7 ms·

Singapore? Hong Kong? Your underlying assumption is that the US can increase taxes and regulations indefinitely without consequence. But capital and talent are

by 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."
  - gyardley 15y ago
    Ah, yes, the 'HEROES' act. (Hard to vote against something with an acronym like that, huh?) That's the one that might bankrupt me if either I or the federal government ever decides I'm no longer a permanent resident -- because the taxes on the value of all that illiquid (but highly-valued, on paper) startup stock, marked-to-market, would be more than my liquid assets. And my wife wonders why I get nervous when crossing the border.
  - anigbrowl 15y ago
    Er....no. It was not free before; section 877 of the Internal Revenue Code was amended in 2004, and even before that reflected the assumption that any expatriation from the US was for purposes of tax avoidance. All US income for 10 years after expatriation was subject to US income tax for 10 years, and if you spent more than 30 days of any given year within the US, you were treated as a resident and liable for full US taxes on all income worldwide. Now you can spend up to 120 days in the US per annum after expatriating. http://www.irs.gov/businesses/small/international/article/0,,id=97245,00.html http://www.irs.gov/businesses/small/international/article/0,... has detailed explanation of the different tax regimes since 2008, from 2004-2008, and prior to 2004. They don't take 50% of your net worth; they take progressive amounts on assets above the inflation-indexed $600k exemption up to a top rate of 35% (same as the estate tax). The 50% thing is a special case for future deferred income from a US asset; you pay 30% up front and 30% on distribution, which comes out at 51%. The idea here is that you should pay more because you are trying to have your cake (live outside the US and not pay US income tax) and eat it too (enjoy the fruits of the US economy and enforce any future income claims in a US court if required). If you really don't want that, then you can sell the asset, giving up any deferred income, and take the 30% hit. I am not a tax lawyer, or any other kind of lawyer right now. Nor do I have a very strong opinion on whether this tax is good or bad; I'm just pointing out that there are factual errors in your statements above.
    - temphn 15y ago
      By your own admission you are not a tax lawyer. Perhaps this is why you are conflating two different things, income and assets. All US income for 10 years after expatriation was subject to US income tax for 10 years Yes, and that was bad enough, but what is new is this: they take progressive amounts on *assets* above the inflation-indexed $600k exemption up to a top rate of 35% (same as the estate tax). The 50% thing is a special case for future deferred income from a US asset; you pay 30% up front and 30% on distribution, which comes out at 51% That is a tax on assets in addition to income. Assets. Meaning everything you've built up to this point, not just your continuing revenue streams while overseas. An asset tax for expatriation is a new development in American history.
danssig 15y ago
Your facts are a misrepresentation. There have been many american expats for a long time. We usually keep our citizenship because there was no need to give it up. Having to file taxes to the US every year is annoying but not enough to renounce citizenship over. Lately, however, the US has been getting more and more intrusive in my foreign life. Why do I owe any taxes on money I earn in a foreign land? I'm not using any US resources (don't give me any nonsense about navy seals coming to my rescue if I get kidnapped), I'm not working there, I have no property there, nothing. Now they want to know how much money is in my bank account! I have a hard time finding banks that will do business with me because I happen to be in a "tax haven" country so doing business with americans means you have to have infra to send information about my banking activity back to the US. The cost of rejecting a handful of american customers is minuscule compared to the cost of setting up such infra. I don't want to give up my citizenship but I'm not putting up with this mafia-style protection racket anymore.
- Gormo 15y ago
  Why do banks in other countries have to obey US disclosure laws at all? If US authorities make demands of them, why can't they just say no?
  - danssig 15y ago
    Well, the country could just say no but once the country has said yes (probably after some very one-sided negotiation) the bank no longer has a choice. That is the case here: have American customers? Then you have to comply with the US rules. The US is making a lot of trouble in banking. For example, if two non-US parties trade some US-based stock, then the whole thing has to be reported to the US specially independent from the normal reporting they have to do. I wish the US were a small enough player that everyone could just ignore this kind of nonsense but that's not the case at the moment.

by temphn 15y ago

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."
- gyardley 15y ago
  Ah, yes, the 'HEROES' act. (Hard to vote against something with an acronym like that, huh?) That's the one that might bankrupt me if either I or the federal government ever decides I'm no longer a permanent resident -- because the taxes on the value of all that illiquid (but highly-valued, on paper) startup stock, marked-to-market, would be more than my liquid assets. And my wife wonders why I get nervous when crossing the border.
- anigbrowl 15y ago
  Er....no. It was not free before; section 877 of the Internal Revenue Code was amended in 2004, and even before that reflected the assumption that any expatriation from the US was for purposes of tax avoidance. All US income for 10 years after expatriation was subject to US income tax for 10 years, and if you spent more than 30 days of any given year within the US, you were treated as a resident and liable for full US taxes on all income worldwide. Now you can spend up to 120 days in the US per annum after expatriating. http://www.irs.gov/businesses/small/international/article/0,,id=97245,00.html http://www.irs.gov/businesses/small/international/article/0,... has detailed explanation of the different tax regimes since 2008, from 2004-2008, and prior to 2004. They don't take 50% of your net worth; they take progressive amounts on assets above the inflation-indexed $600k exemption up to a top rate of 35% (same as the estate tax). The 50% thing is a special case for future deferred income from a US asset; you pay 30% up front and 30% on distribution, which comes out at 51%. The idea here is that you should pay more because you are trying to have your cake (live outside the US and not pay US income tax) and eat it too (enjoy the fruits of the US economy and enforce any future income claims in a US court if required). If you really don't want that, then you can sell the asset, giving up any deferred income, and take the 30% hit. I am not a tax lawyer, or any other kind of lawyer right now. Nor do I have a very strong opinion on whether this tax is good or bad; I'm just pointing out that there are factual errors in your statements above.
  - temphn 15y ago
    By your own admission you are not a tax lawyer. Perhaps this is why you are conflating two different things, income and assets. All US income for 10 years after expatriation was subject to US income tax for 10 years Yes, and that was bad enough, but what is new is this: they take progressive amounts on *assets* above the inflation-indexed $600k exemption up to a top rate of 35% (same as the estate tax). The 50% thing is a special case for future deferred income from a US asset; you pay 30% up front and 30% on distribution, which comes out at 51% That is a tax on assets in addition to income. Assets. Meaning everything you've built up to this point, not just your continuing revenue streams while overseas. An asset tax for expatriation is a new development in American history.

danssig 15y ago

Your facts are a misrepresentation. There have been many american expats for a long time. We usually keep our citizenship because there was no need to give it up. Having to file taxes to the US every year is annoying but not enough to renounce citizenship over. Lately, however, the US has been getting more and more intrusive in my foreign life. Why do I owe any taxes on money I earn in a foreign land? I'm not using any US resources (don't give me any nonsense about navy seals coming to my rescue if I get kidnapped), I'm not working there, I have no property there, nothing. Now they want to know how much money is in my bank account! I have a hard time finding banks that will do business with me because I happen to be in a "tax haven" country so doing business with americans means you have to have infra to send information about my banking activity back to the US. The cost of rejecting a handful of american customers is minuscule compared to the cost of setting up such infra. I don't want to give up my citizenship but I'm not putting up with this mafia-style protection racket anymore.

Gormo 15y ago
Why do banks in other countries have to obey US disclosure laws at all? If US authorities make demands of them, why can't they just say no?
- danssig 15y ago
  Well, the country could just say no but once the country has said yes (probably after some very one-sided negotiation) the bank no longer has a choice. That is the case here: have American customers? Then you have to comply with the US rules. The US is making a lot of trouble in banking. For example, if two non-US parties trade some US-based stock, then the whole thing has to be reported to the US specially independent from the normal reporting they have to do. I wish the US were a small enough player that everyone could just ignore this kind of nonsense but that's not the case at the moment.