11 ms·
This is not a tax dodge. There is no way to dodge taxes as a US citizen by moving abroad, the US is the only country in the world with a real global taxation sy
by pembrook 6y ago
This is not a tax dodge. There is no way to dodge taxes as a US citizen by moving abroad, the US is the only country in the world with a real global taxation system.
EDIT
further information I posted below:
The US has the unique position of being able to actually enforce this due to the fact the USD is the reserve currency of the world and every country needs to stay on the good side of the US Treasury to transact in the global economy. FATCA requires all foreign financial institutions to report on any US citizen assets.
In fact, the laws are so strict, they make living abroad as an honest middle-class expat a total nightmare. I have friends who cannot find a single bank in their country that will work with them because of the reporting requirements of working with US citizens. They cannot save in foreign banks and they cannot invest either due to the US penalizing foreign Mutual fund/ETF purchases by private citizens.
- hawk_ 6y agoUhm acquiring another citizenship to give up American can totally be a tax dodge. The key is giving up the American one.
- Kranar 6y agoSort of. Giving up U.S. citizenship comes with an expatriation tax [0] on all assets including foreign assets. The purpose of this tax is to deter people from renouncing citizenship and then selling off assets while avoiding paying capital gains on them. So expatriation can protect you from paying taxes on capital gains from future assets, but it doesn't do much to protect you from capital gains on assets you currently own. [0] https://www.irs.gov/individuals/international-taxpayers/expatriation-tax https://www.irs.gov/individuals/international-taxpayers/expa...
- 1over137 6y agoHis step 2 could then be to renounce his US citizenship.
- garmaine 6y agoIn which case you pay an "exit tax" equivalent to the tax hit from liquidating all your assets, e.g. capgains on all held stock. Renouncing citizenship never works as a tax dodge, unless you have some reason to expect large future gains in your assets that aren't reflected in their current market prices.
- jedberg 6y agoLike what Facebook's cofounder did right before the IPO.
- gamblor956 6y agoUnlike Schmidt, Saverin was not born a U.S. citizen. He only became a U.S. citizen when his parents emigrated to FL during his teenage years. Also, unlike Schmidt, Saverin has spent most of his adult life actually living outside of the U.S. and had been living outside of the U.S. for years before finally renouncing his citizenship.
- gnicholas 6y ago> Renouncing citizenship never works as a tax dodge, unless you have some reason to expect large future gains in your assets that aren't reflected in their current market prices. It also could make sense if you expect future income tax rates to be much higher, or if you expect new taxes (e.g., wealth taxes) to be enacted.
- petr_tik 6y ago"The only country" that you know of. According to this, https://en.wikipedia.org/wiki/International_taxation#Taxation_systems https://en.wikipedia.org/wiki/International_taxation#Taxatio..., Hungary, Myanmar have the same as the US. Spain and Turkey and several others have it for some citizens.
- pembrook 6y agoNone of those countries are able to actually enforce that however, in the same way the US can. Myanmar, Turkey, etc. do not have the power to force foreign banks to report on all of their expat citizens.
- mirekrusin 6y agoYou can declare you no longer want to be US citizen.
- marmaduke 6y agoIt costs about 3k USD
- deleted 6y ago[deleted]
- medium_burrito 6y agoand 40% of assets over $2m. Thanks, Obama :(
- xyzzyz 6y agoWhat 40% are you talking about?
- medium_burrito 6y agoHere it says 23.8%: https://1040abroad.com/faq/renouncing-u-s-citizenship/ https://1040abroad.com/faq/renouncing-u-s-citizenship/ I could swear it was 40%, but I'm too lazy to look it up more. Suffice it to say Uncle Sam gets his pound of flesh and more.
- wtn 6y agoThe easiest way is to move to Puerto Rico.
- vmception 6y agoBut then you have to live in Puerto Rico. Even with the possibility of traveling all the time as long as you aren't on the mainland for 6 months, Puerto Rico is just not attractive enough. Everyone I know that was trying to take advantage of Act 60 (previously Act 20 and Act 22) all left when the COVID pandemic started. It was just too clear that the infrastructure was too poor.
- wukerplank 6y agoSo, what is this? His passion for the Mediterranian? Reconnecting with his ancestor's roots? BTW: All tax systems are draconian, at least to the middle class. Not to people who can afford creative lawyers.
- pembrook 6y agoMy guess, ease of movement in the EU for him and his kids. When you've got Eric Schmidt money, you probably want to have the ability to live and vacation anywhere you want, whenever you want. Otherwise you're limited to 90 days in the EU at a time as a tourist.
- throwawayay02 6y agoMany EU countries sell citizenship in exchange for very modest investments. Cyprus, however, is a very suspicious choice.
- zajio1am 6y agoMany EU countries sell permanent resident status, not citizenship.
- dharma1 6y agoThere are many EU countries that have some type of golden visa, but for a citizenship Cyprus is the fastest one - AFAIK you can get it in 6 months if you invest $2m. The other countries require years of stay for citizenship. I doubt this has much to do with tax, or that he is about to renounce his US citizenship. It just makes it easier to stay and live in the EU (with family) for extended periods of time, nice extra passport to have if money is no object. I think Cyprus has come under fire for this so unsure how long it will last.
- pingec 6y agoOh really? Which ones? I'd only think of Cyprus and Malta
- 6y ago
- dragonwriter 6y ago> There is no way to dodge taxes as a US citizen by moving abroad Well, no way to "legally avoid"; "dodge" is broader, and there are probably many ways of dodging taxes that are easier if the institutions you deal with in your daily life aren't subject to US jurisdiction and regulations designed to expose tax evasion to US authorities. Also, typically you want to have at least one national citizenship, so if you are planning to legally avoid US taxes by renouncing US citizenship, getting some other citizenship is usually step one. Of course, there are other reasons it is convenient to have citizenship in an EU member state, even if you are a US citizen, so its not necessarily step 1 of a tax dodge.
- pembrook 6y ago> aren't subject to US jurisdiction Every single financial institution that transacts in US dollars (so, all of them) is subject to the power of the US Treasury. So many people want to believe all the rich are hiding their money abroad. For American citizens, this simply isn't true and hasn't been for a decade or more. It's not feasible. Also, American capital gains taxes (the ones rich people mostly pay) are extremely low compared to most places in the EU anyways. Its not worth the risk even if you can find a nefarious organization to help you do it.
- esarbe 6y agoDid you somehow miss the whole Panama papers shebang? Yeah, the rich do hide their money abroad.
- ChrisLomont 6y agoThere was a surprising low number of Americans in those documents, which date back into the 1970s. In 2010 there were significant changes in US law which effectively removed places like Panama papers from happening again moving forward. These are the reasons the poster above you stated the decade limitation. He is correct.
- justincormack 6y agoyou still have to pay exit taxes on renouncing, so not clear this is a good way of avoiding tax.
- mirekrusin 6y agoHey what happened to this idea they had to create google country? Didn’t fly?
- part1of2 6y agoIt becomes a tax dodge only when you renounce your US citizenship, which some millionaires have done already, such as Eduardo Saverin
- ProAm 6y ago> This is not a tax dodge I bet he is well into only paying capital gains territory. Like Warren Buffet who said he pays less than his secretary [1] [1] https://money.cnn.com/2013/03/04/news/economy/buffett-secretary-taxes/index.html https://money.cnn.com/2013/03/04/news/economy/buffett-secret...
- coredog64 6y agoBuffet says he pays a lower rate than his secretary, not a lower amount.
- ProAm 6y agoAbsolutely. Im just saying Schmidt isn't an idiot and probably has his taxes in order. This Cypress citizenship might be an effort to evade taxes but I would be surprised if that was the major reason.
- goatinaboat 6y agoThis is not a tax dodge. There is no way to dodge taxes as a US citizen by moving abroad, the US is the only country in the world with a global taxation system. It’s not to avoid criminal justice either as Cyprus is a lapdog to the US for extradition, same as the UK is.
- jb1991 6y ago> In fact, the laws are so strict, they make living abroad as an honest middle-class expat a total nightmare. I have friends who cannot find a single bank in their country that will work with them because of the reporting requirements of working with US citizens. What? This is not true at all. Getting a bank in most other countries is not hard at all and certainly not a "nightmare." As a U.S. citizen you must still file taxes and an FBAR that merely reports your assets in foreign accounts, but I've never seen a bank have any problems opening an account for an American, in any country.
- beagle3 6y agoThen you didn’t look. There’s some rule from the ‘1940s which says only a SEC-licensed broker can manage securities for a US tax payer. It was mostly ignored outside the US until 2010 but since then, together with FATCA, is very much enforced. Most of my US expat friends are lucky in that their local banks will let them have a checking account and sometimes even a savings account, but no other services are available to them. (And no local brokers would touch them with a 10-feet pole).
- jb1991 6y ago>Most of my US expat friends are lucky in that their local banks will let them have a checking account No, it's not luck. Getting a bank account is not the chore you are making it out to be. A securities broker for trading stocks -- that I have never tried -- but when it comes to opening a regular bank account, there are no major hurdles whatsoever. Your expat friends, assuming they are living legally in another country, got bank accounts because it is easy to do, not because they were lucky. The one exception to this would be those living in another country without any formal residence permit, then in that case, it would be problematic in any country since you are technically not allowed to actually live there and many countries do not allow that for citizens of other countries (not just the U.S.). I've lived all over the world and I have never known a single person in the American expat community who was denied opening a regular bank account anywhere -- again, assuming they were legally living in the foreign country.
- 6y ago
- polote 6y ago> they make living abroad as an honest middle-class expat a total nightmare There was a guy a few days who wrote an article about giving up on his US nationality exactly for that purpose https://larrysalibra.com/goodbye-usa/ https://larrysalibra.com/goodbye-usa/ (found on https://hnblogs.substack.com/p/hn-blogs-51120 https://hnblogs.substack.com/p/hn-blogs-51120)
- seppin 6y agoHow on earth did a Republican administration just pass a massive tax reform bill and not address this?
- dundarious 6y agoI'm sure Erich Schmidt has access to resources not available to your friends. There is absolutely the potential for a tax angle to this application, perhaps involving creating business entities in Cyprus to avoid the IRS's reach. That is of course just my suspicion and I could be wrong, but I think my suspicions are reasonable enough to dispute the strength of your claims ("There is no tax dodge. There is no way to dodge...")
- pembrook 6y agoIt's amazing to me how strongly people want to believe there's some magical way that rich Americans are avoiding taxes by hiding money in exotic locales. This was possible in the past for Americans, but it doesn't make sense anymore. That's the truth. The secretive Swiss banks and numbered accounts you read about in adventure novels as a kid are all reporting on US citizens now. It doesn't matter how much resources Eric Schmidt has, the US government has more resources and power than Eric Schmidt. Especially given he's a widely known public figure, he'd be the perfect target of any investigation. US taxes are already extremely favorable to the rich. Do you seriously think he'd risk his freedom and reputation over something so stupid?
- keiferski 6y agohttps://en.wikipedia.org/wiki/Panama_Papers https://en.wikipedia.org/wiki/Panama_Papers
- tuatoru 6y agoAlso, https://www.icij.org/investigations/fincen-files/global-banks-defy-u-s-crackdowns-by-serving-oligarchs-criminals-and-terrorists/ https://www.icij.org/investigations/fincen-files/global-bank... Banks saying one thing and doing another.
- hobby-coder-guy 6y agoBullshit
- deleted 6y ago
- m463 6y agoYou should look into leaving the united states without leaving the united states. https://www.gq.com/story/how-puerto-rico-became-tax-haven-for-super-rich https://www.gq.com/story/how-puerto-rico-became-tax-haven-fo... Also, didn't california just pass a CEO tax? Does it apply to him?
- a_bonobo 6y agoCould he retire from Google, take his money, and resign his US citizenship? That's what Tina Turner did, she is now a Swiss national, she does not pay taxes to the US anymore https://en.wikipedia.org/wiki/Tina_Turner https://en.wikipedia.org/wiki/Tina_Turner
- michaelrosmer 6y agoThis in itself is not a tax dodge but if he wanted to this would set him up to be able to renounce his US citizenship and still have a good passport much like Edwardo Saverin and others.