6 ms·

Farewell America

41 points by Flemlord 17y ago

jhancock 17y ago
As near as I can tell, this article says "The U.S. won't turn a blind eye to private banking tax evasion schemes anymore, so we're out of here". So long and please don't come back. As long as there exist large loopholes for high-net-worth folks to evade taxation, we will never get to bottom of "what is fair and reasonable taxation".
- thras 17y ago
  To be fair, they're also saying that people shouldn't pay taxes to the U.S. because Bush was evil.
  - jhancock 17y ago
    I'm not sure I agree with that. Especially when you consider Swiss banking history and their willingness to hide money for just about anyone. Obama is in a tight spot. Tax revenues are _way_ down. The U.S. not only needs to pay for ongoing costs, but for bad debts in our economy. Offshore private banking should have been stopped long ago, before it started. Would Obama be going after them so hard if the U.S. was not in such a tight spot? Its hard to say as its always a hard call to go after this level of wealth. At this point, I think he has little choice.
    - thras 17y ago
      I hope that you don't agree the idea that people don't have to pay taxes because they disliked Bush. It's insane.
      - jhancock 17y ago
        I don't understand this statement in connection to your first one. I think its fine for people to take a stand for political reasons but not necessarily insane. That is not what has happened here. If they did not like Bush, they had 8 years to pull out of the U.S. when Bush was in office. They did not. They pulled out when Obama's attorney general started going after clearly illegal tax evasion. I am not happy with the fact that I will be paying for the rest of my life for the costs of Bush's spending. You do understand how much the national debt and credit exposure rose during his terms, don't you? You do understand that "no new taxes" generally gets interpreted as "we'll silently create new debt"? I am highly conservative when it comes to money. I pay as a I go, and encourage others to do the same.
- cakeface 17y ago
  It seemed to me that a large part of their argument was that foreigners were required to pay inheritance tax on the value of all US assets, even though they weren't us citizens. That doesn't really seem fair to me.
  - ajross 17y ago
    Why? The US Government taxes activity within its borders. It's not different than foreigners paying sales tax on stuff bought in the US. Now, I know next to nothing about international inheritance and estate tax policy, but I'd have to assume many, many other nations have identical policies, no?
    - CWuestefeld 17y ago
      No, the problem is that the US government taxes activity by its citizens (and even ex-pats) outside of its borders, and is fairly unique in doing so. It seems clear to me that someone who isn't deriving any benefit from the "protections" of the US government shouldn't be required to pay for those protections. Otherwise, it really is just a protection racket.
      - jhancock 17y ago
        As a U.S. citizens living in China for many years, I still consider the U.S. my home long term. I receive a reasonable tax deduction for living out of the country the majority of each year, and that is a fair tradeoff. The U.S., my home, still needs to survive and invest in its future. Taxes are the critical element for this. So when you say "protections". Well, if I'm not living in the U.S. "right now" I'm not right now receiving protections, right? Not really. I am. I can go home anytime I want if things get too tough for me in China. I have the safety of knowing their are local police and fire departments in my home town protecting my house, for example, the things that non-citizens don't want to pay taxes to help support. Even if I were living in the U.S. right now, I wouldn't be pulling money from Social Security or other forms of aid. But the "protections" are their whether I'm currently using them or not.
- steveplace 17y ago
  I'll take the downside. The ability to move capital outside of nations is, in my opinion, critical to freer government and society.
  - jhancock 17y ago
    It is useful (I won't agree with critical) in some respects for overall wealth creation. For example, leveraging outside wealth into our stock markets. It does amount to U.S. citizens paying tax on the same transactions that non-citizens avoid.
  - anigbrowl 17y ago
    You can still move capital out of the US. If you do not wish to pay taxes on your capital gains, you can move yourself outside and take up the citizenship of another country, while renouncing that of the US. As far as I am aware, there is nothing preventing you moving (say) a million dollars of your personal, post-tax income to Switzerland and just parking it there if for some reason you feel it's not secure here. You have to declare the fact but it's not like there are capital controls in place that prevent you from doing so - I'm quite willing to be corrected on this if you know otherwise.
    - pelle 17y ago
      It isn't quite that simple if you're a US citizen. Clinton closed that loophole. You are still liable for worldwide tax for I believe 10 years if the IRS decides you renounced your citizenship for tax purposes. The US is also the only major country that taxes it's citizens regardless of residence. Yes there is a large deduction, but you still have to file and pay anything over that deduction. The big thing preventing you from moving your money to say Switzerland is that most international banks including those in Switzerland don't dare to touch US clients for the same reasons as described in the document.
    - eugenejen 17y ago
      No, when you are dead. Since you were once U.S. citizen in tax sense by owning U.S. properties and securities. (including you as permanent residents, or H1-B visa holders) The U.S. tax authority now has right to go to Swiss banks to request freezing of assets. The worse part is when calculating your tax, the U.S. tax authority will treat you as a non citizen so they can tax assets more than 60k, instead of usually 1 million in 2009. This just happens to one of the Taiwanese Billionaire, Wang Yung-ching. He owned U.S. properties and his company Formosa Plastics Corporation now is trying to estimate the amount of the tax they owe to U.S. tax authority, even the company is not a U.S. company and he has no U.S. citizenship and permanent resident status. But because both entities owns U.S. properties. The U.S. tax authority has their bites to all the company assets in Taiwan, too. Meanwhile, his heirs in Taiwan still need to pay the inheritance taxes for their own shares of the inheritance.
- potatolicious 17y ago
  > "So long and please don't come back." I'd like to know where they intend to go. No western, industrial country wants their profiteering behinds amongst its citizenry, and certainly Canada and all of industrialized Europe would frown on their shenanigans. Their only options are tin-pot tropical banana republics or the former Soviet bloc.
  - borism 17y ago
    Would you consider Netherlands, Luxembourg (or Switzerland for that matter) tin-pot tropical banana republics?
    - jhancock 17y ago
      I do consider that in some cases they have no problems abusing laws of other nations. The countries you mention are very small. They could not accumulate the wealth they have in a vacuum. One thing small "banking" countries have subsided on for ages is helping people/companies in other countries hide their money. If these small and noble nations are indeed noble, they will find a way to survive without doing this. They already have a head start. If we cut them off now, will they be able to survive as they have without continuing to engage in illegal banking? Or how long will it take them to devolve into banana republics?
- JabavuAdams 17y ago
  Did you read the part about foreign non-resident aliens being subject to US inheritance tax law, simply because they own shares of US companies? It's nice to have different countries with different laws and customs. I don't want to be subject to US law just because at one time I had an interaction with some US entity. This opens the door to all kinds of over-reaching.
  - Adam503 17y ago
    Good. A person who personally profits from owning shares of a US corporation should pay taxes on those profits.
    - run4yourlives 17y ago
      Um, that's not the best policy to pursue. Usually, you pay tax in the jurisdiction whose services provided by the tax you will use. I'm Canadian, and pay Canadian taxes, because I use Canadian services. If I own a small piece of say, Disney, I can usually apply for an exemption to some or all of the income tax because the US recognizes that I live and work in Canada, and pay taxes there. This encourages me to buy more Disney shares. Guess what happens when the IRS decides that I have to pay them, while at the same time getting taxed by the Canadian government? Exactly. I sell Disney.
      - jhancock 17y ago
        You right, it is screwed up. You should write to your Canadian representative to let them know you are being unfairly taxes by Canada for a service they do not provide. Why should Canada profit from your stock transaction for a U.S. entity? Canada doesn't pay for the costs of allowing Disney to keep Mickey under intellectual property protection indefinitely. Canada doesn't pay for the costs of running the SEC. The U.S. does. I think a stock appreciation tax (capital gains) should be paid to the country the stock is listed in, i.e., where you made your investment. Same with property, which this thread started with. Pay your taxes where the value was created.
        17y ago
steveplace 17y ago
Be aware: reading Zero Hedge may be hazardous to your health.
- borism 17y ago
  I have to agree. It does have some good tidbits every now and then, but mostly spits out some derogatory non-sense. Does more harm than good. It's somehow considered very professional and underground, but from what I've read by real pros in the field, the guy mostly doesn't seem to have any clue what he's writing about.
  - njl 17y ago
    Best guess on the street is that it's actually a collective of about 40 people.
  - bitwize 17y ago
    The gold fringers posting in the comments don't seem to help the site any.
  - toxoplasma 17y ago
    Can anyone out there recommend good econ blogs/sites? I'm an econ novice. Thanks!
    - steveplace 17y ago
      - I run an advisory over at investingwithoptions.com, but it's more short term and not econ. - Zero Hedge is good if you take it with a grain of salt - Barry Ritholtz at The Big Picture - paul kedrosky's blog couple others, but they interlink with each other
      - jhancock 17y ago
        Your recent post on the education bubble is well written. I look forward to future installments. Since I assume you make financial decisions with hard numbers, I'm hoping to see some as this thesis continues.
teeja 17y ago
"...over the last 60 years has unquestionably been one of the most aggressive nations in the world .... With breathtaking moral duplicity, the USA maintains enormous offshore havens ..." Thanks to Noam Chomsky ... and almost noone else ... I already knew all that.
hristov 17y ago
So the "article" consists of one sentence which links to another article and says I should read the other article. This is such blatant hit farming that even Slashdot would be ashamed of it. I am sure the other article is a fine and important one, but I am just not going to click on it out of principle. I wish I could mod stories down. How much karma does one need for that?
- jhancock 17y ago
  I'm guessing you need admin access to the database to mod things down. Flagging is all there is so far as published info.
lucasvo 17y ago
Most of you miss the point. I grew up in Switzerland and have a U.S. passport because my father is american. I know countless other people who have U.S. passports but haven't been in the U.S. for years. They will never be in need of medicare nor do they care what the americans do, never the less they have to pay US taxes to pay for politics that they don't neccessarily support in a country they have never lived in. This has been accepted by the other nations and they have tried to comply with these rules as much as possible. Switzerland has stricter privacy laws which allows people to evade taxes easily. The problem is, the swiss still pay their taxes even though they aren't forced to – and there are numerous studies suggesting that not forcing people to do something actually works better. I can completely understand nations who want the swiss to close this loophole. Recent events, this was confirmed a friend managing relations with the U.S. at a big swiss bank, made a lot of people rethink whether they still want to keep their U.S. passports and are getting rid of them. These people are have been living in Switzerland for years made their fortune in Switzerland and plan to retire here. Is there really any reason why they should pay taxes, just because they were born in the US? However you should read the second part, in which they start talking about estate tax. In this example he talks about non-US citizens, people who have invested their money in the U.S. Obama now wants to make a law that will tax estate in the U.S even if the owner is not in possession of a U.S. passport or a greencard. Doing an MBA in the states is reason enough to being taxed. This means that a wealthy individual who owns US property or stocks & bonds and spent some time in the US now has to pay up to 45% of estate tax in the U.S. on his U.S. property. Just because you own German stocks, should Germany get access to all your financial accounts and be able to freeze the assets when you pass away to determine if you should be taxed in Germany? This is absolutely ridiculous and as they mentioned in the letter, the additional tax revenue will not create enough tax revenue to solve the problems of the U.S. That's why they are suggesting that their clients should withdraw from investing in the US, because that 2 month vacation in California suddenly means, that they'll take 45% of your Apple shares when you pass away.

41 points by Flemlord 17y ago

As near as I can tell, this article says "The U.S. won't turn a blind eye to private banking tax evasion schemes anymore, so we're out of here". So long and please don't come back. As long as there exist large loopholes for high-net-worth folks to evade taxation, we will never get to bottom of "what is fair and reasonable taxation".

thras 17y ago
To be fair, they're also saying that people shouldn't pay taxes to the U.S. because Bush was evil.
- jhancock 17y ago
  I'm not sure I agree with that. Especially when you consider Swiss banking history and their willingness to hide money for just about anyone. Obama is in a tight spot. Tax revenues are _way_ down. The U.S. not only needs to pay for ongoing costs, but for bad debts in our economy. Offshore private banking should have been stopped long ago, before it started. Would Obama be going after them so hard if the U.S. was not in such a tight spot? Its hard to say as its always a hard call to go after this level of wealth. At this point, I think he has little choice.
  - thras 17y ago
    I hope that you don't agree the idea that people don't have to pay taxes because they disliked Bush. It's insane.
    - jhancock 17y ago
      I don't understand this statement in connection to your first one. I think its fine for people to take a stand for political reasons but not necessarily insane. That is not what has happened here. If they did not like Bush, they had 8 years to pull out of the U.S. when Bush was in office. They did not. They pulled out when Obama's attorney general started going after clearly illegal tax evasion. I am not happy with the fact that I will be paying for the rest of my life for the costs of Bush's spending. You do understand how much the national debt and credit exposure rose during his terms, don't you? You do understand that "no new taxes" generally gets interpreted as "we'll silently create new debt"? I am highly conservative when it comes to money. I pay as a I go, and encourage others to do the same.
cakeface 17y ago
It seemed to me that a large part of their argument was that foreigners were required to pay inheritance tax on the value of all US assets, even though they weren't us citizens. That doesn't really seem fair to me.
- ajross 17y ago
  Why? The US Government taxes activity within its borders. It's not different than foreigners paying sales tax on stuff bought in the US. Now, I know next to nothing about international inheritance and estate tax policy, but I'd have to assume many, many other nations have identical policies, no?
  - CWuestefeld 17y ago
    No, the problem is that the US government taxes activity by its citizens (and even ex-pats) outside of its borders, and is fairly unique in doing so. It seems clear to me that someone who isn't deriving any benefit from the "protections" of the US government shouldn't be required to pay for those protections. Otherwise, it really is just a protection racket.
    - jhancock 17y ago
      As a U.S. citizens living in China for many years, I still consider the U.S. my home long term. I receive a reasonable tax deduction for living out of the country the majority of each year, and that is a fair tradeoff. The U.S., my home, still needs to survive and invest in its future. Taxes are the critical element for this. So when you say "protections". Well, if I'm not living in the U.S. "right now" I'm not right now receiving protections, right? Not really. I am. I can go home anytime I want if things get too tough for me in China. I have the safety of knowing their are local police and fire departments in my home town protecting my house, for example, the things that non-citizens don't want to pay taxes to help support. Even if I were living in the U.S. right now, I wouldn't be pulling money from Social Security or other forms of aid. But the "protections" are their whether I'm currently using them or not.
steveplace 17y ago
I'll take the downside. The ability to move capital outside of nations is, in my opinion, critical to freer government and society.
- jhancock 17y ago
  It is useful (I won't agree with critical) in some respects for overall wealth creation. For example, leveraging outside wealth into our stock markets. It does amount to U.S. citizens paying tax on the same transactions that non-citizens avoid.
- anigbrowl 17y ago
  You can still move capital out of the US. If you do not wish to pay taxes on your capital gains, you can move yourself outside and take up the citizenship of another country, while renouncing that of the US. As far as I am aware, there is nothing preventing you moving (say) a million dollars of your personal, post-tax income to Switzerland and just parking it there if for some reason you feel it's not secure here. You have to declare the fact but it's not like there are capital controls in place that prevent you from doing so - I'm quite willing to be corrected on this if you know otherwise.
  - pelle 17y ago
    It isn't quite that simple if you're a US citizen. Clinton closed that loophole. You are still liable for worldwide tax for I believe 10 years if the IRS decides you renounced your citizenship for tax purposes. The US is also the only major country that taxes it's citizens regardless of residence. Yes there is a large deduction, but you still have to file and pay anything over that deduction. The big thing preventing you from moving your money to say Switzerland is that most international banks including those in Switzerland don't dare to touch US clients for the same reasons as described in the document.
  - eugenejen 17y ago
    No, when you are dead. Since you were once U.S. citizen in tax sense by owning U.S. properties and securities. (including you as permanent residents, or H1-B visa holders) The U.S. tax authority now has right to go to Swiss banks to request freezing of assets. The worse part is when calculating your tax, the U.S. tax authority will treat you as a non citizen so they can tax assets more than 60k, instead of usually 1 million in 2009. This just happens to one of the Taiwanese Billionaire, Wang Yung-ching. He owned U.S. properties and his company Formosa Plastics Corporation now is trying to estimate the amount of the tax they owe to U.S. tax authority, even the company is not a U.S. company and he has no U.S. citizenship and permanent resident status. But because both entities owns U.S. properties. The U.S. tax authority has their bites to all the company assets in Taiwan, too. Meanwhile, his heirs in Taiwan still need to pay the inheritance taxes for their own shares of the inheritance.
potatolicious 17y ago
> "So long and please don't come back." I'd like to know where they intend to go. No western, industrial country wants their profiteering behinds amongst its citizenry, and certainly Canada and all of industrialized Europe would frown on their shenanigans. Their only options are tin-pot tropical banana republics or the former Soviet bloc.
- borism 17y ago
  Would you consider Netherlands, Luxembourg (or Switzerland for that matter) tin-pot tropical banana republics?
  - jhancock 17y ago
    I do consider that in some cases they have no problems abusing laws of other nations. The countries you mention are very small. They could not accumulate the wealth they have in a vacuum. One thing small "banking" countries have subsided on for ages is helping people/companies in other countries hide their money. If these small and noble nations are indeed noble, they will find a way to survive without doing this. They already have a head start. If we cut them off now, will they be able to survive as they have without continuing to engage in illegal banking? Or how long will it take them to devolve into banana republics?
JabavuAdams 17y ago
Did you read the part about foreign non-resident aliens being subject to US inheritance tax law, simply because they own shares of US companies? It's nice to have different countries with different laws and customs. I don't want to be subject to US law just because at one time I had an interaction with some US entity. This opens the door to all kinds of over-reaching.
- Adam503 17y ago
  Good. A person who personally profits from owning shares of a US corporation should pay taxes on those profits.
  - run4yourlives 17y ago
    Um, that's not the best policy to pursue. Usually, you pay tax in the jurisdiction whose services provided by the tax you will use. I'm Canadian, and pay Canadian taxes, because I use Canadian services. If I own a small piece of say, Disney, I can usually apply for an exemption to some or all of the income tax because the US recognizes that I live and work in Canada, and pay taxes there. This encourages me to buy more Disney shares. Guess what happens when the IRS decides that I have to pay them, while at the same time getting taxed by the Canadian government? Exactly. I sell Disney.
    - jhancock 17y ago
      You right, it is screwed up. You should write to your Canadian representative to let them know you are being unfairly taxes by Canada for a service they do not provide. Why should Canada profit from your stock transaction for a U.S. entity? Canada doesn't pay for the costs of allowing Disney to keep Mickey under intellectual property protection indefinitely. Canada doesn't pay for the costs of running the SEC. The U.S. does. I think a stock appreciation tax (capital gains) should be paid to the country the stock is listed in, i.e., where you made your investment. Same with property, which this thread started with. Pay your taxes where the value was created.
      - 17y ago

steveplace 17y ago

Be aware: reading Zero Hedge may be hazardous to your health.

borism 17y ago
I have to agree. It does have some good tidbits every now and then, but mostly spits out some derogatory non-sense. Does more harm than good. It's somehow considered very professional and underground, but from what I've read by real pros in the field, the guy mostly doesn't seem to have any clue what he's writing about.
- njl 17y ago
  Best guess on the street is that it's actually a collective of about 40 people.
- bitwize 17y ago
  The gold fringers posting in the comments don't seem to help the site any.
- toxoplasma 17y ago
  Can anyone out there recommend good econ blogs/sites? I'm an econ novice. Thanks!
  - steveplace 17y ago
    - I run an advisory over at investingwithoptions.com, but it's more short term and not econ. - Zero Hedge is good if you take it with a grain of salt - Barry Ritholtz at The Big Picture - paul kedrosky's blog couple others, but they interlink with each other
    - jhancock 17y ago
      Your recent post on the education bubble is well written. I look forward to future installments. Since I assume you make financial decisions with hard numbers, I'm hoping to see some as this thesis continues.

teeja 17y ago

"...over the last 60 years has unquestionably been one of the most aggressive nations in the world .... With breathtaking moral duplicity, the USA maintains enormous offshore havens ..." Thanks to Noam Chomsky ... and almost noone else ... I already knew all that.

hristov 17y ago

So the "article" consists of one sentence which links to another article and says I should read the other article. This is such blatant hit farming that even Slashdot would be ashamed of it. I am sure the other article is a fine and important one, but I am just not going to click on it out of principle. I wish I could mod stories down. How much karma does one need for that?

jhancock 17y ago
I'm guessing you need admin access to the database to mod things down. Flagging is all there is so far as published info.

lucasvo 17y ago

Most of you miss the point. I grew up in Switzerland and have a U.S. passport because my father is american. I know countless other people who have U.S. passports but haven't been in the U.S. for years. They will never be in need of medicare nor do they care what the americans do, never the less they have to pay US taxes to pay for politics that they don't neccessarily support in a country they have never lived in. This has been accepted by the other nations and they have tried to comply with these rules as much as possible. Switzerland has stricter privacy laws which allows people to evade taxes easily. The problem is, the swiss still pay their taxes even though they aren't forced to – and there are numerous studies suggesting that not forcing people to do something actually works better. I can completely understand nations who want the swiss to close this loophole. Recent events, this was confirmed a friend managing relations with the U.S. at a big swiss bank, made a lot of people rethink whether they still want to keep their U.S. passports and are getting rid of them. These people are have been living in Switzerland for years made their fortune in Switzerland and plan to retire here. Is there really any reason why they should pay taxes, just because they were born in the US? However you should read the second part, in which they start talking about estate tax. In this example he talks about non-US citizens, people who have invested their money in the U.S. Obama now wants to make a law that will tax estate in the U.S even if the owner is not in possession of a U.S. passport or a greencard. Doing an MBA in the states is reason enough to being taxed. This means that a wealthy individual who owns US property or stocks & bonds and spent some time in the US now has to pay up to 45% of estate tax in the U.S. on his U.S. property. Just because you own German stocks, should Germany get access to all your financial accounts and be able to freeze the assets when you pass away to determine if you should be taxed in Germany? This is absolutely ridiculous and as they mentioned in the letter, the additional tax revenue will not create enough tax revenue to solve the problems of the U.S. That's why they are suggesting that their clients should withdraw from investing in the US, because that 2 month vacation in California suddenly means, that they'll take 45% of your Apple shares when you pass away.