[youngbullind]

This affects my girlfriend. She has a dual passport but only lived in the US to the age of six months. We are are British but live in Spain which already makes for complex tax arrangements, and this on top of things is just crazy. How the hell does the US think it has the right to tax people who haven't lived there for over 30 years?

[masklinn]

That's debatable but as the article notes citizenship-based income tax has been part of US law for a long time without that much issue (the standard deduction is already pretty high, it's just a pain in the ass that you have to declare it but most expats have been living with that for a long time).

FATCA is utterly bonkers though.

[cylinder]

They couldn't enforce much before FATCA. Now they can easily see and potentially seize your account funds.

[rhino369]

They are citizens of our country and are therefore responsible for funding the government. They have the right to just move back to the United States and enjoy the fruits of our country. Why shouldn't they have to pay up?

Taxes aren't a payment for services rendered.

If your girlfriend doesn't believe herself to be an American she should renounce citizenship. But you are asking to have her cake and eat it too.

[dalke]

Because 1) the question is why the US - unlike every other country except Eritrea - has this policy, 2) it's difficult or at least expensive to renounce citizenship, and 3) it's only been in the last 10 years or so that many Americans have even heard of this requirement.

As you can read in this thread, it costs over $2,000 to file renunciation, and your taxes need to be in order. Resolving the tax situation in this case sounds quite expensive. Oh, and I think you have to pay taxes for up to 10 years after renunciation, and you can't renounce until you're 18 years old.

Suppose you were born in the US while your British parents were finishing up a college education. You left the US when you were 6 months old. You've not back to the US, you have no US relatives, you don't know anything about US taxes, or Selective Service requirements, or other obligations of US citizens, and have no plans to even visit the US. Then at the age of 40 you realize that you are under US law. You want to renounce citizenship, but learn you'll need to pay $150K in penalties, even though you've been paying UK taxes all your life and would never have needed to pay US taxes had you filed. You only have $50K in savings.

What do you do, and how do you think you would feel?

[forgetsusername]

>How the hell does the US think it has the right to tax people who haven't lived there for over 30 years?

As long as you maintain a passport and citizenship, how do they not have such a right?

[Flimm]

Every country in the world bar the US and Eritrea don't tax their citizens who live abroad for so long. So it's certainly the norm not to do this, whether you want to call it the government's right or not.

[Symbiote]

I'm British, and I left the UK last summer.

In January, I got a tax refund from the British government, since I'd been paying tax on my income at a rate that expected me to earn that amount for the whole year. Claiming that was the first tax return I'd ever completed, i.e. the first time my taxes weren't correct automatically.

My only remaining "asset" in the UK is my student loan, and some money in an account to make the payments. I do not expect to communicate with the British tax office ever again.

This situation is typical of most countries.

[mike_hearn]

If you believe "might makes right" then sure, they have the right.

If you ask what moral legitimacy it has, then the answer is none - they have no right.

[chrisseaton]

Does your girlfriend have access to services as a US citizen? Such as embassies, entrance to the US without a visa, or evacuation in case of war? Who should pay for those services if your girlfriend doesn't want to?

[leoedin]

You say this like other countries don't also offer those services. Almost every western country does, and none of them tax their citizens abroad.

The UK embeds the cost of consular protection and embassy services into the renewal cost of a passport - approximately £15 in 2010, probably more now. It's an insurance payment that most people will never use, so it doesn't need to cost very much per person.

Citizens of a number of countries can enter the US without a visa. They don't also have to fill out tax returns in the US.

[vinay427]

>Almost every western country does, and none of them tax their citizens abroad.

This is certainly not limited to western countries, to underscore your point. Even India evacuated its citizens from Yemen, while the US did not. [1]

On that note, India also organized the largest-ever civilian airlift to evacuate tens of thousands of citizens from Kuwait during the Iraq invasion (1990). [2]

[1]: http://america.aljazeera.com/articles/2015/4/7/us-among-26-c...

[2]: https://en.wikipedia.org/wiki/1990_airlift_of_Indians_from_K...

[mike_hearn]

The USA charges people it evacuates from war zones, and may or may not do so at all. It is not obligated to do so.

Additionally, if she has dual citizenship, she would get it for free from the UK anyway even if she lives in Spain.

People with British passports also have 90-day visa free access under the Visa waiver program. Unless she intends to move there, there aren't really any benefits to being a US citizen, and certainly nothing that can justify extra-territorial taxation. She gets no services from the US government.

[chrisseaton]

If she's come to the conclusion that she doesn't need any of the services that she gets as a citizen, for the reasons you've given, then why is she still a citizen? Either it's worth it (including any emotional attachment) when you balance it against the cost or it isn't.

But if she chooses to retain her citizenship then she's incurring a potential cost to the US, which surely it's reasonable for her to contribute to.

[mike_hearn]

What costs? If she doesn't live there she imposes no costs on the USA. If she ever returned and started imposing costs, she'd also start paying taxes.

Why is she still a citizen? The article says she's in the process of renouncing. Not done already probably because:

• She might one day need to spend time with family or elderly relatives, even if she'd prefer to stay abroad.

• The USA does not allow you to give up your citizenship for tax reasons. She's probably screwed herself here by talking to the BBC, so I suspect she doesn't know that (edit: wrong, I missed the part in the article where it says Jane is a pseudonym). If they think you relinquished your citizenship to avoid taxes they can simply levy taxes on you anyway.

• Giving up citizenship is itself an expensive process and can trigger an "exit tax" that assumes you liquidated every asset you own on the day of renouncement, including things like a home. This exit tax can itself make giving up US citizenship financially infeasible.

• It costs $2350 and can take months.

In short, the entire US FATCA system is designed to screw over expats as hard as possible. It's very hard to get out and isn't at all justifiable under any moral or ethical code I'm aware of. The only reason the US can enforce it at all is the primacy of New York in the financial system and the incredibly aggressive Congress.

[mike_hearn]

Oh, and I forgot the main one of course - lots of places won't let you become stateless. You need to be a citizen of another country already to give up your US citizenship. And that, in turn, is a very long term and difficult process.

[chrisseaton]

This thread was originally about 'how the hell does the US think it has the right to tax people who haven't lived there for over 30 years?' You or I may disagree with those issues, but those people having rights as a US citizen and access to US consulate services may be why the US thinks it has a right to tax them.

[bmelton]

Agreed with everything you said, but it's worth pointing out that Congress doesn't set the expatriation fees, the State Department does, which falls under the executive branch.

Ostensibly, the fees were raised as a reaction to Eduardo Saverin's expatriation for tax avoidance purposes.

Congress is to blame for plenty, but not this.

[staticelf]

Maybe thousands of people who are paying tax in the US but aren't citizens? Pretty much every country has embassies and do not tax people when living abroad.

The embassies is also for people just traveling/visiting and not living permanently abroad.

[rbcgerard]

What portion of a U.S. citizen living abroad's tax bill do you think those services represent? 1%? .01%? .001%?

[xtracto]

> Does your girlfriend have access to services as a US citizen? Such as embassies, entrance to the US without a visa, or evacuation in case of war? Who should pay for those services if your girlfriend doesn't want to

My wife has those! guess what we don't pay a dime because we are citizens of... the rest of the world.