> US citizens residing in other countries can still receive some services and protection from the US federal government.
Seriously, like what? In how many percent of situations does this ever come up. Sure it's more than >0, but if it is like 1$/person does it really make sense? This is economic bullying by a country that right now happens to be in a position (having strong military, influence and their currency being the reserve one) to be able to get away with it.
I wonder if this is the kind of stuff that pushes EU politicians forward with their notions that they cannot rely on the US?
What it comes down to is that because of its size and economic power there is an enormous incentive for wealthy people who earn their income (in an actual sense, not a tax law menagerie sense) in the US to try to avoid US taxes by living abroad and moving assets, their "home", etc outside of US jurisdiction while still in reality earning their income from the US.
One of the basic benefits is always being able to return to the US. Being inside American borders is very much safer than being anywhere else if/when the next major global military issue arises.
You also get the benefits of the US legal system if you maintain ties, investments, etc.
If you don't want to pay those taxes you are welcome to renounce your citizenship, but you have to get another country to accept you first. (they won't revoke your citizenship if the result is your being stateless)
It’s a funny fear, because today, being in the US vs. some other developed country takes about 7-8 years off your life.
Meanwhile, those developed countries with functioning health care systems that you can return to whenever don’t bother with worldwide taxation.
https://en.wikipedia.org/wiki/List_of_countries_by_life_expe...
When accounting for all sexes, US sits at 79.3 years and the top country sits at 83.7 years. Where is this "7-8 years" coming from?
My poor recall.
The US government couldn’t care less. If everyone decided to eat only TV dinners and shelf stable snacks that would be A-OK, even desirable because that kind of thing leads to GDP growth. France would never allow it.
US governments are borderline contemptuous of tradition, and tend to court radical reinventions of basic needs. That leads to people getting hurt, but is great for the economy.
>France would never allow it.
While I do not support eating unhealthy foods like that on a regular basis at all (I have some sort of instinctive repulsion towards that), I do support allowing adults to have the freedom to make their own choices regarding what they eat.
In the U.S. no one is going to force you to buy anything, but no one will save you when your market disappears.
It’s a kind of freedom, but it’s not “more choice”. It’s often less choice.
Does it actually?
I assume that disparity is more to do with the populations of impoverished people around this very diverse country that can't compare to smaller European countries that just don't have those populations.
There is no Mississippi in Germany, those populations are in other countries.
If you compare the whole European Union to the US the disparity is much smaller.
>It’s a funny fear, because today, being in the US vs. some other developed country takes about 7-8 years off your life.
I think that is an exaggeration, I can't find that statistic anywhere.
But you have to look at people in your demographic, not the entire country.
The US has the best health care in the world if you can afford it.
Just about anybody can get insurance and set aside the max out of pocket costs to insure themselves and their family, but they will take a considerable hit in quality of life, home size, luxuries, etc. In other countries that health care is paid for with lowered salaries through taxes and quality of life takes a hit anyway.
> There is no Mississippi in Germany, those populations are in other countries.
It depends on what you mean by that comparison. Germany relatively recently absorbed a much poorer East Germany. There are still states like Mecklenburg-Vorpommern that are much poorer than the average in Germany. Yet they're all integrated into Germany's very good healthcare system. It could be the same in the US, but it isn't, for political reasons.
> If you compare the whole European Union to the US the disparity is much smaller.
This is not true. The European Union member states have a much greater range of GDP/capita than US states.
But even if you dealt with a broker and crafted a special insurance insurance product to deal with the eventuality of being denied further insurance, you are ignoring something significant: you don't improve the quality of life or lifespan of the population by making healthcare only accessible to the rich.
But you don’t need a US passport to access that, just a decent one.
I like to think (hope? Dream?) That there won't be any more major conflicts now that we have nuclear weapons. But betting against the stupidity of politicians seems like a risky proposition.
Well to be fair, once you move back in you will already start paying taxes again. This "benefit" is already paid for by you paing taxes when you effectively become resident again after moving inside the country again. Exactly like it works for any other country right now. This is questionable as a benefit while you're not living there.
> You also get the benefits of the US legal system if you maintain ties, investments, etc.
You get those benefits even if you just do some business in US as a foreigner. By this logic, should US also tax worldwide income of anyone who does any business in it and relies somehow on its legal system? Cmon this is a huge stretch. Also if you maintain ties, investments, this means that you are already helping the country by either supporting business or outright keeping your capital in the country and helping it by investing in it. You are ALREADY helping the country. And by this logic the country is supposed to tax you further to what puniush you for helping it?
For example: federal student aid doesn't require US residency.
https://studentaid.ed.gov/sa/types/international
Also, the taxes that the US imposes on citizens overseas has some pretty significant exceptions. US citizens can deduct over $100,000 worth of their foreign-earned income and part of their housing expenses.
Differing rules of what’s a short-term vs long term capital gain.
E.g.: Canada doesn’t tax capital gains on your Primary residence when you sell it, but US does.
And buying a non-US ETF can create another tax mess since you’ve now bought into a multibillion dollar trust that doesn’t file with the US gov.
The US doesn’t see your Canadian Tax-free savings account as tax free, so now you have to keep track of every transaction in there.
https://www.investopedia.com/ask/answers/06/capitalgainhomes...
It's a lot of money, but if you bought a house in Canada in Toronto/Vancouver 30 years ago, you'd be paying US CGT on its sale.
And can a US-citizen/non-US-citizen couple still file jointly?
I’ll be first in line to complain about complicated taxes. I file three income tax returns, thanks to the fact I live in a jurisdiction with local income taxes as well as state and federal.
> US citizens residing in other countries can still receive some services and protection from the US federal government.
Same deal for expat citizens of many other countries and their government, but they aren't taxed for it.
There's an expat downthread who was extracted from a dangerous country, and the US later sent him a bill for his services. After reading that, it jogged a memory of reading about this being a common occurrence. So what are these "services" he's supposedly paying taxes for?
> If they want to participate in the US financial system then they have to play by US rules.
This is just simple strong-arm bullying and control-freak data collection, and will almost certainly come back to bite the US as its economy declines over the next decades and loses the leverage to impose these sorts of things.
(Disclosure: I'm a US citizen who resides in the US, and think these regressive practices are gross.)
[0] Eritrea, which is not exactly the best company to be in with regard to this topic, since if you are an expat and don't pay taxes, they threaten your remaining family with violence until you pay. And that's just for a 2% flat tax.
Several banks have been stomped on for this behavior, the "oldest bank in the world" closed as a result and there have been many other actions.
If you don't want to deal with American taxes, renounce your citizenship, or earn less than $100k abroad.
There are way bigger fish for the US to fry other than Switzerland. FATCA wasn’t created because of Swiss banks. Claiming otherwise is ignorant.
Making cases is hard because these things are very convoluted.
Swiss banks, however, were doing things which were really obviously illegal and their brazen tax avoidance made them a good target for prosecutors. Other targets are honestly just better at avoiding the law and will be harder to get to. Progress is being made though.
A lot of banks in Switzerland will outright refuse to deal with US customers, even when they have residency.
This is, however, not specific to Swiss banks. US citizens (or even green card holders) can have a hard time opening a bank account just about anywhere, because of such onerous reporting requirements[1] to the US authoritues that's it's just not worth their while.
[1] https://en.wikipedia.org/wiki/Foreign_Account_Tax_Compliance...
From personal experience, I can tell you that (value of expatriate services) - (cost of dealing with US tax system) is a very deep negative value.
It's much harder to get your citizens to work in your interest in risky foreign countries if you aren't willing to back them up.
Getting a second passport is extremely costly in terms of time or money, and your “free to pay an administrative fee and renounce” comment indicates that you don’t understand this at all.
Source: went through the process of acquiring a second passport for the purpose of renouncing.
The US rules apply not just to Swiss banks, but to all banks. Many overseas banks will no longer allow US citizens to open accounts, and some have even closed accounts rather than deal with the burden that the US is placing on them. This does not help US citizens at all.
You cannot just renounce your citizenship. Beyond it being costly, you have to have a second citizenship first, which takes time - 7 years is a common length of time, although some countries have shorter or longer requirements, and many have language requirements that you're expected to meet.
The US is one of two countries in the world that require you to jump through tax hoops if you're working overseas.
uh no.
Every bank around the world is in that position today because of the FATCA treaty.
Then there's Boris Johnson, British PM, and until recently US citizen. What benefits do you think he would have been getting as a US citizen abroad, over and above diplomatic protections he already had as MP and member of Govt?
US citizens residing in other countries can still receive some services and protection from the US federal government. So it's completely fair to tax them for that. We can argue about the value of those services but clearly it's >0. Those who don't like the deal are free to pay an administrative fee and renounce their citizenship.