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Secret Bitcoin billionaires to renounce their US citizenship before cashing in?
- cylinder 9y agoYou have to not only acquire a visa to reside in a low tax jurisdiction but you also have to obtain citizenship in it first. You can't become stateless.
- bjoli 9y agoSome citizenships can be bought for around €100k.
- rurban 9y agoMuch less actually. Paraguay is currently the cheapest with $5,200. See the list with no or low taxes at https://flagtheory.com/tax-free-countries/ https://flagtheory.com/tax-free-countries/
- eaandkw2 9y agoI’m not saying you are wrong, but something really annoys me when I here you can’t become stateless. It's like saying you can’t not have an owner.
- itake 9y agoI think you can be stateless, but then you're not allowed to be anywhere civilized
- empath75 9y agoBeing stateless is an awful thing — the rohinga are effectively stateless, for example.
- planteen 9y agoGood luck protecting yourself against a state, even if you are a billionaire. You have to sleep somewhere and protect your assets somehow.
- mikekchar 9y agoBeing stateless means that you are not allowed to reside anywhere without permission. While there are some drawbacks to having citizenship (depending on the country), there are no countries where it is worth your while to withdraw citizenship without having another to fall back on. All of the legal rights that most people take for granted disappear when you are not a citizen. And if you are arrested for any reason (or even no reason), nobody will come to your aide if you are stateless. Having lived a good percentage of my adult life in countries where I do not have citizenship, it's something that I keep in mind -- I do not have the rights of a citizen. I only live here as a guest on the good graces of my host. Only international agreements with the country that I come from guarantees any due process of law in the case that there is trouble. Having said that, I completely agree with you: it would be wonderful if countries would guarantee rights of people no matter their origin or political affiliations. We don't live in that kind of world, unfortunately.
- eaandkw2 9y agoI totally understand. It actually sounds a lot better when you say "you are not allowed to reside anywhere without permission." It would be nice to be able to travel around the world without restrictions.
- mikro2nd 9y agoPretty much every country has a way to grant right-of-residence visas (or even instant citizenship) to people in a position to invest a large sum of money.
- themihai 9y agoI believe Cyprus is a such country
- ddorian43 9y agoMoney buys many things. Fastests/cheapest: https://ctrustglobal.com/citizenship-by-investment/ https://ctrustglobal.com/citizenship-by-investment/ You can really go ~anywhere, example NL: https://ind.nl/en/other/Pages/Investing-in-the-Netherlands.aspx https://ind.nl/en/other/Pages/Investing-in-the-Netherlands.a...
- charlesdm 9y agoMalta and Cyprus pretty much sell passports. I believe €750,000 gets you a Maltese passport, without requiring you to spend any time in the country.
- Broken_Hippo 9y agoActually, you can. By choice, even. The US allows it: For example, you can renounce your citizenship while living on tribal land. Some countries require it before they give you their citizenship. Though it seems most folks are stateless through discrimination of different sorts or by the circumstances of their birth. https://en.wikipedia.org/wiki/Statelessness https://en.wikipedia.org/wiki/Statelessness
- jacques_chester 9y agoIt will depend on what the IRS considers to be the capital gain event. Also, this: > His or her wealth is on a Post-It and nobody else knows about it. So the person who was clever enough to buy bitcoin in 2010 renounces in 2018, becomes a citizen of a country without income tax or one that doesn’t tax foreign holdings, and then starts cashing in without the U.S. government ever becoming aware. Is pretty much a description of tax evasion. Crimes don't get canceled when you renounce citizenship. And the evidence of this crime is public and immutable. If you're in this position, congratulations! Now just suck it up and pay the capital gains, since 80% of Lots Of Money is better than 0% of Lots Of Money. Life as a free-and-clear gazillionaire is going to be better than life as a fugitive from a powerful, spiteful tax agency.
- appleflaxen 9y agoI am not a lawyer; I have no idea what the tax law says. But if the tax law says the gain event is selling the asset, then there is absolutely nothing morally wrong with exploiting this tax loophole. It's a travesty that it exists in the first place (as it was when Apple exploits Irish law), but the laws are written by the government that no individual can control. If the laws create a loophole, it's legal (obviously) and ethical to step through it.
- jacques_chester 9y agoWe're talking about deliberately hiding wealth to avoid taxation. This is hardly loophole territory. I'm Australian. I've lived in the US long enough now that I am treated as a US tax resident -- worldwide income, foreign assets, the whole shebang. I have to report and pay capital gains tax on my compulsory retirement savings in Australia, which I cannot transfer here or withdraw, because of an oversight in the US-Australia tax treaty. Yes, it's absurd. But even in the matter of a few hundred bucks it is not worth messing with the IRS. There is too much to lose. You have to pick your battles. Trying to sneak past capital gains tax illegally is bitpenny wise and pound foolish. If you don't like the tax laws, do what everyone else has to do and get elbow-deep into the messy, uncomfortable and morally challenging world of representative democracy.
- dheera 9y agoBitcoin billionaires would just pay the taxes. $500 million and a lot of time is worth WAY more than $1 billion and time wasted dealing with crap. It's way more money than I would ever know what to do with, anyway. Life with $500 million and $1 billion would not be very different. It's people with $100k of bitcoin that are more likely to want to go through troubles to not have to pay taxes. Because having $100k and $50k in the bank could be very different living situations.
- AznHisoka 9y agoThat $1 billion also quickly turned into $500 million anyway if they held off selling last year to deal with these tax issues.
- username223 9y ago> Life with $500 million and $1 billion would not be very different. Except for one important detail: membership in the Three Comma Club :-). Purchasing power has long ceased to matter for these people: money is just a way to keep score in a game. It can be traded for equally pointless status symbols like bigger yachts, tropical islands, or (recently) Mars rockets. That bitcoin billionaire would much rather turn $500 million into dollar bills and set them on fire than let them be used to fix some of America's worn-out roads and bridges.
- charlesdm 9y agoThis is just incorrect. There are generally two types of people; some hate taxes, and the higher the gain the bigger the incentive is to move abroad (this generally does not apply to Americans, as they are taxed globally). And then you have people who don't care and would pay the tax either way -- whether it's set at 10% or 35%.
- posterboy 9y agoyou're forgetting the ideology behind early participants. I wouldn't call it liberal, but that gets the point across.
- skybrian 9y agoIronically it might make more sense to avoid taxes if the money is not for you. (For example, someone who takes effective altruism seriously.) But then again they could just donate the money anonymously.
- yardie 9y agoAs an American expat my experience far more people are moving to the US for tax reasons than are moving away. Out of all the western democracies it’s still one of the lowest taxable rates. Most people surrendering citizenship aren’t doing so to avoid taxes. They are doing so to avoid double taxation. A Bitcoin billionaire is either paying the US 15-20% capital gains tax or France, for example, 45-50%. Either way, Caesar still gets his due.
- origami777 9y agoSingapore is a western (like) country and has no capital gains tax. Though as some other commenters have noted, i don’t know if the IRS would consider it legal for a US citizen to bail and not pay the tax. Edited
- dogma1138 9y agoSingapore is a tiny bubble that if you are rich you can live a luxurious life style without fearing (too much) for your safety but I would not call it western by any means.
- origami777 9y agoHmmmm. Your statement makes me think you don’t know much about Singapore. It is a tiny city, but it has a massive role in Southeast Asia. I have lived there before and lived a great life without being rich by US or Singapore standards. The national language is English. They are by all means a capitalist country. It is a modern high tech society. Very western if you ask me. The only way they aren’t that I can think of is that they are not a democracy.
- sjg007 9y agoYou can't renounce citizenship for purely tax reasons, I believe.
- origami777 9y agoThe closet incident I could remember was when a Facebook co founder did this. Looks like he still had to pay a tax https://en.m.wikipedia.org/wiki/Eduardo_Saverin https://en.m.wikipedia.org/wiki/Eduardo_Saverin
- shlant 9y agoour plan is the MM2H Visa: http://www.mm2h.gov.my/index.php/en/ http://www.mm2h.gov.my/index.php/en/ It requires a large initial deposit and proof of funds, but all foreign-sourced income is tax free. Malaysia is very centrally located in SEA, has great weather year round, very modern, great food.
- pentae 9y agoI was considering it a few years back myself, but then I went and spent some time in Malaysia and couldn't fall in love with it. I ended up in Thailand and much prefer it here. I recommend spending some time in Malaysia before you take up the MM2H program.
- shlant 9y agoWe actually did Thailand first and are just about to leave Chiang Mai after spending a total of 2 years here. We have been to KL twice and Penang twice. We will be spending a couple months in Penang this summer and then a few months in Kuching to narrow down where we want to settle. So far have not found any deal breakers, and the Durian/fruit situation makes it VERY enticing. Chiang Mai was top of the list for a while (we have done most of the rest of Thailand), but considering the Thai Elite Visa does not give good ROI and burning season makes the North awful for 3-4 months of the year, Thailand is no longer a top pick. Also we have kind of outgrown it at this point.
- everdev 9y agoAre there still Bitcoin billionaires after the 50%+ drop?
- bradleyjg 9y agoAs the link in the post says, there is an exit tax in place to prevent just this. One of the qualifying prongs to be subject to the tax is "Individuals with a net worth of US$2 million or more as of the expatriation date." That's not liquid net worth, or realized net worth, it's just plain old net worth. If you are subject to the tax, all your assets are deemed sold as of the date of expatriation as income tax on the phantom gains are owed. Of course someone could hope to stay off the radar or move to a non-extradition country and try to thumb their nose at the USG, but there's a big difference between a loophole existing and the fact that enforcement isn't always perfect.
- posterboy 9y agoThis is illusionary, as billions worth of bitcoin couldn't be cashed out at once. How do they take the potential for crash into account. Also, is intellectual property also taxed, like all the mssing
- bradleyjg 9y agoThis tax provision is not designed to be friendly. It's designed to deter what the US considers bad behavior. You can disagree that it's bad behavior, you can call the law is unfair, immoral, unreasonable, illogical -- whatever. Arguing against those positions is not the point of the post I made. My point was to point out that there isn't any loophole in U.S. that would allow a cryto billionaire to avoid capital gains taxes via the expedient of renouncing citizenship. People can try anyway and see what happens, but there's a non-zero risk that they'll be chased to the ends of the earth by the IRS and DOJ.
- posterboy 9y agoWell, at least they can't come later and claim the price increased twofold in the meantime.
- ynniv 9y agoDoes there need to be even more documentation of tax avoidance and money laundering schemes for us to realize that no one is going to renounce their citizenship over taxes?
- soneca 9y agoI think the "Bitcoin billionaire" is more of mythical figure than real people. To be a Bitcoin billionaire, even a multimillionaire you had not only buy thousands of Bitcoin early on, you had to also: - Hold when it was valued at USD10 (it was a milestone that generated a lot of buzz that it was a peak value) - Hold when it was valued at USD100 (it was a milestone that generated a lot of buzz that it was a peak value) - Hold when it was valued at USD1000 (it was a milestone that generated a lot of buzz that it was a peak value) - Not lost the password of a negleticble amount of money stored as virtual currency that no one quite understood in a virtual wallet you are not sure where to keep. - Not be hacked in several ways, included in the biggest exchange of the early days Is anyone guess how many people are left after all that. My guess is that I would count in one hand
- pwinnski 9y agoI got bit by your #4 scenario, and I know I'm not the only one!