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Record number of Americans dump U.S. passports
- hellbanner 11y ago"But it's illegal to give up U.S. status to dodge paying a tax bill -- and doing so doesn't mean authorities won't come looking for back taxes." .. how exactly would that be pursued?
- hellbanner 11y agoMETA: can someone please explain HN's upvote algorithm ?New account, 3 points and frontpage. Earlier one of HN staff said that accounts that posted high-ranking content got upvoted faster. Now I'm wondering if the upvotes are weighted by who gives them?
- rurban 11y ago"tired of dealing with complicated tax paperwork headache" really? This your spin on the only other country besides Ethopia which does double taxation on its citizens? Shame on CNN
- pigscantfly 11y agoThe other country is Eritrea, actually (neighbors and in a state of frozen conflict with Ethiopia but different country).
- rurban 11y agoOuch, sorry. You are right. I mixed it up
- _delirium 11y agoThere's no double-taxation, since you can 100% deduct any foreign taxes paid. I paid no U.S. tax in the years I lived in Denmark for this reason; I wasn't double-taxed. Since the U.S. has one of the lower federal tax rates of developed countries, and expats don't have to pay state or local taxes, really only people who live in tax havens end up having to pay U.S. taxes (by raw number, I would guess the largest number are expat oil-company employees living in one of the low-tax gulf states). So it mainly boils down to a tax headache, which is significant. I didn't pay any U.S. tax, but I had to file a whole bunch of documents.
- whubr 11y agoThis is true for regular income tax etc but you can still get stung on capital gains. See, e.g http://m.taxesforexpats.com/articles/expat-tax-rules/capital-gains-for-expats.html http://m.taxesforexpats.com/articles/expat-tax-rules/capital... I'm not an ex pat, but I have dual citizenship. I've never lived or earned money in the US but I still have to offer my income and declare my bank balances to the IRS every year - the principle is enough to make me want to return my passport, never mind the paperwork.
- davidw 11y ago> you can 100% deduct any foreign taxes paid. That's not correct, actually. It's 100% up to some number that's fairly high for a European salary. And like you say, it's a big hassle.
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- mikeyouse 11y agoThis article is posted every single year without fail[1], the number of people giving up passports is absolutely inconsequential. This number is further minimized since the US has one of the lowest tax rates to begin with, so the vast majority of dual-citizens owe 0 in additional tax. [1] - https://www.google.com/#q=site:https:%2F%2Fnews.ycombinator.com%2F+americans+passport https://www.google.com/#q=site:https:%2F%2Fnews.ycombinator.... I'm not sure what the benefit to these repeated articles is.. Anti-tax fervor? Some country-specific PR?
- hapless 11y agoIn 2015, they completed the phase-in of new reporting requirements for ex-pats. Some of which are quite onerous. Among other things, you will need special banking services in your new home country, because foreign banks do not necessarily make FACTA reports for all accounts. Some won't even open accounts for Americans.
- ma2rten 11y agoThe vast majority of dual-citizens owe 0 in additional tax. That's not the point. It's about all the paperwork you have to do. I live in the US, but I am not sure I would want to become a US citizen for this reason.
- parennoob 11y ago> It's about all the paperwork you have to do. I'm curious -- is there actual paperwork, or is it possible to do it electronically? If yes, why aren't there programs that do it for you? Would like to hear comments from a US expat. I wonder if there's an opportunity in simplifying this. I'm guessing most expats would rather pay, say $50 for a company to do this paperwork on their behalf? Or do H&R / Intuit have that market cornered as well?
- hapless 11y agoRenouncing your U.S. citizenship for tax reasons technically makes you ineligible to enter the United States for any other reason. It is potentially a cause for denial on any class of visa. I wonder how many of these ex-pats realize that they may never be able to visit again...
- gozur88 11y agoIs it a cause for denial in and of itself, or does it just mean that you apply for a visa like other nationals of the country in which you reside? And how do they know you renounced "for tax reasons"?
- equalarrow 11y agoIronic when you think about how this country was founded on tax revolt. Seems like a completely silly law.
- jtheory 11y agoNote to self: if I renounce my US citizenship, do NOT check the box saying "I'm doing this for tax reasons". Seriously, this is apparently real law, but according to a "citation needed" bit in wikipedia, has never been enforced. > The 1996 law included a provision to bar entry to any individual "who officially renounces United States citizenship and who is determined by the Attorney General to have renounced United States citizenship for the purpose of avoiding taxation by the United States."[47] There is no known case of this provision, known as the Reed Amendment, having ever been enforced.[citation needed]
- JoeAltmaier 11y agoThe US sets a record for issuing passports every year. Logically, the number not renewed ("dumped") would be higher every year.
- ma2rten 11y agoThis is talking about giving up your citizenship, not about passport renewal.
- JoeAltmaier 11y agoSee first comment.
- dragonwriter 11y ago4,279 out of ~319,000,000 may be a "record number", but its so small as to be negligible.
- fabulist 11y agoThe author is arguing that the rate at which it was increasing (18x between 2008 and 2015) and the persistence of the trend (every year for the past three years) as well as that the most major contributing factor (tax law) is unlikely to change made this newsworthy, not the proportion of the population. Edit: And I don't find it to be a moving counter argument. Additionally, I'm not sure its a good apples-to-apples comparison as the phenomenon seems to be prevalent among US ex-patriots, rather than the entire population. Edit2: It turns out that it's hard to know how many americans live overseas[0], but it seems like 6.8 million might be a good guess. 4.2k / 6.8m is still only about .0006% though. [0] http://www.migrationpolicy.org/article/counting-uncountable-overseas-americans/ http://www.migrationpolicy.org/article/counting-uncountable-...
- toothbrush 11y ago> ex-patriots Nitpick: the word you're looking for is “expatriates”. Although this one made me smile :).
- fabulist 11y agoIt's too late to edit my post, but thank you for pointing it out, I was always perplexed by that.
- officialchicken 11y agoYes, as absolute numbers. But how many of those are "high net worth" individuals, who may (or may not) contribute considerably more in taxes each year than the average tax payer? I believe, "Is there an exodus of people with access to large amounts of capital", is the real question with various long-term implications.
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- joolze 11y agoGod, that graph with the disappearing data is annoying. "Hey guys, what's a great way to show time-series, numerical data in a concise and easy to understand way?" "How about a movie, Bob?"
- whybroke 11y agoThe conjecture by CNN that it is primarily about taxes is not only unfounded but absurd. Far more Americans immigrate to feel freer, safer, better protected, for a higher quality of life or for a richer culture. Anecdotally, I alone know four Americans who permanently immigrated to Europe. None for tax reasons.
- thieving_magpie 11y agoI'd say it's conjecture that "far more Americans immigrate to feel freer, safer, better protected". Where's that source? Where are they going that's "freer" and "safer". I'm not saying there aren't areas that are more free, however the hell you define that. There might even be safer places, although that's a ridiculous generalization of the United States. It's all relative to your race, religion, location, economic situation. That sounds absurd.
- davidw 11y agoThe homicide rate in the US is certainly higher than many places in Europe: https://en.wikipedia.org/wiki/List_of_countries_by_intentional_homicide_rate https://en.wikipedia.org/wiki/List_of_countries_by_intention... That wasn't the chief reason I lived there though. The health care system in the US is a godawful mess. OTOH, the US is a pretty wealthy place with lots of good stuff going on. I'm sure everyone has their own reasons.
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- thieving_magpie 11y agoThe homicide rate is higher than Europe, if that's really the gold standard for you. As you know, the US is a pretty big place. We don't get a lot of murders out here in Montana. Healthcare's a pain, sure. Still there's no evidence that any meaningful amount of people are leaving for the bastion of freedom that is Europe, which I find laughable. Ask an Arab around Paris how safe they feel.
- mauvejames 11y agoI'm looking at moving to the US in the near future, and some of the implications of the tax system are pretty startling. For example, I have contributed to a small retirement plan which grows tax free here in the UK, and the US/UK tax treaty ensures that it will continue to grow tax-free once I've moved. So far, so good. However, there is a body of professional opinion stating that such plans count as a "foreign grantor trust" under US law, which has specific reporting requirements that the plan itself is required to comply with, and I am penalised if it fails to do so. The penalty scale starts at $10,000 and goes up from there. Of course, this body of opinion is being pushed by tax advisors who have a vested interest in both making things as complicated as possible, and who are inclined to a conservative view of the law given their responsibilities to their clients. The IRS hasn't clearly stated one way or another whether UK pension plans are subject to this reporting -- but have specifically exempted the Canadian equivalent. This is just one frustration of several: becoming a US resident will force me to close some of my financial accounts with institutions which want to avoid FATCA hassles, I'll be limited in which investment choices I can make, and when I eventually take my pension benefits the US will claim tax on the tax-free lump the UK provides if I'm still a resident or have taken citizenship. For those who have emigrated permanently -- or who acquired US citizenship at birth without ever living there -- I can well understand why even those without significant income or assets would want to renounce their citizenship.
- wwalser 11y agoI'll speak up since I'm an American living over seas and I feel like several of the comments currently ranking highly on the page either miss the point or make factually inaccurate statements. Note that if they miss the point, it's very unlikely that they choose to miss the point. More likely they have been misinformed by poorly constructed articles like this one. I was born in the US but have been living and making most of my income over seas for five years. I'm actually relocating back to the US in two weeks (yey, welcome back :D). On the one hand I'm sad to leave the place that I currently live since, for me, it's better in nearly every way than most US cities. It's cleaner, I've lived well without a car, walked/cycled significantly more and I've visited nearly every crevice of this city and never felt unsafe due to a combination of cultural and legal differences. I pay slightly higher taxes than I would in the states. On the other hand, I'm very excited about having less paper work to do for a few years. That's all context for my view: For me, it's not about the amount of money I pay in taxes. I'd call myself upper middle class so far as income goes and I've not had to pay US tax for the past five years. I will have to this year because of some options that I exercises but generally I'm happy to pay US tax. The burden, the thing that's made me consider renouncing, is the reporting. Let's start with the basics, I have to do my taxes in two places. This involves finding an accountant both in the US and over seas who is capable of doing taxes for someone who is a special type of tax resident. Every accountant will say that they are competent but I have found their claims mostly unfounded. One can pay someone who specializes but that always involves paying a significant premium. In addition to doing taxes in two places I also have to fill out a separate form listing all assets worth > $10k and in which I have >= 50% ownership. This includes bank accounts, houses and any other investments. This is particularly onerous when one marries to a non-US resident. Suddenly the US government knows a lot about them. Do they have any bank accounts with more that $10k in them? Do they own any property? Any investments? Because if they do, by most countries standard you probably suddenly own 50% of it. On top of all of that, as of 2015 I also have to ensure that my bank does a specific type of reporting. I'm lucky in that where I am Americans are numerous enough to make this worthwhile for the banks but this is not the case everywhere. Some banks in foreign countries have started refusing US customers. Comparing the number of people renouncing citizenship to the total population of the US misses the point. It's better to compare against the number of americans living and working over seas. From a quick search around the internet the number of expats looks to be ~7M. It's still a very small fraction and not something that I expect law makers to pay attention to. The reason I think this comparison makes sense is because it is worthwhile to consider whether or not we want to keep connections to our diaspora. The issue from a governance perspective doesn't seem to be a loss of tax revenue but instead a non-reversible export of talent. In a flat world I have doubts about the US's ability to maintain expertise in all of the area that will fuel future economies. That being the case, I think it would be good for the US to make it simple and straightforward for Americans to go to other places where they can become experts and return home for further work. I don't expect the US's policy to change. In fact, if the number of people renouncing continues growing more rapid I wouldn't be surprised to see the US use more aggressive rent seeking measures. This seems obvious given recent additions to the reporting requirements placed on expats and higher fees associated with renouncing.
- xbmcuser 11y agoI don't understand one thing about us tax law. US corporations avoid paying taxes by using forieng subsidiaries where as Americans are still taxed despite the fact that they are not even living in the US.