Comment by Aeolun
Comment by 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.
Comment by 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.
> 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.
In Switzerland, almost no bank wants to deal with you if you have US citizenship. Its easier to just avoid creating whole new department for that reporting, risk getting sanctions if you make a mistake etc.
US in this case is a global bully, based on some talks with people involved in such processes also arrogant, very aggressive in enforcement, at the end punishing its own citizens just because they can.
Their choice, but if I or my kids would ever be in the situation of potentially gaining citizenship or green card (that probably won't ever happen, life here is much higher quality overall for people like me), this alone is good enough reason to not do it.
The US is a bully because wealthy people want to live, work with, have assets, or even have citizenship in the US. The US is very business friendly and offers top-tier everything if you have money.
Wealthy people though are accustomed to having their cake and eating it too, so naturally they will try to take as much as they can while giving back as little as they can manage. Their wealth will carry them very far towards this goal, so the US cannot be soft when it comes collecting.
Its like saying you need to be hard on terrorism or drugs problems, so that you can actually fix that. We know how that worked in past 100 years...
What it will collect is totally negligible in US budget and won't make dent in anything (compared to say companies like Apple or Google skimming paying taxes by tens of billions yearly), and it won't make many friends to US.
But sure, chase them, chase them hard, I have literally no skin in that game. I guess as long as really serious problems are ignored government is happy.
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)
> 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...
> It's about as definitive a form of taxation without representation as I can imagine...
American citizens retain the right to vote in US elections no matter where they live. They have representation.
There is one group in Congress dedicated to representing Americans abroad. Since 2007 they've been working to reform the tax code and make the voting process easier. No politician in my state has ever joined - and the tax code remains the same.
Americans abroad are taxed on worldwide income, but don’t get the same benefits; healthcare, infrastructure, education, etc. We pay full price for a system we barely use. The laws on starting a company abroad are arcane; cruel and unusual.
... So I don't feel very represented*.
Again, no other country outside North Korea and Eritrea (a combined population of 30m people) treats their citizens like this. The US just started it because it needed to raise funds during the Civil War, and keeps it because it's a useful way to siphon money.
Non Americans are shocked when they hear of these rules - it's unthinkable. Even Americans are surprised, most have never heard of such a thing.
* Tbf, neither do most Americans these days. According to Pew, only 20% of Americans are 'satisfied with how democracy is working'. 10% feel "hopeful" when thinking about politics, compared to 65% who feel "exhausted".
60 years ago, 77% of people trusted the US govt. Today, 77% of Dem voters wish we'd stop arming war crimes.
> 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?
pretty much every EU country has a similar law
they do often work slightly different based fundamental differences in tax and law models so it's not always coupled to citizenship but practice still quite the same as in you get taxed when moving "capital" (mainly companies) out of the country
"pretty much every EU country" is not an example, so I guess no, then.
Anyway, this is not what was discussed here, and has nothing to do with citizenship. The example was a non-resident's business abroad being taxed when giving up their citizenship. As far as I know, there is no European country that does anything remotely equivalent. I am willing to accept that there might be some, but this is far from the norm.
Moving stuff across borders is something entirely different.
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.
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...