Tax Leads Americans Abroad to Renounce U.S.

[JollyRoger]

We ahve american expats working for our company, and the company pays their US taxation for them (well, its factored into their remuneration package).

Yep. Before the work was outsourced to India, I used to do expat returns during the tax season for the employees of the corporate clients of a big accounting firm. The compensation was invariably grossed up to reflect the tax bite. So this tax really ends up a tax on corporations who prefer to have highly paid Americans working out of the country.

 

[MamboJoel]

There is a clear tendency coming out of this issue : "These expats don't bring the US anything, there is no reason the US should do anything for them to stay American."
The problem I have with this is that it's linking citizenship and money. You can pay ? You can stay american, you can vote. It's pretty disgusting.
It seems to me that a few decades ago beeing American meant much more than beeing able to afford it.
And when I think about my other country that tries to give voting rights to aliens, applies universal health assistance to them and never accept any citizenship renouncing whatever the money. It's another world I guess...
I don't know exactly where the most pragmatic stance is, but I'm sure citizenship and money have nothing to do together.

 

[Trajan12]

If they're living somewhere else then why would they need U.S. citezenship? What are we holding their seat or something? It doesn't make any sense to me.
If life's so good out there then you can always visit if you want. But I'd imagine people going back and forth between citezenships would be very annoying.

 

[Sophie 378]

Does any other country require non-resident citizens to pay taxes to them as well as their country-of-residence?

 

[JollyRoger]

Does any other country require non-resident citizens to pay taxes to them as well as their country-of-residence?

Yes. I have done tax returns non-Americans working in the U.S. and some have had to pay tax to their home country based on a portion of their U.S. income.

 

[plarq]

@Rik Meleet: Your advice of ceiling income is received. However, your attitude is unfair. Why should an American in US, earning 100K$, taxed once; while an American in Europe, earning 100K$, taxed twice? Isn't socialist caring about equality?

 

[JollyRoger]

@Rik Meleet: Your advice of ceiling income is received. However, your attitude is unfair. Why should an American in US, earning 100K$, taxed once; while an American in Europe, earning 100K$, taxed twice? Isn't socialist caring about equality?

Why should an American earning $100,000k not be taxed by the U.S. on $90,000 merely because he is in Europe while an American who stays in America be taxed by the U.S. on all of his income?

 

[Knight-Dragon]

Why? They're of no use to us. They aren't working for us, we don't benefit anything from them.

What about those working for US corporations, charities, govt agencies etc overseas?

 

[Knight-Dragon]

We ahve american expats working for our company, and the company pays their US taxation for them (well, its factored into their remuneration package).

Yes, and then the US govt also charge tax on that tax compensation figure...

Most countries in the world will have double taxation agreements to avoid situations like this. Though AFAIK the US govt rarely signs these... that's why you have this situation for (most?) US citizens working outside the US.

 

[Cuchullain]

Clearly following in the tradition of their ancestors who renounced British citizenship as part of a tax savings strategy.

Thank you for pointing out this thoroughly amusing irony!

 

[MamboJoel]

If they're living somewhere else then why would they need U.S. citezenship? What are we holding their seat or something? It doesn't make any sense to me.
If life's so good out there then you can always visit if you want. But I'd imagine people going back and forth between citezenships would be very annoying.

Indeed, it's exactly the point : Your citizenship is for life, you're american wherever you go, whatever is in your wallet.
Looks like some need to travel a bit more often...

 

[Scuffer]

They are not an asset to their homeland if they are working overseas and paying no taxes to their homeland.

I was replying to someone who seemed to be suggesting that they wouldn't be much of an asset regardless of were they where, or where their taxes were paid

 

[Stegyre]

In either event many high earning
US citizens working outside the USA ended up having two sets of taxmen.

@Rik Meleet: Your advice of ceiling income is received. However, your attitude is unfair. Why should an American in US, earning 100K$, taxed once; while an American in Europe, earning 100K$, taxed twice? Isn't socialist caring about equality?

Just to clarify, for our non-U.S. posters, virtually all of us pay "two sets of taxmen": every tax season, I file my federal return and I also file my State return. In fact, if I worked in two different States during the year, I file a return in each State. (Boy what a pain that was when I moved from California!) At least from our cultural perspective, there is nothing wrong or unusual about having more than one taxman. (Although you'll certainly find people who complain about having any taxmen at all. )

These ex-pats aren't paying any State income tax (and, to be fair, they aren't consuming any State services and probably aren't eligible to vote in State elections, because of residency requirements).

Also, it is not at all clear from the OP article that these ex-pats are being crushed under an excessive tax burden. I'm not going to opine on something I know nothing about, especially since we have some posters who have worked directly in this area. They can tell us what the actual tax bite is. Yes, these ex-pats are paying more in taxes than their (native) next-door neighbors, but (a) they are not necessarily paying more taxes than their fellow citizens at home; and (b) they are enjoying more benefits than their next door neighbors (specifically, the benefits of U.S. citizenship, however those may be valued).

Taxing ex-pats can be excessive, but its not at all clear that it is. Those who make citizenship a tax issue are akin to those who make marriage a tax issue (i.e., divorcing but living together to avoid the "marriage penalty" of U.S. taxation): they value niether citizenship nor marriage very much. Without more evidence that these people are really being prejudiced, I don't have much sympathy for them.