of requiring expats earning >$100k/yr in low-tax nations to make up the tax difference, you wouldn't get much sympathy. However, it wouldn't be very honest to attribute his lack of sympathy to apathy. I imagine he'd care, and that he'd find the present arrangement agreeable.
- binarray2000 11y ago> attribute his lack of sympathy to apathy I wrote "the Average Joe cannot think", not "the Average Joe doesn't want to think". Other than that, I agree.
- peripheral 11y agoI have experience dealing with this. I'm not a U.S. person, but I have a company in a EU country that I co-own with a U.S. citizen (through personal holding companies). Our (EU) bank first demanded we fill in 9 ridiculously extensive forms detailing our entire business, then raised our bank fees from 5 to 105 euro per month, and then closed our account, giving us 2 weeks to send our balance elsewhere. All within a year time. It's extremely hard for us to find a new bank outside the U.S., and inside the U.S. isn't easy either, since we're not a U.S. company, and do no business there. Thank god we're liquidating this company anyway. Doing consulting work, I actually did some work for the bank that closed our account. And honestly, while I didn't get close to the departments that deal with FATCA, I can't say I blame them for closing our account. You should see how much of a headache all of the new regulations in the financial industry are for the institutions.
- throwaway13337 11y agoWhat country was this?
- jbpritts 11y agoMajor banks in the Czech Republic will not issue checking accounts to US citizens because of the costs of FACTA. This leaves expats with large, bureaucratic, formerly state-owned banks, like Ceska Sporitelna, which charge exorbitant fees and have dubious customer service. FACTA is a big problem. It is comical that major banks in Europe have a "No Americans" policy because of this stupid legislation; it needs to end.
- xlcashlx 11y agoIt appears the first $100,000 you make overseas is tax exempt by the FEIE[0]. As far as I understand my rent details as well as bank accounts overseas are reported to the IRS. This extra work can be seen as a burden for both parties. [0] https://www.irs.gov/Individuals/International-Taxpayers/Foreign-Earned-Income-Exclusion https://www.irs.gov/Individuals/International-Taxpayers/Fore... *edit grammar
- Randgalt 11y agoTry opening a bank account as a foreign US resident. It took my over a month to get my bank account and required copious documentation and a lawyer. All the time there was no guarantee that I would actually get the account. I personally know several US expats who were unable to get bank accounts. It's so much work for the banks that many are just not accepting US citizens for new accounts.
- mark_l_watson 11y agoMy wife and I had been planning on buying a home in either Belize or Costa Rica but gave up this plans because of FACTA. Too bad because I really like Central America and was looking forward to a major lifestyle change from integrating into a local rural community. Really a messed up law and messed up policy. I do understand why our government did it: not good for the economy to have older people spend their social security money in a relatively inexpensive foreign country. I think the money laundering and anti terrorism arguments may just be a smokescreen. This may also be just our government throwing their weight around, bullying other countries.
- dangjc 11y agoYou really changed your life plans because of FATCA? Are there really no banks in Central America willing to work with Americans? I'm in Singapore, and though I've had to close one bank account due to it, I've had no problems with my others. Filling out an FBAR the first year took me a couple of hours to figure out, but every year after it took me like 10 minutes.
- mark_l_watson 11y agoYes I did. My wife and I had a pro and con sheet for reasons to move and reasons not to move. FACTA tipped the scales, so to speak, and we decided to not do move. I am still a little sad about our decision though. I think that life is more interesting living in different places, doing different kinds of jobs, etc. BTW, I didn't want to move for financial reasons as much as wanting a low key lifestyle. There is something about Central America that makes me feel great just hanging around. Anyway, my wife and I live in the mountains of Central Arizona, and I also love our lifestyle here, so life is good.
- dangjc 11y agoMy general experience with FATCA has been quite mild. I've been in Singapore for 5 years, and I had one investment account that had to be closed, but all my bank accounts were fine. The FBAR took me a few hours to figure out how to fill out the first time, but every year after it only took 10 minutes to update the numbers. The laws about starting a business are much more onerous. If I become a founder/shareholder/director of a company not incorporated in the US, there are all sorts of painful compliance requirements that are basically there to make me rather incorporate in Delaware or something. Net net, I sense that except for a few unfortunate cases, most of the pain of compliance with FATCA is coming from those who it was meant to target: wealthy tax evaders. This article did appear in the WSJ...
- patrickmay 11y ago"The best solution is for the U.S. to join the rest of the world in taxing based on residency rather than citizenship." As a former expat, this would have made my life significantly easier. The current U.S. tax code is appalling in its overreach.
- Simulacra 11y agoInteresting article.
- jake_morrison 11y agoI am a business owner living overseas in Asia. I generally spend about $2500/year on tax preparation, between my personal return and the 5471 form that I have to file to report my company information on my US tax return. While my financial life does have it's complexity, I have to pay this simply for compliance, independent of income. The $100K/year deduction is on "earned income", i.e. salary. So if you have other income, e.g. dividends or other capital gains on real estate or selling your company, you have to pay at your full standard income rate (small company dividends are not "qualified" unless the US has a corporate tax treaty with the host country). As a business owner, my best strategy from a personal tax perspective is that my company makes no profit - it should all go to me as salary. In the past, that has put me in conflict with a non-US partner, as it didn't match his best strategy. And it means that "profit sharing" for employees doesn't make sense. So US tax law costs me considerable money in compliance costs and fundamentally distorts the way I run my business, for no additional tax revenues to the US. Fundamentally, residence based taxation makes more sense. It's more direct and easier to manage. People talk about these benefits of being a US citizen, as if I don't get services from the country where I live.