
Expatriate Americans Break Up With Uncle Sam to Escape Tax Rules - kevin818
http://online.wsj.com/articles/more-expatriate-americans-break-up-with-uncle-sam-to-escape-tax-rules-1402972439
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jmadsen
I wish the title of the article better reflected the real point - explained in
the article itself - instead of saying "escape tax rules", with all the
implications

The fact is, more and more of us with solid middle-class incomes and perfectly
normal lives are becoming increasingly concerned about laws that are poorly
explained and advertised to us, but with huge potential penalties if we go
unaware of them. These are exclusive to people living in other countries - if
they imposed some of these on non-expatriates, there would be a riot.

It is becoming a very stressful burden.

~~~
philiphodgen
The paperwork burden caused by poorly known and viciously complex tax rules is
probably the first reason people give me for cancelling citizenship.
Especially since the US government seems hellbent on imposing astonishingly
large penalties for paperwork failures.

The risk is too large for middle class people.

The second tax reason people give is the estate tax.

~~~
electromagnetic
A family friend ran into this. She lived in Canada nearly all her working life
and only heard about having to file paperwork with the US when it was being
announced there was going to be a crackdown due to the recession.

Fortunately between her and her husband they had enough money to get a good
lawyer and get it sorted out before they tried to nail her for all the tax she
owed.

I think the biggest issue with the "tax by citizenship" is that it turns US
citizenship into a commodity to be traded for personal benefit.

It's noble to try to chase the tax dodgers, but it's a lot more practical to
tax the people who stay and ensure anybody who wants to flee is going to be
losing sizeable amounts of their property.

Canada has investment rules based on nationality/citizenship and the owners of
those shares can't just elope and expect to keep their controlling interests.
In fact most of the big companies that face these rules have their foreign
investments near maximum, so that anyone fleeing would be forced to sell all
their stake and selling a big stake of any company means selling at a sizeable
loss.

------
deciplex
>"U.S. citizenship is the most coveted citizenship in the world. To give it
up, it has to be pretty serious,"

It's pretty serious to give up your birth citizenship no matter where you're
from. But, as someone with American citizenship, this doesn't ring
particularly true for me. There are a number of passports I would trade,
today, right now, for the one I currently hold. Anyone claiming American
citizenship is the most coveted in the world is saying a lot more about
themselves than they are the US.

~~~
jessriedel
What countries's citizenships would you suppose is coveted by more people
worldwide than the US?

~~~
WildUtah
Any EU citizenship is more useful and less dangerous and more lucrative and
more flexible and subjects you to less world-wide paperwork, tax, and business
restrictions.

So Estonia, Poland, Romania, Bulgaria, Slovenia (or is it Slovakia?),
Lithuania, Latvia, Slovakia (or Slovenia?), and Greece have more valuable
passports for their citizens.

If you travel a lot in East Asia, Japan's passport is awfully useful and has
much nicer perks than US citizenship.

Obviously, France, Britain, Canada, Germany, Italy, Sweden, and other core
wealthy nations have much, much better deals for citizens, too.

The US passport and citizenship is more and more like a third world quality
passport every year, with one major exception. That exception, of course, is
the right to live in the USA, which is a dang nice country with excellent open
country, parks, forests, space to breathe free, big highways, fishing,
hunting, the right to keep and bear arms, and fine honest people.

But if you don't love this land, you're better off with Latverian or Hungarian
or Freedonian citizenship, because our politicians have done squat to keep our
citizenship valuable around the world.

~~~
jessriedel
It sounds like you're talking about the usefulness of citizenship _for
traveling_. But the quotation discussed by deciplex, and his statements, are
not qualified in this way.

Extensive nation-hopping is not something most folks in the world can do. (The
"onerous tax filing" being even more of a rich-person's problem.) I'd guess
that the US citizenship is in fact the most coveted worldwide, all things
considered.

~~~
deciplex
Well, at least you admit you're just guessing...

And, did you bother to read the article? I'm surprised you write off these
regulations for expats as 'rich-people problems'.

~~~
jessriedel
The typical American moving abroad is richer than the median American, and the
median American is much, much richer than the vast majority of humans on
Earth. The middle-class person being discussed in the article had $100k in the
bank, which is more than most humans earn in a lifetime.

So yes, rich-people's problems.

~~~
deciplex
Yes, I suppose we should all learn to deal with oppressively stupid regulation
until world peace is achieved and no one goes hungry.

I really don't get your point. So, if you are 'rich enough' (note: the people
in this article are solidly middle-class) to actually maybe be affected by and
give a shit which passport you've got, your opinions are immediately written
off as 'rich people problems'. On the other hand if you're among the poor in
the developing world and your passport is perhaps not something you'll ever
think about or care about, then because _maybe_ according to jessriedel you
_might_ prefer a US passport to e.g. a French one or a Swedish one or
whatever, the US passport is 'the most coveted in the world'. Despite
(apparently too rich to count) people giving them up in record numbers.

I'm fascinated to hear other opinions you hold on random shit, if this is any
indication of how you arrive at your conclusions. Do tell.

~~~
jessriedel
You're completely mistaken about my position. I also haven't said anything to
warrant your rudeness.

------
philiphodgen
I was quoted in this article. I do lots and lots of this work -- helping
people log out of the USA cleanly and permanently. AMA.

~~~
nickthemagicman
Im very interested in this. Which countries are best for expats from a quality
of life and ease of obtaining citizenship standpoint?

~~~
philiphodgen
You have to solve two problems -- your place of citizenship and your place of
residence. Dominica and St. Kitts are the two places most people look to buy
citizenship. There are other more expensive places too.

Residence - this is easier to arrange. If the country will give you a tourist
visa you're in, at least temporarily.

~~~
toomuchtodo
Any places cheaper than St Kitts/Nevis ($400K)?

~~~
philiphodgen
Look at Dominica.

Scam artists have been known to exist in selling citizenship in Central
America. Be wary. Don't try clever stunts.

~~~
toomuchtodo
Thanks. Dominica looks fairly reasonable at $100K for an individual, and $175K
for a couple.

------
rincon0404
The US needs to adopt a residency based tax system like the rest of the world.

This would solve so many problems.

The main issue why this remains a problem is that Congress doesn't care about
American citizens who live abroad. Congress knows they can abuse Americans who
will never comprise a large enough portion of any district for their votes to
really matter. This is why people are actually renouncing. They have no other
practical solution or representation.

------
judk
Why does WSJ (and NYT) add extra words to make headlines more awkward?

Is WSJ really trying to argue that expats are dodging tax _rules_ , not
_taxes_?

~~~
morgante
> Is WSJ really trying to argue that expats ate dodging tax rules, not taxes?

Actually, yes. Maybe you didn't read the story, but it specifically talks
about how the major burden for middle class expats isn't necessarily taxes but
the penalties for failing to file specific paperwork.

Anecdotally, this is certainly true for the expats I know (including myself).
I didn't have to pay any US taxes, but the penalty for not filing excessive
disclosure forms on all local bank accounts is very onerous.

~~~
philiphodgen
This is exactly right. HNers who are US citizens will set up a perfectly
ordinary corporation in their country of residence and run their company
perfectly legally in that country. Years later they hear of Form 5471. The
government's SOP on this is to impose a $10,000 per year penalty then force
you to beg for the penalty to be removed. Sometimes that happens. Sometimes
that doesn't. How many small businesses could stand a $40,000 or $50,000 hit
just because you didn't file a piece of paper saying you owned stock in a
foreign corporation?

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rincon0404
isaacbrocksociety.ca

This link needs to be here. If you're an American abroad suffering similar
treatment, you can find support with these people who are in the same
situation. They are trying to help end the US's unfair CBT citizenship based
taxation and switch to RBT residency based taxation like the rest of the world
already uses.

------
thefreeman
Any non paywalled link?

Edit: [http://pastebin.com/TrTF32uw](http://pastebin.com/TrTF32uw)

