You are viewing a single comment's thread.

view the rest of the comments →

0
26

[–] HoneyNutStallmans [S] 0 points 26 points (+26|-0) ago  (edited ago)

Background:

The United States, along with only Eritrea, taxes its citizens' income wherever they are in the world. One of those is a military dictatorship, but I'll leave it up to you to figure out which one it is.

Many US citizens have ended up dropping their citizenship (in favor of living elsewhere in the world) to avoid the hassle of filing taxes and other very revealing documents, as well as for other hardships caused by the US' taxation policy. I've detailed a list of hardships in this post.

The fact that only two other countries in the world do this, with other countries finally abolishing policies that taxed worldwide income, should say a lot about the US' progress in law and rights.

Finally, I shall describe how citizenship can be relinquished and what it implies.

Relinquishing citizenship is the process by which a person discards his citizenship. There are 6 forms of relinquishing US citizenship:

  • Naturalization in a Foreign State

  • Oath of Allegiance

  • Join Foreign Armed Services

  • Work for a Foreign Government as a Foreign National

  • Work for a Foreign Government With an Oath of Allegiance

  • Renunciation

Renunciation is a special form of relinquishment in which a person sets up an appointment in a US embassy or consulate and basically declares that he is no longer a citizen. The renunciation process, for some time, has cost $400 but, as of 2013, started to cost over $2000. Previously, the other 5 forms of relinquishment were free. As of last week, hence why this article was published, the US State Department has brought its relinquishment-without-renunciation fees up to parity with renunciation fees.

Relinquishing US citizenship can only be done under certain conditions:

To leave America, you generally must prove 5 years of U.S. tax compliance. If you have a net worth greater than $2 million or average annual net income tax for the 5 previous years of $160,000 or more (that’s tax, not income), you pay an exit tax. It is a capital gain tax as if you sold your property when you left. At least there’s an exemption of $680,000. Long-term residents giving up a Green Card can be required to pay the tax too.

Article 15 of the Universal Declaration of Human Rights states:

(1) Everyone has the right to a nationality.

(2) No one shall be arbitrarily deprived of his nationality nor denied the right to change his nationality.

Implicitly, no person shall be prevented from renouncing citizenship, provided that s/he has another citizenship. Oddly enough, the US is not a signatory to either of the two UN conventions on stateless persons, so the US actually allows you to renounce your citizenship and become stateless.

Basically, America owns you if you're a US citizen. As you may have heard, anyone born in the United States or born to one US citizen parent is automatically a citizen, which means that all these rules apply to them. The mayor of London, Boris Johnson, a US citizen born in New York City while his British parents were staying there, sold a house and suddenly owed hundreds of thousands of pounds (dollars) to the IRS. Basically, US citizenship is the worst citizenshipt to have.

0
10

[–] TheTrigger 0 points 10 points (+10|-0) ago  (edited ago)

Wow. When my parents were moving out of their home country, they had three offers:

  1. Australia
  2. United States
  3. Canada

I'm am grateful every single day that they opted to not go to the USA, and instead landed in Canada. I feel like my life is infinitely better here. Not just because of what you said, but for lots of different reasons. This feeling gets reinforced constantly. :/

0
4

[–] The_Wanderer 0 points 4 points (+4|-0) ago 

Have an upvote, but be wary of getting too complacent in Canada. It tends to behave more like a glorified extension of the US, at least for the past few decades.

0
1

[–] HoneyNutStallmans [S] 0 points 1 point (+1|-0) ago 

I was born in the US.

When you know that, wherever you are in the world, you have a responsibility to spend your time indexing and counting your personal assets and reporting that back to your birthplace and, in some cases, to even pay tax thereto, you quickly realize how much you're really fucked over just because you were born in the wrong place.

0
4

[–] Primax 0 points 4 points (+4|-0) ago 

How do they enforce their overseas tax policy? Seems pretty easy to just ignore.

0
4

[–] CryHavoc 0 points 4 points (+4|-0) ago  (edited ago)

When a U.S. expat opens a bank account overseas (or with any financial institution), the bank or institution has to file paperwork with the IRS.

So I guess as long as you keep all of your earnings in a mattress and don't invest them I guess you could evade the taxes but that probably isn't a great option.

0
4

[–] The_Wanderer 0 points 4 points (+4|-0) ago 

That's what I'm wondering; if I'm in another country already (and have no remaining US or US-based assets) why the fuck would I pay them another red cent? Sooner give them ThePirateBay treatment (mail package containing police riot baton, write detailed and explicit note about where said agency may cram it).

0
1

[–] WillyWillyBumBum 0 points 1 point (+1|-0) ago 

Clearly you've never heard of FATCA. Basically the US government got many countries to sign an agreement that requires all financial organizations in the country to pay special attention to US citizens and snitch on them (or pay fines otherwise). There was some minor outcry after the fact because it forces foreign banks to spend extra resources to keep the system running. Guess who they pass the costs on to in most cases.

0
0

[–] HoneyNutStallmans [S] ago 

Like someone else said: FATCA. Get the banks to become the watchers of any US citizen's account or any account that has a US citizen as a signing authority, which includes joint bank accounts, for the USG. If they don't comply, then hinder their business in the US.

0
0

[–] DickHertz ago 

The tax thing is at least consistent. If you have unrealized capital gains then it's the last chance for the government to collect taxes on them so you're just squaring up before you leave. Despite your assertion that it's the worse citizenship to have there is no shortage of people waiting to get in. Perhaps it is the worse citizenship to have if you are very wealthy and are sick of paying taxes?

0
0

[–] HoneyNutStallmans [S] ago 

If you have unrealized capital gains then it's the last chance for the government to collect taxes on them so you're just squaring up before you leave

The US should just allow you to keep assets inside the country. It's very complex to think of something that works, but it's much more sane than bullying foreign instutions and Americans abroad. Clearly every other country in the world has figured it out, so the US should be able to, too.

Despite your assertion that it's the worse citizenship to have there is no shortage of people waiting to get in.

Those people are at least making a concious choice about gaining US citizenship, though perhaps they may not fully understand the consequences. Persons born in the US or persons born to a US national father or mother did not choose to become US citizens and end up with "tax" burdens wherever in the world they choose to live.

To be fair, I believe that those born outside of the US to a US national have the choice to relinquish citizenship consequence-free before age 18 and a half. I have a feeling that many won't realize what they're getting into unless it's too late.

It is the worst citizenship to have if you wanted to live anywhere in the world, except of course in the country of citizenship itself.

Perhaps it is the worse citizenship to have if you are very wealthy and are sick of paying taxes?

It's not a matter of being "sick of paying taxes". There is a slowly growing income exclusion (it's almost up to $100,000/year) which is income that the IRS won't even look at. The tax burden by the foreign country for anything above income exclusion level can be further excluded as tax credits, so that, at the worst, your tax burden to the US is null because the foreign country taxed you more than the US would have.

1
-1

[–] CatNamedJava 1 point -1 points (+0|-1) ago 

This is the same reason why company have off shore profits thst they get blame for not paying taxes on. Same thing. They make the profit abroad pay whatever tax the local government femands rhan get a tax bill from the US.

0
0

[–] HoneyNutStallmans [S] ago  (edited ago)

Taxation of persons and incoporated entities can be quite different. I don't know too much about business taxation so I would like someone else to fill me in.

What's ridiculous is that US citizens abroad are taxed out the ass while domestic entities doing business in the United States can shuffle things abroad and then end up paying nothing to the USG.

Personally I believe that the USG should not be meddling in the affairs of any money handled abroad.