Some Renouncing US Citizenship

Discussion in 'Politics, Religion, Social Issues' started by itcheroni, Aug 2, 2012.

  1. itcheroni macrumors 6502a

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    #1
    http://finance.yahoo.com/news/the-renouncers--who-gave-up-u-s--citizenship--and-why-.html

    Are an equal number of high net worth individuals moving to the US to balance those leaving? Does having high net worth citizens matter to a country?

    Or do you look at these people and just think, good riddance?

     
  2. Prof. macrumors 601

    Prof.

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    #2
    There are days I want to renounce my citizenship as well.
     
  3. AhmedFaisal Guest

    #3
    They just don't want to have to file a US tax return every year and considering that with a certain net worth it is very easy and fast to get a greencard and as a US born you can always easily get your citizenship back when you need it, it's a logical move.
     
  4. charlieegan3 macrumors 68020

    charlieegan3

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    #4
    But the OP wanted to know the effect of them doing this would have on a country.
     
  5. AhmedFaisal Guest

    #5
    Short of changing the law to "once you give it up, you can't ever get it back" or "you can't give up your US citizenship" is it relevant? The only way you could prevent them from doing it is by not taxing worldwide income and then you might as well let them give up their citizenship. So the effect is IMHO nil.
     
  6. itcheroni thread starter macrumors 6502a

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    #6
    Only some of the people in the article renounced their citizenship because filing was a hassle. Many more left because tax rates are more favorable elsewhere.

    If US tax rates were competitive with places like Hong Kong or Singapore, the US would still have some revenue from these people. And if rates go higher or certain exemptions were eliminated, as many politicians propose, even more high net worth individuals would leave, along with their money. I think this has a negative effect on an economy.

    One common argument is that we need the revenue and that a "race to the bottom" would hurt our economy an standard of living. I recently paid a visit to Singapore and I think the standard of living there is noticeably better than the US at this point. And part of their success, IMO, is luring rich people to their country through favorable tax rates, especially on capital gains and inheritance(zero). You can't have jobs without capital.
     
  7. ugahairydawgs macrumors 68020

    ugahairydawgs

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    #7
    This is the argument that has long fallen on deaf ears with proponents of blindly raising taxes on the wealthy. I can logically see the reason behind why Democrats want to raise taxes: they think that doing so will raise revenue to help those they feel are in need or fund some other project they feel to be necessary. The sentiment behind why they want to raise taxes is fine, if not noble.

    That said....it's pointless. Just because you have a benevolent reason behind why you want to raise taxes doesn't mean that the people you are going to raise taxes on are just going to sit there and take it. Sure, giving up your citizenship is a pretty rare thing to do in order to avoid high taxation, but shifting assets around to foreign accounts is not. Raise cap gains rates and it will just pull money out the market. Revenues will go down....not up.

    To me I think a lot of the problem stems from the junked up tax code. The wide array of ways that the IRS can pick your pocket is a bit out of hand. I'm personally a big proponent of a flat tax, but I could get on board with the right kind of progressive tax too (i.e., significantly lower rates than where we are today). Just off the top of my head it could look something like this.

    0-4,999: 2%
    5,000-9,999: 4%
    10,000-19,999: 7%
    20,000 - 29,999: 10%
    30,000 - 39,999: 12.5%
    40k+: 15%

    Get rid of all of the credits and deductions and let everyone pay something into the system, no matter how nominal it may be.
     
  8. itcheroni thread starter macrumors 6502a

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    #8
    I would even go as far as making income tax 0 under 100k. If I remember correctly, when the income tax was first introduce in 1907(?), 99% of the population paid no income tax and those who did ranged from 1-7%. I'm sure someone will correct any errors I've made. :)
     
  9. ugahairydawgs macrumors 68020

    ugahairydawgs

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    #9
    Federal government is too big for that now. The net is casts too wide and the ketchup cannot be put back into the bottle completely.

    We all benefit, in one way or the other, from government programs and projects. It is only fair that we all pay in towards it. The system is inherently broken if we don't all have skin in the game.
     
  10. citizenzen macrumors 65816

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    #10
    :eek:

    Pardon me while I pick my jaw up off the floor.

    I just didn't expect such a liberal view to come from you.

    [thumbs up]
     
  11. Eraserhead, Aug 3, 2012
    Last edited: Aug 3, 2012

    Eraserhead macrumors G4

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    #11
    There were fewer things government had to pay for in 1907...

    The other flaw with pointing out Singapore and Hong Kong is that the people who are renouncing their US citizenship for those citizenships actually live in those cities and therefore should pay taxes there.

    Oh yeah and Singapores taxes aren't that low once you include the compulsory social charge.
     
  12. ugahairydawgs macrumors 68020

    ugahairydawgs

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    #12
    We all benefit from highways and national defense. Someone has to fund the State Dept and things like that. Anyone that tries to deny that just has their head in the sand. I think the problem for people like me is how much waste there is and how many over-inflated (and at times unnecessary) programs there are in our federal government.

    I think the folks on the higher end of the tax bracket would complain a lot less about how much they have to pay if folks on the lower end of the bracket paid something into the system we all benefit from.
     
  13. Eraserhead macrumors G4

    Eraserhead

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    #13
    And education and some healthcare and police and fire.

    Realistically probably pensions too.
     
  14. ugahairydawgs macrumors 68020

    ugahairydawgs

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    #14
    Herein lies where the waste I previously mentioned comes into play, especially with your first two.
     
  15. AhmedFaisal Guest

    #15
    They do, it's called sales tax. What these "everyone needs to pay" libertarians need to get into their thick skulls is that beyond a certain income and thus tax revenue, it's simply inefficient for the federal government to collect it. Think about it for a second. If a low income earner has a tax liability of X that is at or below the cost Y of processing the tax return, then the government is better off not collecting said liability of X. Clear enough?

    You do realize that Medicare and Medicaid are more cost effective by a wide margin than private health insurance, right? As for education, no party can call itself blameless for ****ing that up. As for pensions, the government pension system is much more cost effective than private retirement (unless it's for the super rich) or the joke of corporate pension funds.
     
  16. ugahairydawgs macrumors 68020

    ugahairydawgs

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    #16
    You do realize a person that currently has a 0 or negative tax liability still has to file a 1040, right? Your cost Y for processing the return is going to be there regardless.
     
  17. turtle777 macrumors 6502a

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    #17
    So what skin in the game do those 50% of the population have that don't pay income taxes, and that get lifetime learning credits that more than offset their social security tax ?

    Exactly, nada.

    -t
     
  18. ugahairydawgs macrumors 68020

    ugahairydawgs

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    #18
    They don't have anything in the game......which is my point.
     
  19. Eraserhead macrumors G4

    Eraserhead

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    #19
    Without government funded education what are you going to do with the bottom ~20% of the population who can't read.

    And are you really going to allow those without health insurance to just die?
     
  20. ugahairydawgs macrumors 68020

    ugahairydawgs

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    #20
    I'm not saying that education and health programs aren't important, I just think there is a lot of waste there. I still fail to understand why we need a national department of education using its financial influence to determine what is taught in our schools, as if the needs of students in south central Alabama are the exact same as students in south central Los Angeles.
     
  21. ucfgrad93 macrumors P6

    ucfgrad93

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    #21
    Agreed. I think people that renounce their citizenship to avoid paying taxes are complete douchebags.
     
  22. Eraserhead macrumors G4

    Eraserhead

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    #22
    State funded is still paid out of taxes...
     
  23. ugahairydawgs macrumors 68020

    ugahairydawgs

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    #23
    I'm not quite sure I understand what you're saying there.
     
  24. itcheroni, Aug 3, 2012
    Last edited: Aug 3, 2012

    itcheroni thread starter macrumors 6502a

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    #24
    We've been through this before in a previous thread.

    Mitt Romney paid roughly 15% in taxes, $3 million last year or over two years if I remember correctly. In Singapore, he would pay close to zero. So I think taxes are lower in Singapore.

    And even the effective tax rate is quite low for the average Singaporean. I always pester Singaporeans about their taxes when I met them traveling. They always remark that the difference between them and the US is quite notable. I have a close friend in Hong Kong who makes about 30k USD a year and she doesn't have any idea what her taxes are because it's negligible. She estimates it's between 2-3%. And of course filing (cost of compliance) is a whole other matter. They are surprised that normal everyday people have to hire accountants just to figure out how much to pay.

    Edit: Even China is better in this regard. I have a friend who laughs at me because the US only charges him a flat 10% and China doesn't tax him for his capital gains abroad, so it really sucks to be an American investing in America.
     
  25. turtle777 macrumors 6502a

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    #25
    I'm going to look past this question, since there's obviously no way to respond.

    The fact is, our medical ability and knowledge is far greater than our ability to finance it. There has to be some limit set on what health insurance covers.

    The other fact is, the government could easily afford to pay catastrophic health insurance for everyone, and still save billions compared to the current stupid system. Obviously, there are tons of people (health care industry, lobbyists, politicians, unions etc...) that are against this.

    -t
     

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