5 ms·

Is the end to double taxation for the corporate tax only? Human Americans are also double-taxed on income earned abroad.

seanmcdirmid 11y ago
Only if the math doesn't work out right (same for corporates also). There is a lot of ambiguity though...
- deciplex 11y ago
  Everything over the deduction (currently just shy of $100k) is taxed, minus a further deduction for tax paid to a foreign government on the earnings. Basically, you will pay the higher of US tax or local tax, on earnings over $100k. And you're right, most people don't pay. Really the bigger pain in the ass is that you even have to file. I've filed tax returns to the IRS for the last 10 years despite not paying a cent of tax to the US during that time, since my local tax is higher anyway. It's ridiculous. And come to think of it, even if they did end the double taxation, it's likely they'd keep making us file, the assholes, considering they also recently began to require that we make a yearly report to FinCEN in addition to the IRS.
  - seanmcdirmid 11y ago
    So there is ambiguity: what if your Chinese company sends you to the states on a biz trip? The Chinese and U.S. governments both feel like they have exclusive taxation rights, so you just pay tax to both (and no, even the taxes paid are not deductible). Or what a of health insurance, if it counted as taxable income in your host country, is it taxable in the U.S. also? And then there are "expenses" that I have no clue about. Once you make more than $100k, you hit a lot of difference between the two systems that cause problems; you have to be very conservative in your interpretation of the ambiguity. It is all a pain, and that's not even fun ting things like American stock grants abroad.
    - geomark 11y ago
      It's messy and expensive to pay an accountant who knows how to get it right, which makes for a big disincentive to take any work abroad. Small jobs are money losers after accounting and filing costs.
      - seanmcdirmid 11y ago
        Not just messy, sometimes no one really knows what the rules are since you are trying to reconcile two completely different tax codes.
        geomark 11y ago
        That's kind of what I meant by messy, so few people know how to resolve the two sets of rules.
  - geomark 11y ago
    Actually, it's been a requirement to file a FBAR for many years if you have a foreign bank account with more than equivalent of US$10,000 in it. So that filing requirement isn't exactly new, just that it's gotten more attention lately and now with FATCA you might not get away with ignoring it. And yes, expats just love that requirement to file a tax return on your world wide income regardless of where it was earned or where you live, because as a US citizen you are the property of the US government.
    - deleted 11y ago
      [deleted]
    - seanmcdirmid 11y ago
      All the Chinese banks I use now want my Social security number! So....remember to file those fbars kids!
      - geomark 11y ago
        I thought China was not going to cooperate with FATCA. Really surprised they would agree to report on bank holdings to the US gov.
        seanmcdirmid 11y ago
        They weren't cooperating until this year. Now they are in full cooperation. It has something to do with fox hunting and the US also agreeing to report Chinese national bank holdings to the Chinese gov.
pzone 11y ago
Yes. The reason is that corporations vote with their feet quite readily, as seen here.
- muzz 11y ago
  This is more like "voting with accounting". The non-accounting footprint of the corporation-- the location of its employees, its factories, etc-- is largely unchanged.
- gozur88 11y ago
  People would vote with their feet, too, except they're heavily penalized for doing so. If you renounce your US citizenship there's a one-time tax of 40% of your all your US assets and the US claims the right to tax you for the next ten years. Subjects, not citizens.

seanmcdirmid 11y ago

Only if the math doesn't work out right (same for corporates also). There is a lot of ambiguity though...

deciplex 11y ago
Everything over the deduction (currently just shy of $100k) is taxed, minus a further deduction for tax paid to a foreign government on the earnings. Basically, you will pay the higher of US tax or local tax, on earnings over $100k. And you're right, most people don't pay. Really the bigger pain in the ass is that you even have to file. I've filed tax returns to the IRS for the last 10 years despite not paying a cent of tax to the US during that time, since my local tax is higher anyway. It's ridiculous. And come to think of it, even if they did end the double taxation, it's likely they'd keep making us file, the assholes, considering they also recently began to require that we make a yearly report to FinCEN in addition to the IRS.
- seanmcdirmid 11y ago
  So there is ambiguity: what if your Chinese company sends you to the states on a biz trip? The Chinese and U.S. governments both feel like they have exclusive taxation rights, so you just pay tax to both (and no, even the taxes paid are not deductible). Or what a of health insurance, if it counted as taxable income in your host country, is it taxable in the U.S. also? And then there are "expenses" that I have no clue about. Once you make more than $100k, you hit a lot of difference between the two systems that cause problems; you have to be very conservative in your interpretation of the ambiguity. It is all a pain, and that's not even fun ting things like American stock grants abroad.
  - geomark 11y ago
    It's messy and expensive to pay an accountant who knows how to get it right, which makes for a big disincentive to take any work abroad. Small jobs are money losers after accounting and filing costs.
    - seanmcdirmid 11y ago
      Not just messy, sometimes no one really knows what the rules are since you are trying to reconcile two completely different tax codes.
      - geomark 11y ago
        That's kind of what I meant by messy, so few people know how to resolve the two sets of rules.
- geomark 11y ago
  Actually, it's been a requirement to file a FBAR for many years if you have a foreign bank account with more than equivalent of US$10,000 in it. So that filing requirement isn't exactly new, just that it's gotten more attention lately and now with FATCA you might not get away with ignoring it. And yes, expats just love that requirement to file a tax return on your world wide income regardless of where it was earned or where you live, because as a US citizen you are the property of the US government.
  - deleted 11y ago
    [deleted]
  - seanmcdirmid 11y ago
    All the Chinese banks I use now want my Social security number! So....remember to file those fbars kids!
    - geomark 11y ago
      I thought China was not going to cooperate with FATCA. Really surprised they would agree to report on bank holdings to the US gov.
      - seanmcdirmid 11y ago
        They weren't cooperating until this year. Now they are in full cooperation. It has something to do with fox hunting and the US also agreeing to report Chinese national bank holdings to the Chinese gov.

pzone 11y ago

Yes. The reason is that corporations vote with their feet quite readily, as seen here.

muzz 11y ago
This is more like "voting with accounting". The non-accounting footprint of the corporation-- the location of its employees, its factories, etc-- is largely unchanged.
gozur88 11y ago
People would vote with their feet, too, except they're heavily penalized for doing so. If you renounce your US citizenship there's a one-time tax of 40% of your all your US assets and the US claims the right to tax you for the next ten years. Subjects, not citizens.