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It's important to note that leaving the United States to avoid future taxation is not an option for even upper middle class without serious penalty. The US is

It's important to note that leaving the United States to avoid future taxation is not an option for even upper middle class without serious penalty. The US is the only country in the world that taxes their citizens who are residing in other countries. Even if you move to another county, you still pay US taxes every year. If you'd like to renounce your citizenship to avoid that, the US has that covered. There is also an expatriation tax for people making above 120k a year or have a net worth over 2 million dollars. 30 percent of your wealth is much more than any of this being discussed. The US is in a position to enforce this, too, because all banking in the world reports to the US on their citizens' holdings. This is unique to only US citizens. As such, it's hard to even get a foreign bank to accept you as an American holder knowing the amount paperwork that causes them. Taken together, it's not a possibility for the rich to just leave if they don't like the way they are being taxed. Americans are financial prisoners of their country.

pyronik19 6y ago
Luckily, a wealth tax isn't constitutional so the socialist can stomp their feet as much as they like they are going to need to gain a lot more power than currently feasible to make it a reality.
afthonos 6y ago
This is somewhat misleading, especially the "30% of your wealth bit". What the expatriation tax does is tax you as if you had sold all your property for cash on the day you renounce your citizenship, though it does apply a $600k+ exclusion to the proceeds of the "sale". Put another way, it's the US saying "you don't get to accumulate wealth in the US and then leave without paying taxes on it." It's not great (I'm an expat, so if I ever considered relinquishing my citizenship, it might affect me), but it's certainly not as terrible as you made it sound. That said, it is pretty annoying that the US taxes you on worldwide income, independent of residence. And a lot of people who give up their citizenship do so because that plus the enforcement regimes imposed by the US on foreign banks mean that it's very hard to actually live abroad as a US citizen.
- throwaway13337 6y ago
  I appreciate the details here. You're right that it is more complicated. I had to refresh my understanding. Apparently, the income requirement rises with inflation and the last number the IRS states is 160k. The 2 million net worth does not appear to rise with inflation. Leaving the US with these amounts creates the assumption of expatriation being for tax avoidance in the US. With respect to your comment, though, all holdings are deemed as sold for the purpose of taxation at a market value so you do have to pay a very large lump sum on the date of expatriation if I understand correctly. This would be a pretty significant tax though you're right that what I stated above about expatriation was not complete. I've also been an expatriate for a number of years. Owning a company in another country without being double taxed is nearly impossible as an American citizen with new rules pertaining to foreign-owned businesses. It ended up being a lot less hassle for my finances to simply move back to the US so here I am trying to plan my permanent escape. All the information is clear as mud. It's also my understanding that getting a visa to come back to the US to visit family after renouncing your citizenship is difficult. It's like being excommunicated from a fanatical religious organization. https://www.irs.gov/individuals/international-taxpayers/expatriation-tax https://www.irs.gov/individuals/international-taxpayers/expa... https://www.law.cornell.edu/uscode/text/26/877A https://www.law.cornell.edu/uscode/text/26/877A
  - novaRom 6y ago
    I saw some stories on r/IWantOut similar to what you said about a visa to come back, but about other countries. So it's not US only.
AnimalMuppet 6y ago
> It's important to note that leaving the United States to avoid future taxation is not an option for even upper middle class without serious penalty. OK, but if the "wealth tax" applies to the upper middle class, that's a serious policy failure. (Of course, the income tax rates the upper middle class pay were originally intended only for the very wealthy, so...)

pyronik19 6y ago

Luckily, a wealth tax isn't constitutional so the socialist can stomp their feet as much as they like they are going to need to gain a lot more power than currently feasible to make it a reality.

afthonos 6y ago

This is somewhat misleading, especially the "30% of your wealth bit". What the expatriation tax does is tax you as if you had sold all your property for cash on the day you renounce your citizenship, though it does apply a $600k+ exclusion to the proceeds of the "sale". Put another way, it's the US saying "you don't get to accumulate wealth in the US and then leave without paying taxes on it." It's not great (I'm an expat, so if I ever considered relinquishing my citizenship, it might affect me), but it's certainly not as terrible as you made it sound. That said, it is pretty annoying that the US taxes you on worldwide income, independent of residence. And a lot of people who give up their citizenship do so because that plus the enforcement regimes imposed by the US on foreign banks mean that it's very hard to actually live abroad as a US citizen.

throwaway13337 6y ago
I appreciate the details here. You're right that it is more complicated. I had to refresh my understanding. Apparently, the income requirement rises with inflation and the last number the IRS states is 160k. The 2 million net worth does not appear to rise with inflation. Leaving the US with these amounts creates the assumption of expatriation being for tax avoidance in the US. With respect to your comment, though, all holdings are deemed as sold for the purpose of taxation at a market value so you do have to pay a very large lump sum on the date of expatriation if I understand correctly. This would be a pretty significant tax though you're right that what I stated above about expatriation was not complete. I've also been an expatriate for a number of years. Owning a company in another country without being double taxed is nearly impossible as an American citizen with new rules pertaining to foreign-owned businesses. It ended up being a lot less hassle for my finances to simply move back to the US so here I am trying to plan my permanent escape. All the information is clear as mud. It's also my understanding that getting a visa to come back to the US to visit family after renouncing your citizenship is difficult. It's like being excommunicated from a fanatical religious organization. https://www.irs.gov/individuals/international-taxpayers/expatriation-tax https://www.irs.gov/individuals/international-taxpayers/expa... https://www.law.cornell.edu/uscode/text/26/877A https://www.law.cornell.edu/uscode/text/26/877A
- novaRom 6y ago
  I saw some stories on r/IWantOut similar to what you said about a visa to come back, but about other countries. So it's not US only.

AnimalMuppet 6y ago

> It's important to note that leaving the United States to avoid future taxation is not an option for even upper middle class without serious penalty. OK, but if the "wealth tax" applies to the upper middle class, that's a serious policy failure. (Of course, the income tax rates the upper middle class pay were originally intended only for the very wealthy, so...)