Basically if you earn a certain amount or have a high enough net worth, you must pay a tax on all of your assets as if you were selling everything you owned. You are charged this amount even if you are not selling anything.
This is the only wealth tax in America as far as I understand it.
It's there for a reason tho...
If it wasn't, the wealthy would take their wealth and fuck off to somewhere it was worth more.
They're fine to do that, but the US is still going to want it's cut, you're still paying federal taxes every year because you're a US Citizen.
Rich people hate paying taxes. So they just renounced citizenship on the way out and took all their wealth with them.
But like you said, it's based on how much wealth you own so for normal people, it's not a big deal.
It's weird seeing people against it.
Edit:
Also, you have to be pretty wealthy to even have to pay it. The vast majority of Americans would pay $0 to renounce.
I’ve lost count of how many rich overseas workers have made 5+ replies to my comments in less than 10 minutes screaching about how they shouldn’t pay taxes
And every single one claims to be right on the line for having to pay it… yet want it thrown out for billionaires as well…
Apparently I can’t turn off replies to comment like on reddit, so I’m just blocking every “temporary poor billionaire” who wants to spend energy online arguing billionaires should pay taxes because it would mean they do too
No one has time for the Scrouge McDuck defenders.
To be entirely fair, I think its insane that the US would charge income tax on citizens who live abroad in the first place.
Well, yeah, but again it's only for the wealthy
If you are a U.S. citizen or a resident alien of the United States and you live abroad, you are taxed on your worldwide income. However, you may qualify to exclude your foreign earnings from income up to an amount that is adjusted annually for inflation ($107,600 for 2020, $108,700 for 2021, $112,000 for 2022, and $120,000 for 2023). In addition, you can exclude or deduct certain foreign housing amounts.
Those parts are never mentioned when people complain about this stuff. Because the only ones paying it are the wealthy ones, and they always bitch about taxes.
They pay, because at any moment they can come back as a citizen. If the wealthy do t want to pay for that option, then they can renounce citizenship and pay a one time tax to remove their wealth.
I'm aware there's no real way to say anything here without sounding like a pretentious snob, but those income limits aren't exactly spectacularly high.
I work in tech in NYC and my income is around those limits. My boyfriend is from Switzerland and there's a non-trivial chance that we'll wind up there long-term. If I was from literally any other country in the world beyond Eritrea, I would file Swiss taxes and that would be that. Instead, I'll have a direct financial incentive to give up my native citizenship because I'm from one of two countries that makes a claim to any income earned anywhere in the world, even if I don't step foot in the country that year. This is particularly rough in Switzerland because average salaries there are quite high, and thus so are costs of living, and so surpassing those limits isn't a particularly uncommon thing. (Edit: About one in four Swiss residents make more than $120,000 annually).
I know this won't garner any sympathy at all, but a bad policy only affecting the relatively wealthy doesn't change the fact that it's a bad policy. It could even backfire from a financial perspective, since having renounced American citizenship, I'd be less inclined to spend time in the US and contribute to taxes while visiting, and I'd never move back long-term, cutting off a chance of the government getting full income taxes from me ever again, whereas a change of circumstances might have otherwise prompted me to eventually return to the US.
Not sure if you noticed, but the American social net is fucked. Mostly because of people who make a lot and not contribute back.
If you don't want to pay taxes, you don't have to participate in the American system.
If you want all the benefits and none of the costs of being American...
Someone in this thread mentioning offering violin recitials for free
Please do explain then how literally every single other country in the world with a strong safety net and welfare system has managed to fund it without having to tax expats.
If you want all the benefits and none of the costs of being American…
Because again, in literally every single country except one African dictatorship, they interpret "the benefits" as things that you enjoy while actually being in the country, and therefore something you pay for while residing there. The ability to be a citizen of your native country is an assumed right everywhere else.
The only benefit I'd be enjoying is the right to return to my home country if I ever needed to. You don't have to pay for that in practically any other country. And so, yes, I would have to seriously think about renouncing my citizenship since I'd be paying for essentially nothing. I think that's rather unfortunate.
They tax their people more to pay for it.
It’s not rocket surgery.
The answer definitely wouldn’t be to tax the wealthy less…
Cool, renounce your citizenship then.
I'm not going to keep repeating the same things and giving you the same IRS website and hoping you magically start understanding.
Please do explain then how literally every single other country in the world with a strong safety net and welfare system has managed to fund it without having to tax expats.
We're all waiting...
They tax their rich...
Hey, America should do that too!
What's one way we could do that... Maybe we should tax them on things like foreign property deals?
Oh... But what if one of them just changes permanent residency to overseas and then claim that means the sale can't be taxed in America?
Well, we could just tax foreign income over an amount the vast amount of American workers will never earn.
....
Hopefully I got this whole conversation out of the way.
I known you don't care about facts here, but for anyone else reading this, the top 10% of American tax payers contribute 74% of all income tax. The US has one of the most progressive tax systems in the world. Stronger social nets in other countries depend on significantly higher taxes on the middle class. That of course does not mean that the extremely wealthy aren't dodging a lot of taxes, but a decently experienced tech worker or pretty much any doctor is in a very very different tax situation than Jeff Bezos etc.
By the way, again not that you care, but your average worker that earns $120,000 is not making massive international real-estate deals. In the context of Switzerland, for instance, one in four Swiss people make enough to be over the US foreign tax threshold.
the top 10% of American tax payers contribute 74% of all income tax.
Because they earn the most income...
That's what happens with percentage based taxes and rampant wealth income disparity...
The bottom of the top 10% are making 3x an average American.
And it only gets more ridiculous as you get up to the 1% which is why the top ten number is high...
Why are you so opinionated about something you don't know about?
Quick edit:
That's right, you're the rich overseas worker who doesn't want to.pay taxes
It's not that you can't understand why the wealthy should pay taxes. You just don't want pay taxes. I'll just block you so I don't fuck up and respond again
Clearly you don't have any interest in talking, and that's fine, but I do feel obligated to point out that you curiously did not answer this question:
Please do explain then how literally every single other country in the world with a strong safety net and welfare system has managed to fund it without having to tax expats.
The people this law targets aren't the ones committing tax avoidance. And the US social safety net isn't fucked because of a lack money, it's fucked because it doesn't even exist in the law.
The exit tax doesn't do shit to address that. It doesn't pay for anyone's healthcare or magically make the poverty cliff go away. It's a tax on upper income workers. Meanwhile actual rich people get their money through capital gains or loans and don't pay this shit at all.
Oh but I forgot that since I own a small house in a middle class rural neighborhood and drive a Subaru that I'm "rich" so my opinion doesn't mean shit apparently.
Arguing that allowing the super wealthy to just take all their stuff and leave wouldn’t hurt the system we have now even more than it already does is one of the most asinine things I think I’ve read on the Internet. Congratulations.
Don't have much of an idea about how the tax system works, do ya?
I pay no tax to the US, but I bitch about it. I've lived abroad since I was 3y.o and realized when I turned 18 that I have to declare to the IRS every year. Let me tell you, it is an absolute pain in the ass when you have to do it yourself, without a US bank account or phone number. Takes me a full working day to declare 0 tax to the IRS when they already know that I owe zero tax because they force any bank I have accounts at to report to them. Half the banks in Sweden simply refuse to have me as a customer because of this, in addition to certain types of income technically being subject to double taxation because of US law.
I can't even get rid of my US citizenship without paying an absurd exit tax
I can’t even get rid of my US citizenship without paying an absurd exit tax
If that's true in your case, it means you have over 2 million in assets or made more than 170k averaged over the last five years...
If you're below both this, you don't have to pay the exit tax
So either you don't know the basics of what you're complaining about, or you're pretending you don't make an obscene amount of money
...or I don't have a 5yr record of reporting taxes to the IRS. There's also the 2'500USD "Administration fee"
It’s not just about money. It’s a labor burden and a privacy intrusion. And even if iceblade02 could renounce for free, they then must carry the renounciation cert for the rest of their life and show it to every bank they deal with and hope that no data entry errors trigger data oversharing anyway.
They must renounce to get their human rights back. Because without renouncing, they lose their human right to non-discriminatory treatment on the basis of national origin (article 1 of the Universal Declaration of Human Rights).
But back to money, that annual tax filing accidental Americans must file costs them $300+/year -- accountants do not work for free. It’s effectively a tax on the poor.
$120k is "wealthy" now? 120k isn't even enough to buy a fucking house in most cities in the US. Actual wealthy people aren't affected by this law because they don't have regular income.
I've seen this on Reddit before: Six figures means you're rich, because that was true in the 80s, right? Obviously people don't have a clue that 40 years of inflation has made that middle class.
Also: income is not wealth, and the willful lack of understanding on that point blows my mind. A person who is wealthy can live an upper middle class lifestyle or better without ever having to work again. A person who has respectable income may have minimal wealth, or even mountains of debt (student loans, mortgage, etc). A person who makes 100k could be a few months unemployment away from losing their house or lease, while a person with "wealth" may not have to work at all.
People don't become filthy rich working full time for six figures. The wealthy (~$20-50m net worth and up IMO) are people who made their money with something other than labor - through investments and things that the government doesn't really classify as normal income.
Edit: It's like the saying goes: nobody makes a billion dollars. They take a billion dollars. If you tax the wealthy on income, you collect very little tax, because it's not classified as income. Meanwhile you're going to tax an engineer or physician who probably have hefty student loans and work their asses off full time, at the highest marginal rates because we don't or can't tax wealth.
Edit2: we've got minimum wage internet trolls who think an employee software engineer is basically a cigar chomping capitalist because they make over the median wage. The middle class has shrunk and maybe you're not in it. Get a clue, dumbasses.
Six figures means you’re rich, because that was true in the 80s, right?
No, this was not any more true in the 80s than it is now.
I certainly agree based on my previous statement that income is not wealth, but I was trying to make two points and mixed the messages.
One is that amounts of money that were once considered an unbelievable amount for income or wealth - say $100k and $1m - have now been eroded by inflation to fairly modest money. In the 70s or 80s, having a million meant never working again. Earning 100k a year when a house cost $50k was huge money, and might lead to wealth quickly, if one bought several houses with it.
Another point I'd like to sneak in is that there's almost no modern equivalent to that kind of employed income. On paper, inflation puts it at 400k - so maybe today's equivalent of a surgeon - but the 50k house now costs $500k-1m. Notional inflation being 4x, while the critically important things have gone up 10-20x means that something harder to quantify is broken, and upward mobility isn't working the way we expect. The same opportunities don't exist. We are less likely to turn income into wealth over time than at points in the past, and so the tendency of people to erroneously think high income = wealth may have a reasonable basis in history that has never been less true today.
Edit: and it's not just houses, it's the stock market. The advent of the internet and e-commerce resulting in tech stock growth 1995-today is a phenomenon not likely to be replicated in any other area. We may be running out of growth to be had. The ability to get 10-20x your money over 30-40 years of investments is probably gone, and with it the prospect of comfortable retirement for even relatively high earners.
120K lands you at 86th percentile [1]. So... relatively, you are sorta well off.
Sure, you can't buy a house with that income in a big city. But that merely shows how fucked up the real estate bubble is. Just think, the top 86th percentile earning person is no where near enough to even buy a home. Houses are about 1m in my neighborhood. So you need to earn about 250k/yr to realistically afford a home. That lands you at 97th percentile. So just top 3% of the people can actually afford a home on a single person's salary. That's how fucked we are.
The median income for a non-family household (i.e. single) is 45k, and family household is 95k (possibly dual income) according to 2023 census [2]. So, you're doing relatively quite well in comparison.
Who is "wealthy" is a subjective term. So a median person might see someone making 120k as wealthy. But the person earning 120k might see themselves as poor since they can't even own a home. Historically, the single income middle class could afford homes.
They pay, because at any moment they can come back as a citizen.
But that's true of pretty much every other country in the world as well. So it still doesn't explain why the US is the only one that charges tax on foreign-earned income.
So it still doesn’t explain why the US is the only one that charges tax on foreign-earned income.
On the wealthy...
You keep omitting that point, and it's starting to get old.
But the reason is idealistic.
America was supposed to be the land of immigrants where anyone can immigrate, work hard, and earn wealth.
That system doesn't work if once you amass your wealth, you fuck off somewhere else and take it all with you. The reasoning is you were able to amass that wealth through America's social ladder.
If the wealthy (the only ones that pay foreign income tax or exit taxes) don't want to pay that, they know that being honest will never result in change.
If how I'm saying it doesn't make sense, use the IRS website I've provided numerous times.
You keep calling these people "wealthy" but the income levels you shared don't even come close to matching that. Also lol at the idea of America being an idealistic place so that's why people should pay this tax. My fucking ass. America is and always has been rigged for rich people, which should immediately tell you why this law still exists.
How about we actually tax real wealthy people, like millionaires loaning money to themselves, instead of forcing the middle class to pick up the slack yet again?
If how I’m saying it doesn’t make sense, use the IRS website I’ve provided numerous times.
You cannot expect people to use the irs.gov website. That’s not open to the public. It’s exclusive. Try going there over tor - you will get a 403. Indeed it’s shitty that access to legal information is restricted. It should be open to all.
Because you're American and should pay taxes no matter if you're in Antarctica or not. If you're in a different country and not participating in America's system, then why are you claiming to still be an American citizen? The answer is to renounce at that point. The right winger "taxes against rich are bad" are starting to come out in this thread lol.
Because you’re American and should pay taxes no matter if you’re in Antarctica or not.
Why is America the only country that has this perspective (Eritrea excepted)? Is literally every single other country besides an African dictatorship simply delusional, and only America and Eritrea found the divine wisdom that all global income should be taxed?
The United States is one of the few countries that has a system of taxing its citizens and residents on their worldwide income, including income earned abroad. This practice is known as "citizenship-based taxation." There are a few reasons why the U.S. follows this approach:
Historical Reasons: The United States has had a system of citizenship-based taxation in place for a long time. It dates back to the Civil War era when it was implemented to fund the war effort.
2. Desire to Prevent Tax Evasion: Citizenship-based taxation is intended to prevent U.S. citizens and residents from avoiding taxes by moving their assets or income abroad. Without it, individuals might seek tax havens to reduce their tax liability.
Complex Tax Code: The U.S. tax code is complex, and changing to a different system, such as residence-based taxation (taxing only income earned within the country), would require a significant overhaul of tax laws.
Revenue Generation: Taxing foreign income allows the U.S. government to generate revenue from its citizens and residents, regardless of where they earn their income.
It's worth noting that while the U.S. taxes its citizens and residents on foreign income, there are mechanisms in place, such as the Foreign Earned Income Exclusion and foreign tax credits, to mitigate double taxation and reduce the tax burden on income earned in other countries. However, compliance with U.S. tax laws related to foreign income can be complex and may require professional assistance for those living abroad.
That's not a reason on why we shouldn't have a wealth tax... You're just blindly insulting America without reason, which this site is already a xenophobic circlejerk.
Why are you talking about wealth taxes when they have nothing to do with the question I asked?
Again, why is America the only major country that has this policy? Either answer this, or don't respond.
Because this is a form of wealth tax. That's not even a question you're asking. Fuck out of here with that aggressive debate lord shit.
The topic was on taxing foreign income. To quote the relevant bit from above:
If you are a U.S. citizen or a resident alien of the United States and you live abroad, you are taxed on your worldwide income.
Though I agree that if you aren't capable of even following the topic at hand, it's best that I just save my breath here.
If you think it's that easy to renounce American citizenship, you have no idea what you're talking about.
I fully support taxing the rich. I am very explicitly NOT rich. And I cannot come close to being able to afford to renounce my American citizenship.
You seem unaware of the population of accidental Americans. When a Dutch couple gives birth on US soil before returning to Europe, that child automatically a birthright citizen of the US. They can grow up having never set foot in the US (apart from birth), and for the rest of their life they have a legal obligation to file US tax and declare to the US all their Dutch income & bank accounts even if they are below that $120,000 line. They also get targeted for discrimination along with all other Americans by banks who don’t accept Americans (even if they are also Dutch). They have to pay a US accountant upwards of $300/year for the rest of their life just to file that zero.
It’s also worth noting that an income of $120k goes much further in the US than it does in Europe (where they might be living).
So obviously a lot of accidental Americans have become motivated to renounce. But if they already own a home, you can see the problem. I would not say owning a home makes someone “rich”. They still need to work to eat and to maintain the home.
This is the absolute least important problem with American taxes, there's a thousand other things we're trying to fix.
Stop pretending like the bottom of "the top 10% wealthiest Americans" need help. We've got fucking children starving and not even getting a free school lunch. Excuse us for not having sympathy for everyone making between 120k and 120 million a year.
I'm just blocking all of you at this point, so do t expect another reply
It's like the Inheritance tax. It's basically meaningless to the poor, but it sounds bad so the GOP uses it to scare their base. However the targets of the tax are primarily the handful of rich capitalist bastards who have a harder time bribing lobbying their way out of it.
The exit tax starts at $120k. That's "I can rent but not buy an apartment in San Francisco" class, not the "rich capitalist bastard lobbying Congress" class. And of course it's also an income tax so it does jack shit to tax actual wealthy people.
Actual rich people already worked around the tax issue by putting their assets in stocks and loans. They aren't paying this tax at all in the first place. They don't need to lobby anyone.
It's fucking ridiculous how some of you try to frame this income level. Doctors and lawyers are not the wealthy capitalists phoning up Congress and getting what they want from them. It's actually fucking crazy that you're acting like they do. People raising a family at that income level will never retire just like any other worker, but now they're rich capitalist bastards?
Totally agree. Income isn't wealth and people are clinging onto 1970s implications of "millionaire" when in 2023 having a million net worth doesn't even allow you to retire and might just mean you own a house and have little other savings. Similarly "six figures" income meant a lot 30-40 years ago, but inflation eroded that to middle class in the 21st century.
My issue isn't so much with the tax itself as it is selectively enforced. If those assets remained in the US and the person never renounced, they would never be taxed. Or at least not taxed at the same rate.
So it's important enough to make sure rich people don't run away but, as long as you don't try to run, you don't owe us anything.. So the rich in America can continue getting richer..
Also, the income threshold is pretty average for any senior level software engineer. You don't need to be astoundingly rich to be on the hook.
What?
You think Americans do t pay property tax?
They're still paying it even if they don't set foot in America
I'm sorry, everytime you reply you say a new wrong thing I have to type alot to explain. I thought there was a few things you didn't know, but I'm not going to take the time to explain how American taxes work from ground up.
Also, the income threshold is pretty average for any senior level software engineer. You don’t need to be astoundingly rich to be on the hook.
Over $100,000/year is wealthy in America. The median income is 3/4 of that...
You think Americans do t pay property tax?
That tax is irrelevant. That just muddies the waters to bring up property tax because every real estate property is subject to local property tax. It’s a wash. When you buy a house, you implicitly agree to property tax wherever that house is located.
You think Americans do t pay property tax?
This is not the same thing as an exit tax.
For example, two people each own identical houses. One lives in the US and one lives outside. Both decide to keep it until they die. They both owe property taxes. If the person living outside of the US renounces their citizenship, they owe an exit tax even though they did not sell the property. The value of the house didn't change. It's location, owner, property tax obligation.. Nothing changed.
There is nothing wrong with this. It should just be applied equally. If there is going to be a wealth tax, I want it applied to wealthy Americans even if they don't renounce their citizenship.
If those assets remained in the US and the person never renounced, they would never be taxed.
You flat out said it...
Fuck it, I'm just blocking, I don't want roped into another one of these
How can you file a lawsuit in a country you are not a citizen of, against a country you are not a citizen of? Real question.
Do you really think foreign nationals aren’t afforded legal rights within the United States? Real question.
Yes that was my understanding of the situation. Feel free to explain why I'm wrong, that's why I asked the question. Even the term "foreign national" is something I'm not familiar with and it's not entirely clear whether you would even use it in some of the cases cited in the article considering that one individual is self described as living overseas when he renounced his citizenship.
A foreign national is anyone that is a citizen of a foreign nation. If an American is renouncing their US citizenship, they must already have gained citizenship of another nation, which makes them a foreign national once they no longer have US citizenship.
If they had no legal rights in the United States, there would be zero tourism or business travel from foreigners to the US because any American could do whatever they want to that foreign person (steal from them, con them, murder them, you name it) without fear of legal repercussions.
So yes, foreigners have the right to use American courts if the injustice they are alleging happened on American soil.
Yes that makes sense now, thank you!
I have a few weird questions if you have time to answer them. How does it work in the case where the person was outside of the USA at the time, seeing as they were not on USA "soil" at the time? It's just that one of the parties (in this case the federal government) has to be on USA soil?
And how does that work if, say, you're standing on the USA side of the Mexican border and you throw a brick at someone on the Mexican side? Could the Mexican citizen in this case file a lawsuit in a USA court?
I am not the OP, nor am I a lawyer, but I believe I am informed enough to answer these.
How does it work in the case where the person was outside of the USA at the time, seeing as they were not on USA "soil" at the time? It's just that one of the parties (in this case the federal government) has to be on USA soil?
Yes. In this case, the alleged offense (the cost demanded for renouncing citizenship) took place by the US federal government on American soil, which is why they can use through American courts.
The reason why they probably wouldn't be suing through the court system of the country they immigrated to is because other countries do not have the authority to dictate how much money the US is demanding. But at the same time, there's technically no reason to pay the US either if you never plan on going back there, given that the US has no power to arrest people in foreign soil...unless the two countries have an extradition treaty in place (and much of the first world does). The US would then have to sue for extradition within the court system of the other country first, and then you'd be facing a lawsuit in the US over unpaid fees.
The threat of the latter is also assuming the fee justifies the court expense spent pursuing it, which I doubt it would. I met a lot of American expats in China who technically owe the US government thousands of dollars in unpaid taxes/fees/etc but aren't even worried about going back to visit because the government would be spending far more pursuing legal action than they stand to make from the suit. The only time one should be worried is the rare example where the government might want to make an example of someone, or if you're a mob boss or something and that's the only concrete offense they can jail you for.
And how does that work if, say, you're standing on the USA side of the Mexican border and you throw a brick at someone on the Mexican side? Could the Mexican citizen in this case file a lawsuit in a USA court?
Now ain't that the tricky scenario. A similar case actually came up recently, with Hernandez v. Mesa and it was ruled at the time by the conservative-stacked Supreme Court that the US government was not responsible for prosecuting a crime where the victim was not in the US and not an American citizen. But the fact that there were dissenting opinions from all of the non-conservative judges, who are themselves legal experts on the constitution, shows that this is a very contentious gray area.
I guess the takeaway from this is that the person in this hypothetical scenario would be better off filing suit from Mexico and pushing for extradition, as the two countries have an extradition treaty.
Wow thank you! Bonus points for citing case law and referencing dissenting opinions. To go back to the original article, one thing I did not consider that even though one man was not on US soil he still would have been a US citizen when he was charged the fee. Only after the fee was paid was his citizenship renounced. For some reason it's funny to me that if not for that fact, the government may have been able to argue that based (on face value) on Hernandez v. Mesa that he wasn't in the US nor a citizen at the time!
Thanks for explaining all that so eloquently. I would not have been able to answer their border hypothetical as well as you did.
Court jurisdiction can become a really complicated question, but citizenship of the parties has nothing to do with it. If a court has jurisdiction, doesn't matter if the plaintiffs reside on Mars.
The law and courts apply to anyone with standing. Have you not read news stories when illegal immigrants are challenging their detention? Or Guantanamo prisoners petitioning the court that they shouldn't be tortured? This is the same thing.
You say inhabitants but it's clear from the article that at least some of the litigants were not inhabiting USA territory. And I thought the entire point of setting up Guantanamo Bay was that it "technically" wasn't US soil therefore they are not afforded the same protections.
You are right; it's not inhabitants. It's anyone with standing.
I edited my reply for clarity.
French citizens who are rear ended by an American during their vacation, for example, but must return home the next day, still have screws to the courts.
As one would expect.
The location of a person when they file a lawsuit has no bearing on its validity.
No other system would make sense.
Slow your roll, turbo, do you always get this shitty when someone asks a genuine question about a topic they aren't familiar with?
Real question.
That wasn’t me being shitty. That was me asking a genuine question in order to understand just how unfamiliar they were to this subject. Once they answered, you’ll find I explained the entire thing to them.
Do you always assume the worst in people? Real question.
I mean, it's like asking how can you order food in a restaurant of a different country you're not a citizen of? Like, you might not be familiar with the topic but you're assuming some limitation that makes no sense and doesn't exist.
Except you're comparing LEGAL SYSTEMS with ORDERING FOOD
They aren't comparable.
I'm almost positive I could navigate ordering food from almost anywhere in the world, as long as I could speak their language.
But I don't for a second think I could navigate their legal system, and in quite a few cases from my understanding, I wouldn't be able to do anything at all as a foreigner.
Sure, it MIGHT be similar enough. But I'm not going to risk it, and I would prefer to at least ask someone with more local knowledge than myself. Probably a lawyer but if it's only passing curiosity, a simple question on a website will do.
Well yeah, i couldn't make a lawsuit in my hometown or in a different country without a lawyer either. Yes, you get a lawyer and they file a lawsuit in the appropriate court, whether it's your home country or a foreign country. Yes, the process will be different but it doesn't matter which country youre a citizen of.
I imagine it starts with hiring a lawyer, the same as if you're a citizen.
The only people renouncing US citizenship are rich people because the US will still tax them.
The payment to renounce it is like a one time fee to not be taxed
I know that if you are a US citizen in France a lot of bank will refuse to open a bank account for you.
It's due to the fact that they need to report to the IRS the banking informations of all US citizen and they just don't want to spend any money on that.
Plus even if you are not taxed you still have to declare to the IRS your revenues every year.
Some people are US citizen without every putting a feet in the US, I totally understand that they would want to renounce their citizenship.
Not true.
The rich have other ways to avoid paying tax. Hell, arguably the US is a tax haven for the rich, compared to many many countries. IRC Trump paid no tax 10/15 years due to reported losses. I suspect this was plain old tax avoidance. People like Bezos, Musk or Buffet pay almost nothing.
For example, when I worked at a European bank, we would often refuse US citizens anything but the basics. The IRS and US government is notoriously over-zealous and the US is one the few countries which applies double taxation. Many banks therefore avoid American passport holders like the plague. There are stories of people having their bank accounts summararily closed or frozen:
Often these were people who hadn't been in the US since childhood or at all, earned and paid (up to 10x higher) taxes in Europe than they ever would in the US, but still got fucked over by the IRS and a country they would never visit (again). The US is one of the only countries in the world that does double taxation.
These weren't rich people. Almost all of them were middle-class. Plenty were unemployed or earning less than 20k a year.
For middle-class people, it's especially problematic come pension time, when time came for the payout of a European pension plan or the sale of the family home. Stuff they'd already paid tax on to the country they'd lived in most of their lives, but are forced to give America 'its share' despite getting less than nothing in return.
Plenty of them are also unable to vote in the US, because they never had a last residence, voting is a state matter, and it's made needlessly complicated for foreign residents. Taxation without representation.
Unless you have more than $2,000,000 in assets or averaged more than $170,000 for five years, you don't pay the tax.
Thereby handily ignoring the rest of my comment, because you'd prefer to think of anyone who wants to renounce citizenship as a rich tax evader, rather than admit that there are plenty of reasons why someone might not want to have American citizenship, because shockhorror not everyone wants to be American, live in the US, or loves the US. Especially if they've never lived there or visited.
Imagine having been born in Italy during a long holiday, and for the rest of your life being forced to fill in Italian tax forms, despite working a minimum wage job and having no idea how the Italian system works and barely speaking the language. And when you try to get a loan from a American bank, they say no, because they'd have to file relevant paperwork with the Italian equivalent of the IRS.
In that example it would cost $0 to renounce citizenship...
I don't think repeating it again is going to help you bro, either read the link or just accept you don't get it. I do t need constant updates that you still don't understand
Imagine a scenario where you gained Italian citizenship through an accident of birth. Your parents were on holiday, your mother went into labour a bit earlier than expected.
Is the only reason you wouldn't want to be Italian that you want to avoid paying tax there?
If they wait till after they make six figures and get taxed...
Yeah, that's a safe assumption. If it wasn't taxes, they'd have done it sooner, it's not like people jump straight into six figures buddy
If it wasn’t taxes, they’d have done it sooner,
The Guardian:
By some calculations, there may be as many as 30,000 people among the estimated 5 million to 9 million US citizens living abroad who would like to begin the renunciation process but can’t.
...
Marie Sock, the first woman to stand as a presidential candidate in the Gambia, was forced to pull out of the race recently after she failed to get any response to her request to renounce her US nationality from the US embassy.
...
He became disillusioned when he learned that because his son was born outside the US he would not be eligible for US citizenship, and yet because of James’s citizenship he would treated as if he were a US taxpayer. That struck him as a modern form of taxation without representation. For the past year he has been trying to get through to an official who will help him renounce his citizenship, without success. “I never asked for US citizenship, and now I’m not even allowed to give it up.”
Your article is talking about specific delays during COVID because stuff was shut down because of COVID...
Which, since you didn't know, fucked up a lot of shit.
For almost two years, since the pandemic struck in March 2020, most US consular missions around the world have suspended their expatriation services for those wishing to give up US citizenship. The US embassy in London, the largest of its sort in western Europe, announces on its website that it is “currently unable to accept appointments for loss of nationality applications” and is unable to say when services will resume.
The US state department says giving up citizenship requires a face-to-face interview with a government official, and that it is too risky given coronavirus.
If that COVID denying trump supporter would have done it at some point of the decade abroad before a worldwide pandemic, it would have been easy. Everyone is that article is talking about how COVID affected it, not how it normally is.
But here's the fun part, you still have to file a tax return every year! Even if you're well under the threshold! And trying to find someone living abroad who is versed in American expatriate tax law is expensive! And I can't afford it!!
I am hiding from the IRS and have been for 16+ years.
That's probably most of them- but there's other situations as well. Some countries require you renounce other citizenships to gain theirs.
Getting pretty deep in the weeds so I may be wrong.
But I believe in that case it's not a voluntary renouncement, so it may be treated differently.
But still, you gotta be pretty wealthy to owe any money. And with the state of America, the vast amount of Americans are more deserving of sympathy and they're the ones we should be focusing on helping.
They just don't have the money for lawyers, PR campaigns, political donations, or the contacts of journalists as the wealthy people do.
Esther Jenke also told the Times that finances played a role in her decision to renounce her citizenship.
"My husband and I bought a house. If we sell the house, even though it is our primary residence, because from a US perspective it's foreign property, we would have to pay capital gains tax on it," Jenke told the Times.
The 1st part says that there is a financial reason to renounce your citizenship, but the 2nd part makes it seem like they'll pay capital gains on the house, specifically because they renounced their citizenship
If they remain US citizens, they will have to pay US capital gains tax on the sale of their home in the place they now live. They'd also be liable for US federal income tax. This would be on top of whatever taxes they're liable for in the country they moved to.
If they have renounced their citizenship and are no longer resident in the US, then they're (broadly) no longer liable for US taxes, including US capital gains on the sale of their home.
Renouncing citizenship is expensive, but massively cheaper than the taxes they'd pay as non-resident US citizens. I'd assume their income had come in under the threshold or something, so the matter only came up when they wanted to sell their home.
And somewhere, the world's smallest gold plated violin shittily plays an off-tune medly of mediocrity.
The US is one of the few countries who don't care where you earn the money...
The financial incentive is to avoid paying taxes. Then she gave a hypothetical of what would happen if she hadn't renounced us citizenship. Because the US taxes a foreign home sale as capital gains, even when it's labeled as primary residence.
Because wealthy people hate paying taxes and would renounce citizenship to avoid, the US put in this percentage based fee to renounce US citizenship. For normal people it's nothing. But for the wealthy it can be a lot of money. So now a bunch of them are suing to get it back.
It's hard for these people to explain why they shouldn't have to keep paying taxes, so it's always going to sound confusing when they want sympathy.
Didn't realize tax avoidance was so popular on Lemmy.
Unless your take is that literally all taxes are good always, it's not unreasonable to question why America is the only country in the world other than Eritrea to tax foreign earned income.
Because America is the top destination for the rich that isn't a literal tax haven?
Because US power defends the interests of the rich at great cost across the world?
Because the US has great control over the financial systems which make the international order run and has the capacity to tax foreign income, unlike most countries, for whom it would simply be a waste of resources to try?
And yes, I'll say it - all taxes on the rich are good. Controversial, I know.
Norway, Sweden, and Israel all have more billionaires per capita than the United States. Germany, Finland, Australia, Denmark, and Canada aren't far off.
I'm gonna take a wild guess that your definition of the rich for whom all taxes are good is precisely your income + $1.
The actual threshold is $120,000, which in the context of Switzerland, the case that will potentially be relevant for me in the future, is low enough that one in four residents exceed it. Costs of living there are consequentially very high, as you'd expect. There's something to be said about managing the fortunes of billionaires that will hide their wealth across a bunch of countries in elaborate schemes, but that's a very different matter than taxing engineers, tech workers, and doctors.
I'm gonna take a wild guess that your definition of the rich for whom all taxes are good is precisely your income + $1.
Man, if that was true, everyone above the poverty line is rich. I was thinking more "An individual income that is literally over double the median household income where I live"
Not sure where you are or what that amounts to but In the US I would consider double the median income middle class or upper middle class, still far from rich.
I think of “rich” as someone who can quit working right now and be able to live comfortably on their savings for the rest of their life. If they still need to work, that’s below the “rich” line.
I kinda like Chris Rock’s definition as well.. something like: “you can lose rich if you pick up a drug habit… but if you’re wealthy, you can’t lose wealth.. you can afford to do cocaine for the rest of your life if you’re wealthy”.
An INDIVIDUAL income that's double the median HOUSEHOLD income is pretty damn well off. This isn't the 1950s. Single-provider households are not the norm.
'Rich' is income in considerable excess of the average. The idea that 'middle class' is actually considerably above the middle shows the obsession we, as a society, have with being midde class - aped from both above and below that status.
I think of “rich” as someone who can quit working right now and be able to live comfortably on their savings for the rest of their life. If they still need to work, that’s below the “rich” line.
So 'rich' is money management to you?
all taxes on the rich are good. Controversial, I know.
I think what may be more controversial is who you are grouping in as “the rich”. Does home ownership put someone on the /rich/ side of the line?
People with more than $10k USD worth of non-USD in the bank must report the account. I would move that line at least to $100k if the idea is to not harass & intrude on non-rich people.
I don't see the problem with reporting the account.
So why exactly is the US permitted to tax people that don't even live in their country?
The only thing they should be allowed to do is tax the profit made in the US, they should not have access to anything outside of their borders. Even if that is in a so called "tax heaven".
Overreach it is called.
You can just Google it or ask AI, y’know. Number 2 really stands out, if you’re curious.
The United States is one of the few countries that has a system of taxing its citizens and residents on their worldwide income, including income earned abroad. This practice is known as "citizenship-based taxation." There are a few reasons why the U.S. follows this approach:
Historical Reasons: The United States has had a system of citizenship-based taxation in place for a long time. It dates back to the Civil War era when it was implemented to fund the war effort.
Desire to Prevent Tax Evasion: Citizenship-based taxation is intended to prevent U.S. citizens and residents from avoiding taxes by moving their assets or income abroad. Without it, individuals might seek tax havens to reduce their tax liability.
Complex Tax Code: The U.S. tax code is complex, and changing to a different system, such as residence-based taxation (taxing only income earned within the country), would require a significant overhaul of tax laws.
Revenue Generation: Taxing foreign income allows the U.S. government to generate revenue from its citizens and residents, regardless of where they earn their income.
It's worth noting that while the U.S. taxes its citizens and residents on foreign income, there are mechanisms in place, such as the Foreign Earned Income Exclusion and foreign tax credits, to mitigate double taxation and reduce the tax burden on income earned in other countries. However, compliance with U.S. tax laws related to foreign income can be complex and may require professional assistance for those living abroad.
What a shit take
A lot of the people who work in tech are the ones who left reddit and came to lemmy...
They're relatively liberal, until people start pointing out how they tend to make 3x the average American and are wealthy compared to everyone else.
As soon as their tax bracket comes up, they want to pretend that they have it just as bad as the rest of America.
A single person making over twice the median household income isn't who we should be worrying about right now. They can pay their taxes just fine. Others are struggling to eat and afford rent.
Edit:
I've lost count of how many rich overseas workers have made 5+ replies to my comments in less than 10 minutes screaching about how they shouldn't pay taxes
And every single one claims to be right on the line for having to pay it... yet want it thrown out for billionaires as well...
Apparently I can't block replies to comment like on reddit, so I'm just blocking every "temporary poor billionaire" who wants to spend energy online arguing billionaires should pay taxes because it would mean they do too
No one has time for the Scrouge McDuck defenders.
No one gives a fuck about your attempt to sow baseless division
I'm happy to pay more taxes and I regularly vote for that to happen. That doesn't mean the exit tax isn't fucking stupid and blatantly unfair.
If you actually gave a shit about taxing rich people you'd realize this exit tax doesn't affect them at all, since they don't have regular income to tax. It's a tax on workers who don't even live in the country.
$120k isn't even enough to buy a house in most high COL areas. With a family you'll never retire on that income either. Yet some of you are acting like these are 'rich' people so you can conveniently ignore their opinions.
I agree with your 1st paragraph. But IIUC the exit tax is not on wage income - it’s on their global wealth. I don’t see how the rich can escape that without cheating. But the problem is that non-rich middle class workers have homes and they’re being targeted.
It’s a tax on workers who don’t even live in the country.
Yeah indeed that’s the shame of the US tax policy. But to be clear that tax impacts citizens living abroad, not those who renounce. Renouncing actually escapes that.
The exit tax is pretty insane too.
Basically if you earn a certain amount or have a high enough net worth, you must pay a tax on all of your assets as if you were selling everything you owned. You are charged this amount even if you are not selling anything.
This is the only wealth tax in America as far as I understand it.
It's there for a reason tho...
If it wasn't, the wealthy would take their wealth and fuck off to somewhere it was worth more.
They're fine to do that, but the US is still going to want it's cut, you're still paying federal taxes every year because you're a US Citizen.
Rich people hate paying taxes. So they just renounced citizenship on the way out and took all their wealth with them.
But like you said, it's based on how much wealth you own so for normal people, it's not a big deal.
It's weird seeing people against it.
Edit:
Also, you have to be pretty wealthy to even have to pay it. The vast majority of Americans would pay $0 to renounce.
https://www.irs.gov/individuals/international-taxpayers/expatriation-tax
Next day edit:
Edit:
I’ve lost count of how many rich overseas workers have made 5+ replies to my comments in less than 10 minutes screaching about how they shouldn’t pay taxes
And every single one claims to be right on the line for having to pay it… yet want it thrown out for billionaires as well…
Apparently I can’t turn off replies to comment like on reddit, so I’m just blocking every “temporary poor billionaire” who wants to spend energy online arguing billionaires should pay taxes because it would mean they do too
No one has time for the Scrouge McDuck defenders.
To be entirely fair, I think its insane that the US would charge income tax on citizens who live abroad in the first place.
Well, yeah, but again it's only for the wealthy
https://www.irs.gov/individuals/international-taxpayers/foreign-earned-income-exclusion
Those parts are never mentioned when people complain about this stuff. Because the only ones paying it are the wealthy ones, and they always bitch about taxes.
They pay, because at any moment they can come back as a citizen. If the wealthy do t want to pay for that option, then they can renounce citizenship and pay a one time tax to remove their wealth.
I'm aware there's no real way to say anything here without sounding like a pretentious snob, but those income limits aren't exactly spectacularly high.
I work in tech in NYC and my income is around those limits. My boyfriend is from Switzerland and there's a non-trivial chance that we'll wind up there long-term. If I was from literally any other country in the world beyond Eritrea, I would file Swiss taxes and that would be that. Instead, I'll have a direct financial incentive to give up my native citizenship because I'm from one of two countries that makes a claim to any income earned anywhere in the world, even if I don't step foot in the country that year. This is particularly rough in Switzerland because average salaries there are quite high, and thus so are costs of living, and so surpassing those limits isn't a particularly uncommon thing. (Edit: About one in four Swiss residents make more than $120,000 annually).
I know this won't garner any sympathy at all, but a bad policy only affecting the relatively wealthy doesn't change the fact that it's a bad policy. It could even backfire from a financial perspective, since having renounced American citizenship, I'd be less inclined to spend time in the US and contribute to taxes while visiting, and I'd never move back long-term, cutting off a chance of the government getting full income taxes from me ever again, whereas a change of circumstances might have otherwise prompted me to eventually return to the US.
Not sure if you noticed, but the American social net is fucked. Mostly because of people who make a lot and not contribute back.
If you don't want to pay taxes, you don't have to participate in the American system.
If you want all the benefits and none of the costs of being American...
Someone in this thread mentioning offering violin recitials for free
Please do explain then how literally every single other country in the world with a strong safety net and welfare system has managed to fund it without having to tax expats.
Because again, in literally every single country except one African dictatorship, they interpret "the benefits" as things that you enjoy while actually being in the country, and therefore something you pay for while residing there. The ability to be a citizen of your native country is an assumed right everywhere else.
The only benefit I'd be enjoying is the right to return to my home country if I ever needed to. You don't have to pay for that in practically any other country. And so, yes, I would have to seriously think about renouncing my citizenship since I'd be paying for essentially nothing. I think that's rather unfortunate.
They tax their people more to pay for it.
It’s not rocket surgery.
The answer definitely wouldn’t be to tax the wealthy less…
Cool, renounce your citizenship then.
I'm not going to keep repeating the same things and giving you the same IRS website and hoping you magically start understanding.
We're all waiting...
They tax their rich...
What's one way we could do that... Maybe we should tax them on things like foreign property deals?
Well, we could just tax foreign income over an amount the vast amount of American workers will never earn.
....
Hopefully I got this whole conversation out of the way.
I known you don't care about facts here, but for anyone else reading this, the top 10% of American tax payers contribute 74% of all income tax. The US has one of the most progressive tax systems in the world. Stronger social nets in other countries depend on significantly higher taxes on the middle class. That of course does not mean that the extremely wealthy aren't dodging a lot of taxes, but a decently experienced tech worker or pretty much any doctor is in a very very different tax situation than Jeff Bezos etc.
By the way, again not that you care, but your average worker that earns $120,000 is not making massive international real-estate deals. In the context of Switzerland, for instance, one in four Swiss people make enough to be over the US foreign tax threshold.
Because they earn the most income...
That's what happens with percentage based taxes and rampant wealth income disparity...
The bottom of the top 10% are making 3x an average American.
And it only gets more ridiculous as you get up to the 1% which is why the top ten number is high...
Why are you so opinionated about something you don't know about?
Quick edit:
That's right, you're the rich overseas worker who doesn't want to.pay taxes
It's not that you can't understand why the wealthy should pay taxes. You just don't want pay taxes. I'll just block you so I don't fuck up and respond again
Clearly you don't have any interest in talking, and that's fine, but I do feel obligated to point out that you curiously did not answer this question:
The people this law targets aren't the ones committing tax avoidance. And the US social safety net isn't fucked because of a lack money, it's fucked because it doesn't even exist in the law.
The exit tax doesn't do shit to address that. It doesn't pay for anyone's healthcare or magically make the poverty cliff go away. It's a tax on upper income workers. Meanwhile actual rich people get their money through capital gains or loans and don't pay this shit at all.
Oh but I forgot that since I own a small house in a middle class rural neighborhood and drive a Subaru that I'm "rich" so my opinion doesn't mean shit apparently.
Arguing that allowing the super wealthy to just take all their stuff and leave wouldn’t hurt the system we have now even more than it already does is one of the most asinine things I think I’ve read on the Internet. Congratulations.
Don't have much of an idea about how the tax system works, do ya?
I pay no tax to the US, but I bitch about it. I've lived abroad since I was 3y.o and realized when I turned 18 that I have to declare to the IRS every year. Let me tell you, it is an absolute pain in the ass when you have to do it yourself, without a US bank account or phone number. Takes me a full working day to declare 0 tax to the IRS when they already know that I owe zero tax because they force any bank I have accounts at to report to them. Half the banks in Sweden simply refuse to have me as a customer because of this, in addition to certain types of income technically being subject to double taxation because of US law.
I can't even get rid of my US citizenship without paying an absurd exit tax
If that's true in your case, it means you have over 2 million in assets or made more than 170k averaged over the last five years...
If you're below both this, you don't have to pay the exit tax
https://www.irs.gov/individuals/international-taxpayers/expatriation-tax
So either you don't know the basics of what you're complaining about, or you're pretending you don't make an obscene amount of money
...or I don't have a 5yr record of reporting taxes to the IRS. There's also the 2'500USD "Administration fee"
It’s not just about money. It’s a labor burden and a privacy intrusion. And even if iceblade02 could renounce for free, they then must carry the renounciation cert for the rest of their life and show it to every bank they deal with and hope that no data entry errors trigger data oversharing anyway.
They must renounce to get their human rights back. Because without renouncing, they lose their human right to non-discriminatory treatment on the basis of national origin (article 1 of the Universal Declaration of Human Rights).
But back to money, that annual tax filing accidental Americans must file costs them $300+/year -- accountants do not work for free. It’s effectively a tax on the poor.
$120k is "wealthy" now? 120k isn't even enough to buy a fucking house in most cities in the US. Actual wealthy people aren't affected by this law because they don't have regular income.
I've seen this on Reddit before: Six figures means you're rich, because that was true in the 80s, right? Obviously people don't have a clue that 40 years of inflation has made that middle class.
Also: income is not wealth, and the willful lack of understanding on that point blows my mind. A person who is wealthy can live an upper middle class lifestyle or better without ever having to work again. A person who has respectable income may have minimal wealth, or even mountains of debt (student loans, mortgage, etc). A person who makes 100k could be a few months unemployment away from losing their house or lease, while a person with "wealth" may not have to work at all.
People don't become filthy rich working full time for six figures. The wealthy (~$20-50m net worth and up IMO) are people who made their money with something other than labor - through investments and things that the government doesn't really classify as normal income.
Edit: It's like the saying goes: nobody makes a billion dollars. They take a billion dollars. If you tax the wealthy on income, you collect very little tax, because it's not classified as income. Meanwhile you're going to tax an engineer or physician who probably have hefty student loans and work their asses off full time, at the highest marginal rates because we don't or can't tax wealth.
Edit2: we've got minimum wage internet trolls who think an employee software engineer is basically a cigar chomping capitalist because they make over the median wage. The middle class has shrunk and maybe you're not in it. Get a clue, dumbasses.
No, this was not any more true in the 80s than it is now.
I certainly agree based on my previous statement that income is not wealth, but I was trying to make two points and mixed the messages.
One is that amounts of money that were once considered an unbelievable amount for income or wealth - say $100k and $1m - have now been eroded by inflation to fairly modest money. In the 70s or 80s, having a million meant never working again. Earning 100k a year when a house cost $50k was huge money, and might lead to wealth quickly, if one bought several houses with it.
Another point I'd like to sneak in is that there's almost no modern equivalent to that kind of employed income. On paper, inflation puts it at 400k - so maybe today's equivalent of a surgeon - but the 50k house now costs $500k-1m. Notional inflation being 4x, while the critically important things have gone up 10-20x means that something harder to quantify is broken, and upward mobility isn't working the way we expect. The same opportunities don't exist. We are less likely to turn income into wealth over time than at points in the past, and so the tendency of people to erroneously think high income = wealth may have a reasonable basis in history that has never been less true today.
Edit: and it's not just houses, it's the stock market. The advent of the internet and e-commerce resulting in tech stock growth 1995-today is a phenomenon not likely to be replicated in any other area. We may be running out of growth to be had. The ability to get 10-20x your money over 30-40 years of investments is probably gone, and with it the prospect of comfortable retirement for even relatively high earners.
120K lands you at 86th percentile [1]. So... relatively, you are sorta well off.
Sure, you can't buy a house with that income in a big city. But that merely shows how fucked up the real estate bubble is. Just think, the top 86th percentile earning person is no where near enough to even buy a home. Houses are about 1m in my neighborhood. So you need to earn about 250k/yr to realistically afford a home. That lands you at 97th percentile. So just top 3% of the people can actually afford a home on a single person's salary. That's how fucked we are.
The median income for a non-family household (i.e. single) is 45k, and family household is 95k (possibly dual income) according to 2023 census [2]. So, you're doing relatively quite well in comparison.
Who is "wealthy" is a subjective term. So a median person might see someone making 120k as wealthy. But the person earning 120k might see themselves as poor since they can't even own a home. Historically, the single income middle class could afford homes.
But that's true of pretty much every other country in the world as well. So it still doesn't explain why the US is the only one that charges tax on foreign-earned income.
On the wealthy...
You keep omitting that point, and it's starting to get old.
But the reason is idealistic.
America was supposed to be the land of immigrants where anyone can immigrate, work hard, and earn wealth.
That system doesn't work if once you amass your wealth, you fuck off somewhere else and take it all with you. The reasoning is you were able to amass that wealth through America's social ladder.
If the wealthy (the only ones that pay foreign income tax or exit taxes) don't want to pay that, they know that being honest will never result in change.
If how I'm saying it doesn't make sense, use the IRS website I've provided numerous times.
You keep calling these people "wealthy" but the income levels you shared don't even come close to matching that. Also lol at the idea of America being an idealistic place so that's why people should pay this tax. My fucking ass. America is and always has been rigged for rich people, which should immediately tell you why this law still exists.
How about we actually tax real wealthy people, like millionaires loaning money to themselves, instead of forcing the middle class to pick up the slack yet again?
You cannot expect people to use the irs.gov website. That’s not open to the public. It’s exclusive. Try going there over tor - you will get a 403. Indeed it’s shitty that access to legal information is restricted. It should be open to all.
Because you're American and should pay taxes no matter if you're in Antarctica or not. If you're in a different country and not participating in America's system, then why are you claiming to still be an American citizen? The answer is to renounce at that point. The right winger "taxes against rich are bad" are starting to come out in this thread lol.
Why is America the only country that has this perspective (Eritrea excepted)? Is literally every single other country besides an African dictatorship simply delusional, and only America and Eritrea found the divine wisdom that all global income should be taxed?
The United States is one of the few countries that has a system of taxing its citizens and residents on their worldwide income, including income earned abroad. This practice is known as "citizenship-based taxation." There are a few reasons why the U.S. follows this approach:
2. Desire to Prevent Tax Evasion: Citizenship-based taxation is intended to prevent U.S. citizens and residents from avoiding taxes by moving their assets or income abroad. Without it, individuals might seek tax havens to reduce their tax liability.
Complex Tax Code: The U.S. tax code is complex, and changing to a different system, such as residence-based taxation (taxing only income earned within the country), would require a significant overhaul of tax laws.
Revenue Generation: Taxing foreign income allows the U.S. government to generate revenue from its citizens and residents, regardless of where they earn their income.
It's worth noting that while the U.S. taxes its citizens and residents on foreign income, there are mechanisms in place, such as the Foreign Earned Income Exclusion and foreign tax credits, to mitigate double taxation and reduce the tax burden on income earned in other countries. However, compliance with U.S. tax laws related to foreign income can be complex and may require professional assistance for those living abroad.
That's not a reason on why we shouldn't have a wealth tax... You're just blindly insulting America without reason, which this site is already a xenophobic circlejerk.
Why are you talking about wealth taxes when they have nothing to do with the question I asked?
Again, why is America the only major country that has this policy? Either answer this, or don't respond.
Because this is a form of wealth tax. That's not even a question you're asking. Fuck out of here with that aggressive debate lord shit.
The topic was on taxing foreign income. To quote the relevant bit from above:
Though I agree that if you aren't capable of even following the topic at hand, it's best that I just save my breath here.
If you think it's that easy to renounce American citizenship, you have no idea what you're talking about.
I fully support taxing the rich. I am very explicitly NOT rich. And I cannot come close to being able to afford to renounce my American citizenship.
You seem unaware of the population of accidental Americans. When a Dutch couple gives birth on US soil before returning to Europe, that child automatically a birthright citizen of the US. They can grow up having never set foot in the US (apart from birth), and for the rest of their life they have a legal obligation to file US tax and declare to the US all their Dutch income & bank accounts even if they are below that $120,000 line. They also get targeted for discrimination along with all other Americans by banks who don’t accept Americans (even if they are also Dutch). They have to pay a US accountant upwards of $300/year for the rest of their life just to file that zero.
It’s also worth noting that an income of $120k goes much further in the US than it does in Europe (where they might be living).
So obviously a lot of accidental Americans have become motivated to renounce. But if they already own a home, you can see the problem. I would not say owning a home makes someone “rich”. They still need to work to eat and to maintain the home.
This is the absolute least important problem with American taxes, there's a thousand other things we're trying to fix.
Stop pretending like the bottom of "the top 10% wealthiest Americans" need help. We've got fucking children starving and not even getting a free school lunch. Excuse us for not having sympathy for everyone making between 120k and 120 million a year.
I'm just blocking all of you at this point, so do t expect another reply
Correct. It's only the US and Eritrea (the North Korea of Africa) who do this. It's insane.
It's like the Inheritance tax. It's basically meaningless to the poor, but it sounds bad so the GOP uses it to scare their base. However the targets of the tax are primarily the handful of rich capitalist bastards who have a harder time
bribinglobbying their way out of it.The exit tax starts at $120k. That's "I can rent but not buy an apartment in San Francisco" class, not the "rich capitalist bastard lobbying Congress" class. And of course it's also an income tax so it does jack shit to tax actual wealthy people.
Actual rich people already worked around the tax issue by putting their assets in stocks and loans. They aren't paying this tax at all in the first place. They don't need to lobby anyone.
It's fucking ridiculous how some of you try to frame this income level. Doctors and lawyers are not the wealthy capitalists phoning up Congress and getting what they want from them. It's actually fucking crazy that you're acting like they do. People raising a family at that income level will never retire just like any other worker, but now they're rich capitalist bastards?
Totally agree. Income isn't wealth and people are clinging onto 1970s implications of "millionaire" when in 2023 having a million net worth doesn't even allow you to retire and might just mean you own a house and have little other savings. Similarly "six figures" income meant a lot 30-40 years ago, but inflation eroded that to middle class in the 21st century.
My issue isn't so much with the tax itself as it is selectively enforced. If those assets remained in the US and the person never renounced, they would never be taxed. Or at least not taxed at the same rate.
So it's important enough to make sure rich people don't run away but, as long as you don't try to run, you don't owe us anything.. So the rich in America can continue getting richer..
Also, the income threshold is pretty average for any senior level software engineer. You don't need to be astoundingly rich to be on the hook.
What?
You think Americans do t pay property tax?
They're still paying it even if they don't set foot in America
I'm sorry, everytime you reply you say a new wrong thing I have to type alot to explain. I thought there was a few things you didn't know, but I'm not going to take the time to explain how American taxes work from ground up.
Over $100,000/year is wealthy in America. The median income is 3/4 of that...
That tax is irrelevant. That just muddies the waters to bring up property tax because every real estate property is subject to local property tax. It’s a wash. When you buy a house, you implicitly agree to property tax wherever that house is located.
This is not the same thing as an exit tax.
For example, two people each own identical houses. One lives in the US and one lives outside. Both decide to keep it until they die. They both owe property taxes. If the person living outside of the US renounces their citizenship, they owe an exit tax even though they did not sell the property. The value of the house didn't change. It's location, owner, property tax obligation.. Nothing changed.
There is nothing wrong with this. It should just be applied equally. If there is going to be a wealth tax, I want it applied to wealthy Americans even if they don't renounce their citizenship.
You flat out said it...
Fuck it, I'm just blocking, I don't want roped into another one of these
I think it makes a lot of sense for people with millions of dollars (or more) of assets, but not for normal people.
Good, those rich fucks shouldn't be able to loot the country and cash out.
How can you file a lawsuit in a country you are not a citizen of, against a country you are not a citizen of? Real question.
Do you really think foreign nationals aren’t afforded legal rights within the United States? Real question.
Yes that was my understanding of the situation. Feel free to explain why I'm wrong, that's why I asked the question. Even the term "foreign national" is something I'm not familiar with and it's not entirely clear whether you would even use it in some of the cases cited in the article considering that one individual is self described as living overseas when he renounced his citizenship.
A foreign national is anyone that is a citizen of a foreign nation. If an American is renouncing their US citizenship, they must already have gained citizenship of another nation, which makes them a foreign national once they no longer have US citizenship.
If they had no legal rights in the United States, there would be zero tourism or business travel from foreigners to the US because any American could do whatever they want to that foreign person (steal from them, con them, murder them, you name it) without fear of legal repercussions.
So yes, foreigners have the right to use American courts if the injustice they are alleging happened on American soil.
Yes that makes sense now, thank you!
I have a few weird questions if you have time to answer them. How does it work in the case where the person was outside of the USA at the time, seeing as they were not on USA "soil" at the time? It's just that one of the parties (in this case the federal government) has to be on USA soil?
And how does that work if, say, you're standing on the USA side of the Mexican border and you throw a brick at someone on the Mexican side? Could the Mexican citizen in this case file a lawsuit in a USA court?
I am not the OP, nor am I a lawyer, but I believe I am informed enough to answer these.
Yes. In this case, the alleged offense (the cost demanded for renouncing citizenship) took place by the US federal government on American soil, which is why they can use through American courts.
The reason why they probably wouldn't be suing through the court system of the country they immigrated to is because other countries do not have the authority to dictate how much money the US is demanding. But at the same time, there's technically no reason to pay the US either if you never plan on going back there, given that the US has no power to arrest people in foreign soil...unless the two countries have an extradition treaty in place (and much of the first world does). The US would then have to sue for extradition within the court system of the other country first, and then you'd be facing a lawsuit in the US over unpaid fees.
The threat of the latter is also assuming the fee justifies the court expense spent pursuing it, which I doubt it would. I met a lot of American expats in China who technically owe the US government thousands of dollars in unpaid taxes/fees/etc but aren't even worried about going back to visit because the government would be spending far more pursuing legal action than they stand to make from the suit. The only time one should be worried is the rare example where the government might want to make an example of someone, or if you're a mob boss or something and that's the only concrete offense they can jail you for.
Now ain't that the tricky scenario. A similar case actually came up recently, with Hernandez v. Mesa and it was ruled at the time by the conservative-stacked Supreme Court that the US government was not responsible for prosecuting a crime where the victim was not in the US and not an American citizen. But the fact that there were dissenting opinions from all of the non-conservative judges, who are themselves legal experts on the constitution, shows that this is a very contentious gray area.
I guess the takeaway from this is that the person in this hypothetical scenario would be better off filing suit from Mexico and pushing for extradition, as the two countries have an extradition treaty.
Wow thank you! Bonus points for citing case law and referencing dissenting opinions. To go back to the original article, one thing I did not consider that even though one man was not on US soil he still would have been a US citizen when he was charged the fee. Only after the fee was paid was his citizenship renounced. For some reason it's funny to me that if not for that fact, the government may have been able to argue that based (on face value) on Hernandez v. Mesa that he wasn't in the US nor a citizen at the time!
Thanks for explaining all that so eloquently. I would not have been able to answer their border hypothetical as well as you did.
Court jurisdiction can become a really complicated question, but citizenship of the parties has nothing to do with it. If a court has jurisdiction, doesn't matter if the plaintiffs reside on Mars.
The law and courts apply to anyone with standing. Have you not read news stories when illegal immigrants are challenging their detention? Or Guantanamo prisoners petitioning the court that they shouldn't be tortured? This is the same thing.
You say inhabitants but it's clear from the article that at least some of the litigants were not inhabiting USA territory. And I thought the entire point of setting up Guantanamo Bay was that it "technically" wasn't US soil therefore they are not afforded the same protections.
You are right; it's not inhabitants. It's anyone with standing.
I edited my reply for clarity.
French citizens who are rear ended by an American during their vacation, for example, but must return home the next day, still have screws to the courts.
As one would expect.
The location of a person when they file a lawsuit has no bearing on its validity.
No other system would make sense.
Slow your roll, turbo, do you always get this shitty when someone asks a genuine question about a topic they aren't familiar with?
Real question.
That wasn’t me being shitty. That was me asking a genuine question in order to understand just how unfamiliar they were to this subject. Once they answered, you’ll find I explained the entire thing to them.
Do you always assume the worst in people? Real question.
I mean, it's like asking how can you order food in a restaurant of a different country you're not a citizen of? Like, you might not be familiar with the topic but you're assuming some limitation that makes no sense and doesn't exist.
Except you're comparing LEGAL SYSTEMS with ORDERING FOOD
They aren't comparable.
I'm almost positive I could navigate ordering food from almost anywhere in the world, as long as I could speak their language.
But I don't for a second think I could navigate their legal system, and in quite a few cases from my understanding, I wouldn't be able to do anything at all as a foreigner.
Sure, it MIGHT be similar enough. But I'm not going to risk it, and I would prefer to at least ask someone with more local knowledge than myself. Probably a lawyer but if it's only passing curiosity, a simple question on a website will do.
Well yeah, i couldn't make a lawsuit in my hometown or in a different country without a lawyer either. Yes, you get a lawyer and they file a lawsuit in the appropriate court, whether it's your home country or a foreign country. Yes, the process will be different but it doesn't matter which country youre a citizen of.
I imagine it starts with hiring a lawyer, the same as if you're a citizen.
The only people renouncing US citizenship are rich people because the US will still tax them.
The payment to renounce it is like a one time fee to not be taxed
I know that if you are a US citizen in France a lot of bank will refuse to open a bank account for you.
It's due to the fact that they need to report to the IRS the banking informations of all US citizen and they just don't want to spend any money on that.
Plus even if you are not taxed you still have to declare to the IRS your revenues every year.
Some people are US citizen without every putting a feet in the US, I totally understand that they would want to renounce their citizenship.
Not true.
The rich have other ways to avoid paying tax. Hell, arguably the US is a tax haven for the rich, compared to many many countries. IRC Trump paid no tax 10/15 years due to reported losses. I suspect this was plain old tax avoidance. People like Bezos, Musk or Buffet pay almost nothing.
For example, when I worked at a European bank, we would often refuse US citizens anything but the basics. The IRS and US government is notoriously over-zealous and the US is one the few countries which applies double taxation. Many banks therefore avoid American passport holders like the plague. There are stories of people having their bank accounts summararily closed or frozen:
https://www.thelocal.de/20210914/why-are-americans-being-turned-away-from-german-banks
Often these were people who hadn't been in the US since childhood or at all, earned and paid (up to 10x higher) taxes in Europe than they ever would in the US, but still got fucked over by the IRS and a country they would never visit (again). The US is one of the only countries in the world that does double taxation.
These weren't rich people. Almost all of them were middle-class. Plenty were unemployed or earning less than 20k a year.
For middle-class people, it's especially problematic come pension time, when time came for the payout of a European pension plan or the sale of the family home. Stuff they'd already paid tax on to the country they'd lived in most of their lives, but are forced to give America 'its share' despite getting less than nothing in return.
Plenty of them are also unable to vote in the US, because they never had a last residence, voting is a state matter, and it's made needlessly complicated for foreign residents. Taxation without representation.
I'll go with the IRS over you bud...
https://www.irs.gov/individuals/international-taxpayers/expatriation-tax
Unless you have more than $2,000,000 in assets or averaged more than $170,000 for five years, you don't pay the tax.
Thereby handily ignoring the rest of my comment, because you'd prefer to think of anyone who wants to renounce citizenship as a rich tax evader, rather than admit that there are plenty of reasons why someone might not want to have American citizenship, because shock horror not everyone wants to be American, live in the US, or loves the US. Especially if they've never lived there or visited.
Imagine having been born in Italy during a long holiday, and for the rest of your life being forced to fill in Italian tax forms, despite working a minimum wage job and having no idea how the Italian system works and barely speaking the language. And when you try to get a loan from a American bank, they say no, because they'd have to file relevant paperwork with the Italian equivalent of the IRS.
In that example it would cost $0 to renounce citizenship...
I don't think repeating it again is going to help you bro, either read the link or just accept you don't get it. I do t need constant updates that you still don't understand
Imagine a scenario where you gained Italian citizenship through an accident of birth. Your parents were on holiday, your mother went into labour a bit earlier than expected.
Is the only reason you wouldn't want to be Italian that you want to avoid paying tax there?
If they wait till after they make six figures and get taxed...
Yeah, that's a safe assumption. If it wasn't taxes, they'd have done it sooner, it's not like people jump straight into six figures buddy
The Guardian:
...
...
https://www.theguardian.com/us-news/2021/dec/31/americans-seeking-renounce-citizenship-stuck
Your article is talking about specific delays during COVID because stuff was shut down because of COVID...
Which, since you didn't know, fucked up a lot of shit.
If that COVID denying trump supporter would have done it at some point of the decade abroad before a worldwide pandemic, it would have been easy. Everyone is that article is talking about how COVID affected it, not how it normally is.
But here's the fun part, you still have to file a tax return every year! Even if you're well under the threshold! And trying to find someone living abroad who is versed in American expatriate tax law is expensive! And I can't afford it!!
I am hiding from the IRS and have been for 16+ years.
That's probably most of them- but there's other situations as well. Some countries require you renounce other citizenships to gain theirs.
Getting pretty deep in the weeds so I may be wrong.
But I believe in that case it's not a voluntary renouncement, so it may be treated differently.
But still, you gotta be pretty wealthy to owe any money. And with the state of America, the vast amount of Americans are more deserving of sympathy and they're the ones we should be focusing on helping.
They just don't have the money for lawyers, PR campaigns, political donations, or the contacts of journalists as the wealthy people do.
The court has jurisdiction regardless of what country the plaintiffs are from.
I was thinking the same thing.
I can't quite follow this:
The 1st part says that there is a financial reason to renounce your citizenship, but the 2nd part makes it seem like they'll pay capital gains on the house, specifically because they renounced their citizenship
If they remain US citizens, they will have to pay US capital gains tax on the sale of their home in the place they now live. They'd also be liable for US federal income tax. This would be on top of whatever taxes they're liable for in the country they moved to.
If they have renounced their citizenship and are no longer resident in the US, then they're (broadly) no longer liable for US taxes, including US capital gains on the sale of their home.
Renouncing citizenship is expensive, but massively cheaper than the taxes they'd pay as non-resident US citizens. I'd assume their income had come in under the threshold or something, so the matter only came up when they wanted to sell their home.
And somewhere, the world's smallest gold plated violin shittily plays an off-tune medly of mediocrity.
The US is one of the few countries who don't care where you earn the money...
The financial incentive is to avoid paying taxes. Then she gave a hypothetical of what would happen if she hadn't renounced us citizenship. Because the US taxes a foreign home sale as capital gains, even when it's labeled as primary residence.
Because wealthy people hate paying taxes and would renounce citizenship to avoid, the US put in this percentage based fee to renounce US citizenship. For normal people it's nothing. But for the wealthy it can be a lot of money. So now a bunch of them are suing to get it back.
It's hard for these people to explain why they shouldn't have to keep paying taxes, so it's always going to sound confusing when they want sympathy.
Didn't realize tax avoidance was so popular on Lemmy.
Unless your take is that literally all taxes are good always, it's not unreasonable to question why America is the only country in the world other than Eritrea to tax foreign earned income.
Because America is the top destination for the rich that isn't a literal tax haven?
Because US power defends the interests of the rich at great cost across the world?
Because the US has great control over the financial systems which make the international order run and has the capacity to tax foreign income, unlike most countries, for whom it would simply be a waste of resources to try?
And yes, I'll say it - all taxes on the rich are good. Controversial, I know.
Norway, Sweden, and Israel all have more billionaires per capita than the United States. Germany, Finland, Australia, Denmark, and Canada aren't far off.
I'm gonna take a wild guess that your definition of the rich for whom all taxes are good is precisely your income + $1.
The actual threshold is $120,000, which in the context of Switzerland, the case that will potentially be relevant for me in the future, is low enough that one in four residents exceed it. Costs of living there are consequentially very high, as you'd expect. There's something to be said about managing the fortunes of billionaires that will hide their wealth across a bunch of countries in elaborate schemes, but that's a very different matter than taxing engineers, tech workers, and doctors.
Man, if that was true, everyone above the poverty line is rich. I was thinking more "An individual income that is literally over double the median household income where I live"
Not sure where you are or what that amounts to but In the US I would consider double the median income middle class or upper middle class, still far from rich.
I think of “rich” as someone who can quit working right now and be able to live comfortably on their savings for the rest of their life. If they still need to work, that’s below the “rich” line.
I kinda like Chris Rock’s definition as well.. something like: “you can lose rich if you pick up a drug habit… but if you’re wealthy, you can’t lose wealth.. you can afford to do cocaine for the rest of your life if you’re wealthy”.
An INDIVIDUAL income that's double the median HOUSEHOLD income is pretty damn well off. This isn't the 1950s. Single-provider households are not the norm.
'Rich' is income in considerable excess of the average. The idea that 'middle class' is actually considerably above the middle shows the obsession we, as a society, have with being midde class - aped from both above and below that status.
So 'rich' is money management to you?
I think what may be more controversial is who you are grouping in as “the rich”. Does home ownership put someone on the /rich/ side of the line?
People with more than $10k USD worth of non-USD in the bank must report the account. I would move that line at least to $100k if the idea is to not harass & intrude on non-rich people.
I don't see the problem with reporting the account.
So why exactly is the US permitted to tax people that don't even live in their country?
The only thing they should be allowed to do is tax the profit made in the US, they should not have access to anything outside of their borders. Even if that is in a so called "tax heaven".
Overreach it is called.
You can just Google it or ask AI, y’know. Number 2 really stands out, if you’re curious.
The United States is one of the few countries that has a system of taxing its citizens and residents on their worldwide income, including income earned abroad. This practice is known as "citizenship-based taxation." There are a few reasons why the U.S. follows this approach:
Historical Reasons: The United States has had a system of citizenship-based taxation in place for a long time. It dates back to the Civil War era when it was implemented to fund the war effort.
Desire to Prevent Tax Evasion: Citizenship-based taxation is intended to prevent U.S. citizens and residents from avoiding taxes by moving their assets or income abroad. Without it, individuals might seek tax havens to reduce their tax liability.
Complex Tax Code: The U.S. tax code is complex, and changing to a different system, such as residence-based taxation (taxing only income earned within the country), would require a significant overhaul of tax laws.
Revenue Generation: Taxing foreign income allows the U.S. government to generate revenue from its citizens and residents, regardless of where they earn their income.
It's worth noting that while the U.S. taxes its citizens and residents on foreign income, there are mechanisms in place, such as the Foreign Earned Income Exclusion and foreign tax credits, to mitigate double taxation and reduce the tax burden on income earned in other countries. However, compliance with U.S. tax laws related to foreign income can be complex and may require professional assistance for those living abroad.
What a shit take
A lot of the people who work in tech are the ones who left reddit and came to lemmy...
They're relatively liberal, until people start pointing out how they tend to make 3x the average American and are wealthy compared to everyone else.
As soon as their tax bracket comes up, they want to pretend that they have it just as bad as the rest of America.
A single person making over twice the median household income isn't who we should be worrying about right now. They can pay their taxes just fine. Others are struggling to eat and afford rent.
Edit:
I've lost count of how many rich overseas workers have made 5+ replies to my comments in less than 10 minutes screaching about how they shouldn't pay taxes
And every single one claims to be right on the line for having to pay it... yet want it thrown out for billionaires as well...
Apparently I can't block replies to comment like on reddit, so I'm just blocking every "temporary poor billionaire" who wants to spend energy online arguing billionaires should pay taxes because it would mean they do too
No one has time for the Scrouge McDuck defenders.
No one gives a fuck about your attempt to sow baseless division
I'm happy to pay more taxes and I regularly vote for that to happen. That doesn't mean the exit tax isn't fucking stupid and blatantly unfair.
If you actually gave a shit about taxing rich people you'd realize this exit tax doesn't affect them at all, since they don't have regular income to tax. It's a tax on workers who don't even live in the country.
$120k isn't even enough to buy a house in most high COL areas. With a family you'll never retire on that income either. Yet some of you are acting like these are 'rich' people so you can conveniently ignore their opinions.
I agree with your 1st paragraph. But IIUC the exit tax is not on wage income - it’s on their global wealth. I don’t see how the rich can escape that without cheating. But the problem is that non-rich middle class workers have homes and they’re being targeted.
Yeah indeed that’s the shame of the US tax policy. But to be clear that tax impacts citizens living abroad, not those who renounce. Renouncing actually escapes that.