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Other option for people who don't like it: leave the country. You wouldn't know it listening to most people complaining but unemployment insurance was not some

Other option for people who don't like it: leave the country. You wouldn't know it listening to most people complaining but unemployment insurance was not something implemented in 2008, it goes back to the 1930s. That should have been plenty of warning for you to find a place with a tax rate and entitlement system to your liking. Sorry, there aren't a lot of options in the 1st world without taxes and entitlments, but that must just be a coincidence.

srdev 15y ago
I'm conflicted on the idea of leaving the country as a solution. Its not enough to simply live and work in another country -- you're still liable for taxes. You have to fully expatriate and renounce your citizenship. This is often very difficult and time-consuming to do, and near-impossible if you're not in a skilled line of work.
- splat 15y ago
  Even if you do, your total assets are taxed. If you're rich enough, you'll lose ~35% of what you have if you decide to expatriate.
  - srdev 15y ago
    Ah, I was using the term incorrectly. I meant that one must renounce their citizenship in their birth country to be completely free of taxation. Expatriation can be hard. Renouncing birth citizenship extremely difficult if not impossible in some situations (catch-22s, etc)
    - nirvana 15y ago
      For US citizens, to renounce you need to prove that you've paid all income taxes over the previous 5 years, pay an excise taxes on all assets being taken out of the country (which I think is %1-2%) and -- here's the kicker-- get permission of the federal government to be allowed to renounce your citizenship. If they think your earning power is significant enough, they can deny you by claiming your "renouncing to avoid taxes". However, if you live outside the USA full time, I believe that the personal exemption on income is around $80,000. So even if you're making millions, if you pay yourself $80k or less, you can avoid income taxes in the US on your worldwide income. Thus, holding stock in a startup that is appreciating avoids taxation, however, if you ever sell that stock, then you'd be realizing the gain and run into the issue. PS - of course you're right that some countries simply won't allow you to renounce, and that might even end up being the case for some US citizens. I'm just giving the information I've been able to gather on this topic, not really disagreeing with you.
- gyardley 15y ago
  I'm still a Canadian citizen, but because I don't live in Canada, don't have assets in Canada, and don't earn income in Canada, I don't pay taxes in Canada. As far as I know, being taxed on worldwide income is just an American thing.
  - burgerbrain 15y ago
    It is just an American thing. And it's a great example of why "if you don't like it, leave it" is bullshit particularly when spoken in the context of American politics.
    - philwelch 15y ago
      If you don't like it, leave it and then renounce your citizenship.
      - burgerbrain 15y ago
        Clearly you have not been paying attention.
nirvana 15y ago
I think "like it or leave it" isn't really a useful response, and it takes the discussion into the realm of politics. I'm not going to debate the politics, but since I did "leave it", I thought it might be enlightening to share a bit of my experience. (Leaving the USA had nothing to do with unemployment insurance.) It is not difficult to find first world situations that don't involve burdensome taxes or regulations. One strategy would be to domicile your business in a country that doesn't tax worldwide corporate income, only local income. Believe it or not, most countries meet this criteria. Banking in a second country and living in a third, where the latter doesn't tax your worldwide income (like the USA does, but again, the US is the exception rather than the rule) would result in you effectively living tax free. (A US citizen, owing for their worldwide income would have to pay taxes on the amount earned above the living-aboard exemption.) Further, even if we decided that we wanted to bring our business back into the USA, the USA does not want us to be located here... because at some of our founders are not US citizens and the hassle and cost of importing a foreign entrepreneur to the USA is much higher than it is for many other competitive countries.[1] There are first world countries that, believe it or not, are welcoming to entrepreneurs who want to relocate there. So, while I'm not going to go into specifics because if I did, the possible combinations are more than could be discussed here, I can say with first hand experience that there are many, many options for doing this. [1] Just coming in for a short term stay was more ordeal than I like to put up with, and more than we've experienced with any other country.
- krschultz 15y ago
  I don't throw out the 'love it or leave it' for 99% of posts on almost all issues, but when a person equates taxation with theft, it's just a lost cause. We can and should debate what to do with our tax money, but fundamentally the system always ends up in a state where some people are unhappy with some of the spending. There is no way to reconcile what those on the far right and far left want. We end up somewhere inbetween and that means at the end of the day some people are unsatisfied. Those people still need to pay taxes or the system falls apart. For those people there are two solutions. Convince people to agree with you and change the policy, or leave the country. (Of course another option is to just whine about it.)
temphn 15y ago
Singapore? Hong Kong? Your underlying assumption is that the US can increase taxes and regulations indefinitely without consequence. But capital and talent are more mobile than ever before. Record numbers have been renouncing citizenship in recent years (Google it). Most likely when the current flow of expatriation becomes a flood, though, there will suddenly be restrictions imposed on exit: an asset tax, a waiting period, anything to stop the talented from leaving. We've seen this movie before in East Germany, 1961. Remains to be seen whether the US government will do more than expropriate 50% of your assets (2008's exit tax) to deter you from leaving.
- anigbrowl 15y ago
  More people are abandoning US citizenship because a rule change in 2008 has made it simpler, cheaper, and less restrictive to do so: http://economix.blogs.nytimes.com/2011/06/16/more-americans-are-renouncing-citizenship/ http://economix.blogs.nytimes.com/2011/06/16/more-americans-...
  - temphn 15y ago
    It's by no means cheaper. It used to be free to leave. Now they expropriate 50% of your net worth. Massive shift in US policy. Used to be hard to enter the US. When they make it hard to leave, that is a terrible sign. Legal Background: www.mwe.com/index.cfm/fuseaction/publications.nldetail/object_id/3892307d-1b8e-4636-ba2b-f58609256689.cfm Color commentary: www.davidtanzer.com/david_tanzer_articles.asp?article=exit+tax+in+america "The Exit Tax works as though you have died. It’s calculated similarly to the Federal Estate Tax. It requires American taxpayers to identify all assets and debts to determine their net worth, and then to compute a theoretical gain or loss on all assets. The Exit Tax applies to anyone with a net worth of more than $2 million. It also applies to a taxpayer whose average U.S. income tax liability for the past five years is above approximately $124,000. Net worth is without inflation adjustment, which means increasingly more individuals will fall victim. It treats all property as being sold, and all deferred income retirement accounts as being distributed. There is an exclusion of $600,000 for any unrealized gain or deferred income. Then a 30% withholding tax is automatically withheld before deferred income accounts are distributed."

srdev 15y ago

I'm conflicted on the idea of leaving the country as a solution. Its not enough to simply live and work in another country -- you're still liable for taxes. You have to fully expatriate and renounce your citizenship. This is often very difficult and time-consuming to do, and near-impossible if you're not in a skilled line of work.

splat 15y ago
Even if you do, your total assets are taxed. If you're rich enough, you'll lose ~35% of what you have if you decide to expatriate.
- srdev 15y ago
  Ah, I was using the term incorrectly. I meant that one must renounce their citizenship in their birth country to be completely free of taxation. Expatriation can be hard. Renouncing birth citizenship extremely difficult if not impossible in some situations (catch-22s, etc)
  - nirvana 15y ago
    For US citizens, to renounce you need to prove that you've paid all income taxes over the previous 5 years, pay an excise taxes on all assets being taken out of the country (which I think is %1-2%) and -- here's the kicker-- get permission of the federal government to be allowed to renounce your citizenship. If they think your earning power is significant enough, they can deny you by claiming your "renouncing to avoid taxes". However, if you live outside the USA full time, I believe that the personal exemption on income is around $80,000. So even if you're making millions, if you pay yourself $80k or less, you can avoid income taxes in the US on your worldwide income. Thus, holding stock in a startup that is appreciating avoids taxation, however, if you ever sell that stock, then you'd be realizing the gain and run into the issue. PS - of course you're right that some countries simply won't allow you to renounce, and that might even end up being the case for some US citizens. I'm just giving the information I've been able to gather on this topic, not really disagreeing with you.
gyardley 15y ago
I'm still a Canadian citizen, but because I don't live in Canada, don't have assets in Canada, and don't earn income in Canada, I don't pay taxes in Canada. As far as I know, being taxed on worldwide income is just an American thing.
- burgerbrain 15y ago
  It is just an American thing. And it's a great example of why "if you don't like it, leave it" is bullshit particularly when spoken in the context of American politics.
  - philwelch 15y ago
    If you don't like it, leave it and then renounce your citizenship.
    - burgerbrain 15y ago
      Clearly you have not been paying attention.

nirvana 15y ago

I think "like it or leave it" isn't really a useful response, and it takes the discussion into the realm of politics. I'm not going to debate the politics, but since I did "leave it", I thought it might be enlightening to share a bit of my experience. (Leaving the USA had nothing to do with unemployment insurance.) It is not difficult to find first world situations that don't involve burdensome taxes or regulations. One strategy would be to domicile your business in a country that doesn't tax worldwide corporate income, only local income. Believe it or not, most countries meet this criteria. Banking in a second country and living in a third, where the latter doesn't tax your worldwide income (like the USA does, but again, the US is the exception rather than the rule) would result in you effectively living tax free. (A US citizen, owing for their worldwide income would have to pay taxes on the amount earned above the living-aboard exemption.) Further, even if we decided that we wanted to bring our business back into the USA, the USA does not want us to be located here... because at some of our founders are not US citizens and the hassle and cost of importing a foreign entrepreneur to the USA is much higher than it is for many other competitive countries.[1] There are first world countries that, believe it or not, are welcoming to entrepreneurs who want to relocate there. So, while I'm not going to go into specifics because if I did, the possible combinations are more than could be discussed here, I can say with first hand experience that there are many, many options for doing this. [1] Just coming in for a short term stay was more ordeal than I like to put up with, and more than we've experienced with any other country.

krschultz 15y ago
I don't throw out the 'love it or leave it' for 99% of posts on almost all issues, but when a person equates taxation with theft, it's just a lost cause. We can and should debate what to do with our tax money, but fundamentally the system always ends up in a state where some people are unhappy with some of the spending. There is no way to reconcile what those on the far right and far left want. We end up somewhere inbetween and that means at the end of the day some people are unsatisfied. Those people still need to pay taxes or the system falls apart. For those people there are two solutions. Convince people to agree with you and change the policy, or leave the country. (Of course another option is to just whine about it.)

temphn 15y ago

Singapore? Hong Kong? Your underlying assumption is that the US can increase taxes and regulations indefinitely without consequence. But capital and talent are more mobile than ever before. Record numbers have been renouncing citizenship in recent years (Google it). Most likely when the current flow of expatriation becomes a flood, though, there will suddenly be restrictions imposed on exit: an asset tax, a waiting period, anything to stop the talented from leaving. We've seen this movie before in East Germany, 1961. Remains to be seen whether the US government will do more than expropriate 50% of your assets (2008's exit tax) to deter you from leaving.

anigbrowl 15y ago
More people are abandoning US citizenship because a rule change in 2008 has made it simpler, cheaper, and less restrictive to do so: http://economix.blogs.nytimes.com/2011/06/16/more-americans-are-renouncing-citizenship/ http://economix.blogs.nytimes.com/2011/06/16/more-americans-...
- temphn 15y ago
  It's by no means cheaper. It used to be free to leave. Now they expropriate 50% of your net worth. Massive shift in US policy. Used to be hard to enter the US. When they make it hard to leave, that is a terrible sign. Legal Background: www.mwe.com/index.cfm/fuseaction/publications.nldetail/object_id/3892307d-1b8e-4636-ba2b-f58609256689.cfm Color commentary: www.davidtanzer.com/david_tanzer_articles.asp?article=exit+tax+in+america "The Exit Tax works as though you have died. It’s calculated similarly to the Federal Estate Tax. It requires American taxpayers to identify all assets and debts to determine their net worth, and then to compute a theoretical gain or loss on all assets. The Exit Tax applies to anyone with a net worth of more than $2 million. It also applies to a taxpayer whose average U.S. income tax liability for the past five years is above approximately $124,000. Net worth is without inflation adjustment, which means increasingly more individuals will fall victim. It treats all property as being sold, and all deferred income retirement accounts as being distributed. There is an exclusion of $600,000 for any unrealized gain or deferred income. Then a 30% withholding tax is automatically withheld before deferred income accounts are distributed."