Americans Renouncing Citizenship at Record High

https://www.bloomberg.com/news/articles/2017-02-09/americans-renouncing-citizenship-at-record-high

by chenster • 9 years ago

49 54 9 years ago

bloomberg.com

ntelson1s• 9 years ago

Seems like a risky trade to take just for money's sake considering the immigration policies currently at play.

GuiA4• 9 years ago

There are pretty much no upsides to being a US citizen if you don't intend to make the US your primary residence ever.

And if you have a lot of money and want to get back in, an investor visa or even a green card is not that hard to get.

wfunction2• 9 years ago

There are pretty much no upsides to being a US citizen if you don't intend to make the US your primary residence ever.

Passport power?

Inconel• 9 years ago

a green card is not that hard to get.

Are you eligible for Permanent Residency after renouncing US citizenship? I would have thought that such an action would have some consequences regarding future residency.

Turing_Machine2• 9 years ago

According to the State Department's site, if you renounce U.S. citizenship to avoid taxes (i.e., if Homeland Security says that you did), you will be declared permanently inadmissible to the U.S.

seanmcdirmid2• 9 years ago

Careful, even a green card status is difficult to throw off. Funny that you could lose your green card by not meeting the residency test, but that doesn't negate your USA taxation obligations on worldwide income. Not even sure why they think that makes sense.

kchoudhu4• 9 years ago

a green card is not that hard to get

Have you, like, ever applied for permanent residency?

anigbrowl3• 9 years ago

There are massive upsides to US citizenship. Few countries will exert the same effort as the US to help out any of its citizens that end up in harm's way in other countries; Americans have a high level of default business credibility; in many parts of the world, having an American employee can bring considerable prestige and so on. Of course these days it also means being more of a target for terrorism and so on so it's not all gravy for sure.

If you have already formally renounced US citizenship, though, getting a visa or a green card is damn near impossible. You'll have to put a lot of money on the table to win that argument. The rules very strongly discourage deals of this kind, though that probably doesn't mean much any more if the last 3 weeks are a guide.

hartator• 9 years ago

Worth noting that Trump signed to withdraw FACTA. Will see if follow up on that as much on immigration stuff.

pzh4• 9 years ago

That would be really awesome if he did that, even though he would be doing it purely to help out his friends from the banking lobby.

FATCA is pretty bad because it imposes a one-sided requirement that everybody report to the US, but the US doesn't want to lose its beneficial position of being the world's biggest tax-haven, so it sends data to nobody. There were calls to make the US send information to the EU and other countries, but the banking lobby has so far succeeded in stopping such initiatives as they don't want the Russian mob's funds in Miami banks to suddenly go away.

tajen• 9 years ago

of the world's biggest tax heaven

As a European, I've always thought the US had extremely high reporting requirements, power of investigation, and anonymity was dead since the NSA was invented. What makes it a tax heaven? Is it the Delware loophole only?

NateyJay2• 9 years ago

I was born in and live in Canada, but am a US citizen through a parent. The US imposes difficult reporting requirements and regulations on its citizens living abroad. All bank accounts, their balances, stocks, earnings, and more. If you make above about $100k, the US demands taxes on your income, even if you earned the money locally and have never stepped foot in the US. (Edit: Only if living in a country with lower taxes than the US.) Retirement savings accounts and other financial tools that are given local tax breaks, the US does not recognize, and may tax your contributions on.

If you have not met your reporting obligations, whether you were aware of them or not, they can impose huge fines. Many american citizens here, or those with american parents, fear crossing the border or drawing attention to themselves.

Lottery winnings are not taxed by Canada, but if an american wins the lottery anywhere in the world, the USA will take its chunk.

And to add insult to injury, if you want to get out and give up your US citizenship for good, it will cost you. Before 2010 renunciation was free. From then to 2014, it was $400. Now they charge $2,350 plus a big exit tax if your net worth is above $2m.

The US is the only country that taxes its overseas citizens this way, beside Eritrea.

lend000• 9 years ago

The US is the only country that taxes its overseas citizens this way, beside Eritrea.

And the UN has routinely condemned Eritrea (and only Eritrea) for this criminal practice.

The US tax code has grown to be the most oppressive in the first world, including compared to countries with higher net rates.

pzh4• 9 years ago

That's because Eritrea doesn't have the US's military, and its ability to project power is limited to sending a couple of goons to harass a few rich expats they're aware of.

Also, the stick that the US uses to enforce FATCA is the threat of a 30% penalty on all US-sourced income of the entities that fail to report. That and the threat of seizing funds, because any SWIFT transaction in US dollars always passes through the US, even if it is to send money from Germany to India.

simonbyrne• 9 years ago

Actually the UN tends to complain about slightly different issues rather than taxing of expatriates:

In 2015, a 500-page UNHRC report detailed allegations of extrajudicial executions, torture, indefinitely prolonged national service and forced labour, and indicated that sexual harassment, rape and prolonged sexual servitude by state officials are also widespread.

https://en.m.wikipedia.org/wiki/Human_rights_in_Eritrea

anigbrowl3• 9 years ago

I hear many Americans are having trouble with consumer banking in other countries because it's not worth the paperwork and liability risk to have them as customers.

When I'm king I'll fix all this :-)

jacobush2• 9 years ago

You have recent competition in the race to kingship.

gst• 9 years ago

If you make above about $100k, the US demands taxes on your income, even if you earned the money locally and have never stepped foot in the US.

Doesn't the income tax treaty help in that case? Quoting from https://www.irs.gov/pub/irs-trty/canada.pdf: "Subject to the provisions of Articles XVIII (Pensions and Annuities) and XIX (Government Service), salaries, wages and other similar remuneration derived by a resident of a Contracting State in respect of an employment shall be taxable only in that State unless the employment is exercised in the other Contracting State. If the employment is so exercised, such remuneration as is derived there from may be taxed in that other State."

I'm aware of the foreign income exclusion you're refering to, but wouldn't the tax treaty have a higher priority?

NateyJay2• 9 years ago

Yes, it seems you're right. Canada has the higher tax rate, so the USA gives a credit and you are not charged extra on employment income.

But the US has higher capital gains and estate taxes than Canada, and you may be charged there: http://www.theglobeandmail.com/news/politics/delays-costs-mo...

klunger2• 9 years ago

American in Norway here. The amount excluded depends on the tax treaty and is different for each country. Right now, if you make above around 100k USD in Norway (adjusted each year for inflation), that amount above is taxed by the US. But, that is only for regular employment.

If, for example, you decide to start freelancing, you still have to pay all of your self-employment taxes to the US, on top of the similar taxes here, even if your income is well below 100k.

Also, if you decided to start a company or start-up (i.e., anything that is not a sole proprietorship), you get into a hell hole of other compliance regulations that makes it VERY expensive. It effectively mean no one wants to cofound with you or invest in you. Having US citizenship while abroad is terrible for entrepreneurs. (source: conversations with other Americans who have tried and failed to launch startups here for these reasons)

chenster• 9 years ago

Lottery winnings are not taxed by Canada, but if an american wins the lottery anywhere in the world, the USA will take its chunk. And to add insult to injury, if you want to get out and give up your US citizenship for good, it will cost you. Before 2010 renunciation was free. From then to 2014, it was $400. Now they charge $2,350 plus a big exit tax if your net worth is above $2m. The US is the only country that taxes its overseas citizens this way, beside Eritrea.

Loving how you explained it in simple English! I hope all regulations and laws explained this way!

xbeta2• 9 years ago

With H1-B/GC applicants also climbing record high in the recent years, what are we trying to say here?

lazaroclapp• 9 years ago

Mostly that people now move between countries and tend to live and work in different countries than the ones the grew up in (obviously this is not the majority of the population, but is a higher proportion than even a few years ago), and the the US makes it very painful to be a citizen while living abroad. Plenty of people are fine with living in the U.S. and paying taxes in the U.S., or living in country X and paying taxes in country X. But living in country X and paying taxes in country X and the U.S. sounds very unattractive to a lot a people, especially if you have not lived in the U.S. for 20+ years...

If you are looking for a commentary one way or the other on recent political developments in the U.S., well, we have no clue yet, because all the data for H1Bs/GCs and citizenship renunciations both are probably from last year. Also, assuming someone moves to Canada tomorrow, it will take time for them acquire a Canadian citizenship and then from there to the point where they are ready to renounce their U.S. citizenship permanently, specially if that is right now their only citizenship.

WildUtah2• 9 years ago

H-1Bs do not have to pay US taxes for life no matter where in the world they go. It's just one more way that foreigners in the USA are privileged again and again over American citizens.

xbeta2• 9 years ago

Really? As a current H-1Bs, I believe I paid in both income tax + sales tax + property tax (I owned a property here). And I could be kick out at any rate, which means those taxes meant nothing to me, nor to my future generations. Is it really that privileged?

X86BSD2• 9 years ago

I'm curious what happens when you do renounce your US citizenship? Are you deported? To where? Whose laws are you subject too? How can you travel anywhere? Can you get citizenship anywhere else?

erispoe• 9 years ago

These are people with double citizenship.

jfim• 9 years ago

I believe you're not allowed to renounce your citizenship if you don't have another one; in other words, you can't be stateless.

Edit: Interestingly enough, the US allows it. The Wikipedia page on statelessness says "The United States, which is not a signatory to the 1954 Convention on the Status of Stateless Persons or the 1961 Convention on the Reduction of Statelessness, is one of a small number of countries that allow their citizens to renounce their citizenship even if they do not hold any other." See https://en.wikipedia.org/wiki/Statelessness

X86BSD2• 9 years ago

Right, but I don't know what happens when you are a "stateless" person. Are you ever allowed in ANY country? Are you deported from the US after becoming stateless? I have never seen a good explanation of what happens AFTER becoming stateless.

malikNF• 9 years ago

Can someone at bloomberg do something about those annoying videos in there. Not even giving you an option to close the damn thing.

ArchD• 9 years ago

FATCA is a mess. For example, some non-US (e.g. Hong Kong) bank will assume you are a US person (and presumably share your account info with the IRS) if you opened the account with a US phone number unless you prove that you are not a US person by doing some troublesome paperwork. (So what if you have a US number? It could be a Google Voice or Twilio number.)

The onus should be on the IRS to prove to the bank that the account holder is a US person, not the other way round. They want the money but they won't do their share of the due diligence.

Americans Renouncing Citizenship at Record High

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