sundaymorningstaple wrote:I haven't, but others on here have.
To the extent anybody is still having problems, the OECD is now making sure that
everybody from developed economies has the same problems. Countries are now starting to adopt the OECD bank reporting standards which in some ways are even more rigorous than the FATCA standards.
Obviously we aren't talking about 28% tax brackets when born, but the law is the law and will be there when they are of 'age'.
Well OK, but the legal status isn't actually a choice. U.S. citizenship either is or is not a legal, endowed fact at birth. This isn't a choice babies and their parents have.
They only have two choices:
1. Parents can leave their U.S. citizen babies undocumented or document them. Failure to document their citizenship(s) seems like a dumb idea to me in many respects. For example, the U.S. citizen parent cannot get full U.S. tax credits (i.e. free money from the IRS) without documenting his/her child, worth as much as $17,000 in free money over a U.S. citizen child's childhood. Leaving a child's citizenship undocumented also makes it that much more bureaucratically difficult for the child to choose the #2 option below if desired.
2. When the child reaches his/her 18th birthday, he/she can renounce his/her U.S. citizenship if he/she chooses. The current fee is $2350 plus two visits to a U.S. consulate or embassy. The U.S. Expatriation Tax does not apply even to high net worth 18 years olds -- do you know any? -- who renounce in their other country of citizenship, assuming they've lived there for a few years.
But documented or not, a U.S. citizen is a U.S. citizen, and all the legal obligations associated with that citizenship still apply, including tax and financial reporting obligations (if any, when they apply).
Stop to consider that only two countries in the world do that, and most don't even know about the other country so it really doesn't make much difference to them (Eritrea - and it's called a diaspora tax I believe).
No, it's at least three. Hungary is another one, and Hungary doesn't even have a Foreign Earned Income Exclusion. There are also some countries, like Japan, that are "tax sticky," meaning that in certain circumstances it can be very difficult for its citizens to escape tax liabilities. In the case of Japan, gift and inheritance tax requirements remain in place for a full five years since the last departure from Japan.
Approximately 6% of U.S. citizens living overseas owe some amount of U.S. tax on non-U.S. source income. Among the rest of the 94%, some are eligible for free money from the IRS even while living overseas via certain refundable tax credits (notably the Additional Child Tax Credit), and many of those who are eligible receive their free money. That is, the U.S. has a negative tax rate that applies to some of its citizens. This stuff can and does cut both ways.
Moreover, for perspective, there are over 35 countries with compulsory military service including Singapore, and Singapore's even applies to non-citizen permanent residents. Lithuania recently began its military draft. Many people would argue that forced labor at below market wages (or zero wages) with a nontrivial risk of death and injury is a more serious, more severe governmental obligation. The U.S. has not had any compulsory military service since 1973.
I've been filing two tax returns for 33 years, for what? I get nothing from the US, and now that I'm of an age to collect Social Security....
You seriously wrote that in the same sentence and didn't see the contradiction? You get nothing from the United States...except a nice monthly check for the rest of your life, and the life of your surviving spouse (who is also eligible for a spousal benefit even while you're alive when she/he reaches retirement age)? A spouse who may never have even stepped foot in the United States?
But OK, if you don't like that arrangement, no problem! Drop by the U.S. Embassy on Napier Road, pay $2350, and give up your U.S. passport and citizenship. You say it's not worth it, and filing your tax returns costs something at least in terms of your time, so why not exit that particular package deal?
Yes, OK, $2350 is a nontrivial fee. True enough. It happens to be the State Department's actual average total cost of processing a renunciation or relinquishment of U.S. citizenship. So they charge you their costs.
...they've now made THAT taxable as well even though it was NEVER to be taxable when it was created.
First of all, a minimum of 15% of your Social Security benefits are never U.S. taxed. Second, if you're concerned about the remaining taxability of Social Security benefits, you and your spouse should consider Married Filing Jointly. Assuming she is a non-resident alien spouse, she would make what's called a Section 6013(g) election and start filing joint tax returns with you. MFJ is a choice, and it's a dramatically better one in terms of Social Security taxability compared to Married Filing Separately. But whether the net effect for your household is better or not will depend on her income.
I've not started drawing SS yet even though I'm eligible.
Why not? If you're entitled to it, you should. (Unless you're waiting until you reach or get closer to age 70 in order to boost your monthly benefit because you're in good health, expect to stay that way and beat the actuarial tables, and don't need the money yet. Then that's a very good idea to wait. But you should never wait longer than age 70 since the benefit doesn't increase beyond that.)
What do I get in return for my tax dollars?
OK, that's bad question just on principle. Do you think Bill Gates and Warren Buffet "get back" all their U.S. tax dollars? No, of course not. Do you think most U.S. orphans with severe learning and physical disabilities will ever be able to pay taxes equal to the government services such orphans will require for their entire lives? No, of course not.
This is not a fee for service deal here. This is not like shopping at the Apple store, paying $1000 for an iPhone, and enjoying an iPhone. It's not like buying a burger at McDonalds. Taxes are never transactional arrangements in any civil society, including Singapore's. They are the means to fund civil society, a society we all enjoy but to varying degrees and contribute to in varying degrees, according to our abilities, and with variations throughout our lives. (Most babies aren't working at DBS or Singapore Airlines, and they aren't paying much in taxes either.)
I assume that the United States federal, state, and local governments educated you in public schools, provided roads and bridges you and your parents used, made sure your drinking water and food supply was safe, provided police and fire protection, etc., etc. Did you pay for any of those public services in tax years 1957, 1958, and 1959 (as examples) when you were probably in elementary or middle school? (What was your tax bracket back then?) Well, you're paying now, a bit, because you can. And thank you for your service.
It's quite reasonable to respect lifecycle effects in public financing. They are quite real, and the U.S. happens not to ignore them
completely in its tax system....
Why am I still a citizen?
....OK, good question! Fortunately you can change that if you don't like the particular package citizenship deal of rights, privileges, and obligations that you got/have. (Unlike Iranian citizenship, to pick an example, which is extremely difficult or impossible to shake off.) Nobody is forcing you to retain U.S. citizenship if you possess any other citizenship. (The U.S. won't let you become stateless if they can help it, rightly so.) Your choice, your call. Officers are standing by at 27 Napier Road, and they accept all major credit cards.
Today, I'm not so sure and it's too late to change nationalities now as I'm 68....
Oh? Why is that?
When they're adults (or at least very nearly so) and have adult responsibilities, circumstances might change, but $2350 and a couple visits to a U.S. embassy at age 18 is one available option then.