it is time to press your government for Resident based taxation and join the rest of the very world

[riverbendviewgal]

The USA and Eritrea are the only countries in the world who use Citizen based taxation. The rest of the world uses Resident based taxation. RBT allows freedom. CBT is a form of slavery.

Read the article and the comments. Imagine you have a brother, sister, one of your children who works abroad who falls in love, marries a non American and chooses to live the rest of her/his life to be a citizen of another country. Also keep in mind, many babies are born in America and their parents , who were working or going to school in America when these babies were born, are citizens of another country. These babies went back with their parents homeland as children never to return to the USA. They have no desire to. Mayor and MP Boris Johnson is one of these babies. He left the USA at four. He was pretty shocked when he found out he had to pay the USA taxes on his Sale of his London home. and was able to enter the USA ONLY with a USA passport, not his UK passport.


To the rest of the world it looks like it is all about money for the USA And punishment If you give up US citizenship.

Ted Cruz l renounced his Canadian citizenship for $100 And a letter to the Cdn government stating he wished to renounce. No tax returns or bank accounts were required for him to report To the Cdn government. ( BTW, glad that he is No longer a Canadian. He is Sen Joe McCarthy reincarnated. )

Please do not use the excuse that the USA will rescue all Americans if they are in in a disaster. the USA demands payment for the rescue. Canada and other countries also rescue their citizens. So it is not just an American attribute.

In Canada you do not file Canadian taxes if you are living and working in another country. When and if you return , you do. French citizens living abroad have their own representives in their parliament/government who represent them. Canadians living abroad can also vote in Canadian elections if they so choose.

Read the comments.


http://blogs.voanews.com/all-about-america/2015/05/13/so-long-uncle-sam-record-number-of-us-citizens-dump-passports/

[elehhhhna]

1. means test it.

This was meant for those who flew to Cayman, etc. for tax evasion purposes.

[DonCoquixote]

2. RBT allows freedom. CBT is a form of slavery.

Which is exactly what the Billionaires who will move abroad to hide taxes will say. Granted, I would favor a meanms test so that middle class folks do not get hit hard, but if you do not think this change would start to see an exodus of the rich to places like , oh Canada, the way Burger King did, you are at the very least, mistaken.

[doxyluv13]

3. Let them give up their U.S. citizenship...

then no problem. Personally, don't care if they have to leave some of the money they made in the US behind.

[riverbendviewgal]

4. Duh!

Did you not read this article? Most made no money in the USA. Or never lived in the USA. People who do not read the whole article miss so much and become uninformed Just Like the Republicans.I find this frustrating.

[doxyluv13]

5. Yes, I read it.

Plus, I have a sister who emigrated from U.S. to Canada, and a bunch of dual-citizen nieces and nephews, so I'm very up on the topic. Don't be so insulting. Can't you accept that anyone disagrees with you?

[DFW]

6. I very much agree!!!!!!!!!

It is often said (correctly) that a US passport is one of the most expensive passports in the world.

I have been living in Germany for years now, but still receive all my income in the USA. German taxes are higher than in the States, but I knew that when I moved here, and accepted it as an unfortunate fact of life. The accountants' fees are horrendous, as I get hit for them on both ends. Plus, certain kinds of income are only taxable in the States. These are supposed to be covered by the Double Taxation Treaty between Germany and the USA. My German accountants have been in constant touch with the German Tax Office to make sure all this is addressed correctly. And yet: after agreeing that my tax burden in Germany for my first residence year was around 52%, when the written decision came back, the Germans demanded taxes for income that is designated as only taxable in the USA, and was already. For a good portion of my income, between the two countries, I have been ordered to pay, between Germany and the USA, around 98% in taxes.

This is aggravating bullshit that I don't have the time or competence to deal with, and governments are excruciatingly slow in responding to issues not in every how-to manual.

The USA should absolutely go after billionaires with fictitious residences in tax shelter countries, but how many of them are there? Fifteen? There are tens or hundreds of thousands of us normal mortals living and working abroad, perfectly willing to pay taxes in accordance with local laws, often higher than what we'd pay back home, and in countries with higher costs of living. It's no luxury living in Germany for someone in my income bracket. I resent having the additional burden of the time and money spent to get a bunch of nameless, uncaring bureaucrats to get off their asses and figure out what laws legitimately apply to my situation, and then apply them justly. It is high time the USA adopted the same stance on this issue as most of the rest of the world.

Here in Germany, it actually WAS the position of the government that certain people of means should leave and give up their citizenship, but leave their personal wealth behind. That stance was abandoned, though, around 1945--not entirely voluntarily, I would point out. They have taken a somewhat more liberal approach to the question since then.

[riverbendviewgal]

7. Are you planning on going back to the USA?

It sounds like it because of you biting the bullet and paying such high taxation.

It also sounds like if you decided to give up your US citizenship you would be paying a very high exit tax.

[DFW]

8. Not for the moment

There's no exit tax, though. Every asset I own was paid for with money I already paid taxes on. Though I did have a Jewish grandparent or two, they can't grab what I have just because they feel like it--that really did end in 1945, and that was here in Germany.

If I'm paying 52% here or 39% back home, I can still survive on what's left (as long as this 98% nonsense gets straightened out).

The one thing I'm worried about is my Roth IRA. I did the conversion when my residence was still in the USA, which means if I want to retire and live off that, I owe nothing further on it since I paid the taxes up front upon conversion. The Germans have never heard of the Roth conversion.

A friend is a judge on the German tax court, and he wrote his doctorate on double taxation. He had never heard of a Roth IRA conversion, and said as far as he knows there has never been anything written into the double taxation agreement about it. He said the Germans might want to tax me on it, or at least the gains in its value since the conversion. This would be completely contrary to the US law that covered me when I did the conversion. As that would eat away either a quarter (if they tax only the gain) or half (if they want to tax all of it) of what I have saved for retirement, I will give up my German residence before I let them confiscate that. I paid my taxes on that--let them go attack Washington if they want to confiscate what's left.

Apparently there has never been a test case of an American having moved to Germany after having his IRA converted to a Roth IRA, so at the moment, there is no legal precedent to fall back on.

Plus, I have no intention of giving up my US citizenship. It's where I was born and grew up. It's what I am, and I see no reason to choose to be something else. I am in Germany by choice, not by necessity. My wife has a pretty strong hold on me, it's true. Her country does not. If she moves to the States with me some day, she has no intention of becoming an American citizen. It's not who she is. I work in Europe. I could work in the States, too. My wife retired a few years ago. I figure I'll still be working another 15 years or so (I'm 63 now).

My dad retired at 78, but only because pancreatic cancer squeezed the life out of him. His farewell column (he was a journalist) appeared in his newspaper 8 days before he died. I'm not a journalist, but I suspect that's how I'll go out, too.

[riverbendviewgal]

9. Germany has good health care

And friends who lived there say it is very family oriented with lots of national holidays and good working hours.

I guess you will enjoy your golden years in the USA, hopefully. My son died at 26 of Glio Blastma Multiforme and 18 months later his dad, my beloved husband of 33 years died of Non Hodgkins lymphom at 54, 18 months after our son died. They were diagnosed 2 months apart. We just do not know what is in the future. I thank my country Canada for giving them the best treatment and we did not go bankrupt. I am a not poor widow, not rich but do not have to work in Walmart to survive.

[DFW]

10. Partially true

It has first class and second class health care. First class is for "private" patients, who pay up front and get reimbursed (they hope!) by expensive insurance. Second class for everyone else, most of whom have some kind of employer or government backed insurance. A few hundred thousand have none at all. It's not automatic here. You have to take care of your own. Second class, is of course, relative. Although as a normal mortal, you can sometimes have to wait months for a doctor's appointment, when my wife was diagnosed with breast cancer, after the second operation, her chemo, radiation and post treatment rehab was great. Of course, if she had been treated quickly after the first operation instead of being put in the waiting cycle for months, the cancer might not have spread so far down her lymph nodes that all of the ones on her left side might not have had to be taken out during the second operation.

Germany is notorious among Germans for being unfriendly to children, although this is not universally so. My wife, however, had to fight tooth and nail for our elementary school to provide early afternoon supervision for families where both parents worked. Before that, the school sent eight year old kids home to empty homes and said "it's not our problem."

My brother in law also had a fatal glioblastoma at a young age. I'm all too familiar with how that goes. I'm sorry you had to deal with it.

[Pooka Fey]

11. Hi DFW, can you PM me with the name of your USA accountant?

I'm an American expat living in France. I used a NYC based firm for the last two years to file my USA return. They were very expensive and the service was poor - i.e. they took over 6 months to process my return.

My situation is too complicated to do my own taxes. I missed the June 1 deadline this year.

Thanks in advance.

[DFW]

14. I don't recall if I saw this,

So, if I'm doing a repeat performance, please forgive me.

[davidpdx]

12. Very interesting to hear your story from Germany

The base taxes here in Korea (for employment) are 3.3%. Where they get you (and get you good) is the VAT tax and the vehicle registration tax. The VAT tax is 10% on everything including healthcare. The vehicle registration tax depends on what kind of ride you have. Mine is a POS 2007 GM Daewoo, but I still pay $340 a year in taxes for it. I also had to pay an acquisition tax when I bought the car. Same with real estate for the acquisition tax. The property tax isn't bad, we pay $120 a year for our teeny tiny apartment (did I say it was tiny). All together with health insurance it adds up.

I finished my doctorate last year and was employed for the most of the year (I had only had a job during the first couple terms of my doctorate), so I had quite a few exemptions with school being the biggest. I had to fight with them over that one. Next year I'm not going to be so lucky. Though I'm done paying tuition, I don't get the nice write off.

[DFW]

15. My tax rate in Germany is a de facto 52% more or less, plus 19% VAT on everything

That rate kicks in at less than $100,000 at current exchange rates. My younger daughter, who found a great, high-paying job there at age 25, is now paying over €100,000 a year just in income taxes. She was hoping to put some away, but it isn't anywhere near what she would have saved if she had been living in the States.

I pay about $750 a year vehicle tax, but that's on a 2013 BMW 530. We also pay about €2000 a year in property tax on about 1000 m² of land, way less than we'd pay in the States, but in the USA, no one is hit for 19% sales tax on everything. I have no German health insurance. Batteries not included there. It is not automatic no matter HOW much in other taxes they take from you. I can either get "private" insurance for about $3000 a month (yes, MONTH), or else continue to go through my US employer, which is what I do now. They disallow a lot of my medical expenses because they're from overseas, but I sure don't run up $36,000 a year either, and they ARE deductible from my German taxes. In Germany, they impose VAT on the gasoline tax--a double taxation that is illegal under German law, but no one has the money to fight it court, as it would require a Supreme Court decision to rescind it.

[davidpdx]

13. I agree it is getting fucking ridiculous with the let's check the bank accounts of expats every year

bullshit. FBAR is $10,000 and FACTA is $50,000 from my understanding. Those are both pretty damn low thresholds to have to file hundreds of dollars of extra paperwork. My account went over $10,000 this year, so I'll have to file for FBAR next year, but I guarantee you it's going to start slipping below $10,000 later in the year and stay there. Fuck that shit.

[DFW]

16. My account in Germany went over six figures for one day, and that was to pay taxes

I NEVER cross the $100,000 threshold otherwise, but had no choice, as the German taxes I owed were more than that. So I sent the money from Texas and sent it right back out again the day it arrived. I'll have to pay for the paperwork, of course.

[davidpdx]

17. Yeah that is true as long as you don't cross the $100k threshold you don't pay taxes

I just finished my doctorate, but don't ever expect to earn that much (hell I'd be happy with $60k a year).

I've posted an update that I got from DA in another thread.

[DFW]

18. You don't need to earn much here to get to the max-tax bracket

€100K will do it. My younger daughter moved back here to Germany after law school in the USA, now has a job that required EXACTLY the skills she had to offer--degree in international law, bi-lingual in English and German, EU work permit (German citizen) and a US bar exam, so licensed to practice in the USA. Her starting salary was already in six figures (in dollars, not euros), and she now earns three times that. But she acquired semi-unique skills, is a workaholic, and has fabulous people skills. She has head hunters lined up outside her door. Not exactly a typical situation.