Senators to Unveil the ‘Ex-Patriot Act’ to Respond to Facebook’s Saverin’s Tax ‘Scheme’
The Saverin fall-out, as expected, has begun:
Key quote:
The senators will call Saverin’s move an “outrage” and will outline their plan to re-impose taxes on expatriates like Saverin even after they flee the United States and take up residence in a foreign country. Their proposal would also impose a mandatory 30 percent tax on the capital gains of anybody who renounces their U.S. citizenship.
The plan would bar individuals like Saverin from ever reentering the United States again.
What does this mean? Can we never be free from these people? Is this implying that if you renounce citizenship now even with under the 2 million in assets that you will end up paying capital gains taxes anyway? And what is this about “re-imposing taxes on expatriates”? Does that mean that renouncing citizenship doesn’t do anything and that there would be no way to get out of the US net? Personally I couldn’t care less if they ban me from travelling there, but this has me very alarmed at what is going on. I just want to get rid of this unwanted, accidental citizenship and get about living my life in my own country!
I’ve received an advance copy of Al Lewis’ new article for Dow Jones. I think you folks will be encouraged because it will tell our side of the story. So as soon as anyone sees it, let us know. He’s now in the Isaac Brock Hall of Fame.
@shadowraider- well if that isn’t the intent then it needs to be stated. I believe that we all know just how much value can be assigned to the notion of “intent” when it comes down to the law being enforced.
I will worry until such time as the rules are clearly stated. Until such time as that happens I believe that any law will be seen to be punitive in its intent and wil be enforced that way.
@rødgrød, This bill is starting not to look so bad. From what I understood, the former US citizen would only be barred from entering the US if refusing to pay the capital gains tax. If the tax would really be only on US capital gains, and if this bill replaces the Reed amendment, I think it may be better than what’s currently in the law.
Yes but dosen’t the covered expatriate status cover foreign assets? But if one has less than 2 million it doesn’t matter.
anybody have the proposed text of the bill?
@Jefferson, nope,I have a signed and sealed CLN and if I wanted US nationality again I’d have to go through the same process as any other Danish citizen. Imagine the uproar from the homelanders if “treacherous” renunciants were allowed to easily become US citizens again.
Besides, as a teacher I make under 70k USD a year. The AMT has always been the least of my worries.
I bet I could make a lot of money doing taxes for US expats over here, though. Like others here I now know more about the US tax code than any sane person would ever wish. So does my viking husband after helping me with the agonizing process of back-filing. I wonder if a foreign citizen can become an enrolled agent? 😉
@Jefferson D. Tomas, The exit tax applies the capital gains tax (currently 15%) to worldwide assets held at the last day the person is a US citizen, but this bill applies a 30% tax to capital gains after the person renounces. I think that it would be a withholding tax on US capital gains only. But if I’m wrong, then yes, this bill is a monster.
@Shadow: I agree. @Jefferson: There is a summary of the act here ( http://techcrunch.com/2012/05/17/schumer-and-caseys-ex-patriot-act-details-of-how-they-plan-to-get-saverins-67m-and-more/) but I haven’t been able to find the full text.
@rødgrød, I believe that those who are personally involved in a complex subject often know more about it than supposed experts. You probably know more about US taxation than most US accountants.
@shadow but I think that if the worldwide assets are less than 2 million then there is no 15% exit tax.
According to the article Roedgroed has linked above, it looks like they Charles Schumer and Bob Casey are using the same threshold in their bill 2 million or 148k in annual tax liability.
What I don’t understand is what will happen with the 15% tax on deemed sale combined with the 30% on capital gains. This means 45% for assets in the US?
Here’s more. Now, they say Saverin “spits in the eye of the American people.
http://abcnews.go.com/blogs/politics/2012/05/facebooks-eduardo-saverin-spits-in-the-eye-of-the-american-people.
And, here Schumer says “This is a great American success story gone horribly wrong.” http://economy.money.cnn.com/2012/05/17/senators-to-saverin-dont-come-back-ever/
Actually, I think IRS and US are “a great American success story gone horribly wrong.”
@jeffersond.tomas- this is a law that was developed in anger at one person. It is interesting to read that Mr. Shumer denies this though. Which is kind of like the situation where a renunciate denies having done so for tax purposes. How do your prove that the denial isn’t true?
I guess that the only way to question both acts would be to see how close they are connected in time with the avoidance or enactment of an undesired consequence.
This law will probably get worse once it is in its final form. I also see no reason why the capital gains penalty would not encompass world wide assets and not just U.S. based ones. If this were true than it would be a serious departure from the world wide base on which the pre-renouciation assets were taxed.
I really don’t believe that there is any intent to cut renunciats any slack.
@Jefferson, You’re right, the 15% tax only applies if the person has more than $2 million in worldwide assets. Besides, there is a credit of about $630,000 to the exit tax, so with the curent 15% rate, a person only pays exit tax if having unrealized capital gains of at least $4.2 million. This implies assets worth much more than $2 million.
I also have the same doubt regarding what would happen with the 15% tax already paid. Since the exit tax can be indefinitely deferred until the gains are actually realized, perhaps at that time they would be replaced with the 30% tax, I don’t know. Or maybe the gains already reported in the exit tax would be exempt from the 30% tax. It sounds really complicated, like the rest of US tax laws.
Un-be-freaking-lievable. This is practically self-parody. One particular gem from the press release:
“”We simply cannot allow the ultra-wealthy to write their own rules,” said Senator Casey.
Well, Senator Casey, you moron, Saverin did not write his own rules. He followed the rules as written by congress. To the letter.
There must be a term for this type of collective insanity.
@recalcitrantexpat, Maybe it’s my wishful thinking that the senators are trying to make US taxation more logical. I’ll wait and see the actual text of the bill.
http://www.zerohedge.com/news/simple-question-senator-schumer
This is going to p-o a lot of millionaires, the ones who can afford to fight it. Imagine having to cough up more after thinking you’re free and clear? Like finding out you’re still a US citizen after all.
@watcher- I don’t know what the term is but I can definitely say that they are abusing their office. Punitive laws that are made on at the whimsy of the poltical leaders are always based upon a denial of Consitutional Rights.
Certainly the deliberat miscasting of Mr. Saverin as “making his own laws” is calculated to play to the U.S. citizens who see the rich as not contributing their fair share. Of course no one can define what comprises a “fair share” of a person’s tax contributions to a nations budgtary procees.
@Blaze…After reading the quotes from Schumer, I finally come into full appreciation of Johnson’s quote: “Patriotism is the last refuge of scoundrels.”
These laws are perfect bi-partisan red meat: Right-wingers hate us because we are turning our back on America. Left-wingers hate us because we aren’t paying our fair share.
As far as I am concerned they can all ___ off.
Reading about this dreck has truly added to the despair about renouncing. ___ing ____heads. They can all kiss my ___.
Pardon my Anglo-Saxon.
@rodgod: Monalisa pondered setting up a US tax business for ex-pats on another thread a while ago. Maybe there is an international business in the making here. Oh wait, IRS would find a way to seize tha
@Watcher: There are terms for “this kind of collective insanity:” USA (United Self-Serving A–es and IRS (International Robbery Society),
If you meet certain certain thresholds it is assumed that you have renounced to avoid paying taxes. Discrimination based on income, just as FATCA and the current exit tax are. Guilty unless you can prove otherwise. Congress really knows how bad things are, and as other Brocker mentioned, they are firing in all directions. Ready, shoot, aim!
@watcher, it’s called desperation. Hear that sucking noise? It’s the America’s bank account.
I just saw something that made me think, “Maybe I spend too much time worrying about the persecution of US expatriates. Maybe I should learn more about the plight of poor homelanders like this guy: http://tosh.comedycentral.com/blog/2012/05/16/man-protesting-being-cut-off-from-all-you-can-eat-fish-fry-is-just-the-best/?xrs=synd_facebook ”
(Warning: may cause you to laugh so hard you choke on your glass of water. I speak from experience).
You guys are right, and I changed my mind. This bill is a monster, just like the exit tax, FATCA, FBAR and citizenship-based taxation. The insanity has to stop.
I’m glad this is happening because the publicity will put rich foreigners on alert not to immigrate to the US.
Senator Chuck Schumer had the brilliant idea to relax their immigration laws so rich foreigners would buy up real estate in the US to stop the prices from dropping. When Americans heard about it they were pissed that foreigners were going to be living in the houses they lost. I don’t think he does a whole lot of thinking when he comes up with his proposals.