That’s because they can. Every country in the world would gladly do the same (Who doesn’t like some extra money?), they just lack the economic and military power the US have to enforce it.
I don't think so. Do you think Britain taxed individuals living outside their jurisdiction pre-WWII when they were top dog? The US has also been doing this long before they were a superpower. Its been done for over a 100 years.
It’s been done this way since the revolutionary war. It was meant as a punishment for any American born defector to the British. It is still a punishment.
But worse, it hurts American competitiveness abroad. Go to Hong Kong, Dubai, Singapore, etc, and you will find tons of British, Australians, Canadians, etc etc. but only a very small number of Americans relative to the populations.
“Have to”? I am referring to investment bankers, lawyers, business owners. These are people who, because they have the flexibility to live anywhere and pay local taxes, move to these areas to take advantage of local opportunities, and the vast majority end up restricting those earnings in their home country later in life. It is a huge opportunity, similar to manifest destiny.
Won't someone think about the bankers and the lawyers! It is a wonder why the people have not risen up and demanded these groups pay no taxes.
Jest aside, you pointed out that indeed these expats return.
The argument is they benefited from the US before they left and will benefit when they come back.
Why should they pay no taxes and expect to watlz back in whenever they please without having paid something to keep the country running.
They also expect the country to send seal team 6 if they get abducted.
There might be some valid points about the level of tax liability, but to think people should pay no tax on foreign earning is absurd.
Not all expats are bankers or lawyers. I’m a (non-expat) Australian, my brother used to live in Oregon-managing agricultural labourers on a vineyard. I don’t know what he was getting paid, but I doubt anywhere near as much as a lawyer or banker. He probably would have stayed, except his marriage (to an American) broke down. If an Australian can work in agriculture in the US, I’m sure the reverse can happen too. They’ll get screwed as much as a lawyer or banker will-just they’ll be less able to afford specialist tax advice, probably less aware they might need it (until some day it bites them)
> They also expect the country to send seal team 6 if they get abducted.
You know, other countries sometimes rescue their citizens overseas-without citizenship-based taxation. In fact, I don’t think any English-speaking countries do a particularly good job of saving their citizens in foreign trouble. If I was ever kidnapped by terrorists, I’d be wishing I was French
> There might be some valid points about the level of tax liability, but to think people should pay no tax on foreign earning is absurd.
Can something really be “absurd” when literally every country in the world does it-except for the US and Eritrea?
Even many Americans seem to feel that they don't, which is presumably why they fight so hard against their interests because of "socialism". It is amusing seeing them gasp in amazement when they're not bankrupted for getting simple medical procedures overseas.
Citizens of other countries act as liaisons abroad to bring in their network and raise the GDP of their origin country by getting it involved in business it never would have heard of.
When I am involved, I shutdown anything that involves the US and can't be solved with a similar partner in Canada or Europe, without all the hassle.
Because when they weren't in the country, they were not exacting the costs of a human in the system. Their healthcare and other needs were being attended to overseas and they paid for them via taxes to the country they resided in.
> Every country in the world would gladly do the same
Source? I think this is a particularly crass view of the world and it’s various governments’ motivations. Not every government is as hostile to its populace’s wellbeing as the US.
The real question is, does the US provide all the consular services to its citizens for free because of the taxation?
I know that a lot of other countries levy fees on their citizens for some services, especially those that are "nice to have" but not all that important.
The US government also actually tends to do a bad job* about things like this (i.e. evacuating citizen’s from foreign countries). So you have to pay the taxes but probably can’t count on the government to help. Now, I actually think all US citizens should pay their taxes, but it should be far more fair and reasonable than it currently is (we are basically just creating massive PITA for people while probably not catching offshore millionaires/billionaires.) The fact that you are forced to pay taxes but then will have to try to hitch a ride out of the country with Canada is unacceptable.
I've always wondered if most expats are Democrats? Every US election the media tries to find Republicans living in the Netherlands and aside from a GOP donor ambassador they always fail.
The backpackers are, the patent holders and grizzled founders are sometimes not. It was super fun walking the streets in NL wearing a maga hat back in early 2016! I don’t recall a single negative reaction. By day, lots of interested conversation. By night, “grab ‘em by the pussy, American! Woohoo!”
It doesn't matter, there are so few of them, they can be a stuffed-animal for either party to beat. If rule-of-law were really on the menu, they wouldn't have left.
I don't understand where this idea has come from that the court ought to be the provider of novel 'fair' legislation (as opposed to the mean legislation proposed by Congress) or the decider of punishments.
This law is set by elected members of Congress. It is their duty to provide proper punishments for it or to scrap it altogether.
It is up to the president to show mercy when someone faces a trial like this through his power of clemency.
Contrary to this article placing the blame solely with the judiciary, a case like this starts with the federal government starting a case. They don't have to.
The executive is the real one punishing us expats.
Indeed, if the recent decisions by the supreme court have taught me anything, it's that Congress has been incredibly ineffective at passing legislation over the past 40 years.
One reason for this is because the Supreme Court has deferred to allowing a great deal of legislating in the Executive. Congress passes "blank check" laws that require unelected career bureaucrats to make law ("regulation") with minimal oversight.
If the Supreme Court slowly disallows this, then Congress will eventually be forced to vote on controversial issues again.
I don't think there's anything in the constitution that prevents Congress from delegating their power. I don't think the authors anticipated that elected officials would want to give away their power.
> I don't understand where this idea has come from that the court ought to be the provider of novel 'fair' legislation (as opposed to the mean legislation proposed by Congress) or the decider of punishments.
Cause the legislative branch in US is in shambles, "can't" get anything done, at least that's the perception, as the country is divided to a point that both camps consider the other "the enemy", so everybody now relies on either the judiciary or the executive branch to makes laws. This is essentially a constitutional and political crisis, that has been going for the last 20 years in USA.
Gridlock in Washington is a feature, not a bug. The more gridlock, the fewer laws get passed. Unfortunately, there never seems to be much gridlock around spending money.
So if we have two broken branches of government, break the third?
In practice the relative power and authority of different branches of government changes over time. The US constitution is now the oldest still operable founding document, and was constructed at a time when the king held extensive influence over British governance.
If we say that no branch of government is allowed to be rational, then we’ll need a constitutional convention sooner rather than later.
The constitution is not the founding document of the United States, that would be the articles of confederation. But the US constitution is one of the oldest operating constitutions In the world. Most either get rewritten after 50-100 years or get overturned in a revolution.
No, the declaration of independence is the founding document of the United States, since before that no United States existed by anyone's reckoning, and after, someone certainly thought so. The articles were written way after, and formed the second federal government of the United States. The first was the continental congress.
Applying the rules created by the other two branches is the Supreme Court’s mandate. What you’re advocating is breaking the third branch of government on the theory that the other two branches are broken and need to be worked around.
A “results” oriented society is a regression from a “rules” oriented society. We have that in Bangladesh—courts that do what they think is “right” instead of following the rules. It’s better than courts where judges take bribes or act in their personal self interest, but not as good as courts that rationally apply the rules. It doesn’t promote respect for the rule of law because people disagree on what’s just and right. But mostly they can agree on the rules and reconcile themselves to the results if they feel the rules were followed.
What a shamefully misleading article title! I’m shocked to see so many well educated Americans, who should know better, embrace such thinking. What I admire most about Americans is that they’ll jump off a bridge if a court tells them to and the paperwork is in order. That’s how you build a marvelous civilization.
> A “results” oriented society is a regression from a “rules” oriented society. We have that in Bangladesh—courts that do what they think is “right” instead of following the rules. It’s better than courts where judges take bribes or act in their personal self interest, but not as good as courts that rationally apply the rules.
Applying the rules is great when the rules seem mostly fair and reasonable.
When the rules, applied to a situation, produce a seemingly very harsh outcome – especially when there is no evidence their original authors would have actually wanted that outcome in this particular case – judges often look for ways to "bend" them.
Rather than something limited to countries such as Bangladesh – it is something which has happened time and time again in the history of common law tradition. If a judge feels that mechanical application of the law produces an unconscionable outcome, they will find a way to reinterpret the law, so it doesn't actually mean what it says on its face.
This especially happens when the judge views the aggrieved party sympathetically – far more likely for a well-respected businessperson who has received a seemingly disproportionate penalty for unintentional violations of the law, than a career criminal on death row.
> When the rules, applied to a situation, produce a seemingly very harsh outcome – especially when there is no evidence their original authors would have actually wanted that outcome in this particular case – judges often look for ways to "bend" them.
The original authors of what? The original authors of the bills to tax expats actually did want these outcomes.
I actually disagree with the law, but the claim that the writers didn't intend for this is quite the stretch, as the law is extremely clear in the punishments, and if you read into the history, it's quite clear they wanted to punish people.
What may be a remedy by the court is if they believe the punishment is cruel or unusual or the fine excess. They may find that and strike down the entire law, but the law is certainly intended to do exactly this.
I don’t know if there is some precedent in the Mughal tradition or whatever, but maybe it’s British. It has a very “dispensing the King’s Justice” feel to it. But that’s always kind of been the equity side of the courts. The common law courts were famous for rigid decision making. And I’d argue that it’s even more important in a pluralistic society like America where we don’t have a State Church or monarchy to serve as an agreed upon count of wisdom and justice.
Allowing the courts to legislate makes them broken. That is job of of congress.
Appealing to the age of the constitution to defend the courts arrogating power which that constitution did not grant is complete nonsense. If you want the courts to have that power, pass an amendment. If you don't want to do that but still want the courts to be able to create law, then bringing up the constitution is pointless. You have already tossed it in the waste bin.
I'm unsure what you're arguing for. The supreme court has no authority to be 'rational', if congress dictates otherwise. That's not its place.
American government gets its power from the people. If the people, via their representatives, act irrationally, then the government is irrational. no government is going to be perfectly rational. That's kind of the entire point of our constitution. I would highly recommend reading the commentary written by its writers.
The tax deduction for non-resident Americans is, of course, a little more complicated than the article suggests. With the disclaimer that I'm not a tax professional and this isn't tax advice, there are two options: for income up to some threshold (around 120k) it can be "excluded," basically a deduction on your AGI, with anything above that threshold taxed at the higher bracket; the other option is to basically treat taxes paid to foreign governments as a tax credit (with no threshold).
If you're lucky enough to be in the second group, it means you need to file your foreign taxes before the US ones to end up knowing how much you pay. The fun twist: many countries in Europe have a tax system that doesn't assume everyone pays TurboTax, so actually filing is somewhat unusual, and basically impossible to do before 15 April. To find a European tax professional isn't always easy, and if you tell them you're an American they often back off, knowing your case is nightmarishly difficult. And if you do pay some US taxes still (e.g. capital gains on stocks still in a US account) then you're required to at least declare it on your European tax statement -- which itself must be submitted before you know how much US taxes you pay.
The pool of recursion-ready tax advisors is unfortunately very small, and US citizens living abroad suffer for it. As a US citizen living abroad, I think it's still preferable though.
> If you're lucky enough to be in the second group, it means you need to file your foreign taxes before the US ones to end up knowing how much you pay. [...] so actually filing is somewhat unusual, and basically impossible to do before 15 April.
Would this work?
File in the US for an extension on filing. That gives you until October 15 to file. That doesn't give you an extension on paying, so by April 15th make an advanced payment of either what your US taxes would be without the foreign tax credit, or if you can reasonably make a conservative estimate your foreign taxes what you US taxes would be with that as your foreign tax.
After you know for sure your foreign tax you can do your US taxes and get back however much you overpaid with your advanced payment.
I suppose you could also file by April 15th without an advanced payment and without claiming the foreign tax credit, and then file an amended return after you do your foreign taxes to get back the overpayment.
It works great, except that you must pay your estimated tax debt in full when you make an extension. This means you will pay double taxes, then wait on the US government to refund the money that you floated them. Because of the current IRS mess, this can easily take 6mo+ or more.
I’ve been a US expat in Canada for 21 years, and I can say the time and stress of US citizen based tax law is extreme. But every year I do it, send tons of info to the IRS, because I knew the laws, but I would love this burden being removed. I am not super wealthy, my net worth is ~$3 million which is from
decades of a high savings/investment rate into primary retirement accounts and equity in my principal residence.
On a side note, another draconian US expat tax law, the US will tax US citizens on capital gains over the US limit on the sale of your foreign principal residence. Crazy right. Don’t live the US, maybe never have, but if you have US citizenship, accidentally or not, or a green card, they can tax you on the sale of a principle residence located outside US jurisdiction.
The US/Canada tax treaty is good in the sense I rarely pay double tax, except for some special circumstances (stock options), but it is a ton of paperwork, information, and stress that I didn’t mess something up. I worked in Germany for a couple of years, and when I wasn’t a Canadian tax resident (I am also a Canadian citizen) the Canadian Revenue Agency didn’t care about my German income and I didn’t have to file any information for it. It was bliss. But of course the US IRS cared. This tax filing years were nightmares.
The traditional solution of the US government to prevent this was to make you pay thousands of dollars to do it. So much that Germany, which normally doesn't allow dual citizenship, would make an exception on the basis that it was financially impossible for low earners.
They've now come up with an even better solution, which is to force you to go to an in person appointment, but also to ban you from doing so due to covid. Problem solved!
Yeah this is an option. There is a fee and and exit tax audit. But I travel to the US frequently for visiting family and business and I worry renouncing would lead to border crossing troubles. Im not living outside the US because Im anti US. It’s just where my career took me and then I met my spouse, bought a house, had kids, etc. I don’t want to give up the citizenship of my birth country. So I will complain about the draconian US tax laws but I will probably just endure them for the rest of my life.
> I am not super wealthy, my net worth is ~$3 million
It's worth noting that this is the 96th percentile for net worth in the United States. Maybe by "super wealthy" we only mean the 97th, 98th, and 99th percentiles?
This seems to be an appropriate thread to ask, how is the US Exit Tax not a human rights violation? By birth, US citizens are considered the property of the US government and have to purchase their freedom.
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[ 482 ms ] story [ 334 ms ] threadBut worse, it hurts American competitiveness abroad. Go to Hong Kong, Dubai, Singapore, etc, and you will find tons of British, Australians, Canadians, etc etc. but only a very small number of Americans relative to the populations.
Jest aside, you pointed out that indeed these expats return.
The argument is they benefited from the US before they left and will benefit when they come back. Why should they pay no taxes and expect to watlz back in whenever they please without having paid something to keep the country running. They also expect the country to send seal team 6 if they get abducted.
There might be some valid points about the level of tax liability, but to think people should pay no tax on foreign earning is absurd.
> They also expect the country to send seal team 6 if they get abducted.
You know, other countries sometimes rescue their citizens overseas-without citizenship-based taxation. In fact, I don’t think any English-speaking countries do a particularly good job of saving their citizens in foreign trouble. If I was ever kidnapped by terrorists, I’d be wishing I was French
> There might be some valid points about the level of tax liability, but to think people should pay no tax on foreign earning is absurd.
Can something really be “absurd” when literally every country in the world does it-except for the US and Eritrea?
Indeed, why should Americans expect the same treatment that literally every other country extends to its citizens.
When I am involved, I shutdown anything that involves the US and can't be solved with a similar partner in Canada or Europe, without all the hassle.
You get what you pay for.
Are you sure about that? I thought expat taxation was instituted during the Civil War.
Source? I think this is a particularly crass view of the world and it’s various governments’ motivations. Not every government is as hostile to its populace’s wellbeing as the US.
Other countries don't seem to have a problem extending consular assistance to their overseas citizens.
I know that a lot of other countries levy fees on their citizens for some services, especially those that are "nice to have" but not all that important.
* https://travel.state.gov/content/travel/en/international-tra... https://www.nytimes.com/2022/02/16/us/politics/us-evacuation...
That's a disgusting idea.
I don't understand where this idea has come from that the court ought to be the provider of novel 'fair' legislation (as opposed to the mean legislation proposed by Congress) or the decider of punishments.
This law is set by elected members of Congress. It is their duty to provide proper punishments for it or to scrap it altogether.
It is up to the president to show mercy when someone faces a trial like this through his power of clemency.
Contrary to this article placing the blame solely with the judiciary, a case like this starts with the federal government starting a case. They don't have to.
The executive is the real one punishing us expats.
Stop making the court out to be some dictator.
If the Supreme Court slowly disallows this, then Congress will eventually be forced to vote on controversial issues again.
Cause the legislative branch in US is in shambles, "can't" get anything done, at least that's the perception, as the country is divided to a point that both camps consider the other "the enemy", so everybody now relies on either the judiciary or the executive branch to makes laws. This is essentially a constitutional and political crisis, that has been going for the last 20 years in USA.
In practice the relative power and authority of different branches of government changes over time. The US constitution is now the oldest still operable founding document, and was constructed at a time when the king held extensive influence over British governance.
If we say that no branch of government is allowed to be rational, then we’ll need a constitutional convention sooner rather than later.
"rational" in this case meaning "unilaterally countermand the decisions of the other branches"
A “results” oriented society is a regression from a “rules” oriented society. We have that in Bangladesh—courts that do what they think is “right” instead of following the rules. It’s better than courts where judges take bribes or act in their personal self interest, but not as good as courts that rationally apply the rules. It doesn’t promote respect for the rule of law because people disagree on what’s just and right. But mostly they can agree on the rules and reconcile themselves to the results if they feel the rules were followed.
What a shamefully misleading article title! I’m shocked to see so many well educated Americans, who should know better, embrace such thinking. What I admire most about Americans is that they’ll jump off a bridge if a court tells them to and the paperwork is in order. That’s how you build a marvelous civilization.
Applying the rules is great when the rules seem mostly fair and reasonable.
When the rules, applied to a situation, produce a seemingly very harsh outcome – especially when there is no evidence their original authors would have actually wanted that outcome in this particular case – judges often look for ways to "bend" them.
Rather than something limited to countries such as Bangladesh – it is something which has happened time and time again in the history of common law tradition. If a judge feels that mechanical application of the law produces an unconscionable outcome, they will find a way to reinterpret the law, so it doesn't actually mean what it says on its face.
This especially happens when the judge views the aggrieved party sympathetically – far more likely for a well-respected businessperson who has received a seemingly disproportionate penalty for unintentional violations of the law, than a career criminal on death row.
The original authors of what? The original authors of the bills to tax expats actually did want these outcomes.
I actually disagree with the law, but the claim that the writers didn't intend for this is quite the stretch, as the law is extremely clear in the punishments, and if you read into the history, it's quite clear they wanted to punish people.
What may be a remedy by the court is if they believe the punishment is cruel or unusual or the fine excess. They may find that and strike down the entire law, but the law is certainly intended to do exactly this.
Appealing to the age of the constitution to defend the courts arrogating power which that constitution did not grant is complete nonsense. If you want the courts to have that power, pass an amendment. If you don't want to do that but still want the courts to be able to create law, then bringing up the constitution is pointless. You have already tossed it in the waste bin.
American government gets its power from the people. If the people, via their representatives, act irrationally, then the government is irrational. no government is going to be perfectly rational. That's kind of the entire point of our constitution. I would highly recommend reading the commentary written by its writers.
If you're lucky enough to be in the second group, it means you need to file your foreign taxes before the US ones to end up knowing how much you pay. The fun twist: many countries in Europe have a tax system that doesn't assume everyone pays TurboTax, so actually filing is somewhat unusual, and basically impossible to do before 15 April. To find a European tax professional isn't always easy, and if you tell them you're an American they often back off, knowing your case is nightmarishly difficult. And if you do pay some US taxes still (e.g. capital gains on stocks still in a US account) then you're required to at least declare it on your European tax statement -- which itself must be submitted before you know how much US taxes you pay.
The pool of recursion-ready tax advisors is unfortunately very small, and US citizens living abroad suffer for it. As a US citizen living abroad, I think it's still preferable though.
Would this work?
File in the US for an extension on filing. That gives you until October 15 to file. That doesn't give you an extension on paying, so by April 15th make an advanced payment of either what your US taxes would be without the foreign tax credit, or if you can reasonably make a conservative estimate your foreign taxes what you US taxes would be with that as your foreign tax.
After you know for sure your foreign tax you can do your US taxes and get back however much you overpaid with your advanced payment.
I suppose you could also file by April 15th without an advanced payment and without claiming the foreign tax credit, and then file an amended return after you do your foreign taxes to get back the overpayment.
On a side note, another draconian US expat tax law, the US will tax US citizens on capital gains over the US limit on the sale of your foreign principal residence. Crazy right. Don’t live the US, maybe never have, but if you have US citizenship, accidentally or not, or a green card, they can tax you on the sale of a principle residence located outside US jurisdiction.
The US/Canada tax treaty is good in the sense I rarely pay double tax, except for some special circumstances (stock options), but it is a ton of paperwork, information, and stress that I didn’t mess something up. I worked in Germany for a couple of years, and when I wasn’t a Canadian tax resident (I am also a Canadian citizen) the Canadian Revenue Agency didn’t care about my German income and I didn’t have to file any information for it. It was bliss. But of course the US IRS cared. This tax filing years were nightmares.
They've now come up with an even better solution, which is to force you to go to an in person appointment, but also to ban you from doing so due to covid. Problem solved!
It's worth noting that this is the 96th percentile for net worth in the United States. Maybe by "super wealthy" we only mean the 97th, 98th, and 99th percentiles?
Source: https://dqydj.com/average-median-top-net-worth-percentiles/