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There are some important considerations here that haven't been taken into account. For example, the United States is the only major country in the world that ta
by kudu 11y ago
There are some important considerations here that haven't been taken into account. For example, the United States is the only major country in the world that taxes non-resident citizens on their worldwide income, which makes it one of the most inconvenient passports to hold. Additionally, holding an EU passport allows one to work, study, etc. in any EU country, rather than simply visit it.
- bane 11y agoIf you think of the US as a more federated version of the EU, you don't even need a passport to relocate within the US.
- redblacktree 11y agoThis is a good point. There really are a lot of varied cultures in the US. The Louisiana Bayou looks nothing like the Eastern Seaboard, as an example.
- maxerickson 11y agoOnce you factor in the Foreign Earned Income Exclusion and Foreign Tax Credit, it is the filing requirement that is onerous, not the taxation. The first $100,000 of income can be excluded. On income above that, the US demands the difference if the taxes in the foreign country are less than US taxes. I think you acknowledge all this quite well when you call it inconvenient, but I think people don't need to be horribly outraged about it (I think the policy likely does close a path of tax avoidance that would be well used, but I'm pretty ambivalent about whether it is reasonable).
- walshemj 11y agobut this also applies to those dual nationals who have no relsionship with the USA - I doubt that Boris Johnson found it fun to have to file another tax return when dealing with his late mothers estate. BTW for non uk people Boris is going to be the next Leader of the Tory's and possibly PM within 5 years
- maxerickson 11y agoI guess that is what I mean when I say I am ambivalent; I agree that the situation you point out is absurd, but on the other side of it I actually don't care that the US demanded taxes from the wealthy mayor of London.
- walshemj 11y agoCan you imagine the shitstorm that would happen if it was the other way around say a very high profile US politician being hit with a demand from HMRC - Fox news would go ballistic and demand that you invade Canada again.
- maxerickson 11y agoYeah, I think I can imagine it, but think I still wouldn't care about it. If Canada sent Ted Cruz a tax bill, I'd be amused. And I'd expect him to pay it (because he probably would like to visit there without hassle in the future). Which doesn't mean I think it is good policy (from the replies I got you'd think I was loudly praising the United States of the IRS), but I can also estimate how much I am actually personally going to do about it over the next several decades.
- walshemj 11y agoNo man is an island - and if they can screw over rich people guess what's going to happen to the little people. You seriously don't think the principle of equality before the law is worth fighting for?
- maxerickson 11y agoAre you talking about taxing expats? Or my example, which I meant to take place in a hypothetical world where Canada has a law taxing non resident citizens? (Cruz really was a dual citizen of the US and Canada until last year...)
- siberianbear 11y agoThe Earned Income Exclusion, as its name applies, only applies to "earned" income. It doesn't apply to capital gains or dividends. Having reviewed the form in detail, I also believe that self-employed US citizens working abroad with US-sourced self-employment income (i.e., digital nomads) also need to play the ~15% self-employment tax, even if you're able to get out of the "normal" income tax with the Foreign Income Exclusion.
- maxerickson 11y agoI think it is much more likely that digital nomads are operating unlicensed businesses in foreign countries than it is that they are earning "US sourced self-employment income". It could well be easy to import the earnings into some country while characterizing it as US sourced self employment income. That doesn't mean it is actually compliant with the regulations of that country.
- chiph 11y agoIf you're an American expat, having a foreign bank account (you know, because you live there..) means your chances of getting audited go up.
- dantheman 11y ago1. It's a huge hassle - banking in the countries becomes crazy, filing all the taxes is hard - you can't use turbo tax. 2. The amount of money raised by this is paltry. 3. It gives people a reason to renounce their citizenship - who don't want to.
- masklinn 11y ago> Additionally, holding an EU passport allows one to work, study, etc. in any EU country, rather than simply visit it. I don't think you even need a passport, just a proof of nationality (e.g. a national ID card from your country of origin, that's usually free or much cheaper than a passport)
- kyriakos 11y agoThat's true. You can travel around Europe and stay, work, study with just your Id card
- peterfirefly 11y agoNot all EU countries use ID cards, let alone ones with photos.
- masklinn 11y agoOnly 5 countries in the EEA (3 also being in the EU) don't have national ID cards: Denmark, Iceland (which does actually have one, but it doesn't state nationality so it can't be used as ID outside of the nordic union), Ireland, Norway and the UK (abolished in 2010 following their 2006 introduction). Those do have to use passports for free movement (and to enter countries like Albania which offer general entry on the sole basis of EEA citizenship). Both Ireland and Norway have decided to start issuing national ID cards soon (2015 and 2017 respectively).
- bradleyjg 11y agoI believe China also taxes on worldwide income, albeit until recently more in theory than practice.
- aaron695 11y ago> For example, the United States is the only major country in the world that taxes non-resident citizens on their worldwide income, which makes it one of the most inconvenient passports to hold. Soooo if your US passport expires you no longer have this tax? I would have thought it was based on US citizenship not travelling on a US passport.