The exit tax is pretty insane too.
Basically if you earn a certain amount or have a high enough net worth, you must pay a tax on all of your assets as if you were selling everything you owned. You are charged this amount even if you are not selling anything.
This is the only wealth tax in America as far as I understand it.
It’s there for a reason tho…
If it wasn’t, the wealthy would take their wealth and fuck off to somewhere it was worth more.
They’re fine to do that, but the US is still going to want it’s cut, you’re still paying federal taxes every year because you’re a US Citizen.
Rich people hate paying taxes. So they just renounced citizenship on the way out and took all their wealth with them.
But like you said, it’s based on how much wealth you own so for normal people, it’s not a big deal.
It’s weird seeing people against it.
Edit:
Also, you have to be pretty wealthy to even have to pay it. The vast majority of Americans would pay $0 to renounce.
https://www.irs.gov/individuals/international-taxpayers/expatriation-tax
Next day edit:
Edit:
I’ve lost count of how many rich overseas workers have made 5+ replies to my comments in less than 10 minutes screaching about how they shouldn’t pay taxes
And every single one claims to be right on the line for having to pay it… yet want it thrown out for billionaires as well…
Apparently I can’t turn off replies to comment like on reddit, so I’m just blocking every “temporary poor billionaire” who wants to spend energy online arguing billionaires should pay taxes because it would mean they do too
No one has time for the Scrouge McDuck defenders.
To be entirely fair, I think its insane that the US would charge income tax on citizens who live abroad in the first place.
Well, yeah, but again it’s only for the wealthy
If you are a U.S. citizen or a resident alien of the United States and you live abroad, you are taxed on your worldwide income. However, you may qualify to exclude your foreign earnings from income up to an amount that is adjusted annually for inflation ($107,600 for 2020, $108,700 for 2021, $112,000 for 2022, and $120,000 for 2023). In addition, you can exclude or deduct certain foreign housing amounts.
https://www.irs.gov/individuals/international-taxpayers/foreign-earned-income-exclusion
Those parts are never mentioned when people complain about this stuff. Because the only ones paying it are the wealthy ones, and they always bitch about taxes.
They pay, because at any moment they can come back as a citizen. If the wealthy do t want to pay for that option, then they can renounce citizenship and pay a one time tax to remove their wealth.
It’s like the Inheritance tax. It’s basically meaningless to the poor, but it sounds bad so the GOP uses it to scare their base. However the targets of the tax are primarily the handful of rich capitalist bastards who have a harder time bribing lobbying their way out of it.
The exit tax starts at $120k. That’s “I can rent but not buy an apartment in San Francisco” class, not the “rich capitalist bastard lobbying Congress” class. And of course it’s also an income tax so it does jack shit to tax actual wealthy people.
Actual rich people already worked around the tax issue by putting their assets in stocks and loans. They aren’t paying this tax at all in the first place. They don’t need to lobby anyone.
It’s fucking ridiculous how some of you try to frame this income level. Doctors and lawyers are not the wealthy capitalists phoning up Congress and getting what they want from them. It’s actually fucking crazy that you’re acting like they do. People raising a family at that income level will never retire just like any other worker, but now they’re rich capitalist bastards?
My issue isn’t so much with the tax itself as it is selectively enforced. If those assets remained in the US and the person never renounced, they would never be taxed. Or at least not taxed at the same rate.
So it’s important enough to make sure rich people don’t run away but, as long as you don’t try to run, you don’t owe us anything… So the rich in America can continue getting richer…
Also, the income threshold is pretty average for any senior level software engineer. You don’t need to be astoundingly rich to be on the hook.
What?
You think Americans do t pay property tax?
They’re still paying it even if they don’t set foot in America
I’m sorry, everytime you reply you say a new wrong thing I have to type alot to explain. I thought there was a few things you didn’t know, but I’m not going to take the time to explain how American taxes work from ground up.
Also, the income threshold is pretty average for any senior level software engineer. You don’t need to be astoundingly rich to be on the hook.
Over $100,000/year is wealthy in America. The median income is 3/4 of that…
How can you file a lawsuit in a country you are not a citizen of, against a country you are not a citizen of? Real question.
Do you really think foreign nationals aren’t afforded legal rights within the United States? Real question.
Yes that was my understanding of the situation. Feel free to explain why I’m wrong, that’s why I asked the question. Even the term “foreign national” is something I’m not familiar with and it’s not entirely clear whether you would even use it in some of the cases cited in the article considering that one individual is self described as living overseas when he renounced his citizenship.
A foreign national is anyone that is a citizen of a foreign nation. If an American is renouncing their US citizenship, they must already have gained citizenship of another nation, which makes them a foreign national once they no longer have US citizenship.
If they had no legal rights in the United States, there would be zero tourism or business travel from foreigners to the US because any American could do whatever they want to that foreign person (steal from them, con them, murder them, you name it) without fear of legal repercussions.
So yes, foreigners have the right to use American courts if the injustice they are alleging happened on American soil.
The law and courts apply to anyone with standing. Have you not read news stories when illegal immigrants are challenging their detention? Or Guantanamo prisoners petitioning the court that they shouldn’t be tortured? This is the same thing.
Slow your roll, turbo, do you always get this shitty when someone asks a genuine question about a topic they aren’t familiar with?
Real question.
I mean, it’s like asking how can you order food in a restaurant of a different country you’re not a citizen of? Like, you might not be familiar with the topic but you’re assuming some limitation that makes no sense and doesn’t exist.
The only people renouncing US citizenship are rich people because the US will still tax them.
The payment to renounce it is like a one time fee to not be taxed
I know that if you are a US citizen in France a lot of bank will refuse to open a bank account for you.
It’s due to the fact that they need to report to the IRS the banking informations of all US citizen and they just don’t want to spend any money on that.
Plus even if you are not taxed you still have to declare to the IRS your revenues every year.
Some people are US citizen without every putting a feet in the US, I totally understand that they would want to renounce their citizenship.
That’s probably most of them- but there’s other situations as well. Some countries require you renounce other citizenships to gain theirs.
Getting pretty deep in the weeds so I may be wrong.
But I believe in that case it’s not a voluntary renouncement, so it may be treated differently.
But still, you gotta be pretty wealthy to owe any money. And with the state of America, the vast amount of Americans are more deserving of sympathy and they’re the ones we should be focusing on helping.
They just don’t have the money for lawyers, PR campaigns, political donations, or the contacts of journalists as the wealthy people do.
Not true.
The rich have other ways to avoid paying tax. Hell, arguably the US is a tax haven for the rich, compared to many many countries. IRC Trump paid no tax 10/15 years due to reported losses. I suspect this was plain old tax avoidance. People like Bezos, Musk or Buffet pay almost nothing.
For example, when I worked at a European bank, we would often refuse US citizens anything but the basics. The IRS and US government is notoriously over-zealous and the US is one the few countries which applies double taxation. Many banks therefore avoid American passport holders like the plague. There are stories of people having their bank accounts summararily closed or frozen:
https://www.thelocal.de/20210914/why-are-americans-being-turned-away-from-german-banks
Often these were people who hadn’t been in the US since childhood or at all, earned and paid (up to 10x higher) taxes in Europe than they ever would in the US, but still got fucked over by the IRS and a country they would never visit (again). The US is one of the only countries in the world that does double taxation.
These weren’t rich people. Almost all of them were middle-class. Plenty were unemployed or earning less than 20k a year.
For middle-class people, it’s especially problematic come pension time, when time came for the payout of a European pension plan or the sale of the family home. Stuff they’d already paid tax on to the country they’d lived in most of their lives, but are forced to give America ‘its share’ despite getting less than nothing in return.
Plenty of them are also unable to vote in the US, because they never had a last residence, voting is a state matter, and it’s made needlessly complicated for foreign residents. Taxation without representation.
I’ll go with the IRS over you bud…
https://www.irs.gov/individuals/international-taxpayers/expatriation-tax
Unless you have more than $2,000,000 in assets or averaged more than $170,000 for five years, you don’t pay the tax.
Didn’t realize tax avoidance was so popular on Lemmy.
Unless your take is that literally all taxes are good always, it’s not unreasonable to question why America is the only country in the world other than Eritrea to tax foreign earned income.
Because America is the top destination for the rich that isn’t a literal tax haven?
Because US power defends the interests of the rich at great cost across the world?
Because the US has great control over the financial systems which make the international order run and has the capacity to tax foreign income, unlike most countries, for whom it would simply be a waste of resources to try?
And yes, I’ll say it - all taxes on the rich are good. Controversial, I know.
Norway, Sweden, and Israel all have more billionaires per capita than the United States. Germany, Finland, Australia, Denmark, and Canada aren’t far off.
I’m gonna take a wild guess that your definition of the rich for whom all taxes are good is precisely your income + $1.
The actual threshold is $120,000, which in the context of Switzerland, the case that will potentially be relevant for me in the future, is low enough that one in four residents exceed it. Costs of living there are consequentially very high, as you’d expect. There’s something to be said about managing the fortunes of billionaires that will hide their wealth across a bunch of countries in elaborate schemes, but that’s a very different matter than taxing engineers, tech workers, and doctors.
all taxes on the rich are good. Controversial, I know.
I think what may be more controversial is who you are grouping in as “the rich”. Does home ownership put someone on the /rich/ side of the line?
People with more than $10k USD worth of non-USD in the bank must report the account. I would move that line at least to $100k if the idea is to not harass & intrude on non-rich people.
So why exactly is the US permitted to tax people that don’t even live in their country?
The only thing they should be allowed to do is tax the profit made in the US, they should not have access to anything outside of their borders. Even if that is in a so called “tax heaven”.
Overreach it is called.
A lot of the people who work in tech are the ones who left reddit and came to lemmy…
They’re relatively liberal, until people start pointing out how they tend to make 3x the average American and are wealthy compared to everyone else.
As soon as their tax bracket comes up, they want to pretend that they have it just as bad as the rest of America.
A single person making over twice the median household income isn’t who we should be worrying about right now. They can pay their taxes just fine. Others are struggling to eat and afford rent.
Edit:
I’ve lost count of how many rich overseas workers have made 5+ replies to my comments in less than 10 minutes screaching about how they shouldn’t pay taxes
And every single one claims to be right on the line for having to pay it… yet want it thrown out for billionaires as well…
Apparently I can’t block replies to comment like on reddit, so I’m just blocking every “temporary poor billionaire” who wants to spend energy online arguing billionaires should pay taxes because it would mean they do too
No one has time for the Scrouge McDuck defenders.
I’m happy to pay more taxes and I regularly vote for that to happen. That doesn’t mean the exit tax isn’t fucking stupid and blatantly unfair.
If you actually gave a shit about taxing rich people you’d realize this exit tax doesn’t affect them at all, since they don’t have regular income to tax. It’s a tax on workers who don’t even live in the country.
$120k isn’t even enough to buy a house in most high COL areas. With a family you’ll never retire on that income either. Yet some of you are acting like these are ‘rich’ people so you can conveniently ignore their opinions.
I agree with your 1st paragraph. But IIUC the exit tax is not on wage income - it’s on their global wealth. I don’t see how the rich can escape that without cheating. But the problem is that non-rich middle class workers have homes and they’re being targeted.
It’s a tax on workers who don’t even live in the country.
Yeah indeed that’s the shame of the US tax policy. But to be clear that tax impacts citizens living abroad, not those who renounce. Renouncing actually escapes that.
I can’t quite follow this:
Esther Jenke also told the Times that finances played a role in her decision to renounce her citizenship.
“My husband and I bought a house. If we sell the house, even though it is our primary residence, because from a US perspective it’s foreign property, we would have to pay capital gains tax on it,” Jenke told the Times.
The 1st part says that there is a financial reason to renounce your citizenship, but the 2nd part makes it seem like they’ll pay capital gains on the house, specifically because they renounced their citizenship
If they remain US citizens, they will have to pay US capital gains tax on the sale of their home in the place they now live. They’d also be liable for US federal income tax. This would be on top of whatever taxes they’re liable for in the country they moved to.
If they have renounced their citizenship and are no longer resident in the US, then they’re (broadly) no longer liable for US taxes, including US capital gains on the sale of their home.
Renouncing citizenship is expensive, but massively cheaper than the taxes they’d pay as non-resident US citizens. I’d assume their income had come in under the threshold or something, so the matter only came up when they wanted to sell their home.
The US is one of the few countries who don’t care where you earn the money…
The financial incentive is to avoid paying taxes. Then she gave a hypothetical of what would happen if she hadn’t renounced us citizenship. Because the US taxes a foreign home sale as capital gains, even when it’s labeled as primary residence.
Because wealthy people hate paying taxes and would renounce citizenship to avoid, the US put in this percentage based fee to renounce US citizenship. For normal people it’s nothing. But for the wealthy it can be a lot of money. So now a bunch of them are suing to get it back.
It’s hard for these people to explain why they shouldn’t have to keep paying taxes, so it’s always going to sound confusing when they want sympathy.
