You What?

Richard Murphy\’s latest idea:

I argue for a citizenship based tax – which only the US has.

So if you decide that you don\’t like the way the country is going and decide to leave (not, perhas enjoying the tyrrany of the majority) you still have to pay tax to fund the way that you don\’t like the country going. Truly, you are a slave to the State.

It gets even more interesting though. The US system also taxes you if you decide that you\’d like to give up citizenship.

Section 205 creates a new “exit tax” on all persons who give up, renounce, and/or relinquish their US citizenship or greencard.  For greencard holders, expatriation can and does happen involuntarily.  It also applies to US citizenship (though no one can force you to give up US citizenship).  You are deemed to have sold all your worldly goods on the date of expatriation.  The first $600,000 is exempt, and the rest is taxed and due within 90 days of expatriation.  There is no step-up in basis for arrival to the US, so for greencard holders this tax is also on gain incurred prior to moving to the US.  US retirement plans are deemed distributed and taxed immediately.  Taxpayers’ interests in foreign trusts are taxable, even if there is no legal access to the funds.

No, I think we\’ll not have that tax system, shall we?

4 comments on “You What?

  1. Quick question: if a US citizen takes his assets and moves to another country, how does Uncle Sam chase him if he refuses to lodge a return?

    If the IRS gets orders in the US courts, how are they executed in another country? I would imagine US sheriffs have no legal authority to repossess property outside the US, particularly in countries unfriendly to the US.

  2. Since the UK government has decided to extradite its citizens – or, indeed, anyone in the UK – to the US on the basis, not of “probable cause” nor even prima facie evidence but solely on the testimony of US government functionaries, one country where the IRS might be able to get at US ex-citizens is the UK. This might be of interest.

  3. Don’t try commenting on Dicky’s blog unless you want a snotty e-mail telling you your comment does meet his demanding standards, which I think basically involve agreeing with him.

    I was merely trying to ask him, given that I pay over 50% of my income in tax (including GST, rates, etc.) to the aussie government, where I am domiciled but not a citizen, what proportion of what is left he was proposing I should have to pay to the UK government?

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