3 ms·

Most rich people are already citizens of multiple countries, on top of tax and travel benefits it's easy (and relatively cheap) to buy passports from Caribbean

Most rich people are already citizens of multiple countries, on top of tax and travel benefits it's easy (and relatively cheap) to buy passports from Caribbean island nations

fastaguy88 3y ago
It would be good to define "rich" here. Probably not most of the top 5% (50% of 15 million people). Perhaps "most" of the top 0.1%? Any data?
- deleted 3y ago
  [deleted]
- throw1234651234 3y ago
  Top 10% is basically a frugal tech-bro in a flyover. FAANG is top 5%. Assuming "over the course of at least 5-10 years" for both to get there. I doubt these are the people being discussed. These are basically millenials/zoomers that can actually afford the "American dream middle class lifestyle" - house, kids, savings, etc without an inheritance, but not much more. Article is probably focusing on 10mil+ net worths at least, but likely "UHNWI" which are 30 mil+ who have time to think about this stuff.
Forge36 3y ago
I suspect it's better PR to say "instability” than "avoid paying taxes"
- anovikov 3y ago
  You can only avoid US taxes if you drop citizenship altogether. US has citizenship based taxation and you are stuck paying US taxes regardless of where you reside and what other passports you have. So getting another passport (as opposed to residence permit into your US passport) does not help you at all there. Almost all countries have double taxation treaties with US so you can credit your US taxes paid against your tax obligation in your country of residence, but if their taxes are lower than US taxes, you just pay US taxes. Again, no difference if you have that other country's citizenship, or just legal residence as an American. Difference happens only if you actually renounce your US citizenship and thus cease to be a U.S. person for tax purposes. People are getting second passports as a fancy object, and to avoid discrimination in countries where anti-Americanism is popular.
  - Aspos 3y ago
    Having a second passport provides an option to ditch US passport and stop paying US taxes at any moment. One basically pays to buy an option to stop being subject to US taxation at a moment of their choosing.
    - rdl 3y ago
      It's a (virtually) necessary but not sufficient step in the process. The big blockers are exit tax over $2mm (basically, unrealized capital gains get taxed), and doing the actual appointment with an embassy overseas to document loss of nationality (if relinquished) or renounce (if renouncing; same effect, but much worse option IMO). If your assets are under 2mm, or if super liquid and thus easy to pay the exit tax, you have a pretty decent option. Otherwise, the exit tax can be addressed on a scale of multiple years (Puerto Rico has 0% capital gains under act 60, exemption from federal under irc 933, so move to PR first, realize capital gains, have no unrealized capital gains subject to exit tax when relinquishing...) I'm not a lawyer; not legal advice, or financial advice, entertainment purposes only.
devoutsalsa 3y ago
For those who want one & don’t already know, the Caribbean countries are doubling the the price of passports on June 30. The minimum price will be 200,000 USD for the cheaper countries. It takes time to apply, so best to get started if you want the old price.
balderdash 3y ago
The tax benefits of a second passport for us citizens are pretty close to zero unless you give up your us passport, and the exit tax is no joke (basically assumes you sold all of your assets including real estate, private shares, stock/bond portfolios, etc on expatriation and charges cap gains on all the gains)
- llm_trw 3y ago
  Don't forget that the US will lowkey fuck you every chance they get if you give up your passport. You need to come back? Better be ready for your visa to get lost five times and a random 6 hour interrogation at the border. It's easier to get into the US on an Iranian passport than on a UK passport when you've given up American citizenship.
- ghaff 3y ago
  I'm very skeptical of the claim that most rich people have a second passport, especially for any reasonably inclusive definition of rich. If it's cheap and easy based on recent ancestry? Sure. But, as you say, it's just not that useful outside of narrow circumstances and doesn't provide any tax advantages if you keep your US passport as well.
  - balderdash 3y ago
    I think the people that get second passports are mostly doing it for residency reasons e.g. you own a home in another country/spend a lot of time there and want guaranteed travel rights/it’s not much more work/can be easier (through investment) than getting a permanent visa
    - ghaff 3y ago
      That's probably true. If you actually have ties to another country, having a passport (or other residency permit) could make sense. But it's not a case of just getting an arbitrary second passport.

Most rich people are already citizens of multiple countries, on top of tax and travel benefits it's easy (and relatively cheap) to buy passports from Caribbean island nations

fastaguy88 3y ago

It would be good to define "rich" here. Probably not most of the top 5% (50% of 15 million people). Perhaps "most" of the top 0.1%? Any data?

deleted 3y ago
[deleted]
throw1234651234 3y ago
Top 10% is basically a frugal tech-bro in a flyover. FAANG is top 5%. Assuming "over the course of at least 5-10 years" for both to get there. I doubt these are the people being discussed. These are basically millenials/zoomers that can actually afford the "American dream middle class lifestyle" - house, kids, savings, etc without an inheritance, but not much more. Article is probably focusing on 10mil+ net worths at least, but likely "UHNWI" which are 30 mil+ who have time to think about this stuff.

Forge36 3y ago

I suspect it's better PR to say "instability” than "avoid paying taxes"

anovikov 3y ago
You can only avoid US taxes if you drop citizenship altogether. US has citizenship based taxation and you are stuck paying US taxes regardless of where you reside and what other passports you have. So getting another passport (as opposed to residence permit into your US passport) does not help you at all there. Almost all countries have double taxation treaties with US so you can credit your US taxes paid against your tax obligation in your country of residence, but if their taxes are lower than US taxes, you just pay US taxes. Again, no difference if you have that other country's citizenship, or just legal residence as an American. Difference happens only if you actually renounce your US citizenship and thus cease to be a U.S. person for tax purposes. People are getting second passports as a fancy object, and to avoid discrimination in countries where anti-Americanism is popular.
- Aspos 3y ago
  Having a second passport provides an option to ditch US passport and stop paying US taxes at any moment. One basically pays to buy an option to stop being subject to US taxation at a moment of their choosing.
  - rdl 3y ago
    It's a (virtually) necessary but not sufficient step in the process. The big blockers are exit tax over $2mm (basically, unrealized capital gains get taxed), and doing the actual appointment with an embassy overseas to document loss of nationality (if relinquished) or renounce (if renouncing; same effect, but much worse option IMO). If your assets are under 2mm, or if super liquid and thus easy to pay the exit tax, you have a pretty decent option. Otherwise, the exit tax can be addressed on a scale of multiple years (Puerto Rico has 0% capital gains under act 60, exemption from federal under irc 933, so move to PR first, realize capital gains, have no unrealized capital gains subject to exit tax when relinquishing...) I'm not a lawyer; not legal advice, or financial advice, entertainment purposes only.

devoutsalsa 3y ago

For those who want one & don’t already know, the Caribbean countries are doubling the the price of passports on June 30. The minimum price will be 200,000 USD for the cheaper countries. It takes time to apply, so best to get started if you want the old price.

balderdash 3y ago

The tax benefits of a second passport for us citizens are pretty close to zero unless you give up your us passport, and the exit tax is no joke (basically assumes you sold all of your assets including real estate, private shares, stock/bond portfolios, etc on expatriation and charges cap gains on all the gains)

llm_trw 3y ago
Don't forget that the US will lowkey fuck you every chance they get if you give up your passport. You need to come back? Better be ready for your visa to get lost five times and a random 6 hour interrogation at the border. It's easier to get into the US on an Iranian passport than on a UK passport when you've given up American citizenship.
ghaff 3y ago
I'm very skeptical of the claim that most rich people have a second passport, especially for any reasonably inclusive definition of rich. If it's cheap and easy based on recent ancestry? Sure. But, as you say, it's just not that useful outside of narrow circumstances and doesn't provide any tax advantages if you keep your US passport as well.
- balderdash 3y ago
  I think the people that get second passports are mostly doing it for residency reasons e.g. you own a home in another country/spend a lot of time there and want guaranteed travel rights/it’s not much more work/can be easier (through investment) than getting a permanent visa
  - ghaff 3y ago
    That's probably true. If you actually have ties to another country, having a passport (or other residency permit) could make sense. But it's not a case of just getting an arbitrary second passport.