The absolute numbers are still pretty small, though. In 2000 273 people renounced their passports. This year, 6800 people have so far. A big increase, but still a drop in the bucket compared to the 700k that were naturalized.
That only captures the flow toward countries that refuse double nationality. 9 out of 10 of the most common names for those are Asian (Chinese mainly, at least one Vietnamese and at least two Korean)
Most people will keep their passports even when residing long term abroad.
Sorry if it's a stupid question, but how do you tell the difference between an expat and a tourist when looking at people traveling out of the country then?
US worldwide taxation is incredibly obnoxious, but the benefits of keeping a US passport still outweigh the drawbacks for many. That's not guaranteed to last forever, though.
Being able to return to the USA, and visa-free access to more/different countries compared to the new citizenship.
Renouncing American citizenship is extremely rare, as these figures show. The taxation is a paperwork hassle, but you need a very high income to actually owe anything -- for most, the higher tax rate in the new country offsets the American tax due.
If they determined you did for taxes, it's a no-no:
Former U.S. citizens would be required to obtain a visa to travel to the United States or show that they are eligible for admission pursuant to the terms of the Visa Waiver Program. If unable to qualify for a visa, the person could be permanently barred from entering the United States.
If the Department of Homeland Security determines that the renunciation is motivated by tax avoidance purposes, the individual will be found inadmissible to the United States under Section 212(a)(10)(E) of the Immigration and Nationality Act (8 U.S.C. 1182(a)(10)(E)), as amended.
https://travel.state.gov/content/travel/en/legal-considerati...
You cannot/shouldn't renounce your US citizenship for tax reasons. [0] Every piece of advice you read from anyone online will say the same thing: if you must give a reason for expatriation (and you don't have to), say anything but taxes.
You don't officially have to give a reason to renounce, but consular officials might ask you verbally for your reasons. You are not required to give one though. You have the option to include a written statement, but I'm not sure why you'd ever want to take it (unless you really want to give them additional reasons to deny you entry).
It gets WAY more complex if you don't have a standard salary job. Even if you don't make over 100K a year. E.g. small business owner expat is in for a world of pain, stress, and audit.
This is a big misunderstanding of US taxation. Every US citizen must file their taxes on income earned anywhere in the world, even if not earned in the US.
However, for most people, it is very unlikely to actually pay any additional tax to the US government.
After you make $100k, there is also the foreign tax credit. In most countries, you don't need to bother with the foreign earned income exclusion unless you are not paying tax at all.
If you have any kind of saving or investment outside the us, say, a pension fund or a mutual fund, then you do owe quite a bit even if you live in the US (more if you don't). Almost all of these investments/funds are a PFIC by US rules, which means a world of pain - to the point that over 20 years you are likely to have to pay more in taxes than however much money you have there.
I don't think you understand how taxes work. US tax rates are marginal, so for your effective tax rate to be 30% you'd probably be earning several million dollars in payroll. Very unlikely. Not to mention the fact that if you're an expat, income tax paid in your country of residence counts toward your US tax obligation.
If you live somewhere with higher taxes, you owe the US nothing. If you live somewhere with lower taxes, you owe only the difference.
Speaking as a wealthy person who has considered expatriating, the US is REALLY nice relative to almost anywhere in the world if you have a lot of money. There are also activities like piloting your own planes, using wide-open spaces, etc, that are much more regulated and hard to enjoy in other places.
US is also really fun for girls/partying if you have money.
30%+ of your income down the drain sucks a lot, but past a certain point in net worth it becomes somewhat attractive. Same reason people live in California even with the insane tax burden--it's really really freaking nice.
For starters, easy access to one of the largest (and in many cases highest paying) job markets in the world. Secondarily, a high quality fallback in the event of significant geopolitical or environmental changes in ones new host country.
In the hypothetical scenario where an emigrant from the US is 100% determined to never return, and who also is confident in the long term stability of their new host nation - then the inconveniences of yearly tax paperwork might outweigh the benefits. However, I think that's more of a corner case than not as evidenced by the fact that the vast majority of emigrants choose to retain their US passport.
If I'm correct you only have to do a federal tax return (not state) and you have a tax credit equal to what you paid in your residence country.
So yes, I understand filling a tax return is a chore, but you'll only pay taxes if the amount you paid in your residence country is lower that what you would have paid in federal taxes alone.
Considering how low US income tax is, in most countries you won't have to pay anything.
From what I understand, that's mostly true. However, describing it as a simple 'tax return' is probably understating the complexity. Like someone else pointed out further down in the thread, a small business owner "is in for a world of pain, stress and audit". Likewise, income from investments can be massively annoying to file for correctly.
Compared to what? The maximum federal rate is nearly 40%. Yes, there are many many countries with maximum rates in the 50-60% range. But 40%, even marginal, is not low.
Only if you include state rates, which is.. disingenuous at best. It's at least as wrong as saying the US has very low tax rates. If you're talking about expatriation, the IRS, etc, you're only talking about Federal rates. Short of outlawing income tax the Federal government has very little power over dictating state tax rates.
At the Federal level personal taxation is not terrible but it's not low, either. The US has the second higher corporate income tax in the world according to that same chart, and the highest depending on your state of incorporation/operation (if you include state/local).
I disagree. The context of the original quote was;
> Considering how low US income tax is
Now I do understand what you mean when you make the distinction that for expatriate taxation based on citizenship, only the federal taxes are considered, but that is not what the original language actually said in the context of the statement regarding how low US income tax is, and weasel language to push a political agenda is annoying at the best of times.
To be scrupulously fair and expose my biases though, frankly even federal taxes alone are high as far as I'm concerned. Any amount is high when you're forced by threats of violence to pay it. The appropriate amount gathered by that method ought to be zero percent.
It's a bit more than a simple tax return...there's also FBAR and ACA exemption. The penalties for screwing up FBAR are rather ridiculous, especially since the limit mandating reporting is so relatively insignificant.
The fbar/fatca/fincen filings are insane (assume you have 3 bank accounts, a couple of pension /health spending accounts, a saving account you opened for your kid, etc; and that the total tops $50,000 - you're going to have to file 10-20 pages of details with stiff penalties.
Not to mentions that banks and brokers refuse to take you as a customer if you are a US taxpayer.
Some do, but not that many. Having a US passport is useful. You can discount the income tax already paid in an other country, so (other than the hassle of filing) it mostly affect people with very high income or who work in countries like Dubai without an income tax.
The absolute quantity is so far off from being statistically significant sample of the population that the variation rate at this point is a worthless data point.
Statistical significance doesn't imbue a datapoint with worth, but I guess that thinking is why many research literatures are unreliable because people filter which results get published.
expats don't plan to die in the country they moved to. Usually they are there for less than 10 years. Expats don't get citizenship in the new country. No the term is not just Western exceptionalism. Yes it can apply to people not from Western countries.
People generally move to another country in search of a better life... not planning where to die. In casual use I hear expatriate used for anything from someone temporarily living abroad to people who have renounced their citizenship - even if still residing in the US. I understand the legal definition for the US is simply someone working in a country that is not their country of origin (https://definitions.uslegal.com/e/expatriate/). In this legal sense, the US applies the term expatriate to Americans who are in other countries but not to people from other countries who are working in the US. Instead, people from outside the US are referred to as aliens until they obtain US citizenship (https://definitions.uslegal.com/a/alien/).
I would not call this an example of Western Exceptionalism. It is rather a phenomenon known as "othering" meaning to portray someone or something as different to emphasize that he/she/it is the other and not us/this. Note you won't find this term in Webster. They were apparently too busy adding "bling" and "ginormous".
Thats a common misconception and ignorance of western world in action. Just like they call their native Americans as Indians. And when they say "world", they really mean the North American continent. When they say immigrants, they mean third world people, and when they say expats, its first world country citizens.
These misconceptions will change once the solipsistic cloud over the western world clears out.
I understand the air of superiority in your comment. You can keep that to yourself and go back to your colonial days. By the way, what you think about this ? Isnt it stupid to call it a world series ? As a European, will you call it the world series ?
I know many American expats here in Berlin in the high-tech and academic worlds. Many say that the current political climate in the US greased the skids for their expatriation. No one says that the impetus was only the political situation, or that they will never return, but rather that it's a major factor in reducing the resistance to expatriation. For many, even those who aren't particularly partisan, the US political situation has become a source of constant low-level anxiety at best, and that generates a kind of exhaustion that makes it easy to throw up your hands and think "to hell with all this."
There were 15 school shootings in the US last year, according to Wikipedia. Shure, Germany has revolutionary communists, anarchists and néonazis, but the US is a wild place too.
I'm sure this image has been distorted by Hollywood et al., but I have the impression that the US is a particularly violent place, at least when compared to Western countries of similar development.
>but I have the impression that the US is a particularly violent place, at least when compared to Western countries of similar development.
That impression is right and wrong. Violent crime is more common in Europe but murder is more common in the US
Violent crime in the US (murder included) is mostly confined to drug trafficking and the downstream crime.
Basically unless you or your neighbors associate with those kinds of people who derive their income from illegal drugs you're slightly less likely to encounter violent crime in the US.
I'm summarizing a paper I bookmarked awhile back. I'll try and find the link.
The US is not a particularly violent place for the majority of people in it. There are certainly parts of it that are, but chances are someone reading hacker news would never end up in those parts.
I've lived in Atlanta, Chicago, Boston, Miami, Los Angeles, even Flint, Michigan and have even been to some of the less nice parts of those areas. I've never been mugged or beat up or even threatened really. I've had my car broken into once or twice in 50 years, but I was not in or near it at the time. The image Hollywood projects is extremely distorted. I've even known lots of people who owned or really loved guns, and none of them has ever done anything violent with them as far as I know.
The anxiety isn't rooted in simple personal safety. It's caused by the feeling that the state is erratic and unstable, and one can expect negligence and malice from all corners big and small at any time.
Interesting, but it's been a growing trend. US is one of the few countries that taxes its citizens who move abroad. This leads many to give up their US passport/citizenship. You may also know that US citizens who open bank accounts here in UK have to declare, specifically that they are US citizens. It's basically a checkbox you clear (or not). That is then flagged back to some 'entity' in the US presumably...
One thing I did notice that was interesting. If you click the 'raw data' from the Federal Register and scroll down the list of those who have given up citizenship there is one 'Steven Ballmer' listed..I had to chuckle at that one...
>US is one of the few countries that taxes its citizens who move abroad.
More precisely it is taxation by citizenship, not residence.
For example, the Netherlands will happily tax everyone on their assets worldwide, but you're not going to be paying Dutch income taxes if you're not living and working in the Netherlands.
> More precisely it is taxation by citizenship, not residence.
Both. Non-citizens (inc. illegal immigrants) are required to pay US taxes just for residing in the United States. The US will actually give non-citizens a unique tax ID (TIN) for this express purpose.
So the US will tax both based on residential status AND citizenship status.
You can also get an ITIN for non resident aliens, as I found out when I married my wife abroad and needed to put her on my taxes so I could "married filing jointly" and not get screwed on taxes. In at case, the US is effectively taxing a non-resident non-citizen, which is another level of bizarre (but the foreign tax deduction makes it OK in the end).
Well, if an illegal immigrant files taxes, then they're registered in the system and will be thrown out, right? If you're illegally in a country you presumably have to stay hidden in order to not be thrown out, and if you pay taxes you're not hidden anymore.
Yes, and you can make the same argument about having to pay taxes on illegal activity and it basically being self-incrimination, an actual constitution right (which staying here illegally is not). The courts have considered the argument and they don't agree.
They don't really deport people that way, though. It could certainly happen in the future, but currently they're focusing on criminals and suspected gang members for deportation.
No. The There are laws against the IRS reporting illegal income to other agencies. If you pay your taxes, the IRS has no problem with you, and any violation you have with another agency is not their problem.
Makes perfect sense. The US is the most wealthy-unfriendly tax regime in the world. I have friends who have never lived or worked in the US amd yet are asked to pay high US taxes. They hate it and will leave. The people who get naturalized are all people with no meaningful assets. Plus many global banks will not open us citizens accounts.
In other words being a US citizen is no upside and all downside.
You only get taxed on income above a certain amount and you don't usually pay double taxation on taxes you paid to the country you live in. It's not that big of deal except that you have to file the tax return.
It's not a big deal if you haven't made the egregious choice of investing any extra money you may have earned, perhaps via an ETF.
Furthermore, good luck finding a place to invest in the first place. If looking for a US company, the likes of Vanguard and Charles Stanley will freeze your account if they find you reside outside the US. In the UK, I've gotten very used to seeing the text 'we are unable to open accounts for US, Cuban, Iran, Sudan, Syria, and North Korea persons'.
I make well below the standard deduction and just want to save a bit for my future. The US laws as they stand make this very difficult.
quite. For my SIPP provider, I've ended up having to go with one of the more expensive providers, when all I need is one of the cheap diy ones, because the cheap diy ones don't allow US citizens to open accounts
When I called to change my address for an old work Fidelity IRA years back, the panic in the advisors voice, as he informed me I'd no longer be able to contribute to the fund, was kinda funny. Considering I'd never personally contributed to the account in the first place.
Hargreaves Landsdown. I've found the platform easy. They're good at getting the 20% top up, though it takes about 4-6 weeks after each deposit for the extra 20% to be deposited.
Not the cheapest though, but I think they may actually be cheaper than my work place pension! I need to sit down and work it out.
I started with a £20 deposit, and just set up a monthly transfer.
> If looking for a US company, the likes of Vanguard and Charles Stanley will freeze your account if they find you reside outside the US.
Ugh, this is maddening. I had a Kafka-esque conversation with a Charles Schwab dude whose scripted answers almost comically changed when he learned that I lived in the Netherlands. It was fine at first, even with the understanding I lived abroad. But their deceptively advertized "expat services" only apply to Americans living in HK and UK.
It wasn't as bad when I called Vanguard, aside from the non-answers they kept giving me at first (they kept saying it was against US regulations and illegal, which I know to be false; when I pressed, they admitted it was purely their own company policy). At least she wasn't literally reading from a script and took the time to check with some supervisors.
I hear some Americans here with pretty standard work income+pension savings say that they end up spending $1000+/year for an accountant who is educated in cross-border US taxes to prepare their filings that always end up as $0 owed. Seems like a massive burden to me.
If the US doesn't have a tax treaty with the country you are in, pensions become quite difficult.
Even in countries like the UK where there is a tax treaty in place, it can be difficult because the UK offers a wide variety of tax wrappers to encourage people to save money. But those tax wrappers can count as PFICs for US taxes and you won't be getting the paperwork you need to do a QEF, so you have to Mark To Market
I farked up on an ISA because I never knew about any of this and ended up owing over $1000 in back taxes. If I had known enough to declare the PFIC correctly from the date I started it, I wouldn't have owed any where near that amount of tax on it :(
> The US is the most wealthy-unfriendly tax regime in the world.
I'd like to hear more about this. I'm a Canadian, and our conservative politicians are always saying that WE are the most wealthy-unfriendly tax regime in the world, and that it is stifling investment.
And I keep reading about how in Scandanavian countries, the rich have to give nearly all of their income back to the state, but they are impossibly nice people, so they don't mind. Are Sweden, Norway, Finland, and Denmark friendlier to the wealthy AND providing Universal Health Care to their citizens?
Well, in France we have national celebrities who prefer to take Russian citizenship rather than pay taxes here. So I think we have the most wealthy-unfriendly tax regime in the world.
I know only this one particular case, sorry for the exageration. However thousands of (nameless) millionaires have left france in these past years (according to http://www.lalsace.fr/actualite/2017/04/11/de-plus-en-plus-d...) it was 12000 in 2016, 10000 in 2015 and 6000 in 2014. Not a very good development.
Hi, a Finn here. Everyone here in Finland, including but not limited to the wealthy, feels that they themselves pay too big a share of maintaining the welfare state (while they don't seem to mind if other demographics would end up paying more). So business as usual I guess.
Hi. I'm a Russian citizen living in Sweden. I have a work visa.
The income tax is progressive and hits the ceiling of 60% pretty fast. I don't remember exactly but I think it does if your salary is more than 60000 Swedish kronas (around 6000 euros). Universal Health Care is available to everyone who has Swedish ID (I do) and includes higher cost protection for dental services.
Without diving in I can tell Sweden is definitely not friendly to the wealthy but it's very friendly to a lot of people with everyday common jobs with lower and middle level salaries.
Au contraire. The high taxes in Sweden are on income (and consumption). Capital gains tax is maximum 30%, the property "tax" is low, and there's no "asset tax."
That is a major conservative politician talking point. I do not consider it founded in reality, but making it a talking point and an objective does increase political contributions from wealthy sources.
Long-term capital gains hasn't been 15% for a long time. We can thank Obama for that. Furthermore, in any state that's remotely desirable to live in, you can throw in another 10-13% on top of those 20% capital gains.
US taxes are absurdly complex and expensive. The upside is that the system can be fairly easy to game / optimize.
Long term capital gains are 20% if you're in the top tax bracket (making a little under $500k/yr) so I doubt you'll find many people being sympathetic there. It's 15% on long term gains for the majority of people.
Long term capital gains is 15% until you hit a super high income tax bracket. Many states lack capital gains taxes at all (e.g. Washington, which I find very livable). Thanks Obama.
The US is the only country that taxes worldwide income.
So i travel between different countries without living much in any particular one and i pay zero tax. And if i ever want to live somewhere fulltime, i can defer income into trusts and collect it in future years when i happen to not be domiciled anywhere.
Options available to everyone except US citizens.
Or for example my friends in Russia who are US citizens have to pay a crazy US rate instead of the far more reasonable 13% in russia.
All the comments about scandi countries assume people actually declare income without using many more legal strategies available there compared with the US. The effective tax situation for wealthy US citizens is actually much worse, it is just obfuscated by the headline number.
>The US is the only country that taxes worldwide income.
Technically no, so does Eritrea tax non-resident citizens on their worldwide income.
And it's frankly hard to make sense of the rest of your comment.
It's difficult (or impossible?) as you say for an American citizen to basically be a perpetual tourist, not actually residing anywhere?
>to pay a crazy US rate instead of the far more reasonable 13% in russia.
>All the comments about scandi countries assume people actually declare income without using many more legal strategies available there compared with the US.
Well, yes, I am assuming that people generally don't try to live as a perpetual tourist and skirt tax burdens by not actually living anywhere.
>The effective tax situation for wealthy US citizens is actually much worse, it is just obfuscated by the headline number.
the point is a US citizen who is a perpetual tourist still must pay US taxes.
as a non-US citizen i can live in the US for many years and keep accruing income/assets into a trust + take loans against said income/assets to fund expenses. then one year when i happen to be a perpetual tourist i distribute all of that from the trust to myself. zero taxes.
I worked with a guy once who moved from country to country paying zero tax and he was bragging to me about this. He also had a wife and child with him. So I just thought: Nice for him: He gets to live in a country with clean water and sanitation, the rule of law, disease control, free education for young children etc ---- I pay for it.
I don't know about you, but my water and sanitation are billed to me directly by the non-government companies that provide them, and my employer pays a fraction of my health care burden to an insurance company instead of me, for tax-avoidance purposes. Every education system I have ever seen is funded by property taxes, which are paid by owners or renters via monthly checks to the owners, without regard to citizenship or domicile. The rule of law is increasingly paid for by selective enforcement of offenses with revenue-positive fine structures.
I'm not sure what exactly it is my income taxes pay for, but about anything I might want from a government is already paid for by direct billing or by some other type of tax. Maybe I'm paying for a seat cover of an F-35. Maybe I'm paying for a bridge repair that has been overdue for 30 years. I lack the attention span to follow the money that far.
That guy still pays sales taxes, and any taxes that may be indirectly passed on to him through business dealings. It isn't zero; it's just less than you, at the price of being a technically domicile-less nomad. The lifestyle is a bit more stressful, as you have to schedule mandatory events around several sets of local laws.
As an expat, the main reason I'd give up my citizenship is dealing with the extremely onerous IRS and FINCEN filing requirements. Last year I probably spent 20-40 hours on this crap, just to prove I owe nothing. My tax return has been to tax court even though it was 100% perfect, simply because IRS doesn't have the expertise to evaluate their own murky laws around foreign employment. Everything is okay as long as you are a permanent employee without a self-controlled pension. Step out of the bounds and you're in for a world of pain. It seems so unnecessary and stupid to me. You also get double taxed on some things, like house purchase/sales in the UK. Expats really get the shaft from the US gov.
Note it's not cheap to expatriate either. It's 2000 a family member plus possible exit tax. IRS can also pursue you for taxes afterwards if they think you did it to explicitly avoid taxes. There is no 100% escape.
And worse, while you're still entitled to vote for your representatives in the last place you lived in the US, politically, why would they even give you the time of day?
There are a lot of Americans living abroad, estimated to be 3-9 million, excluding military. Collectively more than a number of states. Yet their distribution means that Americans' voices abroad fall on deaf ears in Washington.
also, he's not saying that ppl who give up their citizenship should have fair voting representation. it's the people who are still americans who just happen to live overseas. we are still paying US taxes and therefore should have proper representation.
While the term is loaded with baggage (vs. immigrate, for example) it doesn't make a claim with respect to citizenship gained or lost, especially in this context.
It puts the lie to the "social contract" / "you agreed to be taxed because you haven't left" argument.
You must ask permission to renounce your citizenship, and the government can deny your request, meaning you can't just leave. Then they charge you lots of money to leave, as you've explained.
The old Hotel California rule. US Citizens are the only people in the world (besides a very small african nation) that still have to file and pay income taxes back home when they are no longer living in the United States. So much for being free.
Allow me to request clarification. You say "...explicitly to avoid taxes." Is that attempting to evade taxes you already owe, or avoid paying taxes in the future? I mean, I could see an IRS auditor attempting to claim that as a reason for expatriating, "I no longer want to pay US tax" isn't acceptable and here's your tax bill for all that time you've been living elsewhere. (That's not to say the auditor's claim would ultimately be fruitful...)
Assuming you mean the former, I can certainly see the IRS coming after expats for evasion. And why not? But they cannot be allowed to run roughshod over just anyone they "feel" is evading.
Last I check (which admittedly was a long time ago), the US will continue to tax you for 10 years after you give up your citizenship, if it thinks you're doing so to avoid taxes or if your net-worth is over $100k.
He thinks he's in a John Wayne film, where a guy with a bright T-shirt that says 'TERRORIST' across it will announce his intentions, before opening fire with an AK-47 in a public place. He will then draw his Smith & Wesson, and put the criminal down with one well-placed shot.
In the real world, this is, of course, laughable. Even people with guns don't fight back against armed gunmen, for two reasons.
1. Most of the time, you have no idea who the armed gunman is.
2. You are very likely to be mistaken for the gunman, and shot and killed by the police.
I can do more to not get hit by a truck than to try and convince my elected representatives to behave in a manner I consider upright and positive. There are a plethora of reasons I wouldn't take this option (friends, family, taxes, culture, property, etc), but if it was a fully even choice between "politics" and "cars," I'd take cars.
And traffic accidents are far more common in all western countries than terrorist attacks. But you would never know that reading our newspapers or watching our TV.
Case in point: the number of cyclists killed in Berlin traffic 2016 was higher than the number of people killed by terrorist attacks. Providing safe traffic infrastructure may have a better ROI than all the anti-terror measures. It's just that we have accepted traffic deaths as inevitable and they happen one by one and terror attacks are one big event that people think is somehow magically preventable. (In truth, the 2016 attack would have been preventable had autorities arrested the attack instead of stopping the existing surveillance, but most traffic death would be preventable as well)
Traffic deaths are not entirely accepted. There is a constant trajectory of better infrastructure and more safety systems in vehicles.
Of course we are still accepting traffic deaths at some level, but there is a lot of effort and resources devoted to reducing them over time. It's just expensive and disruptive.
One of the primary reasons I moved to Europe (and not even a particularly cycling-friendly place within Europe) was so I wouldn't die under the wheels of some lifted pickup truck while riding my bike to work.
Based on the names, could it just be that the baby boomers are retiring and going home? They are a very large demographic and I imagine their options for reasonable priced healthcare insurance are shrinking.
It says the NUMBER of people doing so is at an all time high. How many per capita? The absolute number is kind of silly to use as the population grows over time...
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[ 3.2 ms ] story [ 206 ms ] threadMost people will keep their passports even when residing long term abroad.
https://en.wikipedia.org/wiki/Expatriate
Renouncing American citizenship is extremely rare, as these figures show. The taxation is a paperwork hassle, but you need a very high income to actually owe anything -- for most, the higher tax rate in the new country offsets the American tax due.
If the Department of Homeland Security determines that the renunciation is motivated by tax avoidance purposes, the individual will be found inadmissible to the United States under Section 212(a)(10)(E) of the Immigration and Nationality Act (8 U.S.C. 1182(a)(10)(E)), as amended. https://travel.state.gov/content/travel/en/legal-considerati...
You don't officially have to give a reason to renounce, but consular officials might ask you verbally for your reasons. You are not required to give one though. You have the option to include a written statement, but I'm not sure why you'd ever want to take it (unless you really want to give them additional reasons to deny you entry).
[0] https://en.wikipedia.org/wiki/Reed_Amendment_(immigration)
That's not especially common.
Further details: https://www.americansabroad.org/us-taxes-abroad-for-dummies-...
(I'm not American, but none of several close friends in Europe with dual US/something-EU citizenship have given up their American citizenship.)
This is a big misunderstanding of US taxation. Every US citizen must file their taxes on income earned anywhere in the world, even if not earned in the US.
However, for most people, it is very unlikely to actually pay any additional tax to the US government.
https://www.irs.gov/individuals/international-taxpayers/u-s-...
"Your worldwide income is subject to U.S. income tax, regardless of where you reside."
But there's the foreign earned income exclusion:
https://www.irs.gov/individuals/international-taxpayers/fore...
If you live somewhere with higher taxes, you owe the US nothing. If you live somewhere with lower taxes, you owe only the difference.
US is also really fun for girls/partying if you have money.
30%+ of your income down the drain sucks a lot, but past a certain point in net worth it becomes somewhat attractive. Same reason people live in California even with the insane tax burden--it's really really freaking nice.
You have got to be visiting the wrong countries (North Korea?)
Literally anywhere I've been outside the US is a hell of a lot more fun for girls/partying than the US. And that's an understatement.
In the hypothetical scenario where an emigrant from the US is 100% determined to never return, and who also is confident in the long term stability of their new host nation - then the inconveniences of yearly tax paperwork might outweigh the benefits. However, I think that's more of a corner case than not as evidenced by the fact that the vast majority of emigrants choose to retain their US passport.
So yes, I understand filling a tax return is a chore, but you'll only pay taxes if the amount you paid in your residence country is lower that what you would have paid in federal taxes alone.
Considering how low US income tax is, in most countries you won't have to pay anything.
Compared to what? The maximum federal rate is nearly 40%. Yes, there are many many countries with maximum rates in the 50-60% range. But 40%, even marginal, is not low.
https://en.wikipedia.org/wiki/List_of_countries_by_tax_rates
Sort by max individual rate, it's 8th from the top in a list 221 countries long.
At the Federal level personal taxation is not terrible but it's not low, either. The US has the second higher corporate income tax in the world according to that same chart, and the highest depending on your state of incorporation/operation (if you include state/local).
> Considering how low US income tax is
Now I do understand what you mean when you make the distinction that for expatriate taxation based on citizenship, only the federal taxes are considered, but that is not what the original language actually said in the context of the statement regarding how low US income tax is, and weasel language to push a political agenda is annoying at the best of times.
To be scrupulously fair and expose my biases though, frankly even federal taxes alone are high as far as I'm concerned. Any amount is high when you're forced by threats of violence to pay it. The appropriate amount gathered by that method ought to be zero percent.
Not to mentions that banks and brokers refuse to take you as a customer if you are a US taxpayer.
I would not call this an example of Western Exceptionalism. It is rather a phenomenon known as "othering" meaning to portray someone or something as different to emphasize that he/she/it is the other and not us/this. Note you won't find this term in Webster. They were apparently too busy adding "bling" and "ginormous".
These misconceptions will change once the solipsistic cloud over the western world clears out.
https://en.m.wikipedia.org/wiki/World_Series
emigrant: a person who leaves their own country in order to settle permanently in another.
Also, one does not necessarily give up their citizenship to become an expat somewhere else.
I'm sure this image has been distorted by Hollywood et al., but I have the impression that the US is a particularly violent place, at least when compared to Western countries of similar development.
That impression is right and wrong. Violent crime is more common in Europe but murder is more common in the US
Violent crime in the US (murder included) is mostly confined to drug trafficking and the downstream crime.
Basically unless you or your neighbors associate with those kinds of people who derive their income from illegal drugs you're slightly less likely to encounter violent crime in the US.
I'm summarizing a paper I bookmarked awhile back. I'll try and find the link.
I've lived in Atlanta, Chicago, Boston, Miami, Los Angeles, even Flint, Michigan and have even been to some of the less nice parts of those areas. I've never been mugged or beat up or even threatened really. I've had my car broken into once or twice in 50 years, but I was not in or near it at the time. The image Hollywood projects is extremely distorted. I've even known lots of people who owned or really loved guns, and none of them has ever done anything violent with them as far as I know.
One thing I did notice that was interesting. If you click the 'raw data' from the Federal Register and scroll down the list of those who have given up citizenship there is one 'Steven Ballmer' listed..I had to chuckle at that one...
More precisely it is taxation by citizenship, not residence.
For example, the Netherlands will happily tax everyone on their assets worldwide, but you're not going to be paying Dutch income taxes if you're not living and working in the Netherlands.
Both. Non-citizens (inc. illegal immigrants) are required to pay US taxes just for residing in the United States. The US will actually give non-citizens a unique tax ID (TIN) for this express purpose.
So the US will tax both based on residential status AND citizenship status.
That's... Slightly insane?
They don't really deport people that way, though. It could certainly happen in the future, but currently they're focusing on criminals and suspected gang members for deportation.
In other words being a US citizen is no upside and all downside.
Furthermore, good luck finding a place to invest in the first place. If looking for a US company, the likes of Vanguard and Charles Stanley will freeze your account if they find you reside outside the US. In the UK, I've gotten very used to seeing the text 'we are unable to open accounts for US, Cuban, Iran, Sudan, Syria, and North Korea persons'.
I make well below the standard deduction and just want to save a bit for my future. The US laws as they stand make this very difficult.
When I called to change my address for an old work Fidelity IRA years back, the panic in the advisors voice, as he informed me I'd no longer be able to contribute to the fund, was kinda funny. Considering I'd never personally contributed to the account in the first place.
Interactive brokers are the only broker I've found to actually advertise as for expats, but the 10k min is a bit much for me.
Not the cheapest though, but I think they may actually be cheaper than my work place pension! I need to sit down and work it out.
I started with a £20 deposit, and just set up a monthly transfer.
Ugh, this is maddening. I had a Kafka-esque conversation with a Charles Schwab dude whose scripted answers almost comically changed when he learned that I lived in the Netherlands. It was fine at first, even with the understanding I lived abroad. But their deceptively advertized "expat services" only apply to Americans living in HK and UK.
It wasn't as bad when I called Vanguard, aside from the non-answers they kept giving me at first (they kept saying it was against US regulations and illegal, which I know to be false; when I pressed, they admitted it was purely their own company policy). At least she wasn't literally reading from a script and took the time to check with some supervisors.
Even in countries like the UK where there is a tax treaty in place, it can be difficult because the UK offers a wide variety of tax wrappers to encourage people to save money. But those tax wrappers can count as PFICs for US taxes and you won't be getting the paperwork you need to do a QEF, so you have to Mark To Market
I farked up on an ISA because I never knew about any of this and ended up owing over $1000 in back taxes. If I had known enough to declare the PFIC correctly from the date I started it, I wouldn't have owed any where near that amount of tax on it :(
I'd like to hear more about this. I'm a Canadian, and our conservative politicians are always saying that WE are the most wealthy-unfriendly tax regime in the world, and that it is stifling investment.
And I keep reading about how in Scandanavian countries, the rich have to give nearly all of their income back to the state, but they are impossibly nice people, so they don't mind. Are Sweden, Norway, Finland, and Denmark friendlier to the wealthy AND providing Universal Health Care to their citizens?
High-income tax rates are high, but not that high.
The income tax is progressive and hits the ceiling of 60% pretty fast. I don't remember exactly but I think it does if your salary is more than 60000 Swedish kronas (around 6000 euros). Universal Health Care is available to everyone who has Swedish ID (I do) and includes higher cost protection for dental services.
Without diving in I can tell Sweden is definitely not friendly to the wealthy but it's very friendly to a lot of people with everyday common jobs with lower and middle level salaries.
Thanks for the info.
[citation needed]
The US has no wealth taxes like some European countries, and long-term capital gains tax is 15%.
Just to pick a few counterexamples:
Denmark has 42% capital gains tax on gains over ~$7600.
Netherlands has a 1.2% asset tax on assets held worldwide over something like $20k.
>I have friends who have never lived or worked in the US amd yet are asked to pay high US taxes.
Asked to pay or just to file?
US taxes are absurdly complex and expensive. The upside is that the system can be fairly easy to game / optimize.
So i travel between different countries without living much in any particular one and i pay zero tax. And if i ever want to live somewhere fulltime, i can defer income into trusts and collect it in future years when i happen to not be domiciled anywhere.
Options available to everyone except US citizens.
Or for example my friends in Russia who are US citizens have to pay a crazy US rate instead of the far more reasonable 13% in russia.
All the comments about scandi countries assume people actually declare income without using many more legal strategies available there compared with the US. The effective tax situation for wealthy US citizens is actually much worse, it is just obfuscated by the headline number.
Technically no, so does Eritrea tax non-resident citizens on their worldwide income.
And it's frankly hard to make sense of the rest of your comment.
It's difficult (or impossible?) as you say for an American citizen to basically be a perpetual tourist, not actually residing anywhere?
>to pay a crazy US rate instead of the far more reasonable 13% in russia.
>All the comments about scandi countries assume people actually declare income without using many more legal strategies available there compared with the US.
Well, yes, I am assuming that people generally don't try to live as a perpetual tourist and skirt tax burdens by not actually living anywhere.
>The effective tax situation for wealthy US citizens is actually much worse, it is just obfuscated by the headline number.
Still eager to see this proved.
as a non-US citizen i can live in the US for many years and keep accruing income/assets into a trust + take loans against said income/assets to fund expenses. then one year when i happen to be a perpetual tourist i distribute all of that from the trust to myself. zero taxes.
I'm not sure what exactly it is my income taxes pay for, but about anything I might want from a government is already paid for by direct billing or by some other type of tax. Maybe I'm paying for a seat cover of an F-35. Maybe I'm paying for a bridge repair that has been overdue for 30 years. I lack the attention span to follow the money that far.
That guy still pays sales taxes, and any taxes that may be indirectly passed on to him through business dealings. It isn't zero; it's just less than you, at the price of being a technically domicile-less nomad. The lifestyle is a bit more stressful, as you have to schedule mandatory events around several sets of local laws.
How is the Danish stock market doing these days?
Spoken as a true first-world citizen.
I'd hazard that most of the repatriations/expatriations are from people living abroad and sick of the burdens of US tax/financial compliance
Note it's not cheap to expatriate either. It's 2000 a family member plus possible exit tax. IRS can also pursue you for taxes afterwards if they think you did it to explicitly avoid taxes. There is no 100% escape.
And worse, while you're still entitled to vote for your representatives in the last place you lived in the US, politically, why would they even give you the time of day?
There are a lot of Americans living abroad, estimated to be 3-9 million, excluding military. Collectively more than a number of states. Yet their distribution means that Americans' voices abroad fall on deaf ears in Washington.
also, he's not saying that ppl who give up their citizenship should have fair voting representation. it's the people who are still americans who just happen to live overseas. we are still paying US taxes and therefore should have proper representation.
if i didnt have to pay US taxes, i wouldn't care.
You must ask permission to renounce your citizenship, and the government can deny your request, meaning you can't just leave. Then they charge you lots of money to leave, as you've explained.
Assuming you mean the former, I can certainly see the IRS coming after expats for evasion. And why not? But they cannot be allowed to run roughshod over just anyone they "feel" is evading.
A common misconception. If you have given up your US citizenship, you are an immigrant. Not an expat.
Also, i dont think it's a term reserved for westerners. What do you call a rich saudi who currently lives in miami, an immigrant?
no, that one replaces the low-level anxiety of getting shot.
In the real world, this is, of course, laughable. Even people with guns don't fight back against armed gunmen, for two reasons.
1. Most of the time, you have no idea who the armed gunman is.
2. You are very likely to be mistaken for the gunman, and shot and killed by the police.
I'll take never being shot over being shot while carrying a gun and maybe shooting them back, anyday
I assume you were referring to terrorist attacks, but a stupid, inattentive, or drunk driver will kill you just as dead.
Of course we are still accepting traffic deaths at some level, but there is a lot of effort and resources devoted to reducing them over time. It's just expensive and disruptive.
Try again.
This exactly the kind of solid out-reach that gets me to click through and take a look at the axibase product.
By Lincoln's second term, the American Civil War was already underway.