Why I’m Giving Up My Passport

http://www.nytimes.com/2014/12/08/opinion/why-im-giving-up-my-american-citizenship-passport.html?&hp&action=click&pgtype=Homepage&module=c-column-top-span-region&region=c-column-top-span-region&WT.nav=c-column-top-span-region&_r=0

by JumpCrisscross • 12 years ago

259 276 12 years ago

nytimes.com

MAGZine• 12 years ago

Is it just me, or does "being a citizen," feel increasingly archaic as time goes on? The idea is still deeply embedded in society and government, and passports still speak volumes (insofar that they're valued differently), but citizenship seems more of a formality. Some are very tied to their countries of origin, but there seems to be a growing trend to simply follow the wealth--whether it be money, standard of living, etc.

If holding additional citizenship becomes a burden, people simply drop it.

ececconi2• 12 years ago

I just became a US citizen after living in the country for 23 years. For me, the notion isn't archaic at all. I was a permanent resident for some time. The US could revoke my residency if I spent more than six months consecutively outside the USA.

I do think many people think the term is becoming archaic. For people who live and call a country which they are not citizen in their home, it's definitely not archaic. Becoming a US citizen was one of the most important days of my life.

theorique2• 12 years ago

Well said. Very similar situation to my own.

mhurron2• 12 years ago

I just became a US citizen after living in the country for 23 years.

Why? For what benefit? I haven't seen a reason yet to even consider doing that.

nraynaud2• 12 years ago

I still think it's archaic to discriminate that way against citizens of other countries. (the best part being Americans calling them "non-citizen", exposing either some prejudice or some ignorance or both)

austerity• 12 years ago

Doesn't your experience prove the parent's point? For 23 years you've been a productive law-abiding member of society but were stripped of rights just because you are an "alien". Now that you have joined the club you can support similar treatment of others.

generalpf• 12 years ago

Only citizens of privileged countries would hold this view, I think.

jessaustin2• 12 years ago

We hold it in the hopes that eventually all may hold it.

anigbrowl• 12 years ago

When I was young and experimentally idealistic I felt the same way. Thinking of myself as a world citizne, I phoned up the local branch of the UN and asked how I get a UN passport. The very aptient lady on the other end explained that governments hate people without citizenship because they think they might get stuck owing them something, and that UN passports were only issued to refugees who had lost everything, and even then the main function was not to admit them to places, but to have a document that could be associated with an exit date to ensure some transited out of a country.

I still think citizenship ought to be something you choose but in reality it is usually something that happens to you, based on where you emerged into the world and what citizenship your parents hold. This is not going to change for the foreseeable future.

geoka92• 12 years ago

I'm afraid we are drifting backwards: a new cold war is looming and, if we are unlucky, it can turn into a hot one, and it's suddenly going to become quite important what citizenship you have (and where you live).

aikah2• 12 years ago

feel increasingly archaic as time goes on?

It really depends on where you are born.As an american,you can move almost freely across the world.That's not the case if you're born in some god forsaken place in Africa for instance.Being born in the "right place" is definitely a privilege.Trust me.

but there seems to be a growing trend to simply follow the wealth--whether it be money, standard of living, etc.

It has always been that way.There's nothing new about that.People have been moving where there are better opportunities for centuries.

theorique2• 12 years ago

citizenship seems more of a formality

Hardly a formality for citizens of countries that aren't any fun to live in and aren't easy to leave. Ask a Syrian or a North Korean if citizenship is a formality.

jseliger2• 12 years ago

Is it just me, or does "being a citizen," feel increasingly archaic as time goes on

When times are good it might, but just ask Americans who were in Liberia or Sierra Lione recently, or who were in Georgia in 2007, or who were in Ukraine until this year. Citizenship doesn't matter until it really, really matters. In Israel there are increasingly stories about families wondering about whether getting or attempting to get a second citizenship is a form of cowardice or a pragmatic acknowledgement of events on the ground.

We may be living in a peace bubble: http://www.cato.org/publications/cato-online-forum/primacy-f... . I hope that isn't the case. If however it is, citizenship really, really matters.

Let me reiterate that moving towards a safer and more developed world in which citizenship doesn't matter much is great and I hope we do it. But that progress is not guaranteed and is not universal.

mike_hearn2• 12 years ago

When times are good it might, but just ask Americans who were in Liberia or Sierra Lione recently

They would probably tell you that the US State Department charges people for being rescued rather than doing it for free like other governments, and that the bill has a habit of being absurdly large and in some cases (like evacuation via aircraft carrier) can result in bankruptcy and people wishing they had not been rescued.

http://travel.state.gov/content/passports/english/emergencie...

Departure assistance is expensive. U.S. law 22 U.S.C. 2671(b) (2) (A) requires that any departure assistance be provided "on a reimbursable basis to the maximum extent practicable.” This means that evacuation costs are ultimately your responsibility; you will be asked to sign a form promising to repay the U.S. government. We charge you the equivalent of a full coach commercial fare on a comparable mode of transportation at the time that commercial travel ceases to be a viable option. You will be taken to a nearby safe location, where you will need to make your own onward travel arrangements. Typically, you will not have an opportunity to select the destination to which we will take you; it will be to the nearest safe location (only in rare circumstances will that be to the United States). If you are destitute, and private resources are not available to cover the cost of onward travel, you may be eligible for emergency financial assistance.

https://goatpath.wordpress.com/2011/02/11/how-much-can-an-ev...

As far as I can tell once you leave US borders, unless you intend to return permanently one day there are no benefits to being a US citizen and lots of downsides.

By the way one thing I keep reading about re: FATCA is that the State Dept seems to be underreporting the numbers of people who are giving up citizenship.

robotresearcher• 12 years ago

It matters if you want to participate in democracy by voting. Many (most?) places you can't even vote for your town's major or school board without a national citizenship.

fsloth• 12 years ago

I think you live in a fairly unique situation if you consider citizenship becoming old fashioned. With all the speak about globalization, shifting ones recidence from country to country is not something people generally engage in often. Family, work and living permits, cultural background, language - these are still quite real limitations to most. It's probably a bit different with top experts but by definition most are not...

akgerber• 12 years ago

Is following wealth internationally a particularly new trend? Nearly all of America's population is descended from immigrants who came chasing money and/or standard of living.

kalleboo5• 12 years ago

Isn't it also a fairly modern concept? At least in Europe, until WW1, citizenship and passport checks weren't nearly the thing they are today.

davidw8• 12 years ago

I'm kind of conflicted about this article. As an American living abroad, it's very, very pertinent. On the other hand, it's basically political in nature so I'm going to flag it in any case, as I don't think it's fair to complain about political articles except for ones I really happen to like.

Edit: for those actually interested in doing something, this group looks to be legit: http://americansabroad.org/

CapitalistCartr• 12 years ago

Articles about immigration into/out of the United States seem to hold a special place on HN.

qdpb• 12 years ago

Do you also have to pay "thousands" of dollars to accountants? This particular bit seems to be an exaggeration, as I would imagine any tax software should be able to deal with foreign income. And with only federal income to report, this should be cheap too.

vajrabum• 12 years ago

Here's an example that explains the tax rules for Canadian Green Card holders who have Canadian tax free retirement savings accounts. It all seems equitable and simple until you start reading deeper and it becomes clear that as a US Green Card holder from Canada working in the US that you probably need regular services from a tax attorney or a very sharp CPA with experience advising Canadians working in the US to keep you out of trouble. You probably only need that for this issue when the rules change but they do change and it's not the only issue that you're going to need professional advice for. The cost of that specialty advice adds up fast. http://www.serbinski.com/working-in-usa/rrsp.shtml

davidw8• 12 years ago

Do you also have to pay "thousands" of dollars to accountants?

No, I found a good guy who really knows what he's doing up in Vicenza. But between his fee, and a day off work to go see him and get all my US stuff in order... it does start to add up.

I would imagine any tax software should be able

Maybe, but I doubt it does it nearly as well as a competent accountant, who, for instance, knows how to read an Italian tax filing, and knows the details of the US-Italy tax treaty.

tormeh5• 12 years ago

I think this kind of flagging is misplaced. Politics is usually unwanted on HN because political posts usually reduces to "OMG, [Obama/Tea party] SUXXORZ!!!!".

When it's sufficiently interesting, politics is ok, the problem is propaganda and discussing values that are a matter of taste.

davidw8• 12 years ago

When it's sufficiently interesting, politics is ok, the problem is propaganda and discussing values that are a matter of taste.

https://news.ycombinator.com/item?id=6120530 is a pretty good summary of why I don't want to see politics here. I'll also add the "bullshit asymmetry principle": http://ordrespontane.blogspot.it/2014/07/brandolinis-law.htm... - which tends to become important as these discussions grow. It's super easy to say some inane thing, but to properly refute it requires research, links, statistics, reason... it's difficult. I don't think "good political discussions" are a stable state, either - it's something that might happen for a period of time, but then decay sets in.

percept• 12 years ago

Disregarding the broader debate, I think most would agree that the filing process for Americans who willingly comply is itself egregious.

You can be making less than the exempted amount, and still be obligated to pay thousands simply to file a return.

sologoub3• 12 years ago

There has been a good amount of discussion here about the merits of having an automated return generated by the government and have people simply either agree to it or update with additional deductions as appropriate. Unfortunately, because of heavy lobbying, such a thing won't materialize any time soon. [1]

Personally, I'm in favor of a simpler, flatter tax with fewer deductions. Right now the system rewards those who game it more aggressively, rather than rewarding those who behave in financial responsible ways. For example, having a house that one can barely afford with a huge mortgage is better tax-wise than having a modest home and saving/investing more. That seems entirely backwards to me.

[1] http://www.businessinsider.com/intuit-opposes-free-tax-filin...

arbuge3• 12 years ago

Automated returns would work in simple cases, but not for expats. Expats have to navigate a complicated maze of tax exemptions, tax credits, and foreign currencies, systems and deadlines which are hard to reconcile with their US counterparts.

superuser22• 12 years ago

Being "financially responsible" is the last thing a government wants to promote. From a moral standpoint we like it when people save, but for the prosperity and growth of the economy at large, everyone should be spending every cent they make.

VLM• 12 years ago

This makes an interesting startup idea.

I'm sure those tens of millions would be thrilled to only pay hundreds to a specialty USA startup instead of thousands to local tax accountants.

A theoretical annual market revenue of a billion bucks is not bad. A bit over three million customers is not totally unreasonable, and a third of a thousand dollars is disruptively cheaper but still multiplies out to a lot of revenue.

ianferrel2• 12 years ago

I expect that the American taxation of expats is unlikely to change because there's simply very little economic pressure to do so.

The value of an American citizenship is incredibly high. The vast majority of people in the world would go to great lengths and expense to be able to have one. The taxation requirements, as onerous as they are, are still worth it to the vast majority of citizens.

Similarly, the value of a British citizenship (or of any other powerful western country) is very high, and most people would put up with great costs to have it. The author mentions that he pays quite high taxes there as well.

The marginal value of having an additional citizenship from the set of powerful western countries is quite low, though, which is why this author no longer feels that the costs are worth it. But only an incredibly small fraction of people are in a position to be citizens of more than one powerful western country, which means that the costs of being a citizen will likely continue to be judged (by most people) against the value of citizenship on its own, not as a marginal addition to some other citizenship.

arbuge3• 12 years ago

> I expect that the American taxation of expats is unlikely to change because there's simply very little economic pressure to do so.

On the other hand, it is possible to change it with very little loss of revenue to the US because this taxation raises very little money in practice. Because of the 97.6k income exemption, as well as double taxation tax credits, the only real thing it does is create mountains of expensive paperwork for expats (as well as the IRS). Think along the lines of paying $5k to a specialty accountant to prove that your US tax bill is zero, every year.

The other part of your comment about this affecting only a small fraction of people is inaccurate. It affects all US expats - currently several million (6.32m is the last number I've seen). The only criterion for being affected is US citizenship. Foreign citizenship is irrelevant. You will be taxed in most foreign countries if you are resident there, regardless of your citizenship - and then taxed again by the US on the basis of your US citizenship.

_delirium4• 12 years ago

I don't think it's quite that bad. I've been an expat for some years, and I pay about $200/year to a CPA to make sure everything's filled out. At least for regular employment income it's pretty straightforward, if slightly tedious: report your income and foreign tax paid, run things both with and without the AMT, and declare any foreign bank accounts (declaring again, another way, if any had over $10k in a year). I could probably do it myself, but I figured I'd pay a CPA just to make sure it's done right. Things do get more complex if you run a business or own property, I suspect, but just as an employee I haven't found it difficult to do the annual "$0 tax owed" paperwork.

pmorici2• 12 years ago

>> On the other hand, it is possible to change it with very little loss of revenue to the US because this taxation raises very little money in practice.

Are you sure? These tax laws also collect money from US Citezens working as contractors for the US military over seas not just someone who has decided they would rather live in Europe for the rest of their lives. They are often paid 6 figures salaries and there are 10's if not 100's of thousands of them around the world esp. supporting the wars in Iraq and Afghanistan. I don't think you would find a lot of support for reducing their taxes to zero.

bostonpete• 12 years ago

It seems like the 97.6k income exemption and double taxation tax credits help explain why this taxation isn't a huge burden on normal expats.

However, we've seen plenty of examples of American corporations setting up offices in foreign countries to avoid paying U.S. taxes -- what's to prevent the highest paid individuals from doing something similar to avoid their tax burden if this taxation policy was changed?

ianferrel2• 12 years ago

I didn't say that the taxes only affect a small fraction of people. I said that only a small fraction of people have (or can easily attain) dual citizenship, and can reasonably do something about it.

Someone who doesn't have dual citizenship is certainly going to complain about the tax paperwork, but they're not in a position to do much about it. They're not a big enough voting bloc to effect change and they're certainly not going to renounce their citizenship over it without having citizenship in another powerful western country to fall back on.

mcv6• 12 years ago

$5k for an accountant to do your taxes is pretty high. I'm self-employed, and I'm paying EUR 500 per year to my accountant. More expensive ones cost EUR 1000. If the US tax system is so complex that it'd require $5000 in accountant work, that's certainly pretty extreme.

Spearchucker• 12 years ago

"The vast majority of people in the world would go to great lengths and expense to be able to have one."

What is that based on?

Someone12345• 12 years ago

As someone with an indefinite (10 year renew, for $500/pop) "green card" I've decided going for citizenship after 3-5 years is too risky. I operate a foreign bank account in order to repay my student loans (since it costs me roughly 1% to send money that way Vs. 3% or more via a credit card (even with 0% foreign transaction fees)).

My concern is that if I was a US citizen, the bank might close my account for the reasons cited in the article. So now I won't be able to get citizenship (and e.g. vote, get a US passport) until my loans are completely paid off and I can close the account.

I will say that my "plan" is if I ever leave indefinitely, that I will renounce my citizenship. Having to file US taxes is extremely painful even for someone with "simple" taxes like me (one job, no additional sources of income, few deductions). Before I moved to the US I never had to fill out a single tax form (ever). Americans just love pointless bureaucracy like no other...

I'll be damned if I am filing US taxes from abroad. I just refuse to on principle alone.

psuter• 12 years ago

As a green card holder, you are already taxed as a US permanent resident (ie: in the exact same way as a US citizen, regardless of where you live). If your bank knows and hasn't forced you to close your account, they're probably OK with having you. If they don't know, well, use your best judgment.

melvinmt2• 12 years ago

My concern is that if I was a US citizen, the bank might close my account for the reasons cited in the article. So now I won't be able to get citizenship (and e.g. vote, get a US passport) until my loans are completely paid off and I can close the account.

So when you're a US citizen, they will close your bank account, and you will not be able to become a US citizen anymore? I don't quite follow.

Someone12345• 12 years ago

I'm not sure what you aren't following.

- I am currently a green card holder

- I can remain in the US indefinitely, I only have to pay $500 to renew my green card every 10 years, inform them if I am abroad for over 6 months, and not commit any serious crimes.

- I can apply for US citizenship in 2-4 years. US citizenship grants me some rights and takes away from restrictions.

- If I apply/gain for US Citizenship my bank abroad might close my account due to the US government rules (see the article).

- So instead I won't apply, will remain on a green card, and will wait until the account can be closed in 7-10 years time.

- Once the account is closed I can apply for US Citizenship if I wish.

Hello71• 12 years ago

if parent becomes a US citizen, parent's bank account might be closed. therefore, parent 'cannot' become a citizen.

tacostakohashi• 12 years ago

If you live in the US and your other bank becomes aware of that, they'll probably decide it's easier to close your account than deal with FATCA anyway.

codegeek2• 12 years ago

Just so you know, Green card holders and citizens have the exact same requirements when it comes to taxes and foreign account disclosures. If you are a Permanent resident/Green card holder, you still have to file taxes with IRS regardless of where you live or where your accounts are. The foreign bank account law (FATCA) also applies to permanent residents.

cylinder• 12 years ago

Yes, but permanent residency is easily abandoned, and can later be reobtained if desired (through any available means of immigration).

maxerickson2• 12 years ago

Have you run the numbers on refinancing the loan?

(I realize it may not be an option, but if you already have a fairly clear plan to stay in the US, it would seem worth pursuing, maybe even just to avoid all the money transfer fees)

kalleboo5• 12 years ago

Don't know about GP, but as a Swede the interest on my government student loan is lower than the interest on my savings account. I imagine the situation is similar in other parts of Europe.

Pretty hard to compete with that.

Havoc2• 12 years ago

I'm hearing the same thing on the ground - US citizenship is highly prized but people are still dropping it like a hot potato because of this.

The article is wrong in that:

We are the only country (except, arguably, Eritrea) that taxes all of its citizens on worldwide income

Nope. South Africa does this too...the rules are very forgiving though so it tends to be OK anyway despite it being technically "world-wide income".

tim333• 12 years ago

I think what the guy was referring to was taxing citizens who don't live in the country on income arising outside the country. SA doesn't seem to do that:

http://www.sars.gov.za/ClientSegments/Individuals/Tax-Stages...

Havoc2• 12 years ago

ah - thats going into specific legislation. We're probably both right in our own ways....

It boils down to the definition of "resident" under SA law. I studied this at varsity and we can debate it...but lets rather not. My point was simply that SA tax laws have "taxed on global income" rules...contrary to what the article suggests.

seanmcdirmid9• 12 years ago

China taxes worldwide income also for their citizens, it's just that this rule is mostly ignored.

bruceb7• 12 years ago

Being a US citizen certainly benefited him when he was abroad yet he was selected to be a Rhodes scholar.

I support a reduced tax bill when you are living abroad but to say Americans should pay no taxes is ridiculous. They most likely had some direct/indirect benefits from being American and also can always return to a vibrant and economical strong society. It is like insurance, they should still have to pay some premium.

MCRed• 12 years ago

You're missing the point.

This isn't about tax avoidance-- as the article points out the first $97k earned abroad isn't taxed and above that it isn't double taxed.

The problem is that the regulations are absurd, not well documented, and the fines and penalties for innocent errors (such as not filing the right form at the right time for bank accounts on which you owe no tax) are extraordinary.

As an american who has spent an extended time abroad, we also suffer from the fact that the rules for banks are so bad that many countries simply won't open bank accounts for americans, because they aren't prepared for the hassle.

It's often quite difficult to live and work in a country and not have a local bank account. It makes getting and making payments to people in that country much more difficult.

bruceb7• 12 years ago

You should tell the author of the article that because he states: "The challenges facing expat Americans abroad would disappear if the United States taxed and regulated only those who lived in America."

He is advocating taxing avoidance clear as day.

I agree the rules and regulations should be better. But he is going one huge step further.

jpravetz• 12 years ago

Exactly, the US regulations are absurd. And not just for US citizens living abroad. I'm Canadian living in the US as a resident and have a couple of real estate investment interests in Canada, but also can't create an investment account with my Canadian bank because of the regs. The regulations around overseas investments can be punitive to the max, with penalties to boot. You can run into PFIC rules, etc. It costs me over $1500/year to get an accountant to do my US taxes, and I've had specialty crossborder accountants refuse to do my return because it's too complex even for them and they are afraid of the liabilities. Not to mention that you actually can get double taxed when the US doesn't recognize a particular type of income from across the border.

graeme• 12 years ago

I support a reduced tax bill when you are living abroad but to say Americans should pay no taxes is ridiculous.

I'm fairly sure America is the only country that taxes non-resident citizens. Why do you think America is right and every other country is wrong?

bruceb7• 12 years ago

America isn't every other country. In most cases America offers more opportunity than anywhere else.

seanmcdirmid9• 12 years ago

Ugh, there are a lot of countries, including big ones like china.

codegeek2• 12 years ago

"So most expatriates owe no money to the I.R.S. each year — and yet many of us have to pay thousands of dollars to accountants because the rules are so hard to follow."

This is where the problem is. The rules are just so damn hard and complex. I lived in HongKong for a couple of years outside US and expat tax is nothing short of nightmare even when you know you won't owe a penny to the IRS. The tax in HongKong is as simple as it gets and Yes US is a much bigger country and all that but I fail to understand why things are so complex. I love my accountant but sometimes I wonder would she exist if I can do my own taxes in a matter of a few clicks ?

Coming back to giving up US passports point, well good for the author but like someone else mentioned, the value of US citizen or even a Permanent Residency (green card) is really high even though you have to go through so much trouble just to file the damn taxes. Unless you are tremendously successful already with tons of money and not to worry about your financial future AND can choose to live anywhere, sure giving up the US passport will be much easier. Otherwise, it will take serious guts.

HarryHirsch• 12 years ago

What does that fellow want from me now? He says in the article that the first 100 kUSD of foreign earnings aren't taxed, and to fix this he wants to end taxation of expatriates altogether.

It's reminiscent of Prop 13 in California. It was sold as a means to keep the elderly on fixed incomes in their homes, but it also applies to commercial real estate, and that was the purpose of the execrable thing.

Pass the bucket, I'm going to throw up.

josh_fyi2• 12 years ago

The argument here is mostly NOT about paying tax. There are exemptions that cover that. He wants to not pay $5K a year to an accountant and have his bank accounts closed by banks afraid that the US government will confiscate 20% of all money transfers if don't report US expats' accounts correctly.

cmdkeen• 12 years ago

Because it is a marginal tax rate on everything if you have to pay an accountant to prove to the IRS you don't owe anything. Plus in most instances that income will be being taxed in another country - the author is in Britain and we definitely have tax here!

So not only is it double taxation but it is taxation without representation, something that's generally considered bad...

ClashTheBunny• 12 years ago

He can vote. He just doesn't know how. The only Americans that can't vote are in the non-state regions within the territory of the United States. I live overseas and have no problem voting in every election held in Massachusetts. Your district where you vote is the place you last held residency.

kalleboo5• 12 years ago

end taxation of expatriates altogether

Taxation of expatriates which is something that literally no other developed nation does, and they seem to be doing fine.

This is reflected in the fact that now many banks abroad will simply not let Americans open account with them. Any other nationality is fine.

klunger• 12 years ago

I am an American who has lived in Norway for several years. I have to deal with this crap every year and, when the time comes to choose between passports, I am honestly not sure which choice I will make. I love US, as I spent my formative years there and those were some pretty good years, but am less a fan of US tax law.

Yep. I find the Norwegian taxation system to be considerably more manageable and equitable. You pay taxes that are not much higher than in the US and actually get things in return, like excellent health care, free tuition a social safety net, better infrastructure, and a much much higher standard of living across the board. Wellstone was right: We all do better when we all do better. It's genuinely great, but I digress...

The other awesome thing about Norwegian taxes is that the government does it for you. At the end of the year, they send you form with all of your taxes done and ask, "Is this right?" If it is, you click a button and are done. If not, then you might have to do a little work, but it is still so so so much less than managing the US taxes.

hessenwolf4• 12 years ago

Oooh... Irish taxes are like that too! I miss it.

German taxes, on the other hand...

tormeh5• 12 years ago

How bad are the German tax forms? I'm considering moving there. Is it just that you have to do it by hand, or are they more complicated as well?

CalRobert2• 12 years ago

I had to ask about 5 people "wait, so I REALLY don't have to file taxes?? Seriously?" after I moved to Ireland before it really sank in. The answer is no, and if you need to change your tax situation (for instance, if you get married) a simple email to your local PAYE office will often suffice. I email DubNorthCityPAYE@revenue.ie and usually get a response within a few days.

Of course, the sad thing is that I actually DO still have to file taxes. To the US.

coldcode• 12 years ago

Sound nice except for the being frozen part :-)

The IRS could do our taxes as well if there weren't 500,000 special interest exceptions to everything.

zem• 12 years ago

they could probably do it anyway, but intuit lobbied against it:

http://www.propublica.org/article/turbotax-maker-linked-to-g...

logn• 12 years ago

And the special interest lobbying of tax preparers to not let the IRS fill out our taxes.

The IRS could prepare a fairly reasonable tax return, and let people modify it for their deductions or unreported income. But for most people, all their income is reported, along with mortgage info.

credo• 12 years ago

>The other awesome thing about Norwegian taxes is that the government does it for you.

The US has also attempted to do this. However, every attempt has been killed by corporate interests (like Intuit) and politicians (mostly Republicans) and special-interest-groups (conservative anti-tax organizations)

The latter claim that the government shouldn't automatically create a form with all taxes done because the government will not try to minimize citizen tax payments (and most people will check the 'OK' button without reviewing their taxes to see if they can get additional deductions). In reality, I think that most anti-tax organizations realize that they'll lose a significant portion of their support if filing taxes becomes easy. In the case of companies like Intuit, the motives are obviously transparent.

jseliger2• 12 years ago

This may be true, but I downvoted your comment because I don't see any sources for the strongly worded assertions made.

dkopi• 12 years ago

This isn't such a far fetched claim. In Israel for example - you get taxes deducted from your pay check every month, directly by your employer, based on the assumption that will be your constant salary for the rest of the year. Now lets say you get fired in September, lowering your annual salary and bringing you into a lower tax bracket - unless you personally file for a return at the end of the year, the government feels no obligation to return the taxes you've overpaid.

ams6110• 12 years ago

I file my taxes on paper and I do the calculations by hand. I want it to be as painful as possible so I never forget how insanely complex and budensome it is.

prawn• 12 years ago

Does anyone hold those politicians up on this issue and demand further justification, spread the word of what they're obstructing?

moron4hire2• 12 years ago

I'm hoping people will start to realize this more over time. The taxes we pay in the United States are not that low, not when you start talking about the lack of social services we have and compare that to other countries with far more comprehensive programs. I have some Canadian friends who were shocked to learn I pay more taxes than they do. Well, of course, they were also shocked to learn I had health insurance at all, but that's a different story.

High taxes. Long wars that promise to only get longer. Lack of meaningful industry regulations. For what? What is it getting us? It's not like we're getting free tuition out of it, or even reasonably cheap tuition. It's not like we're getting more land and resources--and freedums, I seem to have a lot fewer of those these days, and it weren't no Al Qaida that done took 'em from me. We aren't getting cheaper products with more innovative features. Republicrats and Demicans can argue all day about what change is needed, and we've only ended up with the worst of both sides of the aisle. We'd be a lot better off with the whole program of one system, even if it was the system I didn't agree with.

rqebmm• 12 years ago

Republicrats and Demicans

My boss goes with the phrase "Republi-cons and Demo-rats" which I was always a fan of.

davidw8• 12 years ago

We aren't getting cheaper products with more innovative features

I have a paperback sized device that can download thousands upon thousands of books pretty much anywhere I am. I think it's nothing short of incredible! And the battery lasts for several weeks at a go, to boot.

Your comments about taxes are fairly accurate, but the above surprised me some.

seizethecheese2• 12 years ago

It doesn't hurt that Oil accounts for 30% of Norwegian government revenue[1]. Of course you experience higher services at a similar tax burden.

1: http://www.economist.com/news/special-report/21570842-oil-ma...)

troels• 12 years ago

I'm sure it helps, but we have mostly the same situation in the rest of Scandinavia and that's without any oil.

emn13• 12 years ago

Let's be honest here: the real issue is bureaucracy, not the actual tax bill. Whether taxes are higher or lower; whether they're on income, consumption or corporations - unless there's some really dramatic difference, it's all a bit of a wash.

Cost of living to some degree reflects what people actually can afford because that's what suppliers can get away with.

The stress and time wasted to comply with pointless regulations (ala IRS) likely affects your quality of life more than a few numbers on a balance sheet that are likely compensated by living costs.

tormeh5• 12 years ago

95% of that is put into the Government Pension Fund Global (colloquially the Oil Fund) which, contrary to its name, is not used for pensions. It just sits there, and together with the actual Norwegian pension fund it's the largest sovereign fund in the world. The Oil Fund holds 857.1 billion USD. The reason for the arrangement is to control inflation and avoid the dutch disease.

Norway is not Saudi Arabia, in other words. The part that worries me is not oil's contribution to the government balance, but its outsized share of private enterprise, especially technology.

nostromo4• 12 years ago

You pay taxes that are not much higher than in the US and actually get things in return

This is what bothers me the most about the U.S. Federal Government. Most of the things I enjoy in the U.S. are provided by my city, county and state. Things like courts and fire protection and cops and roads and schools and water and sewage systems and electricity and parks.

And what's amazing about all that is I don't pay very much for it. States and cities seem to be able to really stretch our tax dollars.

I pay a lot more into the federal government and in return I get interstates (which are awesome) and the TSA at airports and borders. Other than that, I don't really have many tangible interactions with the federal government at all. This was made very obvious during the shutdown, which I wouldn't have noticed if I hadn't been reading the news. It seems to be largely a money pit.

johnchristopher• 12 years ago

Bear with me as I don't live in the US but doesn't some money taxed by the federal entity trickle down to the states somehow ?

edit: What's the state/federal taxes ratio ?

privong3• 12 years ago

But it isn't that simple. State budgets are partly funded by federal taxes. Just skimming this abstract from the CBO report[0], in 2011, 25% of state and local government expenses were covered by federal grants amounting to over half a trillion dollars.

[0] https://www.cbo.gov/publication/43967

kohanz• 12 years ago

Some would argue (not myself, just pointing it out), that every one of your interactions is made in freedom, which is made possible by a very large military spend.

liveoneggs• 12 years ago

you get war and war and more war!

WildUtah2• 12 years ago

The top programs the Federal Government pays for are Social Security, Medicare and Medicaid, and the military. Everything else is in the small single digit percentages.

If you're not fighting a war or retired, it's not a surprise that you don't see much direct benefit from federal spending.

State operations like schools, streets and roads, airports, transit, and police are much more visible in daily life. Still, state budgets are supplemented with grants from the federal government, too.

But the big point here is that retirement and health care and war are the biggest federal operations. And, to reference op, you don't get much benefit of that living overseas.

--- Incidentally, the TSA is paid for by air ticket taxes and the interstates were paid for mostly by federal gas taxes and maintained by state taxes. Only new highway construction is paid for out of federal income taxes since the gas tax became unpopular in Congress in the 1990s and was allowed to drop too low to pay for highway grants so it was replaced with income tax money. So even your visible federal tax benefit examples aren't really paid out of federal income tax.

IvyMike• 12 years ago

The federal government spends mostly on SS, Medicare/Medicaid, and military.

https://en.wikipedia.org/wiki/File:U.S._Federal_Spending_-_F...

Presumably if the fed wasn't paying for social security and medicare/medicaid, your state would have to, or you'd have bands of sick and elderly wandering the streets like so many zombies. If the fed wasn't paying for the military, I guess your state could also do this, lest the Brits march in and put us all under the rule of the king again.

perlpimp• 12 years ago

Norway population is 5 million so it makes sense not to have federal/state divided governance like in US.

rawetern• 12 years ago

Don't forget: Eternal war is expensive.

eloisant• 12 years ago

You also get an awesome army that kicks asses around the world, isn't that cool? ;)

danudey• 12 years ago

Don't forget a massive amount of military spending, which trickles down to the local communities in the form of reckless and unnecessary police militarization.

Also: FDA, EPA, FCC, FBI, CIA, and tons of other TLD agencies that keep the country running in the long run.

gcv• 12 years ago

You pay taxes that are not much higher than in the US and actually get things in return

This is amazing. (Let's disregard the two countries' differences in population sizes, demographics, debt, and military budgets.) A self-employed person in the US tends to lose between 40 and 50% of income to triple-taxes (depending on federal, state, and local levels), self-employment tax, and the need to buy expensive health insurance. What is the range of Norwegian tax rates under similar circumstances? Does Norway have a high consumption or sales tax rate?

refurb2• 12 years ago

Norway has a 25% VAT rate (lower for food and other items).

sitharus• 12 years ago

Don't know about Norway, but here in New Zealand there is a personal income tax with progressive rates from 17.5% to 33%, with an additional ~1.5% ACC levy (essentially accident insurance). There's also 15% flat-rate GST (a value-added tax) applied to everything at point of sale.

Councils also charge rates for local road, service and facility management based on land and improvement value, this works out to around $1000-$2000 per year for a family-size house. This is simply invoiced to the home owner.

There are limited rebates for low-income people, especially families.

This covers healthcare - both emergency and elective (though there are waiting lists for elective procedures), education at pre-univeristy levels (though schools do ask for donations because the funding is low after decades of cuts), road maintenance, public transport subsidies, unemployment and sickness benefits, armed forces and various other things.

All this is deducted as I earn, I haven't filed a tex return since I was self employed 8 years ago. As a self-employed contractor I could claim business expenses against income and then paid the personal income tax on the remainder. I did not have an accountant for this, though I have accounting training.

Incorporated companies pay a flat 28% tax, though there are some company types where the shareholders simply pay personal tax on dividends. There's no requirement for a company to be registered or incorporated though, simply pay personal tax on any profits.

Also we don't have any capital gains tax, stamp duty, or pretty much any other sort of tax, other than import duties.

Everywhere overseas looks so complex from this perspective.

mcv6• 12 years ago

Self-employment tax? I get a self-employment tax cut. (Though recently the tax service has been complaining it's losing too much revenue due to the rising popularity of self-empoyment, so that cut might be on the way out.) I believe my actual income taxes over 2013 amounted to about 10%, which is distressingly low. I don't mind paying a bit more than that.

This is in Netherland, by the way. We also have sales tax that ranges from 6% for necessities (food, books) to 21% for luxuries. My health insurance costs about EUR 100 per month.

humanrebar4• 12 years ago

The awesomest part about Norwegian taxes is that they don't have to pay for everything because of all the Norwegian North Sea oil. I'm happy for the Norwegians, but this is not apples to apples.

http://en.wikipedia.org/wiki/Government_Pension_Fund_of_Norw...

alphydan• 12 years ago

Yes, because the US doesn't have any oil ... oh, wait!

Cumulative oil production:

US: ~200bn barrels Norway: ~25bn barrels

(in all fairness, the population of the US is about 60 times larger ... but then again, most of the fund is not spent today)

sintaxi• 12 years ago

IMHO the comparison is fair. The US is the largest oil producing country in the world. It just happens to also have to import oil because consumption is so high.

afterburner• 12 years ago

Oh that last thing is nice; I feel like the Canadian government could easily do the same, as what they are essentially doing is checking my work against theirs, and sending me a notice afterwards that says "yup!" or "you were off by a bit".

Although it still only takes me 30 minutes.

tsotha• 12 years ago

You pay taxes that are not much higher than in the US and actually get things in return, like excellent health care, free tuition a social safety net, better infrastructure, and a much much higher standard of living across the board. Wellstone was right: We all do better when we all do better.

You mean "We all do better when we use oil money spend $3800 more per capita than we collect in taxes".

grownseed• 12 years ago

"Almost all my friends are cultural mutts — people with hybrid backgrounds, for whom nationality isn't the most important part of their identity."

I do identify with my birth country to an extent, but definitely no more or no less than any of the other places I've lived in since I left. I'm afraid this might upset some people, but the piece of paper in my pocket has value only insofar as I can't get a better deal somewhere else.

I've grown pretty tired of "ownership through urination" and I know my multi-cultural friends all feel the same. I know this is mostly down to historical baggage but I really, really wish we could do something about it.

I'm genuinely curious, are there any recognized countries without actual land/borders?

tricolon• 12 years ago

I'm genuinely curious, are there any recognized countries without actual land/borders?

I think the closest you can get is SMOM: http://en.wikipedia.org/wiki/Sovereign_Military_Order_of_Mal...

kissickas2• 12 years ago

Depending on how adventurous you are, you could look at "The World Passport." You can get a passport that has been accepted at 160 nations, supposedly, although based on my research a few years ago it's pretty hit-or-miss. Some great gems on their website like:

Does this mean I don't have to pay my national tax?
No, you must pay that proportion of your national tax officially allocated to peaceful pursuits.

I wouldn't dare travel without another passport as a backup, but I would love to live in a world where I could. And as an American, cutting out the 40% or whatever of my taxes that goes to MiniPax would make me ecstatic.

http://www.worldservice.org/docpass.html

Edit: Here's the list of countries that have accepted it. Part of me wonders if a substantial number of these are legitimate, or if they're just from very tired border agents.

http://www.worldservice.org/visas.html

peter303• 12 years ago

Most citizen renunciations are dual citizens living aboard and deciding the paperwork is not worth it. Its rarely someone with a a single US citizenship, residing inside the US and deciding to exit due to taxes or moral convictions. Some of these dual citizenships inherited their American citizen by birth without ever living inside the USA.

pvnick• 12 years ago

Good for him. There is nothing "patriotic" about complying with unreasonable and out-of-control tax demands. I expect that this process will accelerate as income taxes continue to rise and more indirect income taxes are added such as the affordable care act health insurance requirements and booming student loan debt/interest. It may just wind up being a wise move drop the financial burden of being an American citizen and leave. How ironic...

angersock• 12 years ago

The funny part about this to me is that the largest beneficiaries of tax loopholes are big companies like Apple, Google, etc. They have billions squirreled away overseas, and the .gov is likely never going to see a dime of it.

So, instead, they prey on little folk.

jqwerqlkwjgoi2• 12 years ago

Posting this from a throwaway account, because, well, you can never be too careful.

Several points, as an American who has lived abroad for most of my life, and only recently found out about the taxation laws and requirements:

* the requirements are Overwhelming. Most people don't realize how bad it gets. It's not about the money (most "normal" Americans living abroad owe no money to the IRS), but about the reporting. Every bank account, every stock you own or owned within the last several years, every company you started, and guess what — even if you own 15% of an LLC, that is considered a "controlled company", so all of its financials are to be reported. It's insane!

* it's not work you can easily shift to an accountant. Oh, you do have to hire one, because there is no way a US citizen can do his own taxes (in contrast to most EU countries, for example), but you still have to prepare all the information. Ever tried to report interest (accrued monthly) on six bank accounts, in three currencies, over the past 6 years?

* the benefits of being an American: frankly, I can hardly name any these days. I guess the ability to work in the US counts as one.

* it used to be that having US citizenship would be a dream, especially for people in former Eastern European post-soviet countries. But this is no longer the case. These days being a citizen of one of the EU countries gives you much more benefits and earns you much less hate abroad.

The problem with taxation of expats is very, very serious, and as others have mentioned it is unlikely to be resolved, because there is no organized lobby. The real tax-evaders don't have this problem: it's "normal" people who do.

kissickas2• 12 years ago

I'm an American expat (albeit a young one) and I agree that you have plenty of good points there. But how many are exclusive to the problem of expats and aren't just problems with the tax system in general? Maybe it's because I do see value in having an American citizenship, but I wouldn't mind paying taxes, even as an expat, if it were simpler.

Luckily I'm young and make less than $97,600 (yet another seemingly arbitrary corner of the tax code), so I don't have to pay taxes. Of course, I still have to file and then request an exemption, but that's no surprise in a system where lawyers are the only ones voting on the laws.

jqwerqlkwjgoi2• 12 years ago

I don't mind paying taxes. What I do mind is the overreaching US tax system which puts a huge reporting burden on expats.

If you're young, things are slightly simpler. You don't have a financial history, you (usually) only have one bank account, no savings, no trust funds, no stocks, no shares in companies, and often no mortgage. Believe me, it gets much, much more complicated later on. But I do hope you know what FBAR and FATCA requirements are when you say that you file and request an exemption.

I've seen other tax systems and the US one is the only one with these overblown reporting requirements.

aikah2• 12 years ago

In each bill I get from my bank(a european bank),it's noted,right next to the headings, that if you are an american citizen,the bank will report any operation on your account to the US administration! US went to great lengths to compel foreign banks who operate in the US to snitch on US citizens abroad,even those who havent lived in USA for a long time. I'm not really sure how many countries in the world do that.

mike_hearn2• 12 years ago

It's all banks worldwide, including banks with no US presence or assets, and the answer is that no other countries do it (because it's insane).

kalleboo5• 12 years ago

And yet with all this reporting, they IRS can't just calculate the damn taxes themselves, but require you to spend hundreds to thousands of dollars to produce reams of paperwork.

mcv6• 12 years ago

I'm currently working for a Dutch bank, and as far as I can tell, this is a specific exception for US citizens. There's also specific rules for doing business with countries the US doesn't like (Cuba, North Korea, Iran and a few others). Other countries don't get special exceptions.

That said, of course all countries try to catch tax dodgers, but they go about that in a different way than the US does.

tn13• 12 years ago

Good. Give it up. Most of us like me are willing to pay an additional 10% tax every year just to get US citizenship.

foz• 12 years ago

I'm an American citizen living and working in Switzerland for the last 8 years. When my daughter turned 5, I took her to our local bank to open a savings account for her. The people at the bank turned pale when they realized I was an American. They explained to me that they would have to do a giant pile of paperwork and due to the trouble, they could not open an account. My wife (who's Swiss) had to go to the bank to do it for me. I've had this experience several times, and only hold one account here. It's not like I'm a tax-dodging rich person, I'm an average programmer earning a modest wage. Meanwhile, I know Americans who live here and have quite a lot of money, and manage to move it around and not pay much tax at all. It makes me really want to give up my passport, too.

nagrom• 12 years ago

I note with some amusement the difference in the way that foreign income for private citizens is of interest to the IRS and yet foreign income for corporations can be left abroad and remains untaxed. One would have hoped that it may be the other way round.

ibejoeb• 12 years ago

Some 7.6 million Americans live abroad... We are just like ordinary Americans — except that we lack representation.

That's a wild claim. The author is absent from New York and is free to visit http://www.elections.ny.gov/VotingAbsentee.html to learn about voting.

arkem• 12 years ago

I think the claim is more that there is no Overseas Constituency (basically a congressional district for non-resident citizens) like several other countries have.

See: http://en.wikipedia.org/wiki/Overseas_constituency

ausjke• 12 years ago

Can turbotax/intuit etc help mitigating the regulation problem?I'm OK paying the tax but the paperwork is unnecessarily complex. I think this is the key point here.

f3llowtraveler• 12 years ago

Keep voting Democrat and Republican, and you will keep getting these results.

icantthinkofone• 12 years ago

We’re responding to the burden and cost of onerous financial reporting and tax filing requirements that are neither fair nor just.

I would swear it was a joke article but apparently he's serious. It takes all kinds to make a world.

sdfgfgdfgq245• 12 years ago

Posting this from a throwaway account.

What are the consequences of not filing if you don't owe anything? It seems likely the IRS could eventually force backfiling, but have they issued any fines?

mark_l_watson2• 12 years ago

I read read horror stories in International Living, etc. about people paying huge penalties for minor mistakes in filings.

Also, with FACTA, foreign banks get screwed by the U.S. if they make a mistake on paperwork - really big fines.

jmadsen• 12 years ago

The laws and attitudes of the Congressmen is something I find very typical of our politicians:

Screw over everybody so a few wealthy folks don't "get away with anything".

gcb02• 12 years ago

All that gets even more fun when you request citizenship.

- green card holder has all the obligations of citizens, none of the benefits

- you are start with lots of assets that are now taxable in the US, already overseas.

logfromblammo• 12 years ago

To summarize more concisely, American citizens living abroad must pay taxes with their time and with their personal information rather than with their dollars or foreign currency.

The issue at hand that induces an increasing number of dual citizens to drop their American citizenship is that the U.S. government is supposedly forbidden from both prying into the private affairs of individuals and from compelling involuntary servitude, yet it does so on a massive scale with respect to its citizens living abroad.

These people are often paying more in tax to their local sovereign authority than they would if resident in one of the United States, and would thus owe no money to the U.S. even if they earned 100 times more. They are not trying to avoid the expense of taxes. They are trying to avoid the annual ordeal of stripping naked before their distant federal overlords in a humiliating ritual designed to show that they are guilty of no crime, absent any individualized suspicion of wrongdoing.

They should enjoy the presumption of innocence that the U.S. is compelled by its foundation law to extend, and be able to keep their private affairs private until there is enough specific evidence that a crime has been committed to issue specific warrants. The federal U.S. government has instead been acting as a bully and an ass, with no discernable goals other than to demand obedience and enforce compliance, for far too long.

They can tax foreign-domiciled citizens as much as they like, for now. Rather than question that here, I would very much like to remove their ability to levy their onerous information reporting requirements on those people and upon the foreign persons that would very much like to do business with them without some nosy busybody rudely inserting himself into the transaction to interfere.

When people who supposedly represent our interests act in such a fashion, it reflects extremely poorly upon the nation as a whole. While foreign entities currently tolerate the behavior, it is only because they lack more viable alternatives.

But beyond the behavior, those expatriates have firsthand knowledge of how other nations operate their taxation systems. And they know that the U.S. system is almost always worse when measured by the scale and complexity of the paperwork. There is no particular technical reason why it is that way. But every time a reform is proposed, the media narrative magically transforms it into an issue about money and fairness rather than transparency, privacy, simplicity, efficiency, or any of the other standards that show it to be a colossal failure when compared with any other modern economy on the planet.

It really is very embarrassing to think that my Big Brother not only watches me in my every waking moment, but he also preemptively beats up every single one of my friends in the schoolyard, just to ensure that I can't even have a moment's peace on a sleepover.

seanmcdirmid9• 12 years ago

If you live in a low income tax country like HK, Singapore, or Switzerland, AND you make over $100K a year, you have to actually pay money to the US government. This is where the housing deduction comes in useful.

deletemeafter30• 12 years ago

My wife is British, I'm American. I am currently working on several US based companies but I'm confident my Entrepreneurial streak and her desire to go back to the UK will bring about me forming a business overseas.

I knew this was a concern, but I didn't realize so much so that people were giving up their passports?

Reading through the comments, I see a lot of talk about "What are the common people to do?" and that the well off seem to be dancing around this problem?

Am I off base? I just don't see why I couldn't do the same, even as an 'Average' businessman.

I don't see any moral dilemma in moving my money around to the Caymans, or wherever need be to avoid this problem, either. Why is it presented as so difficult, when so many others seem to be doing this so successfully?

As much as I love the United States, having lived here my entire life, I am not going to let them fuck me over.

brownbat• 12 years ago

The comments here seem universally in favor of the author, so I'm going to stick my neck way out, but...

I'm actually kind of worried about tax evasion. Especially here, because jurisdiction shopping seems uniquely available to the wealthy.

I take the author's point that not everyone caught up in this is actively trying to evade taxes, but I'm also not especially saddened by paperwork hardship stories, nor am I moved by taxes on income after the first ~ $100,000 a year.

I'd find the arguments for change far more persuasive if they were accompanied by compelling suggestions on how to prevent tax fraud from people who can afford to buy a house abroad and spend X days a year in it.

I'm serious, I'm in your corner 100% if you just meet me half way, acknowledge these laws have some purpose. There's a problem they're trying to solve, take that seriously. Present a better solution for that problem, rather than just saying we should shrug our shoulders and tear the whole thing down.

dev360• 12 years ago

This was a good thread. I was planning to file for US citizenship before moving back to Sweden but many of the comments here made me reconsider, especially with regard to the reporting requirements. I am willing to gamble with my permanent residency since I am married to a US citizen, and as many have pointed out, citizenship doesn't offer any discernable advantages except the ability to work in the US.

205guy• 12 years ago

Expatriation and taxes are complex issues with many facets, and I feel the author of the article is naively or deceitfully ignoring them to only focus on the unrealistic solution that would benefit him. First, let's get the taxation-without-representation trope out of the way: you can always vote by absentee ballot in federal elections in your place of last residence in the US [1]. I think it reflects rather poorly on someone if they don't even make that effort--and then complain about it.

As for actually paying taxes, that's fairly well covered in the comments: you don't unless you're making big bucks. The issue seems to be paying an accountant to do the paperwork. Yes, it is slightly more paperwork for an expatriate, but plenty of people in the US pay an accountant to do their taxes too (itemizations, deductions, capital gains, and lots of fancy accounting to reduce taxes). Accountants seem to be about $500, so the $5K figure is for the full service expat (the upper tier whose company pays for everything--or used to), or for those who have 2 businesses like the author. Heck, taxes for business owners in the US are probably $5K as well. For regular employees, it is also possible to download the forms online and file your taxes yourself. That's what I did when I lived abroad as a student and employee.

The new reporting by foreign banks for US citizens seems to be an actual issue. Making foreign banks deal with US bureaucracy sounds like a nightmare, and if they do refuse expat American customers, that might be a problem in day-to-day living. That probably does need some real-world solution, such as raising the limit to 20K for a basic checking account.

The complexity of the US tax forms comes from the innumerable deductions and allowances that are meant to encourage some form of economic behavior (e.g. buy solar panels or invest in local businesses). It's not an ideal system, but it does provide a lot of flexibility and it's one way for the gov't to set economic policy in a county that frowns on more direct gov't involvement.

Finally, on the moral side of the issue, I don't see any problem with a country keeping tabs on the wealth of its citizens who are free to come and go. It's the tyranny of the IRS: rich and poor alike must file. Nobody argues they shouldn't pay taxes when they are in the US, but in order to do that properly, you can't turn a blind eye to what happens to their money when they happen to be out of the country. As other commenters have said, having US citizenship is an insurance of some sorts, and if/when you move back, the irs wants to know where you stashed all your foreign earnings.

I think the US is unique in this regard: lots of wealth, lots of freedoms including travel, lots of tax deductions, and a ruthless IRS that is known to go after the rich and the poor alike. Other countries would probably like to have the power to enforce their tax regimes abroad, but can't.

[1] http://www.howtogermany.com/pages/voting.html

dcherman• 12 years ago

I don't know how accurate this statement is, but I find this pretty ironic.

"The extraterritorial reach of the income tax dates from the Civil War, when the government wanted to prevent Americans from fleeing to Britain to avoid taxes."

Why I’m Giving Up My Passport

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