Taxing Expats: Make it as difficult as possible

If America truly wanted to tax “rich” expats–expats would simply be taxed upon any income over $x00,000 yearly income at some rate, whilst others would imply not file. Although this method would still be taxation without providing government services, it would at least be honest about only ripping off expats who are “rich”. That method would have been recommendable by any lousy government official after reading my last entries.

After analyzing 86.7% of the expat/emigrant population in those articles, it shows that only maximum 0.293% would owe tax to US according to the principle of “taxing-up” to the higher of residential tax or homeland USA tax, using the existing method of exclusions and credits. But even this level of unexcellence is unachievable to that Washington leadership that doesn’t represent us.

The preceding calculations are made under an assumption that the exclusion/credit process is clean. But it isn’t. We’ve long discussed all the form complexity manufactured by the compliance mafia which rotates in and out of Treasury employment. The mafia has made the paperwork of an expat to be more than double that of a homeland tax return. And, whereas homelanders can have their taxes done by low/moderately priced bookeepers, expats must have their taxes done by $200 / hr accountants.

The compliance mafia has also written in an infinite number of reverse loopholes—where, at every turn, the IRS has an opportunity to screw a taxpayer using the complexity of the rule system. We’ve discussed many of these reverse loopholes at this site in these years. Please feel free to throw in your own.

-PFIC’s–the nightmare–any fund product not purchased in America will be taxed enough to rid the person of any profits

– Double taxation of foreign social taxes. For example, in Norway, the social tax is listed separately from other taxes. Social taxes are not creditable or deductible, hence America double-taxes it.

– Double taxation of renunciants: The exit tax (reichfluchtsteuer) was supposedly designed to capture the capital gains of a human being over its life as an American. If that American had always lived in America, the exit tax might represent a clean (bad) tax. But, a human being living out its life outside of America is already due those capital gains taxes to the country of his residence. The reichfluchtsteuer taxes the gains due to his existence as an American, and the American is later taxed honestly by his country of residence, too. ……… and the list goes on….

These reverse loopholes were left out of the analysis, because their effect upon America’s tax revenue is negligible. The issue to note especially in this article, is that these reverse-loophole taxes are destructive upon the individuals they land upon. These stupid reverse loopholes are what make it impossible for Americans to have financial planning if not living in the homeland.

The IRS and the compliance mafia have been happy to force non-rich expats to file mounds of paper, to punish particular persons with obscure rules, to force Americans to exclude or credit things for which they never should have been charged, and then to create ethnic discrimination tools such as FATCA to enforce bad rules. All of this effort has been made by the IRS and compliance condors to grab money they never deserved, with with even lesser significant revenue than the tax revenue I have been showing in previous calculations.

With that clarification, it should be possible to continue with the calculations.

8 thoughts on “Taxing Expats: Make it as difficult as possible”

It’s not the taxes that the US Government wants. It’s the confiscatory penalties. That’s where the IRS plans to make their money and the politicians choose to see nothing but the dollar signs. They think expats are nothing but cash cows.

Disgusted with JT. There is no pride in Canada’s sovereignty nor the sovereignty of every other nation when the nations’ leaders choose to bootlick the United States.

The corruption and pure evil of all this is sickening. What is more sickening is that the average American couldn’t care less and would probably agree that those living “abroad” deserve special treatment and are “not paying their fair share”. Forget if they already pay tax in the countries where they live, work and use services. Americans can’t seem to understand that such a thing exists and is what happens outside of their country. Sadly, this will all continue and thousands more will renounce their oppressive U.S. citizenship and the government will profit from that and take $2,350 for the privilege of allowing innocent people to gain their liberty. Still, their greed being insatiable, they will try to take as much as they possibly can, via penalties, exit taxes and other threats and extortion. Once a system is so blatantly and so obviously corrupt and disconnected from the lives of real people, the system is in the process of collapsing.

They won’t get a penny out of me lol

I’ve got all my money out of the fraudulent banking system in physical gold well hidden.

The coming economic crisis is going to ruin everyone who is not prepared.

FATCA is just a tinny winny little part of the financial mafia that wants all our assets.

They can go fly a kite on Mars as far as I’m concerned.

Another complexity that will affect the tax paid by expats is the exchange rate.

If your local currency is falling relative to the USD, then PFICs may not be much of a problem. This is because you would have purchased the investment at a high USD value and sold at a low USD value (even if you have a gain in your local currency). If sale of your PFIC results in a loss, there’s no extra tax. (Of course this is all complicated by the requirement that gains and losses be separately for parcels acquired on different dates). Similarly, if you have capital gains on real estate or direct share purchases in your local currency, these will be much lower, measured in USD, if your local currency is falling relative to the USD.

OTOH, if your local currency is rising relative to the USD, then you’re screwed. Your USD capital gains will be HUGE relative to the actual gains in your local currency. PFIC taxes and capital gains taxes will be all out of proportion to your taxable income in your home country.

Forcing expats to compute US tax based on the fiction that they are transacting in USD imposes a great deal of foreign exchange risk on those investing where they live and work. Just another example of why CBT is an abomination.