Congressional leaders are contemplating sweeping changes to the tax system. Who knows what, if anything, will come of this, but this may be our last, best chance of eliminating FATCA, FBAR, and CBT (citizenship-based taxation*) in general. If you send your letter to the Isaac Brock Society, the Brockers will print it out and deliver it to the committee in question and/or Trump:
So, let’s all go do our civic duty!
(Sir Isaac Brock is now my favorite hero of the American Revolution!)
*The USA is one of two countries–the other being Eritrea–which tax their citizens (and Green Card holders) who live abroad, on their income earned abroad. FATCA and FBAR are US-imposed reporting requirements (on banks and individuals, respectively) designed to ferret out non-filers. As a result, in some countries, banks have become reluctant to do business with US Americans, lest they become subject to US penalties.
The US govt will tax us wherever we live. That is why banks here cringe when an American walks in the door. The reporting requirements are painful. My accountant has a client who married a citizen from Ecuador. She had a house in Ecuador for 20 years before they married. When we went to sell the house in Ecuador, the US govt wanted their tax. She gave up her citizenship.
On the other side, US banks accept money from foreigners and do not always report out. It’s very one-sided.
Don’t get me wrong. I love America and the passport, but not our tax system.
Unless you are making over…US$108k/year, you do not have anything to worry about, except the hassle of having to file. And you only have to pay the tax on the amount OVER that. AND you can use any tax you pay here against that.
Go ahead. Bring on the contradictions.
Americans are funny people. They hate taxes even to the point of wanting to abolish the whole taxation system, but love the benefits that those taxes give them.
The “hassle of having to file” is not such a small burden. For example, FBARs are required on any account with more than USD 10,000–including any accounts over which the American has signature authority, such as those belonging to a spouse, elderly relative (who may be a non-American with no US ties), or business. No wonder overseas companies now avoid putting Americans in positions with signatory authority over their accounts.
Some people do earn more than the amount you mentioned.Others have things like pensions / retirement accounts, for which local and US regulations inevitably clash. Filing incorrectly can carry stiff financial penalties.
UK foreign minister Boris Johnson–deemed a US citizen due to his birth there, but otherwise with no substantial US ties–bought a house in London, then sold it. The IRS found out, and taxed him on the gains. He then renounced his (involuntary) US citizenship, at a cost of USD 2,350 (the renunciation fee) plus whatever he had to pay as an “exit tax” (probably a lot). Fair? I wouldn’t think so.
And did I mention the global phenomenon of overseas banks being reluctant to accept US customers?
I can say from inside experience that the US treasury is leaking like a sieve. It’s beyond a broken system. Fraudulent refunds from identity theft are so bad, it’s a wonder anyone is still willingly compliant. I’ve got hard numbers around here somewhere…
So, if you cut your finger would you bandage it or cut the whole arm off? Better to scrap the whole foreign earned income reporting and tax for US citizens and residents working and living abroad, than just revamp it?
What’s the point of holding a Green Card or citizenship at that point? People want all the benefits of such, real or perceived, yet want someone else to pay for it. Its like wanting all the benefits of a marriage without dealing with everything else.
You don’t have to go far to see to see some pundit, politico, or internet commenter whine about taxes or that the US can’t afford healthcare for all, or schools have to close, and bridges and roads can’t be repaired because a groups of wankers have their monies in hidden accounts- that these rules were designed to snare, and can afford to do so. Now, the burger flippers have to shoulder the burden for new shiny death machines that the top 25% demand.
There’s nothing inherently wrong with governments taking something off the top to provide certain services. However, when that process becomes as astoundingly complicated as the IRS system, you know something’s up. As Bree said, complexity invites … leaks, known in other parts of the world as theft and misappropriation of funds. Keep it simple and people don’t mind so much. I’ve wondered in idle moments what would happen if you made taxation 100% voluntary. I’d bet you $1.3 trillion that the government’s income would be a lot more than zero.
There are published lists of costs-of-compliance or ease-of-doing-business, and the US is never anywhere near the top.
No other civilized country does what the US does. In fact, the practice seems to have originated during the US Civil War, as a means of punishing those perceived to have fled the draft.
Believe me, US expats pay for every “benefit” they receive from the US government.
A Green Card is supposed to be a residency permit. What if Taiwan decided to tax everyone with permanent residency, even after they left Taiwan? Of course collection would be a problem, but that is why we have FATCA and FBAR, and other extraterritorial legislation.
I have no doubt that the US has many worthy projects that are underfunded, and would benefit from an infusion of our money. Unfortunately, this conflicts with the principle that we should pay taxes based on where we actually live. After all, Taiwan has roads, schools etc. to pay for as well.
Another wrinkle: there is every reason to believe that the US actually loses money on all this (extraterritorial taxation). That is, the expenses of pursuing it outweigh the monetary gains, at least so far.
As for hidden offshore accounts–well, no, I live here, so for me these are local accounts. If the US is concerned about tax havens, then it should start with places like Delaware, Nevada, and South Dakota.
I never said it was corruption free. But, again, would you cut off your arm if you cut your finger?
If your employer is a Taiwanese company, you only need to report what is reported to the government here. Does any employer here report more than them minimum for their foreign employees?
Apparently the banks here seem to operate on a “don’t ask/don’t tell” basis when it comes to ROC citizens that hold US green cards/passports. Nothing reported, nothing earned.
A voluntary tax system? A government that works on tips alone? So when Alabama, Louisiana, or Mississippi, the poorest states, needs some infrastructure work done, instead of getting that grant from Washington they hold a Kickstarter?