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I expect that the American taxation of expats is unlikely to change because there's simply very little economic pressure to do so. The value of an American cit

I expect that the American taxation of expats is unlikely to change because there's simply very little economic pressure to do so. The value of an American citizenship is incredibly high. The vast majority of people in the world would go to great lengths and expense to be able to have one. The taxation requirements, as onerous as they are, are still worth it to the vast majority of citizens. Similarly, the value of a British citizenship (or of any other powerful western country) is very high, and most people would put up with great costs to have it. The author mentions that he pays quite high taxes there as well. The marginal value of having an additional citizenship from the set of powerful western countries is quite low, though, which is why this author no longer feels that the costs are worth it. But only an incredibly small fraction of people are in a position to be citizens of more than one powerful western country, which means that the costs of being a citizen will likely continue to be judged (by most people) against the value of citizenship on its own, not as a marginal addition to some other citizenship.

arbuge 12y ago
>> I expect that the American taxation of expats is unlikely to change because there's simply very little economic pressure to do so. On the other hand, it is possible to change it with very little loss of revenue to the US because this taxation raises very little money in practice. Because of the 97.6k income exemption, as well as double taxation tax credits, the only real thing it does is create mountains of expensive paperwork for expats (as well as the IRS). Think along the lines of paying $5k to a specialty accountant to prove that your US tax bill is zero, every year. The other part of your comment about this affecting only a small fraction of people is inaccurate. It affects all US expats - currently several million (6.32m is the last number I've seen). The only criterion for being affected is US citizenship. Foreign citizenship is irrelevant. You will be taxed in most foreign countries if you are resident there, regardless of your citizenship - and then taxed again by the US on the basis of your US citizenship.
- _delirium 12y ago
  I don't think it's quite that bad. I've been an expat for some years, and I pay about $200/year to a CPA to make sure everything's filled out. At least for regular employment income it's pretty straightforward, if slightly tedious: report your income and foreign tax paid, run things both with and without the AMT, and declare any foreign bank accounts (declaring again, another way, if any had over $10k in a year). I could probably do it myself, but I figured I'd pay a CPA just to make sure it's done right. Things do get more complex if you run a business or own property, I suspect, but just as an employee I haven't found it difficult to do the annual "$0 tax owed" paperwork.
  - Someone1234 12y ago
    $200 is an awful lot of money for effectively nothing at all. You sound like someone who doesn't expect to be abroad very long, if you expected to be abroad for the remainder of your life (as many expats are) you'd likely find that $200*40 years to be less pleasant of a proposition.
    - dyeje 12y ago
      Yes, but $200 is alot smaller than $5000 stated in the parent comment.
    - JoshTriplett 12y ago
      I would hope that that cost covers tax preparation in general, not just the US-specific paperwork.
      - matthewowen 12y ago
        At least in the UK, paying any money at all for tax preparation is unusual.
        Someone1234 12y ago
        Having to do tax preparation is unusual period. I've filed a total of zero tax forms with the UK government in my lifetime. I've filed several hundred with the US government in a couple of years (and paid third parties money to file "for me" because filing directly is insanely difficult).
- pmorici 12y ago
  >>> On the other hand, it is possible to change it with very little loss of revenue to the US because this taxation raises very little money in practice. Are you sure? These tax laws also collect money from US Citezens working as contractors for the US military over seas not just someone who has decided they would rather live in Europe for the rest of their lives. They are often paid 6 figures salaries and there are 10's if not 100's of thousands of them around the world esp. supporting the wars in Iraq and Afghanistan. I don't think you would find a lot of support for reducing their taxes to zero.
  - scott_karana 12y ago
    They're being paid by a US employer in that case, and I suspect that they're not being taxed by the host country, since they're temporary residents. Wouldn't that pretty pretty easily distinguished from "employed by private UK company, pays UK taxes"?
    - pmorici 12y ago
      No, the fact that the salary is paid by a US employer has nothing to do with it. The tests for the Forgein Earned Income Exclusion are where your "tax home" is which is determined by your place of physical employment and the number of days per year you spend outside of the US. So long as your tax home is in a foreign country and you spend at least 330 days outside the US you don't pay federal income taxes on your first This site explains the basics. It most definitely does apply to US contractors. http://www.hrblock.com/tax-answers/services/jsp/article.jsp?article_id=57458 http://www.hrblock.com/tax-answers/services/jsp/article.jsp?...
  - mahyarm 12y ago
    In Canada, if your working for the canadian government in an embassy or similar in a foreign country, you are taxed according to canadian tax law. Same with temporary assignment abroad. I think the USA can continue taxing it's government soldiers in a similar fashion.
- bostonpete 12y ago
  It seems like the 97.6k income exemption and double taxation tax credits help explain why this taxation isn't a huge burden on normal expats. However, we've seen plenty of examples of American corporations setting up offices in foreign countries to avoid paying U.S. taxes -- what's to prevent the highest paid individuals from doing something similar to avoid their tax burden if this taxation policy was changed?
- ianferrel 12y ago
  I didn't say that the taxes only affect a small fraction of people. I said that only a small fraction of people have (or can easily attain) dual citizenship, and can reasonably do something about it. Someone who doesn't have dual citizenship is certainly going to complain about the tax paperwork, but they're not in a position to do much about it. They're not a big enough voting bloc to effect change and they're certainly not going to renounce their citizenship over it without having citizenship in another powerful western country to fall back on.
- mcv 12y ago
  $5k for an accountant to do your taxes is pretty high. I'm self-employed, and I'm paying EUR 500 per year to my accountant. More expensive ones cost EUR 1000. If the US tax system is so complex that it'd require $5000 in accountant work, that's certainly pretty extreme.
Spearchucker 12y ago
"The vast majority of people in the world would go to great lengths and expense to be able to have one." What is that based on?
deleted 12y ago
[deleted]

arbuge 12y ago

>> I expect that the American taxation of expats is unlikely to change because there's simply very little economic pressure to do so. On the other hand, it is possible to change it with very little loss of revenue to the US because this taxation raises very little money in practice. Because of the 97.6k income exemption, as well as double taxation tax credits, the only real thing it does is create mountains of expensive paperwork for expats (as well as the IRS). Think along the lines of paying $5k to a specialty accountant to prove that your US tax bill is zero, every year. The other part of your comment about this affecting only a small fraction of people is inaccurate. It affects all US expats - currently several million (6.32m is the last number I've seen). The only criterion for being affected is US citizenship. Foreign citizenship is irrelevant. You will be taxed in most foreign countries if you are resident there, regardless of your citizenship - and then taxed again by the US on the basis of your US citizenship.

_delirium 12y ago
I don't think it's quite that bad. I've been an expat for some years, and I pay about $200/year to a CPA to make sure everything's filled out. At least for regular employment income it's pretty straightforward, if slightly tedious: report your income and foreign tax paid, run things both with and without the AMT, and declare any foreign bank accounts (declaring again, another way, if any had over $10k in a year). I could probably do it myself, but I figured I'd pay a CPA just to make sure it's done right. Things do get more complex if you run a business or own property, I suspect, but just as an employee I haven't found it difficult to do the annual "$0 tax owed" paperwork.
- Someone1234 12y ago
  $200 is an awful lot of money for effectively nothing at all. You sound like someone who doesn't expect to be abroad very long, if you expected to be abroad for the remainder of your life (as many expats are) you'd likely find that $200*40 years to be less pleasant of a proposition.
  - dyeje 12y ago
    Yes, but $200 is alot smaller than $5000 stated in the parent comment.
  - JoshTriplett 12y ago
    I would hope that that cost covers tax preparation in general, not just the US-specific paperwork.
    - matthewowen 12y ago
      At least in the UK, paying any money at all for tax preparation is unusual.
      - Someone1234 12y ago
        Having to do tax preparation is unusual period. I've filed a total of zero tax forms with the UK government in my lifetime. I've filed several hundred with the US government in a couple of years (and paid third parties money to file "for me" because filing directly is insanely difficult).
pmorici 12y ago
>>> On the other hand, it is possible to change it with very little loss of revenue to the US because this taxation raises very little money in practice. Are you sure? These tax laws also collect money from US Citezens working as contractors for the US military over seas not just someone who has decided they would rather live in Europe for the rest of their lives. They are often paid 6 figures salaries and there are 10's if not 100's of thousands of them around the world esp. supporting the wars in Iraq and Afghanistan. I don't think you would find a lot of support for reducing their taxes to zero.
- scott_karana 12y ago
  They're being paid by a US employer in that case, and I suspect that they're not being taxed by the host country, since they're temporary residents. Wouldn't that pretty pretty easily distinguished from "employed by private UK company, pays UK taxes"?
  - pmorici 12y ago
    No, the fact that the salary is paid by a US employer has nothing to do with it. The tests for the Forgein Earned Income Exclusion are where your "tax home" is which is determined by your place of physical employment and the number of days per year you spend outside of the US. So long as your tax home is in a foreign country and you spend at least 330 days outside the US you don't pay federal income taxes on your first This site explains the basics. It most definitely does apply to US contractors. http://www.hrblock.com/tax-answers/services/jsp/article.jsp?article_id=57458 http://www.hrblock.com/tax-answers/services/jsp/article.jsp?...
- mahyarm 12y ago
  In Canada, if your working for the canadian government in an embassy or similar in a foreign country, you are taxed according to canadian tax law. Same with temporary assignment abroad. I think the USA can continue taxing it's government soldiers in a similar fashion.
bostonpete 12y ago
It seems like the 97.6k income exemption and double taxation tax credits help explain why this taxation isn't a huge burden on normal expats. However, we've seen plenty of examples of American corporations setting up offices in foreign countries to avoid paying U.S. taxes -- what's to prevent the highest paid individuals from doing something similar to avoid their tax burden if this taxation policy was changed?
ianferrel 12y ago
I didn't say that the taxes only affect a small fraction of people. I said that only a small fraction of people have (or can easily attain) dual citizenship, and can reasonably do something about it. Someone who doesn't have dual citizenship is certainly going to complain about the tax paperwork, but they're not in a position to do much about it. They're not a big enough voting bloc to effect change and they're certainly not going to renounce their citizenship over it without having citizenship in another powerful western country to fall back on.
mcv 12y ago
$5k for an accountant to do your taxes is pretty high. I'm self-employed, and I'm paying EUR 500 per year to my accountant. More expensive ones cost EUR 1000. If the US tax system is so complex that it'd require $5000 in accountant work, that's certainly pretty extreme.

Spearchucker 12y ago

"The vast majority of people in the world would go to great lengths and expense to be able to have one." What is that based on?

deleted 12y ago

[deleted]