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It's significantly more than $2350 for many people - you may be required to pay capital gains tax on all of your assets as though you disposed of them all on yo
by arcticbull 3y ago
It's significantly more than $2350 for many people - you may be required to pay capital gains tax on all of your assets as though you disposed of them all on your last day as a US citizen. Same applies to people who have held a green card for more than 8 of the 15 years preceding abandonment. [1]
[1] https://www.irs.gov/individuals/international-taxpayers/expatriation-tax https://www.irs.gov/individuals/international-taxpayers/expa...
- ceejayoz 3y agoI’m not sure “yes, you still have to pay your taxes” can be fairly described as a fee.
- arcticbull 3y agoNot taxes that you would owe if you weren't renouncing, or if you kept a green card for less than 8 years. You could make the same argument for the $2350 fee as "yes you have to pay the costs that the USCIS incurred processing your renunciation." After all the USCIS generally operates on a cost recovery basis. [1] > USCIS funding comes primarily from fees we charge applicants or petitioners requesting immigration or naturalization benefits. These fee collections fund the cost of fairly and efficiently adjudicating immigration benefit requests. [1] https://www.uscis.gov/about-us/budget-planning-and-performance https://www.uscis.gov/about-us/budget-planning-and-performan...
- Retric 3y agoCapital gains is deferred every year that you don’t sell an asset, but that doesn’t mean it isn’t an obligation. The only way to avoid it in the US is to die at which point your beneficiaries get to enjoy a tax loophole. If renouncing citizenship would get you out of that obligation people would do so regularly as a tax break then reapply.
- arcticbull 3y agoOr keep a green card for less than 8 of the 15 years preceding abandonment. This is the crux of my argument: it feels punitive to impose the tax only on people who spend a long time in the US.
- Retric 3y agoYou pay income tax every year. Capital gains was accrued but the IRS defers taxing that as a tax break allowing you to compound interest on money you owe. When you leave they want all accounts to zero out which seems eminently reasonable.
- arcticbull 3y agoRespectfully that's not the argument I'm making. I don't think taxing people when their obligations end is inherently wrong. I think the choice to apply it only to people with 'stronger/longer term connections' to America is meant to disproportionately disincentivize renunciation in the same way that a high fixed fee does/did. [edit] It's mostly problematic for people who find themselves subjects of the IRS, being born abroad for instance - and they may never have even realized their obligations. They are stuck with paying the IRS forever or renouncing and paying capital gains tax on all their assets. Meanwhile, someone who lives in the US for 8 years as an LPR and decides to leave is free to go after filing an I-407 and picking up their 1040-C sailing permit. The whole taxation on the basis of citizenship instead of residency is fundamentally unfair and broken IMO.
- Retric 3y agoTaxing on residency creates a massive loophole. What if Jeff Bezos gains residency in a country without capital gains and sells all his Amazon Stock then moves back to the US. The year he’s gone saves him 25 billion in taxes for doing little more than sitting on an island somewhere. Now, if you taxed capital gains when they occurred rather than when the asset was sold then I would absolutely agree it should be tied to residency. But by deferring it for decades suddenly there’s a major incentive to get out of that obligation.
- xnorswap 3y agoNote that the US is one of only two countries that taxes non-resident citizens. The other example being Eritrea.
- tomatocracy 3y agoTrue, but eg the UK has quite a tight definition of "residency" (the significant ties test) which catches many people who actually live outside the UK.
- xnorswap 3y agoYes, but it doesn't catch the equivalent of people like me, who are US citizens through birth, but with no other ties to the country. Yet I therefore still have to navigate the nightmare that is their paper based (and "refund/allowance" obsessed) tax system, despite not having resided in the US since the age of 3. For example, it's not enough for me to simply earn less than the "foreign income tax allowance". Instead I need to calculate the tax I would owe on one form, calculate the deduction to that tax on a different form, then write the sum from one form on to the other form (god help if you make an error transcribing that number). The US tax form is full of things like "Add the numbers in 11a through 11g together and deduct this number from the number in 13 and write it down in 15". It feels utterly hostile, as if it's trying to catch the person out, instead of guiding them to the accurate number.
- injeolmi_love 3y agoSome accidental Americans may not even have known they owe capital gains tax. Not every jurisdiction taxes capital gains, and many have differing rules. It can be quite shocking to get a tax bill from a place you’ve never lived!
- refurb 3y agoUS has the foreign tax credit. So unless you live somewhere with lower capital gains tax, you’d owe the IRS $0
- bushbaba 3y ago[flagged]
- boffinAudio 3y ago> Ideally renouncing also places you on a never to re admit entry to US list. Why? What if I don't want to be a US citizen, but do want to continue to contribute to US society/economy by living/working there?
- qup 3y agoWhy should the US entertain you in that case?
- thfuran 3y agoWhy should it permanently ban them?
- boffinAudio 3y agoBecause the USA is a free and open society which should not punish someone just because they gave up their citizenship? Honestly, your position is something I would've easily attributed to the Soviets at some point in time, and never thought an American would feel that way ...
- friend_and_foe 3y agoFor the same reason they entertain other people getting visitor's visas.
- CoastalCoder 3y agoCould you explain your reasoning?
- cyberlurker 3y agoSome countries don’t allow dual citizenship. Japan might be one. I know someone who had to give up their citizenship to be able to live with family when they turned 18. What you suggest would be cruel and provide little value.
- refurb 3y agoThat’s how Canada handles people who become non-residents. Mark-to-market on all assets and tax as per normal capital gains. And Canada doesn’t have exceptions like the US (if your assets are <$2M, $600,000 deduction on any value before taxes are applied, etc).
- wrp 3y agoResponses to this seem to be missing the point. When you renounce citizenship, you pay tax on your assets EVEN THOUGH you did not dispose of them. It amounts to having to buy your freedom for a price based on your financial worth.
- mbg721 3y agoWelcome to the USA, where your worth is literally your money.
- deleted 3y ago[deleted]
- __MatrixMan__ 3y agoAmerican headlines are like: > Crowded Building Collapses in Foreign Country, Two Americans Die ...because those two were the only balance-sheet relevant humans in the building. If you don't have to write off the debt when they die, why bother accounting for their lives at all?
- dang 3y agoPlease don't post nationalistic flamebait. It leads to nationalistic flamewars, which are nasty and avoidable. https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html
- __MatrixMan__ 3y agoYou're right. I'm sorry.
- dang 3y agoPlease don't post nationalistic flamebait. It leads to nationalistic flamewars, which are nasty and avoidable. https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html
- alephnan 3y agoPeople who aren’t American also have to pay capital gains tax if they invest in real estate or stocks in the U.S. There’s a reason people around the world want to invest in America.