Comment by gerdesj

Comment by gerdesj 2 days ago

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The "problem" you describe is your US citizenship requires you to pay tax on earnings from outside the US - that's a condition of US citizenship. If you don't want to pay those taxes, then renounce your US citizenship once you have, say, gained UK citizenship, if that works for you.

A famous bloke once said (probably in Hebrew, written up in Aramaic or Greek and badly translated into middle, modern and somewhat strange English): "Pay unto Caesar, that which is due to Caesar and pay unto God that which is due to God" or words to that effect. Substitute IRS for God and you have a suitably cynical aside!

If your firm over here is good enough and you are reasonably settled then why not go all in? I'm not sure what the rules are on reconnecting with the US if you have formally renounced citizenship. However, I'm sure a birth cert from Yeehaw, TX or wherever will go some way. Even so, UK citizens are generally welcomed in the Land of the Free. An ESTA (great scheme IMO) costs about £20 for two years coverage - more than enough to visit the relos.

I know from second hand experience that our bureaucracy is just as convoluted as any other and it will take roughly one to two years (that was about 10 years ago) to get citizenship and probably involves a test that I would fail!

You might like to look into where your company is actually registered. A Ltd is not you - it is a separate legal entity and the UK (etc) is quite a complicated setup within quite a complicated environment. You might explore Jersey and the Isle of Man for places to headquarter. Don't overlook Eire either (EU with UK to the north, with special arrangements)

Anyway, the snag you have is solely US based and not UK (for a change).

khuey 2 days ago

> I'm not sure what the rules are on reconnecting with the US if you have formally renounced citizenship. However, I'm sure a birth cert from Yeehaw, TX or wherever will go some way.

It doesn't. Once you've renounced your US citizenship you're on exactly the same footing as any other foreigner in terms of visiting or living here.

And that's assuming you're smart enough not to admit to the government that you're renouncing your US citizenship for tax purposes. If you make that mistake, you've made yourself permanently inadmissible to the United States under INA 212(a)(10)(E).

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  • gerdesj 2 days ago

    "And that's assuming you're smart enough not to admit to the government that you're renouncing your US citizenship for tax purposes. If you make that mistake, you've made yourself permanently inadmissible to the United States under INA 212(a)(10)(E)."

    Blimey, that's a bit harsh!

    I wonder if Mr Adams and co, when throwing off the yoke of something, something, imperialism and that, and those jolly beastly Britons, would approve of INA 212(a)(10)(E)?

    That is some legacy for those freedom fighters. cough terrorists (sorry - I'm a Brit, its only been 250 odd years!)

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    • AStonesThrow 16 hours ago

      Mr Adams recently wrote about the possibility of spending a year dead for tax purposes.

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    • aardvark179 2 days ago

      It’s a hang over from the civil war I believe.

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    • [removed] 2 days ago
      [deleted]
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    • konfusinomicon 2 days ago

      hahaha, nothing beats a spoon of redcoat tears in a cup of salty boston tea

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xpl 2 days ago

> If you don't want to pay those taxes, then renounce your US citizenship once you have

Haven't you heard of exit tax? If you renounce citizenship (or surrender your 8+ year green card), you must pay 30% of your worldwide assets' value (as if you sold it for cash) to the IRS. And if you own something illiquid, you're deep in trouble!

So no, people can't renounce their U.S. citizenship easily, the IRS has accounted for that...

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  • madaxe_again 2 days ago

    That’s why you put everything into trust first.

    I know a few folks who gave up their US citizenship over tax, and both had to plan for about a decade to do so without paying exit tax - and their lives continue to revolve around being tax exiles - 89 days here, 44 days there, etc. etc.

    I’m glad to be a Brit, if only because the revenue doesn’t pursue me around the planet.

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  • Aeolun 2 days ago

    That doesn’t make any sense. I’m not a citizen any more, so clearly I’m not accountable for any tax.

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    • ithkuil 2 days ago

      If you're no longer citizen you won't be accountable for any tax accrued after you're no longer a citizen.

      But you're still accountable for debt, so all they need is to frame this as taxes on earnings and property that you have accrued while you were a citizen and you keep to be accountable for your debts even after you renounce the citizenship.

      Now, what can the US government actually do to you while you're no longer a citizen depends a lot where you live and whether you care traveling or doing business with the US again

      https://www.irs.gov/individuals/international-taxpayers/expa...

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      • seszett 2 days ago

        > Now, what can the US government actually do to you while you're no longer a citizen depends a lot where you live and whether you care traveling or doing business with the US again

        In most western country anything involving a (even local) bank will be a headache already when you're an American citizen. I can't imagine it would be easier if you're a former American citizen with a large debt towards the US.

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    • dathinab 2 days ago

      It's actually a pretty common law to have in some form to penalize tax evasion and capital flight.

      Most higher developed countries have it in some form (with varying degree of strictness, scoping etc.).

      Technically you also pay the tax in the process of losing your citizenship not after losing it.

      A more "fair" approach probably would be if capital (especially bound capital which generates more capital, like companies) are "pinned" to a country and transferring it from there involve paying tax (oversimplified).

      Then when renouncing US citizenship you would only need to pay "exit" tax if you also move your capital out of the US (e.g. your US company) but if you have a UK company it would already be pinned to the UK and you wouldn't pay exit tax on it (but you would have had to pay taxes on moving capital from the US to the UK to found the company).

      But I mean it's a purely hypothetical approach:

      - it is very much in conflict with globalization and investing in foreign companies (you have to pay exit tax on the money you invest outside the US!). This means it also hinds projection of US power by getting influence into foreign companies through investments.

      - it's not really viable to retroactively apply it

      - it kinda requires all countries to agree on this law

      - it would mess with investment banks, fond etc.

      - it's a mess when it comes to international buying of goods (as you want to prevent laundering capital moving through unusual good buying schemes)

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      • mandmandam 2 days ago

        > It's actually a pretty common law to have in some form to penalize tax evasion and capital flight.

        In basically every other country you don't get taxed when you haven't even lived in the country for years/decades.

        I think the only other countries that tax their citizens in other countries like that are North Korea and Eritrea.

        It's about as definitive a form of taxation without representation as I can imagine...

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      • kergonath 2 days ago

        > It's actually a pretty common law to have in some form to penalize tax evasion and capital flight.

        It really does not sound common at all. In all countries where I have lived, my citizenship did not enter the picture for the local tax authority or that of my country of birth. All that matters is my resident status. I did not renounce any citizenship (because why would I? It comes with no downsides), but I cannot see them going after my foreign possessions, considering they entirely ignored them for years. And if they did, a loophole would be to not renounce it because again it comes with no downsides.

        I actually checked with my country of birth, and renouncing simply requires me to send a declaration to the authorities and they have 2 months to accept (it’s accepted by default if they do not reply within 2 months). No other requirements or anything.

        Do you have many examples of countries that do what you described?

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    • roenxi 2 days ago

      All taxes are arbitrary. It doesn't need to "make sense". The only reason countries tend to tax their own citizens is more because of the practicalities of enforcement rather than any stance on the philosophical nature of taxation; as this particular rule illustrates.

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  • wkat4242 2 days ago

    Wow I knew of the tax thing but not this. That's tough.

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    • saxonww 2 days ago

      It's only if you qualify as a 'covered expatriate' though. I'm not a lawyer or an accountant but a plain reading of the standard suggests the vast majority of Americans would not be covered.

      https://www.irs.gov/instructions/i8854#en_US_2023_publink100...

      I think the key would be how they arrive at the net worth numbers. If it's just a calculation of all your assets as if they were sold at FMV, ~90% of the US is below the net worth threshold.

      https://dqydj.com/net-worth-percentiles/

      The average tax liability standard looks like it would take 5 years at $600K+ of adjusted gross income, too. Plenty of people would meet this standard. Most people would not.

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      • xpl 2 days ago

        So it basically says if you net worth is over $2 mil, you're need to pay exit tax, right?

        If a house and 401k also counted towards net worth, it could impact quite a few Americans. Besides, those who expatriate for tax optimization purposes usually have a significant amount of wealth.

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        • duped 2 days ago

          > If a house and 401k also counted towards net worth, it could impact quite a few Americans

          I have no sympathy for people who want to dodge taxes being forced to pay a tax on income that the government has deferred taxes on while they were a citizen making taxable income in the US, and presumably if you're abandoning your citizenship you're not keeping your home and would have already paid sales and capital gains taxes on it when you sold it.

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      • ithkuil 2 days ago

        You're a covered expatriate also if:

        " You fail to certify on Form 8854 that you have complied with all federal tax obligations for the 5 tax years preceding the date of your expatriation. "

        I agree you should pay up your taxes but this will not only recover the due taxes but it will take more.

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telotortium 2 days ago

> probably in Hebrew, written up in Aramaic or Greek

It is generally agreed upon by scholars that Jesus’ primary language, like in Palestine generally, was Aramaic, not Hebrew, which was already well on its way to becoming a liturgical language (although Jesus probably knew Hebrew well, as he was called “rabbi”, and likely Greek as well): https://en.m.wikipedia.org/wiki/Language_of_Jesus. Certainly for the context of this quote, it’s likely that he was speaking in Aramaic, given that in the chapter he was responding to questions from a variety of local people.

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gwd 2 days ago

> The "problem" you describe is your US citizenship requires you to pay tax on earnings from outside the US

No, I think you're missing the issue.

Suppose the company (let's call it XYZ Ltd) is owned 100% by my spouse. Let's say XYZ has $XYZPROFIT in one year. It then pays $XYZUKTAX on that profit, but the US isn't involved whatsoever. If it pays me $MYSALARY, XYZ reports that to the UK government and pays $MYUKTAX. I then report the US government $MYSALARY and $MYUKTAX, calculate $MYINCOME, and then calculate $MYUSTAX (which is normally $0, since UK taxes are higher than US taxes).

Now let's suppose I own more than 10% but less than 50%. Now I basically have to report to the US the same information about XYZ's financials that the company reports to the UK government, as well as answer 40-60 questions each of which would take a few days to understand the meaning of. Thankfully that's where it ends under normal circumstances; pay an accountant to prove you're not cheating the system and you're done.

Now suppose XYZ is 100% owned by me. It has $XYZPROFIT for the year, and pays $XYZUKTAX on that profit. Now, by default, $XYZPROFIT is included in $MYINCOME, but $XYZUKTAX is not included in $MYUKTAX; meaning by default I'm going to be double-taxed. I can avoid this, but only with 1) extra paperwork, and 2) forgoing any tax breaks for start-ups that the UK government has.

> "Pay unto Caesar, that which is due to Caesar and pay unto God that which is due to God" or words to that effect.

As I said, I don't mind paying taxes, but I don't want to pay it twice.

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helsinkiandrew 2 days ago

> If you don't want to pay those taxes, then renounce your US citizenship once you have, say, gained UK citizenship, if that works for you.

Boris Johnson - the ex UK prime minister - was born in the US, and complained loudly and frequently about having to pay taxes to the US - and appears to have refused to do so atleast partially. Having to pay tax on profits from the sale of his family home (which is tax free in UK) was the trigger to get him to renounce citizenship.

https://www.forbes.com/sites/robertwood/2022/07/10/boris-joh...

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brandonmenc 2 days ago

> The "problem" you describe is your US citizenship requires you to pay tax on earnings from outside the US - that's a condition of US citizenship.

imo a feature, not a bug.

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  • christophilus 2 days ago

    How so?

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    • brandonmenc 2 days ago

      You enjoy benefits as a citizen, even if living abroad. You should pay for those.

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      • tway_GdBRwW 2 days ago

        US citizen and long-time expat calling bullshit on this. That's not the purpose of taxes and that's not how citizenship works in any other country except North Korea.

        Looking at the list of "benefits" another person posted:

        > The rights your passport gives you Are no different than the rights an EU passport gives you, except when entering the US-- but then again, an EU passport gives you better rights when entering the EU, so this is not an exclusive.

        > + the legal and embassy protections given to American citizens. Like the American civilians held in Russia that Biden recently traded Russian spies for.

        Note that the US doesn't have jurisdiction outside of US territory, so it cannot give legal protection and explicitly embassies do not give legal advice. Yes, there may sometimes be trades like above, but on the other hand, if the US prisoners were not US people, they probably would not have been jailed by the Russians in the first place.

        > You still have access to vote absentee, Voting is a responsibility, not a benefit.

        >as well as collect social security benefits.

        Wrong-o! You only get social security benefits you have paid for. If you are living outside of the US, you are not contributing to soc. security.

        > You can use US bank accounts and other institutions.

        So can non-citizens. US bank accounts do not require citizenship. Nor does owning real estate. Nor forming companies.

        You and your children have the right to return if you ever desire it.

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      • SilasX 2 days ago

        So why does no other country in the world do it then?

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sidewndr46 2 days ago

If you renounce your citizenship to avoid taxes, you are barred from ever entering the US or its territories again. Take one quick look at the EEZ of the US and tell me if you are OK with never traveling through those places again.

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