Shadow Raider says
YES! YES! IT WORKED!!! The Senate Finance Committee had its meeting on international competitiveness today (instead of May 23 as scheduled), and it included notes about individuals! It’s considering the proposal in Bernard Schneider’s paper!
Excerpts from the meeting notes (my comments in bold):
“The United States income tax rules applying to cross-border income are based on two core concepts: the residence of the taxpayer and the source of the taxpayer’s income.” (Are they abandoning the concept of citizenship now?)
“Nonresident citizens: U.S. citizens living abroad are generally taxable as residents of the foreign country where they live. They are also required to file U.S. federal income tax returns annually and pay tax to the U.S. on their worldwide income, subject to the foreign tax credit and an exclusion for a limited amount of foreign-earned income. Other countries generally tax their nonresident citizens only on income their citizens earn in their country of citizenship. Some believe certain employers overseas are reluctant to hire U.S. citizens because of the associated tax burden and compliance costs.”
“NON-RESIDENT U.S. CITIZENS
1. Provide an election to citizens who are long-term nonresident citizens to be taxed as nonresident aliens if they meet certain conditions (Schneider, “The End of Taxation Without End: A New Tax Regime for U.S. Expatriates,” 2013; similar to the law in Canada) (You read it right, they mentioned Canada!)
a. Require a minimum period of residence abroad
b. Impose an exit tax on electing taxpayers where deemed to sell all assets at the time of election
2. Repeal the foreign-earned income exclusion (H.R.2 (108th Congress), Jobs and Growth Tax Relief and Reconciliation Act of 2003, sponsored by Rep. Thomas)”
I can’t believe it! feel like jumping around right now!
It sounds promising. I want to say thank you to you, Shadow Raider, for all of your hard work in the bowls of Washington.
This has been an exciting week! Can you tell me how they tax non-resident aliens? Also am wondering what they are thinking about the exit tax, is this the same as the exit tax for renouncing as they have today? I am amazed at how your tireless efforts & those of so many others as well on IBS. Thank you all so so much.
:’-)
Eric posted Bernard Schneider’s paper where is was discussed here last December.
http://isaacbrocksociety.ca/2012/12/08/virginia-tax-review-article-attacks-us-fiscal-imperialism/
Great news indeed !!!
However, ex-pats must keep the pressure on in order to change the status quo. A few positive words at a committee meeting can get lost in the shuffle all too quickly.
IMHO, under the present circumstances, renunciation / relinquishment is still the best solution for long-term ex-pats who have no intention of returning to the US other than to make the occasional family visits.
Keep writing, keep lobbying and never give in to tyranny!
For those who are renouncing / relinquishing, America’s founders would be proud, you are walking in their footsteps.
At least we have some government types listening, but unfortunately Obumba will probably kill it because he wants to keep his hands stuck in our pockets.
Thank you so much, Shadow Raider, for posting your latest “bulletin”. How can we ever thank you for all you’ve done on our behalf?
I agree, Patrick Henry, the best for any of us who have no intention of ever returning to the US to live is to renounce or, better yet, if possible, relinquish our US citizenships. It is what I thought I had done so long ago and lived totally as the Canadian only I thought I was. What this has done to so many of us is inhumane. Thank goodness we have had this Isaac Brock site for support and education.
I will keep writing and lobbying because I can never roll over and give in to the tyranny shown US Persons Abroad and I know many others don’t have the voice to stand up for themselves. I doubt I can ever forgive and forget the US hatred shown to us in painting all abroad “traitors” and “tax evaders”; what has been threatened for my developmentally disabled son and others like him (and their being entrapped with no way out of US citizenship); and just the loss of being able to enjoy real joy in life with this forever in the back of my mind.
I am glad I have had the opportunity to fight this with all of you courageous advocates not afraid to stand up for what you believe to be right; to stand up for others when they either don’t know or don’t care. We here all know we have to pay attention or our rights will be gone. Building what we have built with such literate, caring fellow US Persons Abroad has been, for me, the good that has come out of all of this.
Exit tax? Huh?
Count me in @Calgary411. I feel what you’ve said.
Patrick Henry; I believe that many of us will still keep renouncing and relinquishing, no matter what is proposed. No matter what changes are made, the damage has been done. The social contract – or the pretense of one with US citizens ‘abroad’, is forever broken. The true face and arrogance and ‘might makes right’ heart of the US was exposed and we saw it firsthand. If they could expose US citizens born and/or living entirely to such unwarranted punishment, extortion, and confiscation – even in the complete absence of any actual tax owed to the US, and in other cases, US tax owed only due to the twisted structures of US extraterritorial taxation, then it shows me that the US will always feel that it is entitled to do anything to anyone – at home, or abroad. As long as minors and those deemed incapable are still bound, the oppression continues. Any solution must include them. No family can be free as long as one member remains a US citizen tax-hostage for life.
Thank you so very much Shadow Raider.
@Yogagirl Yep, just like Nazi Germany.
I’d much rather prefer it if they just modified the retarded system entirely to a way that, I don’t know.. makes sense. I provide documentation certifying that I am not a US resident and have not been one for years, and they just leave me the hell alone entirely. Take my passport and convert it to a lower status, treat it like a visa-waiver or something. There, problem solved.
excellent. What is this repeal of income exclusion thing_
unfortunately, the exit tax craziness was in the ACA proposal, somehow as a pre-emptive negotiation
I really do not like the idea of any exit tax or especially Schneider’s rationale for one. Schneider argues for an exit tax because of the political, but not logical or justified, need for us to “pay our fair share.” I only want his alternative but rejected “simplest approach” as treating the departure as a “non-event for tax purposes”
Just let me leave quietly and pay the normal tax owing.
See:
“Having established that the worldwide taxation of long-term expatriates and accidental, nominal, and unaware citizens is unjustified, and that it is unfair and unwise to force U.S. citizens overseas to give up their citizenship to avoid a tax regime that should not apply to them, there are various alternatives to the perpetual worldwide taxation of expatriates. The simplest approach, which is the one followed by most countries, is not to tax nonresident citizens and to treat a departure from the country as a nonevent for tax purposes. Given the history of U.S. taxation of nonresidents, the attitude of Congress, and the unjustified perception that U.S. persons abroad are not “paying their fair share,” this option is clearly not politically viable.”
So what is the exit tax? Capital gains unrealized only? 35% of everything I own? Could 8854 be a better deal if I own less than two million?
“In the year of departure, the individual would tick a new “departing” box, similar to those found on many state tax returns, on a departing or part-year Form 1040. The individual would list all property on a newly designed schedule and calculate and include in income the capital gain or capital loss that resulted from the deemed disposition. Items of personal use property valued at less than $1,000 would be excluded.”
I’d like to thank Shadow Raider, Petros and everyone for all that they’ve done and continue doing. However, nothing has changed yet, since half of America still doesn’t understand the difference between a stateside American and an American living abroad. Most of the news and comments are mind-boggling. So, post more, write more and apply more pressure.
As The_Animal points out, the opposition is endless and as Patrick Henry states, renunciations are still necessary to keep the pressure going and raise awareness. I disagree with the notion that one who renounces will never have the option of living in America at a later date, given that renunciations have no impact on heritage and ancestry and are patriotic for the given circumstances as far as the Founding Fathers are concerned.
Here’s what many stateside Americans think:
http://www.motherjones.com/mojo/2013/05/rand-paul-fatca-repeal-offshore-tax-evasion#comment-891621964
Hey guys, I made the whole thing up. It never happened! Nobody has ever been kicked out of a bank account. It’s all my fantasy, the homelander says:
http://www.motherjones.com/mojo/2013/05/rand-paul-fatca-repeal-offshore-tax-evasion#comment-891744710
Apologies to @MarkTwain who I discover already clearly made my point about the unjustified rationale for an exit tax (this has to be fought). He notes:
“The article, unfortunately appears to be caving in to the absurdites:
“Having established that the worldwide taxation of long-term expatriates and accidental, nominal, and unaware citizens is unjustified, and that it is unfair and unwise to force U.S. citizens overseas to give up their citizenship to avoid a tax regime that should not apply to them, there are various alternatives to the perpetual worldwide taxation of expatriates. The simplest approach, which is the one followed by most countries, is not to tax nonresident citizens and to treat a departure from the country as a nonevent for tax purposes. Given the history of U.S. taxation of nonresidents, the attitude of Congress, and the unjustified perception that U.S. persons abroad are not “paying their fair share,” this option is clearly not politically viable”
He goes on to recommend an exit tax, which he calls equivalent to Canada, and what looks like a tax upon the gains in personal assets over the course of residence. This is a really bad ending to a story with a good beginning.”
[Can my mistaken duplicate posting in “Canadian Trusts” be removed?)
@USCitizenAbroad and others … I realy cannot follow the enthusiasm here about the whole thing….exit tax etc….. btw. there are a few bigger guns besides shadow raider that have done a lot more for us on Capitol Hill
……….US citizens living abroad can’t be obscenely wealthy?…………. and even if many are what difference does that make….. I think we have discussed this rediculous concept about “fair share“ extensively.
Is everybody trying to become a socialist these days ? What I find is that the United States proclaims its so-called “exceptionality” at every possible opportunity. There is no benefit to being an American citizen any longer. And with the current “entitlement attitude” of American homelanders to expatriates’ legally earned income without compensatory representation one starts to feel that a repeat of the “Boston Tea Party” is well-considered a great idea.
Actually, the way this sounds, as it might be implemented is kind of a bad thing. Especially if they are doing away with the FEIE thing.
This means: If you live abroad, you will either be double-taxed, and if you don’t like it, you pay an exit tax. Does this mean that they will double-exit tax for when you say screw it and renounce?
The best strategy was, is and appears to remain: Just ignore the idiots. For Canadians, I’d suggest a name-change for Canadian passports and a request for removal of Birthplace. At the border if anyone gets upset about it, just say you were accidentally born in Israel and it’s for personal safety. There. Problems solved. The US can go fuck itself. Best advice is to not use a foreign passport to cross the border until this is all setup with the name change, to keep fingerprint and biometric flagging off the records.
@Fred, I’ve considered that. One of my names sounds a bit too English and with a small irrelevant change, it would be totally German.
@SwissPinoy, pick a vowel, add an ümlaut
The removal of the exclusion could also be tied to the ACA proposal, if I remember correctly, it allowed for a judgement of tax havens where there are low taxes or no taxes. The income credits would work only in high-income tax areas.
For people who “qualified” to get out it ought to mean freedom, after having paid the reichfluchtsteuer.
That proposal as is would screw any Company wanting to send personnel to oil field regions where there is no income tax—for those typical 2.5 yr expatriate assignments. Good for those Senate democrats, and Corporate expats wouldn’t understand it being a problem, but pretty stupid for any US Corporation competitiveness.
The exit taxes are normally directed at “the rich”, so again, the major problem for minnows is intrusive paperwork when exiting